Billionaire Strikes Back

Billionaire Henry T. Nicholas III fired damning accusations Friday night at a former contractor, accusing him of evading taxes and creditors. In a complaint filed in U.S Bankruptcy Court, Nicholas demanded Roman James, an Orange Country contractor who is likely a key witnesses for the U.S. government in a drug-related case against the co-founder, pay him $858,156 in attorney fees.The lawyer fees, incurred during a 2008 breach of contract dispute in which James accused Nicholas of breaking a confidentiality agreement, are likely inconsequential to Nicholas, who ranked 236th on the Forbes list of the 400 richest Americans with a net worth of $1.5 billion in October."I think it's just a smear campaign, they're just posturing," James says. "I'm just a humble contractor with a little baby, this is way out of my league. I'm not a legal expert. I'm getting schooled by a billionaire's defense team." Nicholas' complaint alleges that "for most of his adult life, James has engaged in a pattern and practice of evading creditors--including the Internal Revenue Service and the State Franchise Tax Board."It goes on to list James' two former girlfriends, an ex-wife, his current wife and a personal friend who have allegedly provided James with a "veil of secrecy" and served as conduits for him to conduct his business affairs while concealing his assets.The complaint also suggests James has not had a bank account in his own name for decades and has used "highly irregular transactions designed to conceal income and assets and misdirect creditors." James was the lead builder on a massive expansion of Nicholas' Laguna Hills mansion earlier this decade. As part of that renovation, James helped build what he and others claim was a series of secret rooms, one of which was used as what the media has dubbed a "sex lair." In 2002 James and several other contractors working on the Nicholas home drafted a lawsuit alleging they had not been compensated for their work. The lawsuit suggested Nicholas held wild parties complete with drugs and prostitutes in the sex lair underneath Nicholas' house. The suit was never filed. Instead, James and the other contractors had settled for an undisclosed sum.The information James claims to have about what went on at the Nicholas residence--and at a warehouse a five-minute drive from the mansion, where a replica of the secret rooms were built--makes him a key witness to the U.S. government, which has charged Nicholas in two separate indictments.The first of those indictments, which accuses Nicholas of 21 federal charges of options backdating, is scheduled to go to trial in February.The second trial, slated to begin next October, is on four drug-related charges. It is this trial where James is expected to testify. If convicted on all counts, Nicholas could face as much as 360 years in prison. As part of their settlement, neither James nor Nicholas could talk about one another. When James felt that confidentiality was breached, he filed a lawsuit against Nicholas. The suit was sent to arbitration, where Nicholas won in 2008. James was ordered to pay Nicholas $858,156.18 in attorney fees for the matter. Following the arbitration ruling, James filed for bankruptcy on May 27, 2009, one day before he was to sit for his Judgment Debtor's Examination, according to Nicholas' complaint. "All of this is inaccurate, this is a total joke," James says. "My attorney fees were 10 grand, his were $800,000. As far as having a business in my wife's name, who doesn't? She paid taxes on it."