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Who We Are »
Betsy Combier

Help Us to Continue to Help Others »
Email: betsy.combier@gmail.com

 
The E-Accountability Foundation announces the

'A for Accountability' Award

to those who are willing to whistleblow unjust, misleading, or false actions and claims of the politico-educational complex in order to bring about educational reform in favor of children of all races, intellectual ability and economic status. They ask questions that need to be asked, such as "where is the money?" and "Why does it have to be this way?" and they never give up. These people have withstood adversity and have held those who seem not to believe in honesty, integrity and compassion accountable for their actions. The winners of our "A" work to expose wrong-doing not for themselves, but for others - total strangers - for the "Greater Good"of the community and, by their actions, exemplify courage and self-less passion. They are parent advocates. We salute you.

Winners of the "A":

Johnnie Mae Allen
David Possner
Dee Alpert
Joan Klingsberg
Harris Lirtzman
Hipolito Colon
Jim Calantjis
Larry Fisher
The Giraffe Project and Giraffe Heroes' Program
Jimmy Kilpatrick and George Scott
Zach Kopplin
Matthew LaClair
Wangari Maathai
Erich Martel
Steve Orel, in memoriam, Interversity, and The World of Opportunity
Marla Ruzicka, in Memoriam
Nancy Swan
Bob Witanek
Peyton Wolcott
[ More Details » ]
 
SEC Charges Wall Street Professionals and Others with Widespread Insider Trading
The Securities and Exchange Commission has filed insider trading charges against nine defendants and also named three relief defendants. The Commission's complaint alleges that from at least March 2004 through July 2008, Matthew Devlin, then a registered representative at Lehman Brothers, Inc. ("Lehman") in New York City, traded on and tipped at least four of his clients and friends with inside information about 13 impending corporate transactions. Those named are: Matthew C. Devlin, Jamil A. Bouchareb, Daniel A. Corbin, Frederick E. Bowers, Thomas R. Faulhaber, Eric A. Holzer, Jeffrey R. Glover, Corbin Investment Holdings, LLC and Augustus Management, defendants, and Maria T. Checa, Lee H. Corbin, LLC and Checa International, Inc., relief defendants,
          
I'll Give You Something to Cry About: Tearful Ex-NY BigLaw Associate Headed to Prison
By Mark Hamblett | New York Law Journal

A former Paul Hastings tax associate fought back tears yesterday as he admitted to securities fraud as part of an insider trading conspiracy.

Eric A. Holzer, 34, admitted to earning trading profits of $119,347 from tips on pending corporate mergers and other transactions he received from a friend in 2005.

"I knew my trading was wrong," he said, his voice choking with emotion. "I deeply regret my conduct."

Southern District Magistrate Judge Debra C. Freeman said she would recommend that Judge Victor Marrero accept Mr. Holzer's plea to one count of conspiracy to commit securities fraud and one count of securities fraud, both felonies.

Although the two charges together call for a maximum of 25 years in prison, the parties agree that the U.S. Sentencing Guidelines call for Mr. Holzer to receive a sentence somewhere between 12 and 18 months when Judge Marrero sentences him on Aug. 17.

Pursuant to a plea agreement with Southern District assistant U.S. attorneys Joan Loughnane and Reed Brodsky, Mr. Holzer is also set to forfeit the $119,347 and pay a fine somewhere between $3,000 and $30,000.

Mr. Holzer became the third person to plead guilty in the $4.8 million insider trading conspiracy alleged by prosecutors late last year.

Mr. Holzer had been caught on tape discussing the scheme with the figure at the heart of the conspiracy, Matthew Devlin, who worked at Lehman Brothers.

Mr. Devlin pleaded guilty in December to one count of securities fraud and four counts of conspiracy. His cooperation with the government in the hopes of receiving a reduction in sentence helped investigators and prosecutors get the information they needed to charge Mr. Holzer and three others.

It was Mr. Devlin who obtained information on corporate mergers and other activities from his wife, Nina Devlin, a partner at the public relations firm Brunswick Group LLC. According to her lawyer, Ms. Devlin did not realize that information she shared with her husband was being passed on to his confederates. She has not been charged in the case.

Mr. Devlin referred to his wife as the "golden goose" and passed the information on to Mr. Holzer and others as a gift, although in one case Mr. Holzer gave him a small amount of cash, $1,000, as thanks for the insider tips.

