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Attorney Matthew Kluger was sentenced to 12 years in prison forstealing corporate merger tips from four law firms to fuel aninsider-trading scheme that prosecutors said generated $37 millionin illegal profits. Kluger, 51, received his term in federal court in Newark, N.J.,where he pleaded guilty on Dec. 14, admitting he stole nonpublicdata on about 30 transactions over 17 years. He passed theinformation to a middleman, Kenneth Robinson , who gave it to trader Garrett Bauer to buy shares. U.S. District Judge Katharine Hayden said he engaged in "thuggish" behavior. "People stay out of the stock market, in part, because they thinkit's skewed toward the insiders," Hayden said in passing sentence."This case has given insight to the lack of credibility for thesmall investor. The heart of this scheme was a lawyer earninghundreds of thousands of dollars a year at white-shoe firms, oneafter another." Kluger's sentence was the longest in an insider trading case, andexceeded the 11-year term imposed on Raj Rajaratnam , the co-founder of hedge fund Galleon Group LLC convicted ofinsider trading at trial last year. Rajaratnam was the most prominent of 66 people charged in aninsider-trading crackdown by Manhattan U.S. Attorney Preet Bharara . All but seven pleaded guilty or were convicted at trial since2009. Most got far less severe terms than Rajaratnam. "The length of the sentence reflects Kluger's enormous and lengthybetrayal of trust," New Jersey U.S. Attorney Paul Fishman said in an interview. "This 17-year insider trading scheme maywell have been the longest of its kind. His sentence may also bethe longest insider trading sentence ever imposed." In pleading guilty, Kluger admitted passing on tips he stole whileworking at four law firms, including Skadden, Arps, Slate, Meagher& Flom LLP and Wilson, Sonsini, Goodrich & Rosati PC . Prosecutors said he faced 11 to 14 years in prison under federalguidelines. Kluger's attorney Alan Zegas argued that he deserved far less time because he made less than $1million. Outside of court, Zegas said he would appeal, saying theterm was "far harsher than what I believed Mr. Kluger deserved." Kluger said he was disappointed with the sentence and doesn't thinkhis term should be longer than Rajaratnam's. Kluger said hecooperated with authorities after his arrest and pleaded, asopposed to Rajaratnam, who went to trial. The three men admitted trading shares in one of the largestinsider-trading cases of the last decade. The scheme involvedcompanies including Sun Microsystems Inc., 3Com Corp. and AcxiomCorp. Bauer, who pleaded guilty Dec. 8, made almost $32 million in thescheme's last four years, according to the U.S. Securities andExchange Commission. He faces nine to 11 years under advisoryguidelines. Robinson, 46, pleaded guilty in April 2011 after secretly recordingthe other two men for the Federal Bureau of Investigation . As a cooperator, he may get far less prison time than the others. Kluger and Bauer, 44, pleaded guilty to securities fraud,conspiracy to commit securities fraud, conspiracy to commit moneylaundering and obstruction of justice. Kluger might have faced asmany as 20 years in prison on all but the conspiracy to commitsecurities fraud count, which carried a five-year term. In his plea, Kluger said the scheme started in 1994, when he firstworked as an associate for New York-based firm Cravath, Swaine & Moore LLP. Kluger at first passed tips only on those deals on which heworked. As the scheme developed, Kluger stole information about deals onwhich he didn't work that he learned about by searching the firm'scomputers. The crimes continued when Kluger worked from 1998 to 2001 at Skadden Arps , another New York-based firm, and when he worked from 2001 to 2002at Fried Frank Harris Shriver & Jacobson LLP, Kluger admitted. The scheme began again in December 2005 andran until March 2011, when Kluger worked in the Washington officeof Wilson Sonsini. Kluger said the men used prepaid mobile phones and pay phones todiscuss the deals and elude detection. After learning in March ofthe probe by the FBI and Internal Revenue Service , Kluger destroyed a mobile phone, a computer and an iPhone he usedto look up stock quotes, he said. Robinson, of Long Beach, New York, was a mortgage broker who helpedthe FBI secretly record Kluger and Bauer, a New York man. Bauer forfeited about $20 million in bank accounts and tradingaccounts, as well as a $6.65 million condominium on the Upper EastSide of Manhattan and an $875,000 home in Boca Raton, Florida. On May 1, Hayden signed a judgment requiring Kluger to forfeit$516,510 to the SEC, including $502,500 in illicit profit andinterest of $14,010. The FBI had already seized $175,000 in cashfrom Robinson's house on March 18, 2011. Half of that was intended for Kluger,which counts toward the amount he must forfeit, according to theSEC. Kluger, of Oakton, Virginia, is the son of Richard Kluger , a Pulitzer Prize-winning social historian. We are high quality suppliers, our products such as Diode Hair Removal Laser Manufacturer , IPL Hair Removal Machines for oversee buyer. To know more, please visits Vacuum Slimming Machine.
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