Broadcom probe looks at ex-CEO's behavior: report

LOS ANGELES (Reuters) - Federal officials investigating stock-options backdating at Broadcom Corp. are looking into allegations that former Chief Executive Henry Nicholas III used hard drugs and hired prostitutes, the Wall Street Journal reported on Friday.

The U.S. Attorney's office in Los Angeles has taken an interest in claims Kenji Kato, a former assistant to Nicholas, made earlier this year as part of a civil lawsuit against Nicholas and several of his companies, the report said, citing people close to the situation.

In court papers, Kato claimed that Nicholas had a deep dependence on cocaine and other drugs, regularly slept with prostitutes and women other than his wife, spiked the drinks of Broadcom customers with ecstasy, and ordered prostitutes for customers while at trade shows in Las Vegas.

Steven Silverstein, Nicholas' attorney, denied all those claims, saying Kato made them in a bid to extort money from Nicholas.

Several of Nicholas' "lower-level" employees were served with subpoenas by agents from the Federal Bureau of Investigation at his home on Tuesday, Silverstein added.

The U.S. Attorney's office in Los Angeles declined to comment, and an FBI spokeswoman said she could not comment on a pending investigation.

The Journal also reported that Kato has interviewed by the FBI in April. His attorney would not comment on the matter.

Broadcom, which makes chips for networking gear, mobile phones, video equipment and other communications products, is among dozens of companies being probed by federal authorities for possible manipulation of stock option grant dates.

In January, the company said it would take a $2.22 billion charge to fix its accounting for improper backdating of stock option grants and said Nicholas bore "significant responsibility" for the lack of adequate controls in the option granting process.

Nicholas ran Broadcom from its founding in 1991 until 2003. The company was not available for comment.