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Wednesday, June 6, 2012

Insight Into Corruption-Protection At Top Law Firms

Former Attorney Gets Record Insider-Trading Sentence
The American Lawyer by Tom Huddleston Jr.  -  June 6, 2012

Former attorney Matthew Kluger was sentenced on June 4 to 12 years in prison for his role in a massive insider-trading scheme that carried on for nearly two decades and was made possible in large part by his position as an associate with a series of Am Law 100 firms.  According to Bloomberg, his prison term is the longest ever imposed for insider trading, exceeding the 11-year sentence given last year to Galleon Group co-founder Raj Rajaratnam.  Prosecutors say the scheme netted a combined total of more than $37 million in illicit gains for the 51-year-old Kluger—who, based on federal sentencing guidelines, faced between 11 and 14 years in prison—and his two collaborators: former stock trader Garrett Bauer and mortgage broker Kenneth Robinson.  In handing down what she acknowledged was a harsh sentence, U.S. District Court Judge Katharine Hayden in Newark, N.J., said that Kluger's crime warranted such a stiff penalty because "it allows greedy, arrogant people to make money off others."  In a statement to the court, Kluger expressed remorse for his actions. He said he wanted the court to know "how terribly, terribly sorry I am." He also expressed a desire to make reparations to some of those he wronged along the way. "I will do anything I can to try and regain a modicum of the trust that I destroyed [with] so many people and so many institutions," he said.

The sentencing comes a little more than one year after prosecutors accused Kluger in a federal complaint of participating in the insider-trading ring. Kluger pleaded guilty to all four counts against him, including conspiracy to commit securities fraud, securities fraud, conspiracy to commit money laundering, and obstruction of justice (NYLJ, Dec. 16, 2011).  The three-man operation kicked off in 1994, according to Robinson's court testimony, when Kluger was a summer associate at Cravath, Swaine & Moore, and continued as he moved on to associate positions at Skadden, Arps, Slate, Meagher & Flom; Fried, Frank, Harris, Shriver & Jacobson; and, finally, Wilson Sonsini Goodrich & Rosati.  Kluger stole confidential information related to corporate transactional work being handled by his employer at each stop, then passed details of pending corporate mergers to Robinson, the scheme's middleman. Robinson would then pass the details on to Bauer, who would then use the inside information to purchase shares for all three men, according to Robinson's testimony.

Across the span of the roughly 17-year scheme, Kluger and his cohorts traded ahead of more than 30 separate transactions, prosecutors say. In December, as part of a settlement agreement with the U.S. Securities and Exchange Commission, the three men agreed to repay their illegal profits from the conspiracy. Prosecutors have said that Bauer took the "lion's share of the profits," which is why the former trader was required earlier this year to forfeit roughly $31.6 million. For his part, Kluger agreed to forfeit $516,000. Robinson will pay $845,000.  In court on June 4, Kluger's attorney, Alan Zegas of Chatham, N.J., argued that his client was insulated from Bauer during the course of the conspiracy and was misled by his co-conspirators as to the amount of stock being purchased as a result of the inside information he was passing along. According to Zegas, Kluger claims the three men began the scheme with an agreement to split all proceeds equally, and that Kluger would have ceased providing the inside information had he known Bauer planned on purchasing a higher volume of stock.  Assistant U.S. Attorney Judith Germano made it clear during the sentencing that the government didn't accept Kluger's claims of what she called a "loosey-goosey agreement" between the trio to split their gains three ways.  Zegas used his client's supposed ignorance about the scope of the scheme to argue for a lighter sentence, even going so far as to ask that Hayden delay sentencing until a hearing could be scheduled to weigh additional evidence he said would establish his client's ignorance about the scope of Bauer's trading activities. The judge refused that request.  After being sentenced, Kluger told a group of reporters that he had been forthcoming with the government since the time of his arrest and reiterated his belief that further discovery would reveal that his cohorts deliberately withheld information from him throughout the scheme.  "A hearing with Ken Robinson on the stand…he would have admitted to doing things on each deal actively to mislead me," Kluger said.  Zegas told reporters that he is considering appealing the sentence.