A related civil suit filed by the Securities and Exchange Commission said Mr. Devlin used the information to curry "favor with his friends and business associates and received in return cash, luxury items and other benefits."

In all, Mr. Devlin was accused in the criminal complaint of passing on information from his wife on 12 different transactions.

The complaint states that Mr. Holzer proposed a scheme to pay Mr. Devlin for the information by buying and selling stocks on Mr. Devlin's behalf.

At one point in 2008, Mr. Devlin told Mr. Holzer that Mr. Holzer's name had appeared on a Brunswick Group watch list of those whose trading attracted attention.

Mr. Devlin was wearing a wire on Sept. 4. 2008, when he spoke to Mr. Holzer and brought up the watch list, saying, "Remember, and that's why we stopped?"

Mr. Devlin also asked Mr. Holzer whether he had a "back story" if he was ever asked why he bought stock in particular companies.

"Oh yeah, I've got a back story," Mr. Holzer replied. "Oh yeah, I'm not worried about it."

Also pleading guilty in the case on Wednesday was Florida day trader Jamil Bouchareb, who admitted to conspiracy and securities fraud. Mr. Bouchareb will be sentenced Aug. 5. Two others were also charged in the conspiracy in December, Daniel A. Corbin of Miami Beach and Frederick E. Bowers of New York.

Mr. Holzer's defense attorney, Paul Shechtman of Stillman, Friedman & Shechtman, said outside the hearing yesterday that his client's actions were out of character.

"Eric Holzer has had an outstanding career as a young lawyer in which he has always respected client confidences," Mr. Shechtman said. "This was an isolated error in judgment having nothing to do with his law firm or practice."

Under New York law, attorneys convicted of felonies are automatically disbarred.

Lawyer of the Day: Eric Holzer
Friday, December 19, 2008 12:32 PM - By Kashmir Hill

Eric Holzer is was a tax attorney at Paul, Hastings, Janofsky & Walker LLP. But he's been caught up in a $4.8 million insider trading scheme along with a bunch of day traders, a1994 Playboy Playmate; and Lee Corbin, a partner at Kurzman Eisenberg Corbin & Lever LLP, according to the Wall Street Journal (subscription).

(Corbin is being spared the ignominy of Lawyer of the Day, as he is only a "relief defendant" in the case. He is not charged with wrongdoing, but is being sued for ill-gotten gains as he acted on the advice of his son, one of the day traders.)

Sadly, Holzer threw his career away for just a little more than one year of a junior Biglaw associate salary. From the SEC press release( see next article - Editor):

Eric Holzer, age 34, Devlin's friend and a tax associate in the New York City office of an international law firm, traded in at least three of the transactions. Holzer reaped profits of $175,000 in his own accounts and two accounts controlled by his father. Holzer gave Devlin cash, some of which came from shares he had his father buy on Devlin's behalf.

According to The New York Law Journal, the scheme was led by Matt Devlin, a Lehman Brothers rep whose wife was a Brunswick Group partner. He referred to her as a "golden goose" and used information gleaned from her work to advise his friends on investments. When Devlin got caught, he helped bring his friends down.

Apparently this trading went down a few years ago. Based on knowledge from Devlin, Holzer bought stock in three companies anticipating their good news. When their stocks soared, he cashed out making just $175,000. However, this caught the attention of Brunswick, and his name appeared on a watch list of people whose trading looked suspicious. He stopped trading after that, but the law caught up with him... as did Devlin, wearing a wire.

From the New York Law Journal:

Agent Ryan said that in a taped conversation on Sept. 4, in which Mr. Devlin wore a wire, Mr. Devlin brings up the watch list and said to Holzer, "Remember, and that's why we stopped?"

"Yeah?" Holzer replied.

Then Mr. Devlin said he wanted to make sure "you have a backstory if anybody ever comes to you and says why you bought X, Y, Z."

After a brief exchange, Holzer said, "Oh yeah, I've got a backstory. Oh yeah, I'm not worried about it, my heart almost dropped."

Holzer then said, "That was probably over two years ago, right? That was a long time ago."

A spokeswoman for Paul Hastings released a brief statement saying, "We learned today of allegations against an associate of the firm, which have no connection to any firm or client matters. We will cooperate fully with the authorities in any investigation."

