Primary global, full tilt poker, bp, bof a in court news

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A former executive at expert- networking firm Primary Global Research LLC, James Fleishman, was found guilty of helping pass confidential information to fund managers as part of an insider-trading …

A former executive at expert- networking firm Primary Global Research LLC, James Fleishman, was found guilty of helping pass confidential information to fund managers as part of an insider-trading scheme. Fleishman, of Santa Clara, California, was found guilty yesterday by a Manhattan federal jury of conspiracy to commit securities fraud and conspiracy to commit wire fraud. The jury deliberated for about six hours before reaching a verdict. U.S. District Judge Jed Rakoff set sentencing for Dec. 21. Until then, Fleishman, who faces as long as 25 years in prison, remains free on bond. He and his lawyer, Ethan Balogh, declined to comment as they left the courthouse. “We had enough evidence to find the defendant guilty of both counts,” said jury foreman Ben Stein, who works in the information-technology sector of a financial-services business. “It was not easy, but we had lots of evidence.” Since November, 15 people have been charged by federal prosecutors in the office of Manhattan U.S. Attorney Preet Bharara in a probe of expert networkers and hedge fund managers. Twelve have pleaded guilty, including Noah Freeman, a former portfolio manager with SAC Capital Advisors LP, and Samir Barai, the founder of Barai Capital Management LP. Fleishman, 42, was the second to go to trial. Winifred Jiau, a former Primary Global consultant who was convicted at trial in June of securities fraud and conspiracy, is scheduled to be sentenced today in Manhattan federal court. Prosecutors said Fleishman obtained and passed confidential data from technology company employees who were moonlighting as consultants for Mountain View, California-based Primary Global. The secret tips were given to fund managers who paid Primary Global for consultation calls, prosecutors said.
The case is U.S. v. Nguyen, 11-cr-32, U.S. District Court, Southern District of New York (Manhattan).
Lawsuits/Pretrial
Full Tilt Paid Board With Players’ $440 Million, U.S. Says Full Tilt Poker paid board members more than $440 million using funds it had told its online poker players would be available to them for withdrawal at any time, U.S. prosecutors said. Manhattan U.S. Attorney Preet Bharara’s office yesterday asked U.S. District Judge Leonard B. Sand for permission to add the new allegations to a civil forfeiture case first filed against Full Tilt, PokerStars, Absolute Poker and other businesses in April. “Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and public alike about the safety and security of the money deposited with the company,” Bharara said in statement. The forfeiture action parallels criminal charges also brought by Bharara against the poker companies and 11 people, alleging bank fraud, money laundering and illegal gambling. Prosecutors said that after the U.S. enacted a law in 2006 barring banks from processing payments to offshore gambling websites, Full Tilt, PokerStars

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  • 1. News: **BLOOMBERG
  • 2. Primary Global, Full Tilt Poker, BP, BofA in Court News A former executive at expert- networkingfirm Primary Global Research LLC, JamesFleishman, was found guilty of helping passconfidential information to fund managers as partof an insider-trading scheme. Fleishman, of SantaClara, California, was found guilty yesterday by aManhattan federal jury of conspiracy to commitsecurities fraud and conspiracy to commit wirefraud. The jury deliberated for about six hoursbefore reaching a verdict. U.S. District Judge JedRakoff set sentencing for Dec. 21. Untilthen, Fleishman, who faces as long as 25 years inprison, remains free on bond. He and hislawyer, Ethan Balogh, declined to comment as
  • 3. the courthouse. “We had enough evidence to findthe defendant guilty of both counts,” said juryforeman Ben Stein, who works in the information-technology sector of a financial-services business.“It was not easy, but we had lots of evidence.” SinceNovember, 15 people have been charged by federalprosecutors in the office of Manhattan U.S.Attorney Preet Bharara in a probe of expertnetworkers and hedge fund managers. Twelve havepleaded guilty, including Noah Freeman, a formerportfolio manager with SAC Capital AdvisorsLP, and Samir Barai, the founder of Barai CapitalManagement LP. Fleishman, 42, was the second togo to trial. Winifred Jiau, a former Primary Globalconsultant who was convicted at trial in June ofsecurities fraud and conspiracy, is scheduled to besentenced today in Manhattan federal court.
