By Michael Rothfeld, Susan Pulliam and Vanessa O'Connell
LONG BEACH, New York-Kenneth T. Robinson knew he had to stop. But in an interview with The Wall Street Journal, said he simply could not fail to trade stocks based on inside information, what which is illegal.
was September 2009, 15 years after first participating in an alleged multimillion-dollar fraud case considered one of the trading stock insider longest in U.S. history. The plot showed serious cracks, one of Robinson's two partners in the alleged crime, his close friend Garrett Bauer, had begun to spend big, paying cash-dollar homes.
For a decade and a half, researchers say, the plan worked to perfection. Robinson, a mortgage banker, was the intermediary. Corporate mergers clues received from a friend (the Attorney Matthew Kluger) and passed them to another friend (Bauer, a stockbroker) who bought shares on behalf of the three.
This scheme frustrated researchers for years because they could not determine where he got his tracks Bauer. The three men raised at least $ 37 million over the years, according to Judith Germano, a federal prosecutor in New Jersey.
But in late 2009, Robinson made a fatal error: negotiated on their own behalf rather than through Bauer. That transaction, and another in 2010 (he and Kluger won the relatively modest sum of U.S. $ 693,000, according to the researchers) helped authorities to connect the dots.
Robinson's interview, conducted on April 13 at his home in Long Island, a coastal suburb of New York provides an unusual look to the mentality and motivation that encouraged the alleged fraud.
Robinson, a 45-year-old father of two children, said he never thought his direct stock purchase would end its activities. "It seemed that he would not arouse suspicion if it was millions of dollars."
involved in the alleged fraud was total nonsense, "said Robinson. Not need the money, he said, but could not resist.
Week of April 6, federal authorities filed charges of securities fraud, conspiracy and obstruction of justice against Bauer and Kluger, who have also been accused in a civil lawsuit filed by the Securities and Exchange Commission's (SEC).
Robinson has pleaded guilty to securities fraud and conspiracy. Helped authorities build their case by secretly recording his alleged partner, whom he considered his friends.
His saga is part of an unprecedented offensive against negotiations with confidential information on Wall Street and Corporate America
Robinson's case has captivated Wall Street for allegedly lasted a long time and involved a lot of money. The three men are accused of trading on inside information since 1994 with agreements to which Kluger learned through his job at a prestigious law firm. The agreements included corporate heavyweights such as the purchase of Sun Microsystems Inc. by Oracle Corp. and McAfee Inc. acquisition by Intel Corp. Neither
Kluger and Bauer have pleaded not guilty or innocent. Kluger was released after paying $ 500,000 bail of $ 1 million and will remain under house arrest. Bauer also was released after she was given a bail of $ 4 million. His lawyer said Bauer "is waiting to review the evidence the case and then make decisions about his defense. "
In the early 90's, Robinson and Kluger worked together in a real estate firm and became friends. The traffic of confidential information took shape in 1994 when Kluger, then a student at the Faculty of Law at the University of New York, did internships at the law firm of Cravath, Swaine & Moore LLP, prosecutors say. There he learned about an upcoming merger and passed the information to Robinson, according to the demand.
Kluger suggested that Robinson could find an operator who trade stocks on their behalf, according to claim and Robinson looked to Bauer, who had been his colleague when he worked at a securities firm, prosecutors say.
As their business progressed, Robinson and Bauer became very good friends, while Robinson and Kluger spoke only when necessary and through cell phones and discarded immediately.
In 2009, the trio made its greatest gain, say researchers. Obtained $ 11 million with the purchase of shares of Sun when it was acquired by Oracle. They also won $ 8.3 million to buy securities of the software maker Omniture Inc., acquired by Adobe Systems Inc., according to demand.
That same year, the Bauer lifestyle change. In August 2009, paid $ 6.65 million cash for a five-bedroom duplex in Manhattan overlooking Central Park, according to property records. Months later paid $ 875,000 cash for a house in Boca Raton, Florida.
was then, Robinson said in the interview, they became concerned and told Bauer "he should stop."
If Robinson had followed his own advice, you may never have discovered. The researchers already suspected about the legality of Bauer talks, but had nothing specific against him.
was in October 2009 that Robinson received the information confidential information that led to his downfall: Hewlett-Packard Co. would buy 3Com Corp. said Robinson, who had traded stock of 3Com on its own, decided to buy more. Kluger
He and won nearly $ 200,000 with the transaction, according to the complaint. Robinson hoped that the operations, not being of millions, to pass unnoticed. But someone noticed something.
Researchers already had a list of friends of Bauer, which included Robinson, according to a source familiar with the matter. When Robinson began to negotiate prior agreements related to the law firm Wilson Sonsini Goodrich & Rosati PC (where he worked from Kluger 2005), regulators began to suspect he was involved with Bauer in the plot, said the person.
SEC officials were part of the FBI and waited more than six months the next step of the suspects.
The moment came in January. Bauer bought 1.4 million shares of the video technology company with Zoran Corp. data will soon be merged with CSR PLC, a manufacturer of wireless products. The trio won nearly $ 2 million operation.
few days later, FBI agents came to Robinson's house. At present the evidence against him, also said that Bauer had won much more in the alleged crime that he and Kluger.
Robinson agreed to help collect evidence against their friends and on March 17 began recording his phone calls, getting both incriminating.
Prosecutors have recommended a sentence of up to 87 months in prison for Robinson.
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