JD Journal » securities fraud

Inside Trader Tied to Kluger Case Pleads Guilty

jim — Fri, 09 Dec 2011 18:47:52 +0000

According to a press release from the United States Attorney’s Office for the District of New Jersey, a stock trader who took part in an insider trading case has pleaded guilty. The case involved former law firm associated Matthew Kluger. The stock trader pleaded guilty to all four counts charged against him on Thursday in Newark federal court, according to AmLaw Daily.

The stock trader in question, Garrett Bauer, was arrested back in April for his role in an insider scheme. Prosecutors working the case claim that there was $37 million netted in the scheme based on illegal gains. The trader split the money with Kluger and mortgage broker Kenneth Robinson. The four charges filed against Bauer were securities fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud and obstruction of justice.

Robinson was a former conspirator in the case who decided to turn informant. He pleaded guilty back in April to one count of conspiracy to commit securities fraud and two counts of securities fraud. Robinson originally told the court that the scheme, which came to an end in March and began in 1994, started when Kluger worked with Cravath Swaine & Moore as a summer associate.

Kluger stole documents detailing corporate mergers and acquisitions from Am law firms that he worked at since 1994. Those firms include Cravath; Fried, Frank, Harris, Shriver & Jacobson; Skadden, Arps, Slate, Meagher & Flom; and Wilson, Sonsini, Goodrich & Rosati. All three men would have shares purchased for them by Bauer, who received merger information from Robinson, who obtained it from Kluger.

As a part of the scheme, federal prosecutors announced that the three men would trade ahead of 30 transactions. Upon hearing that federal investigators had searched the home of Robinson, Bauer destroyed a prepaid cellphone he used to communicate with Kluger and Robinson. This is where the obstruction of justice charge originates. At a New York City McDonald’s, Bauer broke the phone into two pieces and dispensed the pieces into two separate trashcans.

“After taking the lion’s share of the $37 million in profits, Bauer now faces punishment for conduct that undermines the fairness of our financial markets and the public’s trust in the safety of its investments,” U.S. Attorney for New Jersey Paul Fishman said in a statement.

The sentencing date for Bauer is scheduled for March 13. He agreed to forfeit cash and assets in excess of $23 million as a part of his guilty plea for the four counts.

“Mr. Bauer has entered a plea of guilty to the charges and by doing so is on his first step towards going on with his life,” Michael Bachner told The Am Law Daily.

Kluger was charged in April and has yet to enter a plea. He was charged with one count of conspiracy to commit securities fraud and two counts of securities fraud.

Zvi Goffer and Two Others Convicted in Insider-Trading Case

EmploymentCrossing — Tue, 14 Jun 2011 14:13:59 +0000

The ABA Journal reported on a fraud conspiracy case that involves convict Zvi Goffer and two others who are charged with securities fraud. What charges were Goffer and the two others charged with? The jury found Goffer, his brother, and another trader guilty on every charge in this case.

Read the original article here:

Lawyer Who Took Plea Delivers on Stand, Helps Convict Goffer, 2 Others in Insider-Trading Case

UnitedHealth Fraud a Symptom of Sick Economy

joshua — Wed, 24 Mar 2010 17:43:33 +0000

Since the severe economic downturn of 2008, securities-fraud class-action suits have increased tremendously and show no signs of slowing down. Last year, UnitedHealth Group‘s massive $925.5 million dollar settlement brought the grand total to just over $3.8 billion. Laura Simmons, a Cornerstone researcher and a professor at the Mason School of Business at the College of William & Mary in Williamsburg, Virginia, noted that settlements last year did not even account for the downturn of 2008 and are more representative of class-action suits brought between 2004 and 2006.

In 2009 the average class-action securities settlement was $39 million, up from $28 million in 2008, according to the Cornerstone study.

A majority of these suits included purported violations of widely agreed upon accounting practices. Twenty six percent of the class-action securities-fraud plaintiffs were represented by San Diego firm, Coughlin Stoia Geller Rudman & Robbins LLP, during the last 2 years. It was Coughlin who took on the UnitedHeath case. UnitedHeath was accused of secretly giving backdated stock options to executives.

Former McGuireWoods Partner Pleads Guilty to Securities Fraud

joshua — Tue, 16 Mar 2010 16:29:32 +0000

Louis W. Zehil, a former securities lawyer and partner at McGuireWoods, pleaded guilty to fraud and conspiracy to commit securities fraud in the Southern District of New York Monday.

The New York Law Journal reports Zehil admitted to making $10 million in illegal profits by using his role as counsel to illegally trade shares in seven companies that he helped to structure private investment in public equity, or PIPE, transactions between January 2006 and February 2007.

“I knew what I was doing was wrong,” Zehil told Judge Deborah A. Batts. “I take full responsibility for my actions.”

According to Bloomberg, PIPE shares must be registered with the U.S. Securities and Exchange Commission before they can be publicly traded. However, Zehil purchased his clients shares and sold them before being registered. Then, he and an unnamed associate sent opinion letters to transfer agents that they knew contained misrepresentations.

