Pastor's Insider-Trading Trial Shines Light on Jurors' Faith

(Bloomberg) -- He was a Morgan Stanley vice president, a hedge fund manager and, according to prosecutors, the "linchpin" of a multinational hacking scam that allowed him to pocket $14 million in illicit insider-trading profits.

But it’s his post as pastor of the Slavic Evangelical Baptist Church in a Philadelphia suburb that might give Vitaly Korchevsky the most trouble at a trial beginning Monday.

Korchevsky faces federal conspiracy and securities-fraud charges for his alleged role in a sweeping insider-trading ring that relied on corporate press releases stolen by hackers. As jury selection starts in federal court in Brooklyn, New York, defense lawyers want prospective jurors questioned about their thoughts on religion, in an apparent effort to weed out biased panel members.

"People who are expected to be good, or do good, or know to do these things are held to a higher standard than other people,” California-based jury consultant Kathy Kellermann, who’s not involved in the case, said in a phone interview. “That’s not the law, but it is the reality."

Prosecutors say Korchevsky took part in the scam that involved as many as 10 traders and hackers in the U.S. and Ukraine. The case represents an unusual intersection of securities fraud and cybercrime. Using information stolen from press releases before they were publicly disclosed, the group allegedly made at least $30 million by trading on information about companies including Panera Bread Co., Caterpillar Inc., Home Depot Inc. and Advanced Micro Devices Inc.

Press Releases

The hackers stole as many as 150,000 press releases from organizations such as PR Newswire Association LLC, Marketwired LP and Business Wire from about 2010 to 2015, prosecutors said. Korchevsky’s relationship to the alleged hackers is likely to be detailed at the trial.

He’s amassed real estate in Pennsylvania and Georgia valued around $5 million, and had about $5 million in bank and brokerage accounts that the government froze on the day of his arrest. Millions more may have been given to the church or secreted abroad, prosecutors said.

Lawyers have already signaled they want to dig into potential panelists’ faith.

"Does any prospective juror have any religious, moral or philosophical beliefs that might sway you one way or the other" if they were to learn people in the case identify as ’Christian Baptist?’" Korchevsky’s lawyer, Steven Brill, wrote in a proposed list filed with the court on Wednesday. "Have you ever had a very positive or very negative experience with a member of the clergy?"

Buffett’s Business Wire Seeks to Reassure Clients After Hacking

Korchevsky, a U.S. citizen born in Ukraine, was arrested in August 2015 at his home in Glen Mills, Pennsylvania. Also on trial is Vladislav Khalupsky, a trader who lived in Brooklyn and Ukraine and allegedly earned millions of dollars.

Neither’s defense lawyer responded to a request for comment. Their defense isn’t detailed in court papers.

The case has already resulted in guilty pleas from four people in Brooklyn and New Jersey. At least two of them are cooperating with prosecutors.

Korchevsky was a mutual fund manager at Gardner Lewis Asset Management before he moved to Morgan Stanley in 1999. There, he helped manage several Invesco American Value funds, according to Morningstar. He started his own hedge fund, NTS Capital Fund, in Glen Mills in 2011, according to the Securities and Exchange Commission.

While he managed money, Korchevsky also guided the flock at his church, which was founded in Brookhaven, Pennsylvania, in 2003. His congregants rallied to his side after his 2015 arrest. U.S. District Judge Raymond Dearie freed him on $2 million bail over prosecutors’ concerns he might flee, citing the "faith that hundreds of people have put in him."

"By all accounts, his congregants adore, trust, and continue to support him," Brill said in a letter at the time. "Letters are beginning to pour in from far and wide reinforcing Mr. Korchevsky’s good character and solid community foundation."

Jurors may not be as supportive, Kellermann said.

The most common response from jurors "is they should know better," she said.

The case is U.S. v. Korchevsky, 15-cr-000381, U.S. District Court, Eastern District of New York (Brooklyn.)

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