KPMG auditor was photographed accepting cash bribe over coffee

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KPMG auditor Scott London thought it was just a friendly cup of coffee at Starbucks. But it was a setup by a longtime friend. (Patrick T. Fallon / Bloomberg)

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By Stuart Pfeifer

2:33 p.m. CDT, April 10, 2013

It was the Starbucks sting.

The defining moment in the KPMG insider-trading scandal happened over coffee at a Starbucks in the San Fernando Valley, when the auditor at the center of the case was set up by his longtime friend.

Accountant Scott London thought he was meeting for a casual coffee, until the friend handed him an envelope containing $5,000 cash — a payoff for giving his buddy inside information about public companies that KPMG audited.

Unbeknownst to London, the FBI was secretly photographing the exchange, a source familiar with the matter said.

A few days later, FBI agents showed up at London’s Agoura Hills home with the photographs. They told him to hire a lawyer.

FULL COVERAGE: KPMG auditor accused of insider trading

London would later admit to KPMG that he had been providing the friend with information about two of the accounting powerhouse’s clients: Herbalife Ltd., a Los Angeles nutritional products company, and footwear company Skechers USA Inc.

KPMG fired London and resigned as auditor for Herbalife and Skechers. The companies are now scrambling to retain new accountants. And London is awaiting the next step — a likely criminal prosecution and regulatory enforcement.

In an interview with The Times, London declined to identify his friend.

London, 50, has been a certified public accountant since 1986. He had a high-paying job, managing hundreds of KPMG accountants.

He said he gave the friend information about the companies because he wanted to help out a friend who was struggling financially. The friend rewarded him with about $25,000 in cash payments, a new Rolex watch and fancy dinners, London said.

“I have no idea what I was thinking. I don’t know why there was a lapse of judgment, but there was,” he said.

ALSO:

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'What I have done was wrong,' says auditor accused of insider trading

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http://www.chicagotribune.com/business/breaking/la-fi-mo-kpmg-accountant-was-photographed-accepting-cash-bribe-20130410,0,4970173.story

New sheriff of Wall St. is racking up insider trading convictions

Editor’s note: FEDs; Where is the Sheriff of LaSalle Street? In the kleptocracy formed by the coalition of crooked judges, greedy lawyers, medical whores and unethical nursing homes in the Probate Court of Cook County, these ideas are neutralized. The new cottage industry of the 21th Century is looting the estates of the disabled, the infirm, the elderly and then 'killing them off' while the 'judicial officials reap the benefits of public employment. This new industry is in full production in the Probate Court of Cook County. Lucius Verenus, Schoolmaster, ProbateSharks.com

New sheriff of Wall St. is racking up insider trading convictions

Preet Bharara has carved out a reputation for being a tough prosecutor who has overseen some of the most high-profile white-collar criminal cases since the 1980s.

 

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Preet Bharara, the top federal prosecutor in Manhattan, has won 71 insider trading convictions since he took office three years ago. (Timothy A. Clary / AFP/Getty Images / January 18, 2012)

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By Andrew Tangel, Los Angeles Times

8:36 p.m. CDT, March 29, 2013

NEW YORK — Preet Bharara, the man dubbed the new sheriff of Wall Street, notched another arrest in the government's vast insider trading probe.

