What is a man to do with $2.3 billion?

If you are Henry T. Nicholas III, one of the original dot-com billionaires – whose fortune survived the crash of 2000 – the answer is simple: build a “sex cave” under your house, maintain a fully stocked warehouse of drugs, get high on your two private jets, keep a brothel’s worth of prostitutes on the payroll and, during the boring moments, spike your colleagues’ drinks with Ecstasy.

That is what prosecutors claim in an astonishingly wide-ranging case against the 49-year-old technology tycoon that focuses on charges that he rigged his company’s stock option scheme.

Gregory Craig, the lawyer defending Mr Nicholas, insists that his client is innocent and will prevail. “It’s a kitchen-sink attack,” he said yesterday. “They’re trying to throw everything at him from eight years ago.”

The main charges against Mr Nicholas of conspiracy and securities fraud were officially unsealed on Thursday.

Prosecutors claim that Mr Nicholas’s company, Broadcom, “back-dated” stock options – thus allowing executives to buy shares for an artificially low price, then sell them for a profit – but did not disclose the arrangement publicly. This meant that shareholders were unknowingly picking up the bill and that the company’s published accounts were essentially false. Broadcom’s former chief financial officer, William J. Ruehle, also faces charges related to the stock options scheme and he, too, protests his innocence through his lawyer.

Most attention yesterday was focused on the accompanying 18-page indictment on drugs charges against Mr Nicholas. It detailed a lifestyle so extraordinarily profligate that not even the description of “Gatsbyesque” could suffice. It is alleged that Mr Nicholas hired prostitutes and escorts for himself, his employees and his customers, and conspired to obtain illegal prescriptions for drugs such as Valium. He also allegedly kept a warehouse full of drugs and built a $30 million “sex cave” under his mansion with a bar and a million-dollar sound system where he and his rock star friends indulged themselves.

In addition, it is claimed that Mr Nicholas’s consumption of marijuana was so prodigious that during a 2001 flight on a private jet between Orange County and Las Vegas the pilot had to put on an oxygen mask; and that on two separate occasions he drugged unsuspecting colleagues with Ecstasy.

According to prosecutors, Mr Nicholas required several unnamed co-conspirators to provide detailed invoices for drugs they sold to him and used codenames such as “party favours” and “refreshments” to conceal what was being traded.

At a court hearing this week, the magistrate Arthur Nakazato set bail for Mr Nicholas at $3.3 million (£1.6 million) and ordered random weapons searches and drug tests to be carried out, along with the grounding of his private jets. Mr Nicholas, who owns four properties and a warehouse in Orange County and Las Vegas, will be subjected to home detention and electronic monitoring.

Mr Nakazato said he was concerned that the billionaire’s extreme wealth could allow him to flee at any moment, and was disturbed by allegations that he had threatened and hit a grand jury witness during an argument on a private jet last year. “If you flee, I will detain you and I will order an arrest warrant and I’ll have the marshals and the FBI going on a hunt for you,” the magistrate said. “And when they bring you back, I’m not going to show much mercy.”

Mr Nicholas – known as Nick to his friends – was raised in Los Angeles and attended the United States Air Force Academy. After getting a Ph.D in electrical engineering, he co-founded Broadcom in 1991 with Henry Samueli. The company, which makes microchips for mobile phones and high-speed internet modems, went public in 1998, minting a fortune of $10 billion each for Mr Nicholas and Mr Samueli. After the crash of 2000, Mr Nicholas was left with $2 billion, and three years later he resigned from the company to save his marriage.

Since April he has been in a $66,000-a-month rehab centre in Malibu. The drug charges against Mr Nicholas carry a maximum combined sentence of 20 years in prison, while the stock fraud charges carry a maximum combined sentence of up to 340 years. He has not yet entered a plea.

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