A Google search for "Eric Holzer" still brings this up:
Paul Hastings: Professional: Eric A. Holzer: Associate, Tax Department: ericholzer@paulhastings.com. Park Avenue Tower 75 E. 55th Street First Floor New York, NY 10022 ... www.paulhastings.com/professionalDetail.aspx?ProfessionalId=1411 -

But, not surprisingly, Holzer can be counted among Paul Hastings' 2008 layoffs. His page is gone, even the cached version.

Broker Admits Role in Insider Ring (Wall Street Journal (subscription))

Paul Hastings Associate Charged With Insider Trading
Mark Hamblett, NY Law Journal, 12-19-2008

A Paul Hastings associate was among four people charged Thursday in a $4.8 million insider trading scheme involving a former Lehman Brothers representative and his wife, who worked at a public relations firm that had information on impending corporate deals.

Eric A. Holzer, 34, a Paul Hastings tax associate, was allegedly caught on tape discussing the scheme with Matthew C. Devlin, 35, of Lehman Brothers, whose wife, Nina Devlin, is a partner at the public relations firm Brunswick Group LLC.

Mr. Devlin has already pleaded guilty in the case and is cooperating with prosecutors.

The criminal complaint against Holzer was one of three unsealed Thursday in the Southern District of New York charging conspiracy and securities fraud, complaints that allege insider trading on information on 12 impending corporate transactions obtained by Mr. Devlin from Ms. Devlin, who is not charged in the case and is reported by her lawyer to be "devastated" by the revelations.

A companion civil suit filed by the Securities and Exchange Commission in the Southern District details illegal trading on 13 impending transactions that Mr. Devlin learned about from his wife. (See the SEC's press release and complaint.)

Mr. Devlin allegedly referred to his wife as the "golden goose" for the information she provided, information the SEC said he used to curry "favor with his friends and business associates and received in return cash, luxury items and other benefits."

A second lawyer was named as a relief defendant in the SEC suit, Lee H. Corbin of Kurzman Eisenberg Corbin & Lever. A relief defendant is someone who has obtained funds as part of the alleged securities violations by the named defendants "under circumstances in which it is not just, equitable or conscionable for them to retain the illegal profits."

Relief defendants are not charged criminally, but Corbin's son, 32-year-old Daniel A. Corbin of Miami Beach, was charged. A call to Lee Corbin and his firm was not returned.

Daniel Corbin allegedly provided information to his father that he obtained from Mr. Devlin on three corporate acquisitions and one company's stock repurchase.

Also charged in the criminal complaints unsealed Thursday was Jamil A. Bouchareb, 27, of Miami Beach. Daniel Corbin and Bouchareb were described in the complaint as being day traders. Frederick E. Bowers, 40, a Lehman broker, was also charged.

The SEC civil complaint states that the Corbins, Bouchareb, Bouchareb's parents and another defendant in that civil case reaped illegal profits of more than $4.2 million on the information.

Holzer is accused in the criminal complaint of buying shares in three different companies between 2004 and 2005 -- InVision Technologies Inc., Eon Labs and Abgenix Inc.

The trading was done on three accounts, two in Holzer's name and a third in the name of his parents that was maintained for Holzer's benefit.

CRIMINAL COMPLAINT

FBI Special Agent Michael T. Ryan said in the criminal complaint that Holzer purchased stock in three companies and then cashed in on the good news he knew would soon be announced. All told, Agent Ryan said Holzer and his parents made $175,000.

Holzer was accused of proposing a scheme to pay Mr. Devlin for the information by buying and selling stocks on his behalf, and, on at least one occasion, paid him $1,000 in cash from trades.

Mr. Devlin, listed as only Confidential Witness-1 (CW-1) in the criminal complaint, informed Holzer that Holzer's name had appeared on a watch list at Brunswick, a list of people whose trading had attracted attention. At that point, Agent Ryan said, they agreed Holzer would stop receiving inside information.

Agent Ryan said that in a taped conversation on Sept. 4, in which Mr. Devlin wore a wire, Mr. Devlin brings up the watch list and said to Holzer, "Remember, and that's why we stopped?"

"Yeah?" Holzer replied.

Then Mr. Devlin said he wanted to make sure "you have a backstory if anybody ever comes to you and says why you bought X, Y, Z."

After a brief exchange, Holzer said, "Oh yeah, I've got a backstory. Oh yeah, I'm not worried about it, my heart almost dropped."

Holzer then said, "That was probably over two years ago, right? That was a long time ago."