  • 4. Prosecutors said Fleishman obtained and passed confidential data from technology company employees who were moonlighting as consultants for Mountain View, California-based Primary Global. The secret tips were given to fund managers who paid Primary Global for consultation calls, prosecutors said. The case is U.S. v. Nguyen, 11-cr-32, U.S. District Court, Southern District of New York (Manhattan). Lawsuits/Pretrial Full Tilt Paid Board With Players’ $440 Million, U.S. Says Full Tilt Poker paid board members more than $440 million using funds it had told its online poker players would be available to them for withdrawal at any time, U.S. prosecutors said.
  • 5. Manhattan U.S. Attorney Preet Bharara’s officeyesterday asked U.S. District Judge Leonard B.Sand for permission to add the new allegations to acivil forfeiture case first filed against FullTilt, PokerStars, Absolute Poker and otherbusinesses in April. “Full Tilt insiders lined theirown pockets with funds picked from the pockets oftheir most loyal customers while blithely lying toboth players and public alike about the safety andsecurity of the money deposited with thecompany,” Bharara said in statement. Theforfeiture action parallels criminal charges alsobrought by Bharara against the poker companiesand 11 people, alleging bank fraud, moneylaundering and illegal gambling. Prosecutors saidthat after the U.S. enacted a law in 2006 barringbanks from processing payments to offshore
  • 6. gambling websites, Full Tilt, PokerStars and AbsolutePoker worked around the ban to continue operating inthe U.S. Ireland-based Full Tilt, Absolute Poker ofCosta Rica and PokerStars, based on the Isle of Man,were the leading online poker sites doing businesswith U.S. customers. Bharara’s office said inyesterday’s filing that Full Tilt management’s paymentprocessing had so degraded by last year that it wascrediting website players with money never collectedfrom their accounts. L. Barrett Boss, an attorney forFull Tilt, didn’t immediately reply to telephone and e-mail messages seeking comment on prosecutors’filing. The civil forfeiture case is U.S. v. PokerStars,11-cv- 2564, U.S. District Court, Southern District ofNew York (Manhattan). The criminal case is U.S. v.Tzvetkoff, 10-cr-336, U.S. District Court, SouthernDistrict of New York (Manhattan).
  • 7. News Corp. (NWS) Said to Get Letter From U.S. in Bribery Probe News Corp. (NWSA) was sent a letter by U.S.prosecutors investigating foreign bribery,requesting information on alleged paymentsemployees made to U.K. police for tips, accordingto a person with knowledge of the matter. The letteris part of an effort by the U.S. Justice Departmentto determine whether News Corp. violated theForeign Corrupt Practices Act, or FCPA, accordingto the person, who declined to be identifiedbecause the matter isn’t public. News Corp. fell 1.7percent on the news. The inquiry advances anexisting U.S. probe that is reviewing claims thatvictims of the Sept. 11, 2001, attacks had theirphones hacked by News Corp. employees.
  • 8. The letter doesn’t carry the same legal force as agrand jury subpoena, which would compel a responseunder law. Earlier this year, it was revealed thatreporters at New York-based News Corp.’s News ofthe World had hacked the voicemail accounts ofcelebrities and a young girl who had been kidnappedand murdered. Investigators subsequently beganlooking into allegations that the tabloid’s staffersmade payments to police officers in return forconfidential information. The FCPA, enacted in 1977,makes it a crime for U.S. businesses or theiremployees to pay off representatives of a foreigngovernment in an attempt to gain a commercialadvantage. Federal prosecutors have broad discretionto interpret the law and its definition of who qualifiesas a government official. In July, News Corp.retained attorney Mark Mendelsohn of Paul Weiss
  • 9. Rifkind & Garrison LLP, according to the Wall Street Journal, which is owned by News Corp. Prior to joining the law firm, Mendelsohn had overseen the Justice Department’s FCPA investigations. Suzanne Halpin, a spokeswoman for News Corp., didn’t immediately return calls seeking comment on the letter. Last week, she declined to comment on the probe. Jerika Richardson, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, whose office initiated the FCPA investigation, declined to comment. BP Says It Didn’t Hide Information About Gulf Well Blowout Plc (BP) said it didn’t hide information about a possibly dangerous condition in the Macondo oil well before or after it blew out in April 2010,
