Not to pile on or anything, but in addition to today's SEC complaint Nicholas is in hot water with the IRS. As reported by our friend Janet Novack at Forbes, the dispute centers on whether his family can claim $290 million in tax losses from a $6 million investment in junk Asian debt and securities.

The ploy—which the IRS calls a “distressed asset/debt,” or DAD, shelter—was sold to Nicholas and other tech high rollers in 2001 by Chenery Associates and MyCFO, a financial advice firm backed by Netscape cofounder James H. Clark and venture capitalist John Doerr. Three years later Congress changed the tax code to bar partnerships from being used to transfer foreign losses to U.S. taxpayers. Even though that law doesn’t apply retroactively to Nicholas’ 2001 shelters, the IRS sent his family’s partnerships notices declaring them illegitimate economic shams. In March the partnerships filed five lawsuits challenging the IRS’ denial of their losses and its imposition of penalties.

Novack notes that in tax shelter circles DAD has now morphed into DAT, or the "distressed asset trust." That's a shelter in which partnerships are replaced by trusts.