The last two years haven't been easy for Broadcom billionaire Henry T. Nicholas III.
He split up with his wife. He was accused of manipulating stock options at Broadcom Corp., the Irvine microchip company he co-founded. And federal prosecutors filed criminal charges against him, saying he supplied Broadcom clients with drugs and prostitutes.
On Monday, however, Nicholas received some good news: He might be getting his private jet back.
U.S. District Judge Cormac J. Carney told prosecutors pursuing drug charges and stock-option backdating charges against Nicholas that they had reached too far in seizing his Gulfstream IV, worth about $20 million, and telling him they were going to hold on to it indefinitely.
"It's not evidence. It's been used by so many different people. Whatever testing should have been done was done," Carney said. "Why does the government need this airplane?"
The airplane is just one part of a complicated series of cases against Nicholas, but how it is handled could prove vital to how the prosecution prepares for two trials set for next year.
Federal indictments made public in June by the U.S. attorney's office in Orange County accused Nicholas of illegally backdating stock options and of providing drugs to Broadcom customers. The Securities and Exchange Commission is pursuing a similar stock-option case against Nicholas.
His fellow Broadcom co-founder, Henry Samueli, who owns the Anaheim Ducks hockey team, pleaded guilty in June to one count of lying to the SEC and is expected to be sentenced later this month.
Then a different set of prosecutors with the U.S. attorney's office in Los Angeles -- which is focused on the federal civil statutes Nicholas allegedly violated -- seized one of Nicholas' planes, a Newport Coast home bought for $5.5 million in 2006 and a Las Vegas penthouse condominium bought in 2002 for $2.4 million.
Prosecutors are alleging that Nicholas used the jet repeatedly to carry cocaine, ecstasy and other drugs for parties at his homes in Las Vegas and Newport Beach and at a warehouse he owned in Laguna Niguel.
By going after the homes and the plane, they face the possibility that Nicholas' attorneys may demand to examine any evidence prosecutors have that could indicate the plane was used to carry drugs. Such a disclosure could provide clues as to the prosecution's intended courtroom strategy, revealing evidence to the defense long before the prosecution is ready to proceed.
Prosecutors attempted to slow things down by asking Carney to suspend the forfeiture case until the criminal cases have played out. This is standard procedure in drug cases. But Carney, who had to look up the relevant statutes during the hearing, said it was not standard for him.
He ruled that the government could not delay the return of the property.
"My hope and my suggestion is that you give the aircraft back," Carney said.
It is up to prosecutors now to decide their next move. Either they push forward and risk having to provide evidence to Nicholas prematurely, or they hand over the plane.
"They may just have to make a choice. How committed are they to the criminal case versus do they want a new airplane on their tarmac?" said Laurie Levenson, a professor at Loyola Law School. "The judge may not have seen a case like this. And it's the prosecution's responsibility to educate the court."
The prosecutors attempted to do that on Monday. They said they were not treating Nicholas any differently than any other defendants. Cars, houses, airplanes and other property are regularly seized and turned into government property when they have been used to transport or store illegal drugs.
"Mr. Nicholas is a big boy. He made an adult decision to use this plane over a period of years -- not one time, over a period of years -- to consistently take drugs on this plane with his kids present I might add," Assistant U.S. Atty. Kenneth B. Julian told the judge. "This defendant, unlike many of the poor defendants who come through federal court and get their property seized . . . they've only got one car and it's taken away. This defendant . . . has access to another plane. He could buy 10 more planes if he wanted to."
Nicholas' attorney, Barry Simon, however, won this round, arguing that Nicholas should not suffer one more indignity while the government gets its case together.
"There's been a lot of time and effort that has been needlessly devoted to these issues because the government should not be able to take a $20-million asset and put it on ice for a year and a half," Simon said.