  • 10. killing 11 people and triggering the biggest U.S.offshore oil spill. BP personnel determined that asand layer above the blast site was water-bearingrather than a gas-containing “hydrocarbon zone” andprovided supporting data to its well partners beforethe blowout, according to a court filing yesterday.BP investigators reported publicly after theexplosion that this may have been gas-containingsand, while determining it wasn’t a cause of theincident, the company said in the filing. AHalliburton Co. (HAL) unit that provided cementingservices for the well asked a federal court in NewOrleans Sept. 1 to allow it to add a claim of fraud inits lawsuit against BP over the spill, contendingconcealment of the hydrocarbon zone. Halliburtonshouldn’t be allowed to add the new claim, BP saidin its filing. “There is no evidence that BP held the
  • 11. pre-incident belief that the sand was hydrocarbon-bearing, or that it had any intent to conceal,” thecompany said in the filing. BP distributedinformation about the shallower sand within daysafter the incident, the company said. “Had BPdisclosed the higher hydrocarbon zone in April2010, Halliburton would not have pumped thecement program unless and until changes weremade to the cement program, changes that likelywould have required BP to redesign the productioncasing,” Tara Mullee Agard, a spokeswoman forHouston-based Halliburton, said yesterday by e-mail. The Macondo blowout and spill led tohundreds of lawsuits against London-based BP andits partners and contractors. The lawsuits overeconomic losses and personal injuries have beencombined before U.S. District Judge Carl Barbier
  • 12. in New Orleans. The federal case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL- 2179, U.S. District Court, Eastern District of Louisiana (New Orleans). Verizon Must Face Claims Over Idearc Spinoff, Judge Rules Verizon Communications Inc. (VZ) must face claims in a lawsuit accusing it of defrauding creditors of Idearc Inc. when it spun off the directory business in 2006, a judge ruled. U.S. District Judge A. Joe Fish in Dallas denied Verizon’s request to dismiss claims that the telecommunications company intended to “hinder, delay or defraud” creditors and that it aided and abetted breach of fiduciary duty, according to a decision filed Sept. 19. “These detailed and
  • 13. particularized allegations show that Verizon had amotive and opportunity to commit the allegedactual fraudulent transfers, and they permit thecourt to draw a reasonable inference of Verizon’sintent,” Fish wrote. As a result of the spinoff,Verizon received $9.5 billion in assets from Idearcand Idearc was left insolvent, U.S. Bank NA, thetrustee for a litigation trust for creditors, said in alawsuit last year. Idearc filed for bankruptcy in2009. Robert Varettoni, a Verizon spokesman,declined to comment. The case is U.S. BankNational Association v. Verizon CommunicationsInc., 10-01842, U.S. District Court, NorthernDistrict of Texas (Dallas).
  • 14. Verdicts/Settlements Gryphon’s Marsh Gets Eight Years in Prison in Stock-Tip Case Kenneth Marsh, the “ringleader” behind the Gryphon Holdings Inc. boiler-room operation on New York’s Staten Island, was sentenced to eight years in prison for his role in defrauding almost 5,500 people out of $20 million. Marsh, 44, the last of the 18 Gryphon defendants to learn his prison term, was sentenced yesterday by U.S. District Judge Jack Weinstein in Brooklyn, New York. He pleaded guilty in April to one count of securities fraud, admitting he misled investors into paying for phony stock tips. “The victims were heard and they told heart-wrenching stories,” Weinstein said. Gryphon charged clients as little as
  • 15. $99 and as much as $250,000 for access to itsinvestment recommendations, according to arelated civil lawsuit by the U.S. Securities andExchange Commission. The other 17 defendants inthe scheme, including members of its sales force,all pleaded guilty and got sentences ranging fromthree to 25 months. Marsh personally made $1.9million through Gryphon, according to the SECcomplaint. . “The court endeavored mightily tobalance all of the factors and came up with a fairand just sentence,” Alan S. Futerfas, one of Marsh’slawyers, said after the hearing yesterday. Futerfassaid he would have to discuss with Marsh whetherto appeal the sentence. Marsh, a former stockbrokerwho had been barred from the securities industry,used the fictitious names Michael Warren and KenMaseka to pose as two investment advisers with
  • 16. experience working at Goldman Sachs Group Inc. (GS) and Lehman Brothers Holdings Inc. Seven former salesmen and Marsh’s ex-wife, Nicole Marsh, who ran Gryphon with him, cooperated with prosecutors, according to the government. Nicole Marsh, 32, was sentenced to three months in prison on Sept. 14. The criminal case is U.S. v. Marsh, 10-cr- 00480, and the SEC case is SEC v. Gryphon Holdings Inc., 10-cv-01742, U.S. District Court Eastern District of New York (Brooklyn). Wins Bid to Force Teva to Honor Hepatitis- Case Accord Baxter International Inc. won a bid to force Teva Pharmaceutical Industries Ltd. (TEVA) to pay costs of defending Nevada lawsuits alleging that the drugmakers’ sales of the anesthetic propofol led to patients developing hepatitis.
