A Brooklyn, New York mortgage broker, who would scribble secret stock
tips on napkins and pass them to an accomplice in Grand Central station
before eating them, pleaded guilty to insider trading on Friday, federal
prosecutors said.
Frank Tamayo, 41, was the middleman in what prosecutors called a
three-man scheme that generated $5.6 million in illegal profits over
five years, based on tips about a dozen transactions being negotiated by
a prestigious New York law firm.
Tamayo pleaded guilty to securities fraud, tender offer fraud, and
conspiracy charges in the federal court in Trenton, New Jersey.
The defendant also agreed to forfeit more than $1 million, the contents
of two brokerage accounts, and a 2008 Audi Q7. He faces up to 20 years
in prison on the fraud counts. Authorities had in March accused Steven
Metro, a managing clerk at Simpson Thacher & Bartlett, of passing
tips about the law firm's clients through Tamayo to Morgan Stanley
stockbroker Vladimir Eydelman, who would then trade for himself, his
family, customers and Tamayo.
Prosecutors said the scheme lacked sophisticated computerized techniques or
cover-ups now often associated with insider trading.
Rather, they said Tamayo would typically meet Metro, a friend and former
law school classmate, at Manhattan bars or coffee shops, and write the
ticker symbols of stocks to be bought on napkins or Post-It notes.
Tamayo would then meet Eydelman near the main clock in Grand Central,
show him a symbol and, once satisfied Eydelman had memorized it, "chew
the paper or napkin to destroy it," prosecutors said.
The scheme allegedly began in February 2009 when Metro told Tamayo that
Liberty Media Corp might invest in Sirius XM Radio, then on the verge of
bankruptcy.
Tamayo then allegedly told Eydelman to add to his existing Sirius stake,
saying a "source" had alerted him to the bailout.
Authorities said Tamayo this year began recording conversations with the
other defendants, including on Feb. 20 when Eydelman gave him a cigar
box containing $7,000 meant to help Metro buy and renovate a new home.
"Take these cigars, put it to good use," Eydelman told Tamayo.
Eydelman and Metro have both been fired from their respective employers.
No comments:
Post a Comment