Tape links Nicholas to use of drugs

The video images posted on YouTube for all to see were fuzzy and jerky, the kind of images that might be captured by a security camera at a convenience store.

But prosecutors confirmed this week that the tall, bearded man who appeared to be snorting drugs in the video was Henry T. Nicholas III, the Orange County billionaire who co-founded Irvine technology powerhouse Broadcom Corp.

On Wednesday, a federal grand jury indicted Nicholas on charges of conspiring to manipulate stock options and distribute cocaine, methedrine and ecstasy to co-workers and business associates.

Nicholas, 48, has denied those charges.

At a federal court hearing Thursday, prosecutors sought to deny bail for Nicholas on grounds that he “continued to engage in illegal drug activities” even after he was aware that he was under federal investigation.

“For example, defendant was recorded on video using illegal drugs in July 2007,” said the detention request, made by Robb C. Adkins, chief of the U.S. attorney’s branch office in Santa Ana, and two other prosecutors in the office, Andrew Stolper and Kenneth Julian.

The video was posted on YouTube last August, after The Times and other newspapers reported on a Los Angeles County Superior Court lawsuit by former Nicholas aide Kenji Kato, who alleged that Nicholas failed to pay him $150,000 in back wages.

That suit has been stayed pending arbitration. Kato’s attorney, Joseph Kar, attached the videos as exhibits in a related civil suit that Nicholas filed in Orange County Superior Court.

The video also was sent anonymously last summer to The Times, which did not report on it because the paper could not confirm what the video depicted or who had posted it to YouTube.

In their motion Thursday, the prosecutors identified the images as Nicholas using drugs.

They included as an exhibit letters from Nicholas’ attorneys at Munger, Tolles & Olson in Los Angeles to the legal department at Google Inc., which owns YouTube.

In one of those letters, Munger litigator Susan R. Szabo expressed concern about the time it took YouTube to pull the videos after attorneys complained that they were “taken by hidden cameras in Dr. Nicholas’ bedroom, without his knowledge or consent.”

It took 36 hours to pull the video the first time it aired, she said, and 18 hours the second time.

The filing didn’t identify who made the unauthorized video. Federal prosecutors wouldn’t comment, and Szabo didn’t respond to requests for additional information.

Drug use was a central issue at the bail hearing because the grand jury’s indictment accuses Nicholas of a so-called Title 21 narcotics violation under which he is presumed to be a danger to the community and must demonstrate otherwise to be granted bail.

At the bail hearing before U.S. Magistrate Judge Arthur Nakazato, Nicholas attorney Greg Craig described the drug use shown on the video as a single “recreational” use by Nicholas in Las Vegas in July 2007, in between otherwise successful attempts to abstain from drugs and alcohol.

Nakazato ruled that random drug tests and an “electronic leash” could ensure that Nicholas would not violate the terms of his probation, which included home detention at a $63,000-a-month drug treatment facility in Malibu.

Nicholas was released late Thursday on $3.4-million bond, including $2 million in home equity posted by his mother and $150,000 put up by one of his former professors at UCLA, Nicolaos G. Alexopoulos, who is now dean of the engineering school at UC Irvine.

Nicholas has donated large sums to the UCI academy, the Henry Samueli School of Engineering, named for Broadcom’s co-founder, who donated $20 million to the UCI engineering program. Samueli was listed in Wednesday’s options backdating indictment as an unindicted co-conspirator.

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scott.reckard@latimes.com