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Subscribe to RSSNEW YORK -- A former attorney who worked for some of the country's most prestigious law firms was sentenced on Monday to a record 12 years in jail for an insider trading scheme which lasted 17 years and netted more than $37 million between 1994 and 2011.
Matthew Kluger's sentence is the longest ever handed down in an insider trading case and is one year longer than the 11 year jail term imposed last year on Galleon Group hedge fund founder Raj Rajaratnam for insider trading charges.
Kluger was sentenced by U.S. District Judge Katharine Hayden of Newark federal court. Hayden also sentenced stock trader Garrett Bauer to nine years in jail for his role in the scheme and a third person, Kenneth Robinson, is scheduled to be sentenced on Tuesday.
"At the end of the day, the judge agreed that these were extraordinarily serious crimes that betray people's trust in the stock market and were motivated purely by greed," U.S. Attorney Paul Fishman said.
The 51-year-old Kluger, of Oakton, Va., and former trader Bauer, 44, of New York, admitted last year they conspired with New York mortgage broker Robinson, who acted as the middleman.
Robinson, who pleaded guilty to his role in the scheme, was arrested in 2011 and secretly recorded conversations with the other men, including one in which Bauer discussed lighting $175,000 on fire to erase his fingerprints, according to court documents.
The three men used merger secrets gathered by Kluger while he worked as a corporate attorney for prominent law firms, including Cravath Swaine & Moore; Skadden, Arps, Slate, Meagher & Flom; and Wilson Sonsini Goodrich & Rosati.
Kluger admitted passing advance information on company mergers to Robinson, who would give it to Bauer. The trio was estimated to have made $11 million on tech company Oracle's acquisition of Sun Microsystems.
Bauer kept the majority of the proceeds, using some of the profits to buy a $6.65-million condominium on Manhattan's Upper East Side and an $875,000 home in Boca Raton, Florida.
Assistant U.S. Attorney Judith Germano told the judge that Kluger was the mastermind.
"He had wealth, intelligence and family support," she said. "He abused it all. Why? Because he could."
'Not like Gordon Gekko'
Defense Attorney Alan Zegas argued for a shorter sentence for Kluger and said that Bauer realized the lion's share of the profits while Kluger took only a small fraction of the total and was not aware of many trades that Bauer made on his own.
U.S. District Judge Katharine Hayden rejected Zegas' argument and said that every one of more than 30 insider trades made by Bauer was based on information provided by Kluger, whom she characterized as "amoral" and "thuggish." She compared the trio to drug dealers for the way they used throwaway cellphones and multiple ATM accounts to withdraw cash and exchange it in envelopes or bags.
Zegas said he would appeal the sentence.
Kluger, who said in remarks to the court that he was "deeply, deeply sorry," insisted afterward that the sentence was too harsh. Hedge fund billionaire Raj Rajaratnam was sentenced to 11 years in October after being convicted in the biggest insider trading case in U.S. history.
"I guess it's better to take $68 million and go to trial and be unwilling to accept responsibility for what you did," Kluger said, referring to Rajaratnam, who maintained that he traded only on publicly available information.
Defense attorney Michael Bachner attempted to persuade the judge to reduce Bauer's sentence by mentioning the numerous public speaking appearances Bauer has made since his arrest at business schools and law schools and the extensive work he has done with children's charities.
"He is not like Gordon Gekko," Bachner said, referring to the Michael Douglas character who said in the 1987 movie "Wall Street" that greed is good.
In contrast, Assistant U.S. Attorney Matthew Beck told the court, was the Bauer who upped his trading volume even after Securities and Exchange Commission regulators began probing his activities in 2007.
"That's a moment of self-reflection for anyone," Beck said. "That's not what they did. Garrett Bauer instead began increasing the size of his trades. This is hubris like you've never seen."
The Associated Press and Reuters contributed to this report.
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Zegas is a great lawyer the Judge is a moron,however she did the right thing in this case.. The good news is he will have to serve at least 85% of his sentence,the bad news is the Feds will send him to a camp.. Life is alot easier at a camp..
al - If the judge did the right thing why is she a moron - you can't have it both ways - Maybe because she is a woman? Would you have made the same statement if it was a man?
