Billionaire sought secret lair for sex and drugs

Flush with wealth from Broadcom Corp.'s 1998 public stock offering, computer chip magnate Henry T. Nicholas III made a few additions to his equestrian estate in Laguna Hills: hidden doors and secret levers, an underground grotto, tunnels and a 2,000-square-foot sports bar he called "Nick's Cafe."

But there was more, according to a claim made in court documents: plans for a "secret and convenient lair" with hidden entries for Nicholas to indulge his "manic obsession with prostitutes" and "addiction to cocaine and Ecstasy."

The construction team hired by Nicholas has accused him of failing to pay millions of dollars for work performed between April 1998 and April 2002. Nicholas was said to have used "manipulation, lies, intimidation and even death threats" to pressure "nearly every contractor and vendor" on the project to perform extra work without pay "at warp speed."

The allegations, denounced as fabrications by Nicholas' lawyer, echoed others in a recently surfaced lawsuit filed late last year by Kenji Kato, a Nicholas assistant from 1999 to 2006. Kato said Nicholas made him oversee supplies of cocaine and other drugs, pay prostitutes from a "petty cash" fund and conceal his boss' illicit activities.

Nicholas took his wife to Hawaii for a week in August 2000 while work on his secret chamber was being completed, the filing claimed. Stacey Nicholas has since filed for divorce, after catching him in the room with a prostitute.

"Plaintiffs were promised payment and/or threatened with financial ruin — whatever it took — if they failed to complete the task within a week," the draft complaint said, and hundreds of workers began toiling 18 hours a day to excavate and pour concrete.

The noise and presence of armed guards hired to block access to community horse trails near the project prompted neighbors to complain to Laguna Hills authorities, who discovered the work was being performed without a permit and shut it down, "although the room ceiling was covered over so it was not observable from above ground," the contractors said.

In a September 2000 Times story about the dispute, Nicholas said the newest underground structure was "a pump house" to handle water runoff from the horse trails. The draft complaint disputed that account and claimed the new construction was tied to the alleged separate underground facility being built by Nicholas.

It said Nicholas, anticipating he would eventually obtain a permit from the city "to complete his lair," implemented a backup plan, arranging "to completely fabricate the interior" of the hideaway at a Laguna Niguel warehouse. That location, referred to as the Pond or the Ponderosa, "was infamous for its excessive extravagance, its sex rooms and its million-dollar sound equipment," the document alleged.

Nicholas had his private jet pick up prostitutes in New Orleans, Chicago, Las Vegas and Los Angeles "and bring them back to the Pond for his rock star friends," the draft complaint said. "He provided his guests with transportation and cocaine, Ecstasy, meth, marijuana, mushrooms, and nitrous oxide " — and even arranged for his private helicopter to land at a nearby hospital helipad, it said.