  • 17. An arbitration panel properly found that Teva wasbound by an agreement to cover all liability tied toclaims that tainted vials of propofol causedcolonoscopy patients to develophepatitis, Delaware Chancery Court Judge TravisLaster concluded. A Las Vegas jury last yearordered Teva and Baxter to pay more than $500million in damages to a Las Vegas school principalon one such claim. The arbitration finding “is validand enforceable,” Laster said in a Sept. 15 ruling.The accord requires Petach Tikva, Israel-basedTeva to reimburse Baxter for “allclaims, damages, liability or losses” from thecases, the judge said. The indemnity agreement isamong the evidence a Las Vegas jury is hearing inthe trial of three more cases alleging Teva andBaxter officials sold propofol in oversized vials thatencouraged medical personnel
  • 18. to reuse the containers for multiple patients. Las Vegas residents contend they got hepatitis C from the tainted vials. Denise Bradley, a U.S.-based spokeswoman for Teva, declined to comment on the judge’s ruling. Deborah Spak, a spokeswoman for Deerfield, Illinois-based Baxter, didn’t immediately return a call for comment on the decision. The Delaware case is Baxter International Inc. (BAX) v. Teva Pharmaceuticals USA Inc., 6819, Delaware Chancery Court (Wilmington.) The Nevada case is Sacks v. Endoscopy Center of Southern Nevada LLC, 08A572315, District Court for Clark County, Nevada (Las Vegas).• IBM Offers to Settle EU Antitrust Probe, Second Case Closed International Business Machines Corp. (IBM) offered to resolve a European Union investigation
  • 19. into claims the company blocked competitionfrom rival providers of maintenance services formainframe computers. The EuropeanCommission, the Brussels-based EU antitrustregulator, yesterday asked for comments on IBM’scommitments to ensure the availability of spareparts and technical data. The commission alsoclosed a separate probe over IBM’s mainframecomputers after three competitors droppedcomplaints. The commission in 2010 openedinvestigations into Armonk, New York-based IBMover possible conduct that may have blockedcompetitors in mainframe software andmaintenance contracts by restricting access to parts.While IBM has shifted its focus away fromhardware toward its more profitable software andservices businesses, the mainframe operations havehigh gross margins and help pull in revenue for
  • 20. pragmatic approach and determined that these commitments do not constitute a significant issue for them and that it’s preferable to get a settlement and put this probe behind them instead of fighting till the end,” Christian Riis-Madsen, an antitrust partner in Brussels at law firm O’Melveny & Myers LLP, said by telephone. The company said in an e-mailed statement that it “welcomes” the commission’s decision “to close the investigation of IBM’s mainframe and associated intellectual property rights.” The company said it also looked forward to providing the basis for the final resolution of the probe into maintenance practices. Yukos Wins Partial Victory Over Russia in European Court A European court handed a partial victory to former managers of Yukos Oil Co.,
  • 21. ruling that Russia had violated the company’srights while rejecting a political motivation behindtax claims that led to its bankruptcy. Russiainfringed on the company’s property rights withpenalties imposed concerning the 2000-2001 taxassessments and left Yukos inadequate time toprepare a case, precluding a fair trial, the EuropeanCourt of Human Rights said. “The crux of Yukos’scase was essentially the speed with which it wasrequired to pay and the speed with which theauction had been carried out,” the Strasbourg,France-based court said in a statement on itswebsite yesterday. Yukos’s main assets, now ownedby state-run OAO Rosneft, were seized andauctioned off by the government in 2004 to settlemore than $30 billion of tax claims. Yukos ownerMikhail Khodorkovsky, who is in prison serving 13
  • 22. years for crimes including tax evasion and fraud, maintains the charges were fabricated because he opposed then-President Vladimir Putin. Putin, now prime minister, has denied any involvement in the case. The court said it wasn’t prepared to decide on a demand for compensation in excess of $100 billion by Russia’s once-largest oil producer. The same court awarded Khodorkovsky almost 25,000 euros ($34,200) in May, saying he was held in “inhuman and degrading conditions.” “For Khodorkovsky, to see the European Court of Human Rights rule that the case against his company was lawless with human rights violated on several counts was certainly a victory, if a partial one,” said Masha Lipman, an analyst at the Carnegie Moscow Center research group. Yukos failed to prove the tax case against it was politically
  • 23. motivated, the court said. The May 31 ruling onKhodorkovsky’s complaint had also dismissedclaims that his arrest on fraud charges waspolitically driven, saying the accusationsrequired incontestable proof. “The ultimateresolution on the damages is yet to come and Ithink ultimately that that will be resolved infavor of Yukos stakeholders,” Bruce Misamore,former chief financial officer of Yukos, said on awebcast press conference yesterday. The court’sdecision was a compromise, according toCarnegie’s Lipman. The case is: OAONeftyanaya kompaniya YUKOS v. Russia,14902/04, European Court of Human Rights.