Recorded ConversationsThe case came together after Robinson agreed to cooperate with prosecutors and recorded several conversations with Kluger whose contents were contained in a criminal complaint filed against the former lawyer. Robinson pleaded guilty last April to one count of conspiracy to commit securities fraud and two counts of securities fraud. Like Kluger, Bauer pleaded guilty in December to all four counts against him.  Among the more interesting details of the case is the origin of obstruction of justice charges against Kluger and Bauer. In Kluger's case, he destroyed a computer and an iPhone upon learning that authorities had searched Robinson's home, according to court documents, while also instructing Robinson to destroy a prepaid cellphone that he had used to communicate with Kluger and Bauer.  Meanwhile, Bauer's obstruction of justice charge came about after he broke his own prepaid cellphone into two pieces and tossed them in separate trash cans at a Manhattan McDonald's.  Bauer was sentenced to nine years in prison on June 4, while Robinson got 27 months. Robinson received a shorter sentence due to his cooperation with authorities. (Since his arrest, Bauer has been telling his story to groups of people at such places as business schools and law schools, encouraging others not to follow his criminal path, Bloomberg reports.)  For her part, Germano asserted that Kluger was the scheme's mastermind and that none of the illegal trading would have been possible without the insider information he stole from his employers. She also frequently returned to the fact that the scheme began while Kluger was just a summer associate—pointing out that he had already headed down a criminal path before he even became a full-time lawyer.  "He was an attorney who had a duty of trust," she said, "a duty to uphold the confidence" of his clients and employers.  @|Tom Huddleston Jr., a reporter for The American Lawyer, an affiliate, can be contacted at thuddleston@alm.com.

11 comments:

disgusted said...

The best protection comes from the white shoe law firms. If you're in there you've got a free pass. This guy got away with it for 20 years. Unreal. He must have pissed someone off recently. That's why he was put up as a sacrificial lamb.

Kris Sergentakis said...

The name Skadden Arps appears.

This guy got them mad because they didn't get their cut. So now prison.

Anonymous said...

How many others like this dude are out there in the White Shoe Circus world? Like trust me he's not alone!

Anonymous said...

The sacrificial roach is stepped on while his other lawyer buddies sleep safely out of the light in their nests at their law firms.

Anonymous said...

The big law firms have licenses to steal and they do and no one is going to touch them since they control the bailiwick.

Anonymous said...

If law firms weren't corrupt and dishonest they wouldn't stay in business and law firms are made of lawyers. So what do you expect?

Anonymous said...

With the Rajat Gupta Insider Trading case conviction I hope all of you realize and accept that we Jews are in complete and total control of this country and this planet. We are the Landowners and you are the Peasants. Nothing has changed since the days of open slavery. When we want to throw you in jail we get our House Niggers at Child Protective Services or the Police Department to arrest you, detain you, or accuse you of something. If we want you dead we use our Upper House Niggers who are Court Administrators or Judges at Courts or our more Educated House Niggers at the Taxing Authorities to bankrupt you. We do all this when our Chief Rabbi says we can do this after we appeal to him for his help. Give it up - all your women, sisters, mothers and daughters are our cockslut slaves and all of you men are our slaves working to make us even more money. Ron Paul, the only man that could have saved you from bondage, is never going to get elected - face it - slavery is already here and you are living in an illusion if you really think you are free. But that illusion will also be coming down soon, believe me.

Rabbi Dore Weiss, Brooklyn

Anonymous said...

Christine Anderson told about the protection of the favored attorneys in her court testimony. Somehow the NYTimes didn't carry the story. Maybe Anderson will be back before Judge Shira and we'll see how it goes. Will this case get buried again?

Sylvester Traylor said...

Expose Corrupt Courts in New London, Connecticut Superior Court

I filed a civil rights action against Judge Thomas F. Parker,Doc. No. #3:11-cv-00​132-AWT Traylor v. Awwa ET. Al., for the following reasons:

Judge Parker’s made a "Hip-Hop" rappers hand GESTURE, in open court. He even stated that the late Hon. Judge Michael Hurley’s had denied Dr. Bassam Awwa’s two year earlier motion to dismiss concerning a Certificate of Merit because: “Judge Hurley was smitten by the Pro Se litigant.” This statement demonstrates a judge’s animosity towards me and the Law of Case Doctrine, and even ignores the fact that the Director of Medicine at Yale University, wrote a letter confirming that this is a legitimate medical malpractice action. Dr. Zonana stated: “After reviewing Mrs. Traylor's treatment records and other information, Dr. Awwa's failure to call Traylor "played a proximate role in the death of the patient as it would have added to concerns suicidality and prompted more active intervention by the physician."