Kluger wasn't aware of the scope of the deception? Tell it to the getaway driver.
Let me get this straight. If you sell drugs, you get 20+ years in jail. If you steal millions of dollars, you get around 10 years. How is that fair?
Hey Barbara Adams Jackson
This Judge handled my divorce when she was a N J Judge..I truly believe she is either a moron or hates men,perhaps both..In reference to this case she got it right...
Because marijuana will steal your soul while money is just "money". Completely different addiction. /sarc/
The sentencing guidelines for these " poor little rich boys" is THE joke. I have to agree, that with all that has happened with the Wall Street finaglers, and their friends in the huge Investment Banks, along with their enablers in Congress, little has been done to completely address the Thieves who brought an entire world economy to its knees. Millions of small investors lost nearly have of their savings to these banking thieves and how many of these thieves have gone to jail? NOT ONE OF THEM. That tells me that laws were written to either outright protect the thieves or laws were legislated out of existence to protect the thieves from any possible culpability. They make the rules with help from their "lackey" friends in Congresses past and present. They always WIN while the rest of us suffer with THE CONSEQUENCES they ultimately foist upon the rest of us.
d
.
A more appropriate sentence would have been to take the $37,000,000.00 in
ill gotten wealth......plus a hefty fine, ban him from all future trading
and take away his license to practice law~
I seen no mention of monetary punishment?...... taking away all of his
riches would have hurt him more than 11 years sentence?
money is what he loved most.............take it all!
al-2891335,
in response to your evaluation of the Judge based upon you're divorce: Do you know why divorces are so expensive? Because there worth it.
I'm with Enstrom. I've always thought that the most effective punishment for white-collar criminals would be to impoverish them. A few years at Club Fed isn't good enough if the crook can get out, and move back into his luxury condo. Seize all of the assets.
(For the nerds in the crowd, I'm thinking of the "collector" in Star Trek TNG who kidnapped Data, to add him to his personal museum. What clearly hurt him the most was having all of his "stuff" taken away.)
All lawyer jokes are based in truth...
It's a start, but still not enough. And yes, he should lose every penny he gained illegally and then some.
Our Congress and Senate do the same thing and it is legal.
Divorce court is universally handled by stupid people. Worse, it is a huge money maker for lawyers, which only makes it more disgusting. Honestly, as time goes on, I think divorce court will have more men and women simply living together instead of getting married.
Back to the topic at hand. I would like to see this dope have to spend his time in jail mixed with serving in a soup kitchen. 12 Years of exposure to what the other side lives like. Plus at least one working hand that does something useful for society rather than play trading games.
Mark Zucker-what-ever should be next. On the other hand, insider trading goes on everywhere in every town somewhere. We had a company buy out a company I worked for that was public in AR. Everyone in the building knew what was going on, the price offered for the stock and all.
One less Republican voter in November.
go figure...you rob a bank of 5000.00 dollars and the swat team is there to kill you...you rob billions on wall street and you get a bonus......unless your this unlucky guy.....WHY THE DIFFERENCE?
12 years a good start but not enough. Let's do away with the perception of white collar crimes, these crimes are the ones that are doing more damage than, oh I don't know maybe smoking a joint and getting 10 years or more. Bring some equity into the legal system. No more prisons with pools and spas for the elite.
I totally agree. Especially with the current economic conditions brought about by extremely bad behavior. It's nothing more than economic genocide! Capitalism was brutally slaughtered! If Nazis can be pursued and hunted down so can all these Congressional, Wall Street, bank and financial hacks! Give them the sentence they deserve for raping investors and taxpayers while reclaiming ALL the ill-gotten loot regardless where it's hidden.
The punishment does nothing for the victims, in this case the investors who lost and who will never get anything back. Relieving him of his ill gotten gains would have been more appropriate and a longer jail term, but not at Club Fed, more like Ryker's.
"He is not like Gordon Gekko," Bachner said, referring to the Michael Douglas character who said in the 1987 movie "Wall Street" that greed is good.
