Business Crimes Hotline

Former Executive of Biotechnology Firm Convicted of Trade Secret Theft

An executive of a biotechnology firm in California pled guilty to misappropriating trade secrets from his former employer, according to the U.S. Attorney for the Northern District of California. In his plea agreement, the executive admitted that, after being offered a position as a vice president of a competing company, he took the engineering notes belonging to an engineer in his old company in the hopes that the trade secrets in the notes would enhance his career with the new company. The notes were subsequently found in his residence during the execution of a search warrant. (Case No. 05-00744, N.D.Ca.)

COLORADO

Former Qwest CEO Indicted for Insider Trading

The former Chief Executive Officer of Qwest Communications International was charged with 42 counts of insider trading, according to the DOJ. The indictment alleges that during most of 2001, the then-CEO was aware that Qwest's publicly stated financial targets were aggressive, that there were material undisclosed risks to the achievement of those targets, and that there would likely be insufficient non-recurring revenue to close the gap between the publicly stated targets and Qwest's actual performance. While in possession of this non-public information, he is alleged to have accelerated his sale of over $100 million in Qwest stock in violation of insider trading laws. Each insider trading count carries a penalty of up to 10 years in federal prison. (Case No. 05-00545, D. Co.)

ILLINOIS

Employee of Insurance Company Indicted for Embezzling United Way Contributions

The former assistant to an insurance executive was charged with embezzling over $150,000, most of which was intended for donation to United Way, according to the U.S. Attorney for the Central District of Illinois. The assistant served for 5 years as the bookkeeper and coordinator of her company's United Way Campaign. She was entrusted with a checking account to receive donations and disburse money to the United Way, but diverted most of the funds to her own use, according to the indictment. (Case No. 06-30003, C.D.Ill.)

MASSACHUSETTS

Businessman Sentenced for Fraudulent Mortgages

The owner of a title insurance agency was sentenced to 36 months in federal prison on a wire fraud charge stemming from a scheme to defraud lending institutions, according to the U.S. Attorney's office. The business owner reportedly admitted at his plea hearing that he obtained loans in the names of relatives and acquaintances and forged their signatures on loan documents. He fraudulently represented to the lending institutions that existing liens would be paid with the funds from the new loans but he kept the loan funds, totaling approximately $6.5 million, for his own use. He faced a sentencing range of between 46 and 57 months under the advisory guidelines, but received a sentence below the range in consideration of his cooperation with the government in an unrelated public corruption investigation.

Disbarred Attorney Sentenced for Embezzling Client Funds

A former Massachusetts attorney has been sentenced to 15 months' confinement after pleading guilty to larceny and tax fraud in a case involving his alleged theft of more than $400,000 in client funds, according to the Massachusetts Attorney General. The former attorney was disbarred on the same charges after practicing for 30 years. In his plea, he admitted to embezzling funds from the proceeds of the sale of elderly clients' homes after those clients were forced by poor health to enter nursing homes.

NEW YORK

Former President of Accounting Firm Pleads Guilty to Insider Trading

The former president of an accounting firm pled guilty to insider trading in connection with his purchase of shares of Sirius Satellite Radio, Inc. while in possession of non-public information concerning Sirius' negotiations with radio personality Howard Stern.

The firm president, who is also a Certified Public Accountant, became aware of Sirius' offer to Stern after Stern contacted another accountant at the firm for financial and tax advice, according to the U.S. Attorney for the Eastern District of New York. Despite knowing the information was confidential, the firm president allegedly purchased 25,000 shares of stock the day before the contract was announced. Upon sentencing, he faces up to 20 years' imprisonment and a $5 million fine. (Case No. 05-00901, E.D.N.Y)

SEC Files Insider Trading Charges Against Former Trader

The SEC reports that both civil and criminal insider trading charges were filed against a former securities trader who traded on confidential information. The trader allegedly learned of a planned acquisition from his live-in girlfriend, an associate working on the transaction for a New York law firm. The former trader's girlfriend worked on transaction deal documents in the couple's apartment and made deal-related phone calls in the trader's presence, according to the complaint, but elicited a promise from him not to trade on the information. Despite this agreement, he allegedly acquired stock in the target company over a 2-month period, selling his holdings the day after the acquisition was announced. (SEC Litigation Release No. 19518.)

