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Wednesday, Jun 12, 2024

Floating a Loan

With four decks, a helipad, hot tub, movie theater, gym and elevator, the 163-foot Triton is a floating mansion.

The yacht also is part of a legal dispute between two big names in Orange County business.

Jim Baldwin, a developer, homebuilder and owner of the yacht, is suing Broadcom Corp. cofounder and former chief executive Henry “Nick” Nicholas over a $21 million loan deal gone sour.

Both sides blame each other for the loan’s unraveling.

In a suit filed last month in federal court in Santa Ana, Baldwin alleged breach of contract and excessive interest in the loan deal.

He’s also seeking to get out of a three-year agreement that allows Nicholas to use the Triton yacht for two months each year.

A lawyer for Nicholas, a billionaire who made his fortune at Irvine-based chipmaker Broadcom, called the suit a “desperate ploy.”

At the center of the dispute is a loan Baldwin sought in April to prevent “looming default on certain loan obligations,” according to the lawsuit.

The suit doesn’t indicate what financing Baldwin was looking to shore up with a loan. It could be related to Baldwin’s proposed Portola Center project in Lake Forest, where more than 900 homes and other development are planned.

Sought Lenders

Baldwin is said to have e-mailed terms of a proposed loan through an intermediary to wealthy locals who were seen as potential lenders.

Terms laid out in the e-mail included a lien on Baldwin’s yacht, use of the yacht for a number of days per year and a 16% interest rate.

Nicholas agreed to make an “emergency” loan to Baldwin in late June, according to the lawsuit.

Along with the Triton, the loan was to be backed by a home Baldwin owns in Laguna Beach’s Emerald Bay and property in Cabo San Lucas.

Nicholas initially loaned Baldwin $15.5 million. The remaining $5.5 million never was funded, according to the lawsuit.

Differing Takes

The two sides have different takes on how the deal went off track.

Nicholas’ camp argued Baldwin failed to live up to his end of the bargain and charged he committed fraud in seeking the loan, according to an October letter sent to Baldwin by lawyers representing Nicholas at Los Angeles-based Glaser, Weil, Fink, Jacobs, Howard & Shapiro LLP.

Baldwin failed to disclose lawsuits against him that could impact the loan, according to the letter.

Nicholas’ lawyers also alleged Baldwin missed interest payments on the loan, was unable to secure the Mexico property as collateral and didn’t pay some $130,000 in crew wages and fuel and repair costs on the Triton.

The letter seeks $16.6 million in principal, interest and fees from Baldwin and threatens to seek “legal rights and remedies.”

In Baldwin’s lawsuit, his lawyers charged the “entire transaction was a fraud and the defendants never intended to fully fund the loan agreement.”

The suit alleged Nicholas set up the loan so Baldwin would go into default, allowing Nicholas to take over the Triton.

The yacht could be worth an estimated $20 million to $40 million.

In withholding a second payment to Baldwin, the suit contended Nicholas cited concerns the deal could complicate a long-running financial settlement with ex-wife Stacey.

The two were legally divorced in 2008 but negotiations on a financial settlement have carried on for years. It’s believed a settlement is in the final stages but isn’t completed.

“Defendant Nicholas claimed he did not want his ex-wife to argue to the judge that Nicholas was mismanaging their money,” the lawsuit said.

Baldwin is seeking nearly $19 million in damages and legal fees.

Tactical Move?

The suit could be seen as a tactical move by Baldwin to prevent foreclosure on his yacht and home.

The letter from Nicholas’ lawyers gave Baldwin until Nov. 1 to pay the $16.6 million requested. Baldwin’s suit was filed three days before the deadline.

Baldwin’s lawyers at Carlsbad’s Gatzke, Dillon & Balance LLP didn’t respond to requests for comment beyond the lawsuit.

A lawyer for Nicholas called Baldwin’s lawsuit an attempt to cover up money troubles.

“This is simply a desperate ploy, by a desperate individual seeking to abuse the legal process because of the financial quagmire he placed himself in,” said Emilio F. Gonzalez, a lawyer for Nicholas Holdings LLC, Nicholas’ Aliso Viejo-based corporation for his business dealings.

Baldwin, who’s developed part of San Diego County’s Otay Ranch, has had a long history in Southern California real estate.

Brother Al Baldwin lives in Emerald Bay.

An earlier homebuilder of theirs, Newport Beach’s Baldwin Cos., was one of Southern California’s largest in the early 1990s. The company built homes in Anaheim Hills, Rancho Santa Margarita and elsewhere. It filed for bankruptcy in 1995.

Jim Baldwin, known for his love of off-road racing and spear fishing, has been involved in some 20 lawsuits in the past five years, according to court records.


Nicholas is best known for Broadcom, including legal issues that arose while he ran the company.

He saw a long legal drama end in May when federal prosecutors dropped an appeal of a stock options backdating case against him.

In December, a federal judge threw out the government’s case citing a lack of evidence and prosecutor misconduct. Separate drug charges against Nicholas also were dismissed.

Nicholas, who left Broadcom in 2003, had pleaded not guilty in both cases.

Mark Mueller and Michael Lyster contributed to this story.

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