Judge keeps Henry Nicholas court records under seal

A federal judge today granted a Los Angeles Times request to unseal certain documents in the drug prosecution of Newport Beach technology billionaire Henry T. Nicholas III, but kept others secret on grounds they might prejudice a continuing grand jury investigation that could produce additional charges in the case.

"I feel very, very uncomfortable closing the proceedings and shutting the press out in this case," said U.S. District Judge Cormac J. Carney in Santa Ana. He unsealed 11 documents related to a list of government witnesses that Nicholas is barred from contacting -- a roster that already had been made public.

But after hearing from government and defense lawyers that 12 other documents contain references to a Nicholas employee who has not yet testified to the grand jury, Carney told Times attorney Alonzo B. Wickers IV that he would keep them sealed "out of an abundance of caution."

Carney noted that the grand jury proceedings might result in the indictment of other defendants or additional charges being handed up against Nicholas, the co-founder of Irvine computer chip designer Broadcom Corp. Nicholas, 49, has pleaded not guilty to two indictments handed up in June by the federal grand jury in Santa Ana.

In the drug case, he is accused of four counts of maintaining homes and a warehouse for the "purpose of using and distributing controlled substances," including cocaine, ecstasy and methamphetamine. Among other things, Nicholas is alleged to have secretly slipped drugs into the drinks of business associates to gain competitive advantage.

The second indictment, containing 21 charges of fraud, conspiracy and falsifying corporate documents, alleges that Nicholas and William J. Ruehle, Broadcom's former chief financial officer, backdated Broadcom stock options for five years to improperly reward employees. Ruehle also has pleaded not guilty; Broadcom co-founder Henry Samueli, described in the Nicholas indictment as a co-conspirator, has pleaded guilty to lying to the Securities and Exchange Commission about his role in the options awards.

The options fraud case is scheduled to be heard next spring, with the drug case to follow in November 2009. The witness who has not yet testified to the grand jury was identified in court as "a gentleman" who worked for Nicholas and for whom Nicholas is paying legal fees. Another witness who already has testified to the grand jury also is identified in the sealed filings, attorneys said. The documents are related to a motion by Nicholas to quash a grand jury subpoena, Carney said.

One of Nicholas' lawyers, Malachi Jones, argued that releasing the names could have a "chilling effect" on other witnesses. "These names could be "splashed on the front page of the L.A. Times," Jones said. Reading media accounts could also prejudice the deliberations of grand jurors, he added.

-- E. Scott Reckard