by Brian Mahany
The U.S. Attorney’s Office in Manhattan has charged a hedge fund manager with insider trading. Donald Longueuil was charged with conspiracy to commit securities and wire fraud and obstruction of justice. The obstruction charge stems from Longueuil’s middle of the night efforts to destroy computer hard drives.
The FBI and SEC have been investigating allegations of insider trading on Wall Street for years. This month’s charges are thought to be the tip of the iceberg with many more charges to come.
According to prosecutors, Longueuil and others obtained inside information about various semiconductor and technology companies. At times they would pay workers in these companies to leak privileged information. In one instance, Longueuil obtained quarterly earnings reports for Marvell Technology Group, a publicly traded company. He received the information before it became public. Prosecutors say Longueuil and another trader purchased over a million shares of the stock. A short time later the stock price jumped 23% when the earnings became public generating over $1 million in profits for Longueuil’s efforts.
Perhaps the most telling is the behavior leading up to the obstruction charge. The feds say that Longueuil became concerned when the Wall Street Journal ran a story about the insider trading investigation. They say he and co-defendant Samil Barai began a campaign to destroy evidence.
Prosecutors say Barai sent a text message to a cooperating undercover informant that said, “Shred as much as u can” and “put all ur data files onto an encrypted drive.”
Later Barai told the same informant to leave his laptop with his doorman so that Barai could obtain the laptop and “do a dept of defense delete.” The feds say he picked up the laptop and never returned it.
For his efforts, Samil Barai was also charged.
Longueuil’s efforts to destroy and conceal evidence are even more colorful. Prosecutors recovered messages he sent to another cooperating witness. In those messages, Longueuil said he “just fucking ripped it [the flash drive]… fucking pulled the external drives apart… Destroyed the platter… Put ‘em into four separate little baggies, and then at 2 a.m. … 2 a.m. on a Friday night, I put this stuff inside my black North Face jacket,… and leave the apartment and I go on like a twenty block walk around the city.. and try to find a, garbage truck… and threw the shit in the back of like random garbage trucks, different garbage trucks… four different garbage trucks.”
Longueuil faces twenty-five years in federal prison. He was arrested in his apartment.
Like all criminal charges, he is only accused of these crimes at this point. Of course, ripping up hard drives with pliers is not consistent with someone who is innocent and wishes to cooperate in an investigation. Preet Bharara, the U.S. Attorney for the Southern District of New York, summed it up best, “When people frantically begin shredding sensitive documents and deleting computer files and smashing flash drives and chasing garbage trucks at 2 a.m., its not because they have been operating legitimately.
Many white-collar defendants attempt to destroy evidence, unfortunately destruction of evidence and obstruction of justice are themselves separate crimes. These crimes are often more serious than the underlying original charge.
If you believe that you are facing serious criminal charges, consult with a lawyer immediately. These days, the government has access to extremely sophisticated technology to recover deleted emails, reconstruct erased text messages and fix destroyed hard drives. You are better served turning all materials to your attorney. Although even your lawyer might not be able to prevent authorities from gathering your computer and other electronic records, you can avoid charges and accusations that you attempted to erase files or destroy evidence.
Mahany & Ertl is a full service boutique law firm concentrating in white- collar criminal defense, tax compliance and audit defense, and asset recovery. We help people charged with crimes or being investigated for tax evasion, conspiracy, securities fraud, money laundering, wire fraud, mail fraud and bankruptcy fraud.
Call Brian Mahany for a no nonsense, confidential analysis of your situation at (414) 704-6731 or contact him through his website, https://www.mahanyertl.com