Dominion Lending Centres Clearlease Reports US charges 2 with ‘decades-long’ insider trading scheme using data stolen from law firms

Dominion Lending Centres Clearlease Reports US charges 2 with 'decades-long' insider trading scheme using data stolen from law firms

TORONTO – (April 7, 2011) Reports a former corporate lawyer and stock trader were arrested Wednesday and charged with running an insider trading scheme that brought in so much money the suspects spoke at one point about burning $175,000 in cash to avoid detection.

Garrett Bauer and Matthew Kluger face multiple counts of insider trading and obstruction in addition to single counts of conspiracy and money laundering. Authorities said the scheme netted more than $30 million in profit over the last five years.

The 43-year-old Bauer, wearing a grey pullover and jeans, appeared in handcuffs and ankle shackles in U.S. District Court in Newark on Wednesday afternoon. He did not enter a plea and was ordered detained until a bail hearing. Kluger, 50, was to appear in federal court in Alexandria, Virginia.

Bauer is accused of reaping the lion’s share of the profits. In seeking detention for Bauer, Assistant U.S. Attorney Matthew Beck said investigators seized two trading accounts belonging to Bauer worth a total of $20.5 million and bank accounts worth more than $37 million. Bauer’s attorneys, William Davis and Donald Derfner, called the amounts “exaggerated, by a lot.”

If convicted, Bauer faces 12 to 15 years in prison by a conservative calculation, Beck told U.S. Magistrate Mark Falk. The government is seeking to seize his $6.65 home on New York’s Upper East Side and another home in Boca Raton, Florida.

According to the criminal complaint, Kluger illegally took information on upcoming company mergers from his Washington, D.C., law firm, Wilson Sonsini Goodrich & Rosati, and passed it on to a middleman who has not been identified.

The middleman would pass the information to Bauer, who would buy stock ahead of the mergers. Among the mergers were Adobe Systems’ acquisition of Omniture, Hewlett-Packard’s acquisition of 3Com and Oracle’s purchase of Sun Microsystems.

The Oracle-Sun merger made the scheme more than $11 million in illicit profit, the complaint alleges.

In a statement emailed Wednesday, the law firm said: “We were shocked to learn of the conduct the government has alleged a former employee committed against us and two other prominent law firms…”

Authorities allege the conspiracy dates back to the mid-1990s when Kluger worked for prominent New York law firms Cravath Swaine & Moore and Skadden, Arps, Slate, Meagher & Flom, though the substantive counts released Wednesday relate to activity when he worked for Wilson Sonsini.

Evan Chesler, head of Cravath, said his firm “has very strong policies designed to prevent” what Kluger is alleged to have done, and said the company is co-operating fully with the investigation.

In a statement, Skadden also said it is co-operating with investigators and said: “We have strict policies that protect our clients’ confidential information, which we monitor closely. It would be deeply disappointing if these policies were not followed in this instance.”

Bauer and Kluger were able to escape detection by using prepaid, disposable cellphones and by not having direct contact before the stock purchases, according to Daniel Hawke, regional director of the Securities and Exchange Commission’s market abuse unit.

During one phone conversation recorded by the unnamed coconspirator, Bauer allegedly tells the person to destroy $175,000 in cash because his fingerprints are on it.

“You know what, if you feel better burn the money and I’ll give it back to you,” Bauer says.

“Burn it?” the person asks.

“I would burn it in a fire,” Bauer responds.

It is not known whether the money actually was destroyed.

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About Dominion Lending Centres Clearlease

Dominion Lending Centres Clearlease Commercial (DLC Clearlease/ is a fully diversified Lease Finance Mortgage Banking Brokerage Company specializing in Equipment Leasing, Automobile Leasing, Residential, Commercial Lending/Mortgage Financing. DLC Clearlease possesses the capability to accommodate financing needs ranging from a small second Home Mortgage to a Multi-Million Dollar Commercial Projects. No mortgage is too small or too large for this integrated Company.

Headquartered in Downtown Vancouver, British Columbia. We’re expanding in Q2, 2011 to Calgary and Edmonton, Alberta! In Q3, 2011 we are expanding in Toronto, Ontario! Dominion Lending Centres Clearlease services clients from Coast to Coast. Our Residential Group has a team of Licensed Mortgage Brokers offering our clients the best terms and rates available in the current market. Our Commercial Funding/Mortgage Group is active across Canada Funding Mortgages in cities such as Toronto, Edmonton, Calgary, Vancouver and Victoria.

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Dominion Lending Centres Clearlease
HEAD OFFICE, Bentall Two, Suite 900, 555 Burrard Street, Vancouver, BC, V7X 1M8, CANADA.
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