A spokeswoman for Paul Hastings released a brief statement saying, "We learned today of allegations against an associate of the firm, which have no connection to any firm or client matters. We will cooperate fully with the authorities in any investigation."

Ms. Devlin is represented by James Benjamin of Akin Gump Strauss Hauer & Feld.

"Nina Devlin is devoted to her clients and colleagues and has always sought to uphold the highest standards of professionalism in her work," Benjamin said. "She was completely unaware that confidential information about her job was being used as the basis for securities trading. She is devastated by this terrible situation."

Holzer and the three criminal defendants were also named in the SEC suit along with Mr. Devlin, broker-dealer Thomas R. Faulhaber, 44, of New York, broker-dealer Jeffrey R. Glover, 46, of Texas, and Corbin Investment Holdings LLC and Augustus Management LLC.

Bowers made his initial appearance before Southern District Magistrate Judge Gabriel Gorenstein late Thursday. Holzer had yet to appear in court by press time.

The case is being handled by Assistant U.S. Attorneys Joan M. Loughnane and Reed M. Brodsky.

Ex-Lehman Employees Charged in Insider-Trading Case (Bloomberg)

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20831 / December 18, 2008
SEC v. Matthew C. Devlin, Jamil A. Bouchareb, Daniel A. Corbin, Frederick E. Bowers, Thomas R. Faulhaber, Eric A. Holzer, Jeffrey R. Glover, Corbin Investment Holdings, LLC and Augustus Management, defendants, and Maria T. Checa, Lee H. Corbin, LLC and Checa International, Inc., relief defendants, Civil Action No. 08-CV-11001 (S.D.N.Y.) (JGK)
SEC Charges Wall Street Professionals and Others with Widespread Insider Trading

The Securities and Exchange Commission today filed insider trading charges against nine defendants and also named three relief defendants. The Commission's complaint alleges that from at least March 2004 through July 2008, Matthew Devlin, then a registered representative at Lehman Brothers, Inc. ("Lehman") in New York City, traded on and tipped at least four of his clients and friends with inside information about 13 impending corporate transactions. According to the complaint, some of Devlin's clients and friends, three of whom worked in the securities or legal professions, tipped others who also traded in the securities. The complaint alleges that the illicit trading yielded over $4.8 million in profits.

As alleged in the complaint, although many of the defendants had accounts with Lehman, they often attempted to avoid detection by trading in the securities of the target companies in numerous accounts that were not associated with Lehman or Devlin. The complaint alleges that to further conceal their illicit trading, at least two of the defendants sold off some of the shares they had purchased based on inside information prior to public announcements of the deals. In addition, Devlin and one of his tippees arranged to buy shares on Devlin's behalf so Devlin could profit from the nonpublic information but evade scrutiny. When this tippee's name appeared on a watch list, Devlin and the tippee agreed that Devlin would stop providing him inside information.

The complaint alleges that Devlin misappropriated the confidential nonpublic information about the corporate transactions from his wife, a partner in the New York City office of an international public relations firm working on the deals. As alleged in the complaint, because the inside information was valuable, some of the traders referred to Devlin and his wife as the "golden goose." The complaint further alleges that by providing inside information, Devlin curried favor with his friends and business associates and, in return, was rewarded with cash and luxury items, including a Cartier watch, a Barneys New York gift card, a widescreen TV, a Ralph Lauren leather jacket and Porsche driving lessons.

The complaint alleges that, based on the information provided by Devlin, the defendants variously purchased the common stock and/or options of the following public companies: InVision Technologies, Inc.; Eon Labs, Inc.; Mylan, Inc.; Abgenix, Inc.; Aztar Corporation; Veritas, DGC, Inc.; Mercantile Bankshares Corporation; Alcan, Inc.; Ventana Medical Systems, Inc.; Pharmion Corporation; Take-Two Interactive Software, Inc.; Anheuser-Busch, Inc.; and Rohm and Haas Company. At the time that Devlin tipped the other defendants about these companies, each company was confidentially engaged in a significant transaction that involved a merger, tender offer, or stock repurchase.

The Commission's complaint contains the following additional allegations:
Bouchareb Trading Group

* Devlin tipped Jamil Bouchareb, age 27, his friend and client at Lehman about 12 of the deals. Bouchareb, a Miami Beach, Florida-based trader, traded in his own accounts and tipped his friends and business partners. He also caused his parents to trade.