Furthermore, on May 31, 2007 the Honorable Judge Michael D. Hurley ruled that I did in fact comply with C.G.S. Sec. 52-190a by stating: “The court may take into account the good faith certificate and written opinion since they were filed over two months “prior” to the defendants raising the issue of noncompliance with Sec. 52-190a. Given this, this court finds that the Plaintiff has satisfied the requirements of sec. 52-190a.”

The totality of the circumstances surrounding my case is that I was deprived of my federal constitutional rights by an impartial judge, who attends an annual Christmas banquet, with Dr. Bassam Awwa and his insurer.

What would have been the consequences for an African-American, if the roles had been reversed, and he had reached into the judge’s bench to touch a judge? The intimidation of a witness by a judge is undeniably a felony.

The question is: Why would a judge attempt to bully and/or provoke a medical malpractice victim?

The answer to this question is: Click on the below address: Protect the Rights of Medical Malpractice Victims
http://www.change.org/petitions/protect-the-rights-of-medical-malpractice-victims

Sylvester Traylor said...

Expose Corrupt Courts in New London, Connecticut Superior Court

I filed a civil rights action against Judge Thomas F. Parker,Doc. No. #3:11-cv-00​132-AWT Traylor v. Awwa ET. Al., for the following reasons:

Judge Parker’s made a "Hip-Hop" rappers hand GESTURE, in open court. He even stated that the late Hon. Judge Michael Hurley’s had denied Dr. Bassam Awwa’s two year earlier motion to dismiss concerning a Certificate of Merit because: “Judge Hurley was smitten by the Pro Se litigant.” This statement demonstrates a judge’s animosity towards me and the Law of Case Doctrine, and even ignores the fact that the Director of Medicine at Yale University, wrote a letter confirming that this is a legitimate medical malpractice action. Dr. Zonana stated: “After reviewing Mrs. Traylor's treatment records and other information, Dr. Awwa's failure to call Traylor "played a proximate role in the death of the patient as it would have added to concerns suicidality and prompted more active intervention by the physician."

Furthermore, on May 31, 2007 the Honorable Judge Michael D. Hurley ruled that I did in fact comply with C.G.S. Sec. 52-190a by stating: “The court may take into account the good faith certificate and written opinion since they were filed over two months “prior” to the defendants raising the issue of noncompliance with Sec. 52-190a. Given this, this court finds that the Plaintiff has satisfied the requirements of sec. 52-190a.”

The totality of the circumstances surrounding my case is that I was deprived of my federal constitutional rights by an impartial judge, who attends an annual Christmas banquet, with Dr. Bassam Awwa and his insurer.

What would have been the consequences for an African-American, if the roles had been reversed, and he had reached into the judge’s bench to touch a judge? The intimidation of a witness by a judge is undeniably a felony.

The question is: Why would a judge attempt to bully and/or provoke a medical malpractice victim?

The answer to this question is: Click on the below change.org address: Protect the Rights of Medical Malpractice Victims

http://www.change.org/petitions/protect-the-rights-of-medical-malpractice-victims

My strength comes from within because I know that there is only one God who will truly judge my wife’s doctor’s character concerning my wife’s death.

I pray to God and ask him to watch over my beloved wife, and to whisper to her that I will never be diverted from the center core of my belief to fight for injustice for medical malpractice victims for all people, regardless if they are rich or poor, black or white, brown or yellow, juror or witness, perpetrator or victim, cops or judges, Wall Street or welfare.

See: Invisible No More: Widower encouraged after testifying on Medical Malpractice bill
By Karen Florin

http://www.theday.com/article/20110314/NWS01/303149999/1044

See the list of over 4,800 Similar Cases involving Antidepreseants. http://www.ssristories.com/index.php

Anonymous said...

To bad a twister does not drop a house on them.
Maybe Mother Nature will give us another Hurricain and wash these dirty rotten corrupt people away.

Blog Archive

See Video of Senator John L. Sampson's 1st Hearing on Court 'Ethics' Corruption

The first hearing, held in Albany on June 8, 2009 hearing is on two videos:


               Video of 1st Hearing on Court 'Ethics' Corruption
               The June 8, 2009 hearing is on two videos:
         
               CLICK HERE TO SEE Part 1
               CLICK HERE TO SEE Part 2