Aide may cooperate in Nicholas probe
An attorney who ran Orange County billionaire Henry T. Nicholas’ private affairs for more than five years has been in discussions with federal prosecutors about cooperating with a criminal investigation of the Broadcom Corp. founder, according to court filings.
Former Nicholas aide Craig S. Gunther and the government have been unable to reach a plea agreement so far, the filings say. As a result, Gunther wound up pleading not guilty Monday to violating a law aimed at detecting drug dealers and terrorists.
Gunther, who is free on bond, entered his plea to the felony charge before U.S. Magistrate Judge Robert N. Block in Santa Ana. Trial was set for Jan. 8 before U.S. District Judge David O. Carter.
The case grows out of a probe into allegations of stock option manipulation by Nicholas and other top executives at Irvine’s Broadcom, a computer chip company that Nicholas co-founded. Authorities also are investigating allegations that Nicholas violated drug and prostitution laws and how that may have affected his performance as Broadcom chief executive.
Gunther was charged in August with failing to fill out required forms when withdrawing large sums of cash from Nicholas bank accounts. He evaded the requirement illegally by having employees withdraw more than $500,000 in amounts that each were just under the $10,000 that triggered the reporting requirement, an affidavit by FBI agent Paul Bonin said.
Gunther, of Aliso Viejo, declined to discuss the case outside court Monday. His attorney, Robert L. Corbin of Los Angeles, offered only a brief statement.
“We are disappointed that the government has chosen to file these charges at this time,” he said. “These allegations involve highly technical and obscure Treasury regulations.”
Assistant U.S. Atty. Robb C. Adkins declined to say whether a plea deal with Gunther remained a possibility.
Nicholas stepped down as Broadcom CEO in 2003, saying he wanted to patch up his marriage. Since then his legal troubles have mounted, including the stock option probe disclosed by the company.
According to Securities and Exchange Commission filings by Broadcom, the SEC said in July that it might file civil charges against Broadcom and co-founder Henry Samueli, Nicholas’ longtime partner, who also owns the Anaheim Ducks and is a prominent philanthropist.
Nicholas has denied wrongdoing, alleging some of his accusers have tried to extort money from him. Broadcom has said it is cooperating with the SEC; an attorney for Samueli declined to comment.
Gunther served as chief operating officer of Nicholas’ holding company, NS Holdings in Aliso Viejo, until resigning in June.
In court papers filed in the Gunther case, prosecutors disclosed that the FBI had interviewed at least three former Nicholas employees at the company and at his private office. Two of the employees were given immunity from prosecution in return for their statements, according to the FBI affidavit.
Witness Elizabeth Kuhns, who joined Broadcom in 1998, was quoted as saying Nicholas required her to make large withdrawals from the bank so he would always have at least $10,000 in cash in his office or in a black bag he carried with him.
Robert Magnuson, the current head of Nicholas’ private office, didn’t return a phone call Monday. He previously has declined to comment on the affidavit but said he was confident Gunther would be exonerated.
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