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Billionaire accused of building hidden sex and drugs den

By Leonard Doyle in Washington

Henry T Nicholas III was, for a brief period, one of the richest men in America. A patron of the Orange County arts scene, he had a trophy wife and enjoyed playing Rod Stewart numbers at full volume from the steps of his mansion.

The 6ft 6ins engineer founded the company Broadcom in 1991, making the innards of cable TV boxes at his Redondo Beach apartment. When it floated in the go-go years of the internet boom, his shares went up in value 40 times and he soon acquired the trappings of the super rich: private jets, a Lamborghini and a mansion in Laguna Hills with its own equestrian estate and, court documents claim, his personal brothel, hidden in an underground grotto.

The grotto was reached by hidden doors with secret levers, leading to tunnels and a 2,000sq-ft underground sports bar called "Nick's Café". According to claims in court papers, this was a "secret and convenient lair", to cater for "Mr Nicholas's manic obsession with prostitutes" and his "addiction to cocaine and ecstasy".

He used his private jet to pick up prostitutes as far away as New Orleans, Chicago, Las Vegas and Los Angeles "and bring them back to the Pond for his rock star friends", according to documents filed with Orange County Superior Court. "He provided his guests with transportation and cocaine, ecstasy, methamphetamines, marijuana, mushrooms, and nitrous oxide [laughing gas]".

In January 2003, Mr Nicholas quit Broadcom, saying he intended to spend more time with his children and tend to his marriage. Among the many legal troubles he now faces is a divorce battle with his wife Stacey, with whom he controls $1.1bn in Broadcom shares.

Mr Nicholas apparently told his wife about the underground passageways and rooms under their mansion when work began. But the construction was said to be far more elaborate than she imagined and ultimately cost $30m to build over three years.

In August 2000, Mr Nicholas took his wife to Hawaii for a week while work was being finished. The contractors were "threatened with financial ruin - whatever it took - if they failed to complete the task within a week", it is claimed.

But the noise and the sight of armed guards blocking public horse-trails near the site led neighbours to complain. The authorities shut the building site. They did not know "the [underground] room ceiling was covered over so it was not observable from above ground", according to the contractors.

At the time, Mr Nicholas told the Los Angeles Times the structure was "a pump-house" for run-off water. The contractors say the underground site, called Ponderosa, "was infamous for excessive extravagance, its sex rooms and its million-dollar sound equipment", the documents claimed. The allegations were made by a construction company which says it was not paid. The claims have been denounced as falsehoods by Mr Nicholas's lawyer but echo other claims made by Kenji Kato, Mr Nicholas's former assistant. Mr Kato says he is owed $150,000 in back wages, and alleges serial drug use and other debauchery at the mansion.

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