Insider Trial Opens With Claim Fugitive Banker Was Tipster
Accused Insider Trader Says Feds Have the Wrong Person on Trial
(Bloomberg) -- The son of a pharmaceutical company CEO claims a fugitive London investment banker was the real source of insider tips he’s charged with passing to a Greek businessman, who used the information to make millions of dollars in trades.
The illegal trades were the result of information about Ariad Pharmaceuticals Inc. provided by a former Centerview Partners investment banker, according to Jonathan Streeter, a lawyer for Telemaque Lavidas.
“The wrong man is on trial here,” Streeter told a jury Monday at the start of Lavidas’s trial in Manhattan federal court on insider-trading charges.
Prosecutors allege Lavidas got tips about the company from his father, the chief executive officer of a family-owned drug company and a former Ariad director. The younger Lavidas allegedly passed the information to his friend, Greek businessman and restaurateur Georgios Nikas, who has also been charged in the case.
Lavidas is the first person to be tried in connection with a global insider-trading ring that allegedly employed burner phones, cash-filled safes and tips passed from investment bankers and corporate insiders to make tens of millions of dollars in illegal profits. For the past seven years, authorities have been investigating a shadowy, far-flung network that allegedly included residents of the U.S., U.K., France, Switzerland, Israel, Cyprus, Greece and Hong Kong.
While Lavidas is acused of passing information three times from his father, Lavipharm SA’s CEO Athanase Lavidas, Streeter told jurors the defense will shed more light on the wider global network of insider trading to prove Nikas got his Ariad tips from other sources.
Among those facing charges in the U.S. are a Goldman Sachs Group Inc. banker, a Monaco poker player and a Swiss trader who’s expected to be the government’s star witness against Lavidas.
Streeter, a former federal prosecutor who was on the team that won the 2011 conviction of former Galleon Group LLC hedge fund manager Raj Rajaratnam on insider trading charges, drew on his prosecutorial skills to accuse Darina Windsor, the former Centerview banker charged in the scheme, as the true source for Nikas’s illegal Ariad trades.
“She was one of Nikas’s primary sources of information,” Streeter said in his opening statement to the jury. “It was really Darina Windsor who was tipping Nikas.”
Nikas, who owns restaurants in New York, is in Greece and considered a fugitive by the U.S. Windsor is believed to be in Thailand, her native country.
The government will present testimony from Marc Demane-Debih, a Swiss trader who was arrested last year in Serbia and extradited to the U.S. The government also plans to use phone records and emails between Lavidas, his father and Nikas to tie Lavidas to insider trading by his friend Nikas. Demane-Debih claims Nikas told him at a 2011 dinner party that he had inside information about Ariad that he got from Lavidas and his father, the government said.
Ariad’s founder and former CEO, Harvey Berger, was called as the government’s first witness Tuesday. He told jurors that he put Lavidas’s father on the board of his company in 2003. Prosecutors claim the elder Lavidas leaked information to his son about the regulatory progress of Ariad’s leukemia drug Iclusig.
“The defendant was the critical link in that corrupt chain,” Assistant U.S. Attorney Daniel Tracer told the jury in his opening statement. Lavidas “shared secret, stolen information about Ariad to give his friend an illegal edge,” Tracer said.
Lavidas passed the tips to Nikas to benefit his friend and to win favors, including a $500,000 investment from Nikas’s wife in Lavidas’s nutrition-bar company, Mediterra Inc., Tracer said.
If convicted, Lavidas faces as long as eight years in prison, under sentencing guidelines, which are advisory and not binding on the judge, prosecutors said.
Tracer called Nikas and Demane-Debih “serial inside-traders” who made money on illegal tips about other companies in addition to Ariad. Demane-Debih pleaded guilty to 38 counts in a secret hearing in October. He has agreed to cooperate with prosecutors in hopes of leniency when he’s sentenced.
Streeter said Demain-Debih faces as long as 750 years in prison and is “desperately trying to testify” against Lavidas. It is likely that any sentence would be far less.
Lavidas was among six people charged by the U.S. in October. In addition to Lavidas, Nikas and Windsor, U.S. authorities have charged Goldman Sachs investment banker Bryan Cohen, Joseph El-Khouri, a securities trader and avid poker player who lives in London and Monaco, and Benjamin Taylor, a former Moelis & Co. investment banker who lived with Windsor in London.
The case is U.S. v. Lavidas, 19-cr-716, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth, Joe Schneider
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