Several of the cases I’ve featured in my posts over the last year have had significant developments or come to a close. It’s always interesting—and moderately depressing—to see how things turned out.
When an FBI Agent Is the Bad Guy
First up we have Robert Lustyik, a former FBI special agent. I wrote about him last October.
Mr. Lustyik participated in the Bureau’s counterintelligence operations until his retirement in 2012. Shortly after he left, however, Mr. Lustyik was charged in a federal indictment for passing confidential prosecutorial information to his former business partner, Michael Taylor. In October 2014, Mr. Lustyik pleaded guilty to those charges in Utah district court. He is set to be sentenced March 30.
His troubles did not end there, however. Mr. Lustyik is due to be sentenced on April 30 on another indictment in a New York federal court. In 2012, the government alleged that Mr. Lustyik solicited money from one of his co-defendants in return for confidential documents concerning an FBI investigation of an unnamed resident of Bangladesh.
In December 2014, Mr. Lustyik pleaded guilty to all five counts included in the indictment, including conspiracy to engage in a bribery scheme and conspiracy to commit fraud. You can read more at the DOJ’s website.
Why Is It So Hard to Defend Against Insider Trading Charges? Qualcomm Employees Face SEC and Criminal Charges
In May 2014, I wrote about three Qualcomm employees who were facing insider trading charges. Derek Cohen, Michel Fleischli, and Robert Herman were all named as defendants in a SEC complaint for insider trading in connection with the Qualcomm acquisition of Atheros Communications Inc. In addition, the U.S. Attorney’s Office also named Mr. Cohen and Mr. Herman in a criminal indictment for insider trading.
The last time we saw them, they faced the difficult prospect of building an insider trading defense against the accusations of “suspiciously timed” trades and phone calls.
Mr. Herman and Mr. Fleischli have now both reached settlements with the SEC. Mr. Fleischli entered into a deferred prosecution agreement with the SEC in exchange for his cooperation, a $3,000 penalty, and his promise not to trade on the stock market. Mr. Herman, followed suit and has agreed to pay the SEC more than $60,000 in disgorgement at fines.
Mr. Herman also took a plea in his criminal case. Though he initially entered a plea of not guilty, Mr. Herman changed his mind in August of last year. He pleaded guilty to insider trading and will be sentenced in the San Diego federal court on November 21, 2015. Mr. Cohen is the only criminal defendant who has stuck to his guns and maintained his not guilty plea.
Was There a Fox in the Henhouse? Corporate Auditor At Public Company Charged with Insider Trading
I wrote about Steven Dombrowski in February 2014. He was indicted for insider trading. The U.S. Attorney’s Office and the SEC initiated parallel proceedings in early 2014 against him for a number of trades he made while serving as the former Director of Corporate Audit for Allscripts Healthcare Solutions Inc.
Mr. Dombrowski, true to form as a Corporate Audit Director, chose to minimize his risks. Instead of going through a trial, he entered into a plea agreement with the government. In December 2014, Mr. Dombrowski entered a guilty plea to only one of the sixteen counts against him and now faces a maximum sentence of 20 years in prison and a maximum fine of $5 million. It seems highly unlikely that he will get anywhere close to the 20 year max.
Is This the First Domino to Fall in FCPA Case? French Citizen Pleads Guilty to Obstruction in Foreign Bribery Case
Finally, there has been an update in the case against Frédéric Cilins, a French citizen and businessman who pleaded guilty to obstructing a federal criminal investigation. I wrote about him way back in March 2014.
Mr. Cilins worked in the nation of Guinea between 2006 and 2010 and allegedly had contacts with the natural resource conglomerate, Benny Steinmetz Group Resources (BSGR). In March 2014, Mr. Cilins pleaded guilty to bribing a government witness to leave the country during an FCPA investigation into BSGR operations in Guinea.
Mr. Cilins has since been sentenced to 24 months in prison. SDNY Judge William H. Pauley III handed down the sentence. The DOJ press release has more information.