Your right he is not an actor in a movie. He is a real thief. Hopefully all his assets will be seized and sold off to pay those he stole from. Maybe he will meet a few people in prison he can become butt buddies with as well.
Jerry, you're right on, except that he's probably already transferred the money to kids and adopted his wife and she's hidden it in the cayman islands. Now he'll claims he's broke and use our tax dollars to pay for his attorneys. Now if they would go after the bankers who tanked our economy, however, I believe we'll just slap them with another round of high bonuses. Yeah, that'll teach them. DISGUSTING!
Yes the DOJ should definitely go after the crooks on Wall Street who tanked our economy. I'm sure that the boys on Wall Street are afraid that the Obama administration will do just that. That's why they're all supporting Mittens, because he won't do a thing. He's one of them.
He will fit in well with his peers.
To bad they don't start doing this to the congressman and senators who do the very same thing.
Who is THEY ? ...that's the problem with most people who post on the boards... you want to sit on your ass and write cute messages while "THEY" do all the work. Get off your ass and go out and do something about it.
Bobauss - Did you construct that intelligent post with your big boy brain, or did your mommy help you?
boob-ass
Here are some of the names in the article. Just get a 3 year old to read it for you.
THEY = Judge Katharine Hayden of Newark federal court, U.S. Attorney Paul Fishman and U.S. Attorney Judith Germano for a few.
Glad to hear this. Doesn't seem like enough, he should have to pay ALL the money back, that and this jail time would have been GREAT!. But a little time in the can will do his poor heart good. LOL If he had drawn even more time, he might have even turned into a human being. Nahhhhh, couldn't happen.
But at least the judge didn't say "naughty, naughty, say you're sorry and don't do that any more, OK?" and turn him loose.
Think of it this way. The guy is 51 years old; with a 12 year sentence he will be around 63 when he gets out of prison. With his ill-gotten gains confiscated Mr. I-can-get-away-with-it will be starting over and will have a far different life style. Seems like the sentence is long enough so life may not be easy, either in or out of prison. With the present health care plans in this country he will have the burden of medical expenses that would be picked up if he remained in prison.
@ Jerry D Williamson
Insider trading isn't like stealing, it's cheating. The money should be put to good use other than in the cheaters pockets. In order to make this fair these people should lose all their assets even those from overseas bank accounts. They should have to account for every penny and the idea of burning $175,000.00 should not be believed. The money is invested in something.
This is what should have happened to George W Bush when he engaged in insider trading and was saved only because the head of the SEC at the time was a former Bush family Lawyer.
Tom: Be progressive, not regressive. The future ain't over your shoulder, bud.
ap, by your logic we wouldn't need a criminal justice system, since all crimes happened in the past.
Should have been 20 years.
All of these people being jailed for insider trading, yet, our "congress" just passed a law for themselves that says THEy can no longer be involved in insider trading.
Have to love a body of government that will pass laws to punish lawbreakers and give themselves (prior to the new law implemented) a proverbial get out of jail free card. If anyone of those congressional types who benefited from insider trading indicated they put the money to the US people, I would throw the largest BS flag I could locate at their feet.
Lawyers, Bankers, and Congressmen.
Now there's a bunch that only a mother cold love.
The rest of can just hope for "And Justice for all".
Yet Corizne walks and campaigns for Obomber the nobel peace prize winning murderer. I guess when you steal 1.6 billion of customers money that's somehow different?
He was a lawyer. That's why the judge gave him the extra time -- to make an example out of him.
His appellate prospects are ZERO.
Better get a LONG calendar
capitalism at its best...the american way for the rich and powerful...no remorse except they got caught..
The new congress members fought like starving dogs to get in on the action then had to fight to put some loopholes in the new law banning Congress from Insider Trades. Beware of a Congressional candidate who is running on their "Business Experience", it means they know where the opportunities are to get rich. Lobbyists may fund reelection campaigns but they can also offer valuable investment tips.