This time the top federal prosecutor in Manhattan nabbed a top portfolio manager at one of America's biggest hedge funds. SAC Capital Advisors' Michael Steinberg was led out of his Park Avenue apartment building in handcuffs early Friday morning. It's a major arrest at a fund that has long drawn government scrutiny.
Bharara, 44, has carved out a reputation for being a tough prosecutor who has overseen some of the most high-profile white-collar criminal cases since the 1980s. His quest to bring Wall Street wrongdoers to justice has claimed 71 insider trading convictions since taking office three years ago.
He's an unlikely standard bearer in a role once held by bigger-than-life characters such as Rudy Giuliani and Eliot Spitzer.
The latest chief Wall Street scourge is a soft-spoken native of India who grew up in the suburbs of New Jersey. He says he has an indulgence for listening to Bruce Springsteen, and that he wanted to become a lawyer after reading "To Kill a Mockingbird" as a teenager.
"I'm like a lot of Americans. I care about the underdog," Bharara told The Times in an interview. "You want to make sure you're fighting for them. It's a long American tradition."
His latest push appears to center around SAC Capital, run by billionaire investor Steven A. Cohen.
Bharara's office has brought charges against two of Cohen's portfolio managers. In addition to Steinberg, Bharara filed charges in November against Mathew Martoma, a former portfolio manager at a SAC Capital affiliate, CR Intrinsic Investors. Martoma's case involved trading stock of two pharmaceutical companies that were developing a drug to treat Alzheimer's disease.
Steinberg's case involved trades in computer giant Dell. Barry Berke, Steinberg's attorney, said his client "did absolutely nothing wrong."
Both portfolio managers have pleaded not guilty.
"This is another rung in the ladder to get to who they really want," said Ernest Badway, a former Securities and Exchange Commission enforcement attorney now in private practice. "It's obvious to even a casual legal observer that Bharara and his prosecutors are building a case against Steve Cohen — or at least attempting to. Whether they'll be successful is a different story."
Cohen has not been accused of wrongdoing. His spokesman has repeatedly said Cohen has always acted appropriately. Since August 2009, Bharara's office has charged 81 defendants on Wall Street and corporate America with insider trading.
As the head of the U.S. Attorney's Office in the southern district of New York, Bharara oversees more than 230 prosecutors. Major cases have targeted mobsters, weapons smugglers, terrorists and Somali pirates. In one instance, prosecutors even helped return a looted dinosaur skeleton to Mongolia.
Before the cases involving SAC Capital employees, Bharara's biggest insider trading busts were against Raj Rajaratnam and Rajat Gupta. As head of the Galleon Group hedge fund, Rajaratnam had created a sprawling insider-trading network. Gupta, a former director of Goldman Sachs and head of the consulting group McKinsey & Co., fed company information to Rajaratnam.
Gupta was sentenced in October to two years in prison and is out on appeal. Rajaratnam is serving an 11-year prison sentence.
Bharara declared the prosecutions a "wakeup call for Wall Street."
It won him respect in both Washington and in the financial community, and even from some of his predecessors.
"If any federal prosecutor has been in the forefront, it has been Preet," said Spitzer, who held the unofficial mantle of "Sheriff of Wall Street" when he was New York's attorney general. "I give Preet very high marks for doing what he's trying to do and leading that effort."
Bharara's pursuit of Wall Street wrongdoers has even gotten a nod from Springsteen, who last year gave the prosecutor a shout-out during a concert in Hartford, Conn.
"This is for Preet Bharara!" Springsteen boomed before launching into "Death to My Hometown," a protest song aimed at Wall Street.

http://www.chicagotribune.com/news/la-fi-sac-arrest-20130330,0,7327122.story

Former SAC portfolio manager Martoma indicted

Dec 21, 6:13 PM EST Former SAC portfolio manager Martoma indicted

Business Video Buy AP Photo Reprints NEW YORK (AP) -- A former hedge fund portfolio manager was indicted Friday for securities fraud in connection with what prosecutors say could be the most lucrative insider-trading scheme to date. A federal grand jury in New York indicted Mathew Martoma on three counts of securities fraud and conspiracy to commit securities fraud. Martoma worked for an affiliate of SAC Capital Advisors. Stamford, Conn.-based SAC is owned by Steven A. Cohen, one of the world's richest men. Martoma, of Boca Raton, Fla., was arrested last month the FBI in connection with the scheme that allegedly involved an arrangement between 2006 and 2008 to obtain secret, advance results of tests on an experimental Alzheimer's drug. According to the indictment, Martoma made trades in Elan Corp. PLC and Wyeth, pharmaceutical companies that were partners in the development of the experimental drug, using confidential information about a drug trial. The trades allegedly included selling nearly all of the $700 million worth of shares the hedge fund held in both companies just before negative news of trial results were made public. Martoma also sold the stock short and made other trades allowing the firm to benefit when the stocks fell after the trial results were made public, according to the indictment. The trades allegedly helped SAC gain profits and avoid losses to totaling $276 million. Martoma got a bonus of $9.3 million as a result of the illegal scheme, according to the indictment. The indictment follows an earlier criminal complaint that federal prosecutors filed in November. "Though disappointing, today's events come as no surprise," Martoma's lawyer Charles Stillman said in a statement. "The simple fact is that Mathew Martoma did not trade on inside information, is innocent of all these charges, and we look forward to his ultimate vindication."

http://hosted.ap.org/dynamic/stories/U/US_SAC_CAPITAL_MARTOMA?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-21-18-13-29