A corporate lawyer who federal prosecutors say stole merger secrets while working at some of the country's most prominent law firms was ordered released on $1 million bail in his insider trading case.
Matthew H. Kluger, 50, will be subject to home confinement and electronic monitoring as part of the bail conditions, according to a judge's order on Friday in federal court in Newark, New Jersey. He has not yet entered a plea in the case.
Kluger and stock trader Garrett D. Bauer were arrested last week, charged with participating in an insider-trading conspiracy. Prosecutors say the purported scheme spanned 17 years and said on Friday it netted at least $37 million in profits, higher than earlier estimates.
In arguing for home detention, prosecutor Judith Germano said Kluger posed a "significant flight risk." Under the sentencing guidelines, she said Kluger faced around 15 years in prison.
Kluger, who remained silent and appeared in a yellow jumpsuit and handcuffs, had sought less restrictive bail conditions so he could take care of his three children.
The criminal complaint against Bauer and Kluger contends they profited from tips on about 11 transactions Kluger stole when he was an associate in the Washington office of Wilson Sonsini Goodrich & Rosati PC, a law firm with a glittering client base of Silicon Valley heavyweights.
Prosecutors say he passed on inside tips about some of the biggest recent technology firm tie-ups, such as Oracle Corp's $7.5 billion takeover of Sun Microsystems Inc, Hewlett-Packard Co's acquisition of 3Com for $3.1 billion and Intel Corp's buyout of McAfee Inc for $7.7 billion.
Kluger routinely supplied the stolen information to a middleman who then shared it with Bauer, authorities contend. Kenneth Robinson, who was referred to as an unnamed co-conspirator in the complaint against Kluger and Bauer, pleaded guilty on Monday to being the middleman.
Over the last 17 years, prosecutors say Kluger also stole and passed on information from three other well-known law firms: Cravath, Swaine & Moore LLP; Fried, Frank, Harris, Shriver & Jacobson LLP; and Skadden, Arps, Slate, Meagher & Flom LLP.
Kluger's attorney, Alan Zegas, called the government's case "nothing more than raw, unsupported allegations."
Zegas was asked about any potential plea deals. "If an offer is made, I always listen and take the offer to my client and discuss it."
ADOPTED
Details about Kluger emerged at the hearing. Zegas said Kluger was adopted at a young age and that he had a heart condition. U.S. Magistrate Judge Mark Falk said that according to a pretrial services report, Kluger had been charged once with disorderly conduct.
After the hearing, Zegas said that Kluger lived with his former partner and his three children.
Robinson, the middleman, was a close friend of both Kluger and Bauer for nearly two decades and is now cooperating with the government.
Investigators executed a search warrant at Robinson's home in Long Beach, New York, on March 8, according to court papers. He subsequently allowed the government to record his telephone calls to Kluger and Bauer.
In one of the calls, Kluger discussed destroying evidence, according to a transcript in court papers.
"By the way, I got rid of my computer," the complaint quotes Kluger as saying. "I got rid of my iPhone where I had looked up some stock quotes. Those are gone. I mean history. Gone."
Robinson, 45, has pleaded guilty to two counts of securities fraud and one count of conspiracy and hopes to receive a lighter sentence in return for his cooperation.
Bauer, 43, has been released on $4 million bail. He has not yet entered a plea.
The case is U.S. v. Bauer et al, U.S. District Court, District of New Jersey, No. 11-mj-03536.