* Bouchareb's tippees include his friend and business partner, Daniel Corbin, age 32, who traded in a number of the deals through accounts in the name of his companies, Augustus Management LLC and Corbin Investment Holdings LLC. Corbin, a Miami-based trader, shared some of the profits he made with Bouchareb. Bouchareb and Corbin also shared an interest in a number of accounts that traded in the deals. In turn, Daniel Corbin, provided the information to his father Lee Corbin, age 66, an attorney based in White Plains, New York. Lee Corbin traded in his personal accounts in four of the deals and owned an interest in the Corbin Investment Holdings account that Daniel used to trade in the deals. Bouchareb and Corbin introduced Devlin to Lee Corbin, who steered Devlin business from some of his trusts and estates clients. Bouchareb also provided the information to his girlfriend, Maria Checa, age 38, who currently resides in Greensboro, North Carolina. Checa traded in her accounts, Checa International, Inc. and Playmate Capital LLC. Bouchareb shared in some of the profits that Checa made. In total, Bouchareb, Daniel Corbin, Lee Corbin, Maria Checa and Bouchareb's parents reaped illegal profits of more than $4.2 million.

Devlin's Other Tippees

* Frederick Bowers, age 40, a registered representative at Lehman and one of Devlin's work partners was tipped on at least three of the transactions. Bowers then tipped Thomas Faulhaber, one of Bowers' clients at Lehman. Faulhaber realized profits of approximately $217,000. Faulhaber kicked back cash to Bowers who shared some of it with Devlin. Devlin received at least $10,000.

* Eric Holzer, age 34, Devlin's friend and a tax associate in the New York City office of an international law firm, traded in at least three of the transactions. Holzer reaped profits of $175,000 in his own accounts and two accounts controlled by his father. Holzer gave Devlin cash, some of which came from shares he had his father buy on Devlin's behalf.

* Jeffrey Glover, age 46, another of Devlin's Lehman clients and an investment adviser, traded in at least five of the deals. Glover, who is a resident of Bellaire, Texas, made approximately $189,000 in illicit profits.

Defendants Devlin, Bouchareb, Daniel Corbin, Bowers, Faulhaber, Holzer, Glover, Corbin Investment Holdings, LLC and Augustus Management, LLC are charged with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5 and 14e-3. The SEC seeks injunctive relief, disgorgement of illicit profits with prejudgment interest, and civil penalties. Defendants Checa, Checa International, Inc. and Lee Corbin are charged as relief defendants and the SEC seeks their trading profits.

The U.S. Attorney's Office for the Southern District of New York filed related criminal charges today against some of the defendants named in the SEC's complaint. The Commission wishes to thank the U.S. Attorney's Office and the Federal Bureau of Investigation for their assistance in connection with this matter. The Commission also thanks FINRA, NYSE Regulation, Inc., the International Securities Exchange and the Options Regulatory Surveillance Authority for their assistance.

SEC Complaint in this matter

Paul Hastings Settles $ 4.5 Million Bankruptcy Legal Malpractice Case
New York Attorney Malpractice Blog

This article from the Daily Report tells us more about a new trend, legal malpractice cases arising and related to bankrupcy filings:

"A federal judge has approved a settlement—apparently totaling $4.25 million—of a lawsuit against Paul, Hastings, Janofsky & Walker.

The suit had alleged that some of the firm's Los Angeles lawyers helped Mobile Billboards of America and its affiliates sell investments in roving billboards that they should have realized were a scam. The plaintiff was a court-appointed receiver for Mobile Billboards, but U.S. District Judge Charles A. Pannell Jr.'s March 7 order approving the settlement makes clear settlement monies will go to those who purchased billboards.

The Securities and Exchange Commission has contended Mobile Billboards was a “Ponzi scheme.” The receiver's suit against the firm alleged that billboard purchasers relied on misrepresentations in the circulars reviewed by the Paul Hastings lawyers.

In court filings, Paul Hastings maintained that its lawyers didn't know at the time Mobile Billboards' promotional materials may have contained false information and had warned the company that it risked SEC problems. Pannell's order declares that the settlement agreement is not an admission of liability by Paul Hastings.

Prior to the March 7 hearing on the settlement, one investor had written a letter to the judge saying the settlement was inadequate. But Pannell's order of the same date shows that no one appeared at the hearing to argue any objection. It also prohibits all purchasers from suing Paul Hastings over Mobile Billboards."

 
© 2003 The E-Accountability Foundation