CALIFORNIA

Engineer Indicted for Stealing Trade Secrets and Computer Fraud

An engineer and product development manager for a Silicon Valley company was charged by a federal grand jury with three counts of computer fraud and six counts of violating U.S. trade secret laws for the unauthorized downloading of files from a customer's network, according to the DOJ. The engineer was reportedly given controlled access to the customer's network pursuant to a non-disclosure agreement and other restrictions. After the engineer was offered employment at another firm, he allegedly downloaded dozens of sensitive files containing proprietary and trade secret information about his customer's products. He subsequently loaded the confidential data onto a laptop provided by his new employer and emailed certain trade secret information to others, according to the indictment. If convicted, he faces up to 5 years' imprisonment for each computer fraud count, and 10 years for each trade secret count. (Case No. 05-00812, N.D.Ca.)

Former Executive of Biotechnology Firm Convicted of Trade Secret Theft

An executive of a biotechnology firm in California pled guilty to misappropriating trade secrets from his former employer, according to the U.S. Attorney for the Northern District of California. In his plea agreement, the executive admitted that, after being offered a position as a vice president of a competing company, he took the engineering notes belonging to an engineer in his old company in the hopes that the trade secrets in the notes would enhance his career with the new company. The notes were subsequently found in his residence during the execution of a search warrant. (Case No. 05-00744, N.D.Ca.)

COLORADO

Former Qwest CEO Indicted for Insider Trading

The former Chief Executive Officer of Qwest Communications International was charged with 42 counts of insider trading, according to the DOJ. The indictment alleges that during most of 2001, the then-CEO was aware that Qwest's publicly stated financial targets were aggressive, that there were material undisclosed risks to the achievement of those targets, and that there would likely be insufficient non-recurring revenue to close the gap between the publicly stated targets and Qwest's actual performance. While in possession of this non-public information, he is alleged to have accelerated his sale of over $100 million in Qwest stock in violation of insider trading laws. Each insider trading count carries a penalty of up to 10 years in federal prison. (Case No. 05-00545, D. Co.)

ILLINOIS

Employee of Insurance Company Indicted for Embezzling United Way Contributions

The former assistant to an insurance executive was charged with embezzling over $150,000, most of which was intended for donation to United Way, according to the U.S. Attorney for the Central District of Illinois. The assistant served for 5 years as the bookkeeper and coordinator of her company's United Way Campaign. She was entrusted with a checking account to receive donations and disburse money to the United Way, but diverted most of the funds to her own use, according to the indictment. (Case No. 06-30003, C.D.Ill.)

MASSACHUSETTS

Businessman Sentenced for Fraudulent Mortgages

The owner of a title insurance agency was sentenced to 36 months in federal prison on a wire fraud charge stemming from a scheme to defraud lending institutions, according to the U.S. Attorney's office. The business owner reportedly admitted at his plea hearing that he obtained loans in the names of relatives and acquaintances and forged their signatures on loan documents. He fraudulently represented to the lending institutions that existing liens would be paid with the funds from the new loans but he kept the loan funds, totaling approximately $6.5 million, for his own use. He faced a sentencing range of between 46 and 57 months under the advisory guidelines, but received a sentence below the range in consideration of his cooperation with the government in an unrelated public corruption investigation.

Disbarred Attorney Sentenced for Embezzling Client Funds

A former Massachusetts attorney has been sentenced to 15 months' confinement after pleading guilty to larceny and tax fraud in a case involving his alleged theft of more than $400,000 in client funds, according to the Massachusetts Attorney General. The former attorney was disbarred on the same charges after practicing for 30 years. In his plea, he admitted to embezzling funds from the proceeds of the sale of elderly clients' homes after those clients were forced by poor health to enter nursing homes.

NEW YORK

Former President of Accounting Firm Pleads Guilty to Insider Trading

The former president of an accounting firm pled guilty to insider trading in connection with his purchase of shares of Sirius Satellite Radio, Inc. while in possession of non-public information concerning Sirius' negotiations with radio personality Howard Stern.

The firm president, who is also a Certified Public Accountant, became aware of Sirius' offer to Stern after Stern contacted another accountant at the firm for financial and tax advice, according to the U.S. Attorney for the Eastern District of New York. Despite knowing the information was confidential, the firm president allegedly purchased 25,000 shares of stock the day before the contract was announced. Upon sentencing, he faces up to 20 years' imprisonment and a $5 million fine. (Case No. 05-00901, E.D.N.Y)

SEC Files Insider Trading Charges Against Former Trader

The SEC reports that both civil and criminal insider trading charges were filed against a former securities trader who traded on confidential information. The trader allegedly learned of a planned acquisition from his live-in girlfriend, an associate working on the transaction for a New York law firm. The former trader's girlfriend worked on transaction deal documents in the couple's apartment and made deal-related phone calls in the trader's presence, according to the complaint, but elicited a promise from him not to trade on the information. Despite this agreement, he allegedly acquired stock in the target company over a 2-month period, selling his holdings the day after the acquisition was announced. (SEC Litigation Release No. 19518.)