  • 24.  Boston Scientific Wins Dismissal of Suit Over Sales Group Sept. 19 that the complaint failed to state a “cognizable” claim for securities fraud. “Rather than suggesting an intent to deceive investors, the facts contained in the complaint exhibit the defendants engaging in a good faith process to inform themselves and the public of the risks,” Woodlock said in a 41-page opinion. Boston Scientific failed to promptly disclose its decision to fire some sales representatives after an internal audit uncovered ethical violations in dealings with physicians, according to the complaint, filed on behalf of investors who bought the stock from Oct. 20, 2009, to Feb. 10, 2010. The company, based in Natick, Massachusetts, disclosed the terminations in February 2010 after many of the sales personnel
  • 25. were hired by competitor St. Jude Medical Inc., court papers showed. Boston Scientific reported in April 2010 that the disciplinary actions would result in about $300 million in losses. The company made the disclosures in a “reasonable time,” Woodlock said in his ruling. Jonathan Shapiro, an attorney for one of the plaintiffs, Steelworkers Pension Trust, didn’t return a phone call seeking comment on the ruling. The case is In re Boston Scientific Corp. Securities Litigation, 10-10593, U.S. District Court, District of Massachusetts (Boston). Former CSK Auto CFO Watson Sentenced to Two Years in Prison The former chief financial officer of CSK Auto Corp. was sentenced to two years in prison for his role in a scheme to manipulate the
  • 26. company’s earnings and double-billcustomers, federal prosecutors said. Don W.Watson, 55, of Gilbert, Arizona, was also orderedSept. 19 to serve three years of supervised releaseand to pay restitution in an amount to be set by thecourt at a later date, according to a U.S. JusticeDepartment statement. Edward Novak, Watson’sattorney, didn’t respond to a message seekingcomment about the sentencing. O’Reilly AutomotiveInc. (ORLY) this month agreed to pay $20.9 millionto resolve a Justice Department probe of a scheme tomanipulate earnings and double bill at CSK Autobefore O’Reilly bought it in 2008. The investigationhas produced guilty pleas from three former CSKAuto employees, including Watson, the departmentsaid. The case is U.S. v. Fraser, 09-cr-00372, U.S.District Court, District of Arizona (Phoenix).
  • 27.  Litigation DepartmentsSEC Ex-Counsel Referred to Justice Dept. Over Madoff WorkThe U.S. Justice Department should consider whether a former Securities and Exchange Commission general counsel violated criminal law by working on policy related to Bernard Madoff’s fraud when he had a financial interest in the outcome, the SEC’s internal watchdog said. In a 119-page report sent to Capitol Hill yesterday, SEC inspector general H. David Kotz said he is referring the conflict-of-interest allegations against David Becker to prosecutors after receiving guidance from the U.S. Office of Government Ethics. He also urged the SEC to overhaul its procedures for providing ethics advice to agency officials. Becker, who inherited profits from the Madoff fraud,
  • 28. “participated personally and substantially inparticular matters in which he had a personalfinancial interest,” Kotz wrote. The issues Beckerworked on “could have directly impacted hisfinancial position,” Kotz said in the report. Kotzopened his probe in March after Becker and hisbrothers were sued by the court-appointed trusteein the Madoff bankruptcy case to recover $1.5million in what he termed fictitious profits. Whenhe joined the agency in 2009, Becker toldChairman Mary Schapiro and William Lenox, thenthe agency’s ethics counsel, about his family’sMadoff investment. Lenox told Becker in May2009 that he didn’t have a financial conflict ofinterest and could work on the policy. A phone callto William Baker III, Becker’s attorney at Latham& Watkins LLP, wasn’t immediately returned.