Milog - I Think I'm in love - finally soneone caught on Thank you for that - I was in "Business for Twenty odd years in a Tax Division of a Major 50 Company - you want to know about loop holes — this whole BS about Corporate Taxes - there isn't a Corporation in America that pays 35% -
Most pharmaceuticals pay 6% percent Corporate Taxes - they collude with each other
Other than that if any Corporation paid over 10% - then their team of attorneys would be fired
This talking points of Republicans of high Corporate Tax Rates is a joke
And many of their monies is off shore where they screw the countries who gave them these benefits because they already figured out how to screw them before they went into these countries
Please I worked in a Tax Division for twenty years - they have no morals - they don't care about American workers - it's all about the money honey
Corporations as far as I'm concerned should be fined - put in stocks - and paraded as traiters
Too harsh? You should have sat in one of my board meetings - they are callous and unthinking - just
sitting there all I saw was dollars signs - and how much these people would be rewarded for their latest screw of another nation and the public
Now I understand why real estate in New York is so expensive. Living there puts you near the source of all the information with which one can cheat yourself into prosperity at the expense of the rest of the country. Location Location Location.
Insider trading......happens everyday.
Information is money and this is just a tiny speck of corporate crime.
We need harsher laws!
@MoseeU yep totally agree!
They should fine his a$$ big time too, so that he loses all he bought with fraudulent ca$h.
A crooked lawyer.....who would have guessed.
Insider Trading is illegal for the regular citizen, but not for the members of Congress. Is ther something wrong with this, or is it just me?
Thanks to AG Holder and the Justice Department for going after some of the fat bums and winning. The repukes would have passed. And for any of you who think life in a "camp" is "easy"...well, you just don't know what you're talking about.
A lawyer going to prison - PRICELESS!!!
YES!!! A small amount of justice for the so called white collar crooks. The only problem with these creeps is that they didn't steal enough. To get away with the crime, you have to steal on the scale of ENRON, AIG, etc, etc. Then it's not considered a crime. BS!!!!
A lawyer pulled up in front of his office building in his new Lexus. So proud of it, he was. As he was exiting the vehicle, another driver drove by and side-swiped the new Lexus. As the police was trying to calm down the lawyer that was upset about his car, the cop could take no more. He said, “you lawyers kill me. You are so damn materialistic and concerned about your car, you don’t even realize you lost your arm in the accident. The lawyer looks at where his arm use to be and screamed…..”MY ROLEX!!!”. ;o)
While I'm delighted there is a judge who will letthem know that they are nothing but criminals, just like the street thieves, I agree that it's not enough.
A 6.6M condo in Manhattene and a $185,000 condo in Fla? Everything that he now considers he owns should be impounded, and I don't care if his wife/family would lose the "lifestyle to which they have become accustomed". Since there is no way of knowing what he bought with his own valid earnings and what was bought with his ill gotten gains, he must forfeit everything. There is no law written in the blood of the Creator that says when an individual reaches a certain point of wealth that they will be guaranteed that lifestyle for the duration of their existence. None.
See, I'm one of the folks who believes that the wives of these a$$hole$ should be keeping their men in check, and that IF they're going to be cheating, she's going to leave him holding the bag; instead, they get spoiled like those gross "Housewives" programs, where they think that the whole point of life is to spend a fortune at some plastic surgery center. Since the wives seem to also feel it is their right to live that stolen high life as well. His homes, his art, his expensive toys should all be seized. If the family can't survive in a run of the mill 3 bed ranch like the average American has for decades, then that's probably not a DNA line we need to carry forward as a species anyway.
Elizabeth, The lawyer in this case is not the crook with the 6 million dollar NY condo or the 875,000 dollar place in Boca Raton. That was stock trader Bauer, who kept the majority of the profits. They are all scum and deserve the harshest sentence possible. They lawyer is an unethical low life who wasn't smart enough to make his illegal behavior woth the risk.
Foreigner
You need inside, information
Information at a very high price
She gives you inside, information
That can change your whole life overnight,
In a minute
Very high price indeed.
Foreigner
With a little inside, information
You get money, you get power, you get it all
Yeah but that inside, information
Can leave you waiting for that hammer to fall
(let it fall)