“My misrepresentation permitted me to have an improper head start” on other investors, Zehill said, according to Bloomberg. “I know that what I was doing was wrong and I take full responsibility for my actions.”

Zehill was a partner at McGuireWoods from April 2004 to February 2007. He is facing a maximum prison sentence of 20 years for securities fraud and a maximum of five years for conspiracy.

Couple Awarded Full Recovery for Investment Losses; Sister Victimized by Stockbroker Brother

joshua — Tue, 16 Feb 2010 15:25:55 +0000

Following a claim filed by the law firm of securities fraud attorney Mark A. Tepper, a former school teacher and her husband, who had been victimized over a 3-4 month period by her brother, stockbroker Kenneth Popek, have been awarded full recovery of all losses plus interest, attorney fees, forum fees and costs by a FINRA arbitration panel.

The couple suffered a nearly 80 percent investment loss while their portfolio was under management by Popek and Tampa based brokerage firm Calton & Associates, Inc.

Punitive damages against the brokerage firm were also awarded by the arbitration panel. “Calton’s failure to detect Respondent Popek’s wrongful conduct and failure to supervise the investments in Claimants’ accounts rose to the level of gross negligence pursuant to Florida Statute 768.72,” the arbitration panel noted.

“Brokerage firms are the last line of defense against stock broker misconduct and when that protection fails, investors can be the victimized. We’re very pleased with the finding by FINRA’s arbitration panel in favor of our clients,” Tepper said.

Cohen Milstein Hires Litigators Away from Schoengold

Erik Even — Wed, 20 May 2009 22:05:11 +0000

Cohen Milstein has hired two new litigators for its New York office, Joel Laitman and Christopher Lometti, both from Schoengold Sporn Laitman Lometti.

Laitman and Lometti will handle complex securities fraud and investor protection litigation. Both were name partners at Schoengold.

New York City’s Schoengold Sporn Laitman & Lometti is a leading securities fraud law firm that specializes in the representation of individuals, Taft-Hartley pension and benefit funds and other Institutional Investors in securities fraud class action and derivative litigation.

Cohen Milstein Sellers & Toll is a plaintiffs’ class action law firm, with offices Washington DC, New York, Chicago and Philadelphia.

Disbarred Attorney Caught in Madoff Web

Erik Even — Wed, 28 Jan 2009 17:01:11 +0000

A former lawyer, who was disbarred in the 1980s taking client escrow funds, has been charged with defrauding investors of out of millions of dollars as a hedge fund manager.

Say, Buffy, let us invest our wealth with the fellow who was disbarred for stealing funds!

Arthur G. Nadel, 76, made his initial appearance before a federal magistrate judge in the Middle District of Florida in Tampa. He turned himself in after spending two weeks on the lam. Next he will be charged in New York’s Southern District, where he faces securities and mail fraud allegations brought by prosecutors who say more than $200 million is missing.

Nadel, prominent in Sarasota, Florida social and philanthropic circles, claimed to investors and partners that returns on investments in two groups of funds he managed from 1999 through 2007 averaged more than 20% per year. Sound familiar?

FBI Special Agent Kevin G. Riordan tied Nadel’s flight to the publicity from the December arrest of Bernie Madoff in a multi-billion dollar Ponzi scheme. Nadel fled after a business partner, concerned about the Madoff affair, asked Nagel to audit the funds he ran.

Nadel left a note telling his family he would not return, and advising his wife to get a hold of certain funds before it was too late. He also said he might kill himself.

Nadel advised six funds divided into two groups. Hundreds of investors put $210 million into one group, several gave $60 million to Nadel to invest in the other. But by the end of 2008, there was less than $125,000 left in the two groups.

A 1957 graduate of New York University School of Law, Nadel was admitted to the New York bar in 1958, but lost his license to practice for taking client escrow funds.

Photo via May Blog.

Anti-virus Firm Doesn’t Want to Pay WilmerHale for “Luxury Hotel Rooms, Limousines and Bar Tabs”

Erik Even — Mon, 05 Jan 2009 19:29:33 +0000

In more overbilling news, Wilmer Pickering Hale & Dorr has lost a bid to toss out a fraud claim in a $7 million lawsuit, that alleges the law firm overbilled a client it defended in a white-collar crime case.

The Court of Appeals of Texas denied the law firm’s petition for a writ of mandamus, which would have directed the trial court to dismiss a fraud claim brought by McAfee, the anti-virus software company. McAfee can move ahead with the fraud claim, its last surviving cause of action in its suit against the law firm.

McAfee asserts that WilmerHale inflated its legal fees when it defended McAfee former CFO Prabhat Goyal, who was convicted in 2007 of securities-related fraud for overstating the companies profits from 1998 to 2001.

The company says that $6.8 million of the $12 million it cost to defend Goyal included unjustifiable fees and expenses for numerous WilmerHale partners and associates, plus charges for luxury hotel rooms, limousines and bar tabs.

The law firm has denied the overbilling.

Via National Law Journal.