|
 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, who had been cooperating with authorities, pleaded guilty to
securities fraud, tender offer fraud, and conspiracy charges in the
federal court in Trenton, New Jersey, according to U.S. Attorney
Paul Fishman in 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.
Matthew Beck, a lawyer for Tamayo, did not immediately respond to a
request for comment. The U.S. Securities and Exchange Commission
filed related civil charges.
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.
[to top of second column] |
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, court
papers show.
Metro made just $168,000 from the scheme, prosecutors said.
The case echoed a 2011 prosecution in New Jersey, where a lawyer
admitted to passing merger tips to a trader, helped by a middleman
who was also a mortgage broker, and also eventually cooperated with
authorities.
Lawyers for Eydelman, of Colts Neck, New Jersey, and Metro, of
Katonah, New York, did not immediately respond on Friday to requests
for comment. Eydelman and Metro have both been fired from their
respective employers.
The case is U.S. v. Tamayo, U.S. District Court, District of New
Jersey.
(Reporting by Jonathan Stempel in New York; Editing by Alden
Bentley)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
