By Andrew Longstreth
NEW YORK (Reuters) - A lawyer caught up in the government's massive insider trading investigation was sentenced to three years in prison on Friday after pleading guilty to participating in a scheme to trade on corporate secrets from a prominent law firm.
The lawyer, Jason Goldfarb, was among the roughly 50 people who have been charged in a wide-ranging probe focused on insider trading at hedge funds. He pleaded guilty to conspiracy and securities fraud charges in April
The sentence Goldfarb received was slightly less than the 37 to 46 months called for by the federal sentencing guidelines and sought by federal prosecutors. But it was a much steeper sentence than sought by Goldfarb's lawyer, who requested no prison time.
Prosecutors alleged that Goldfarb, 33, received inside information about mergers and acquisitions involving public companies from two lawyers at the well-known law firm Ropes & Gray. Goldfarb passed the information on to a stock trader in exchange for $32,500 in cash bribes, according to prosecutors.
The two Ropes & Gray attorneys, Arthur Cutillo and Brien Santarlas, have previously pleaded guilty. Cutillo was sentenced to 30 months in June. The stock trader, Zvi Goffer, was convicted at trial along with two others in June.
U.S. District Judge Richard Sullivan in Manhattan imposed Goldfarb's sentence in front of a packed courthouse following a three-hour hearing that featured emotional pleas for leniency from Goldfarb's clients, colleagues, friends and family, including his fiancee, mother, and father.
Many of them said that Goldfarb's participation in the scheme was motivated by his desire to financially help his father, whose business was failing, and his mother, who was diagnosed with cancer.
Michael Soshnick, a lawyer for Goldfarb, said that all of the $32,500 he made from the scheme went to his parents.
"My client was not motivated by greed but by need," said Soshnick.
Richard Tarlowe, a federal prosecutor, told Sullivan that the picture of Goldfarb acting out of desperation was "very hard to reconcile from the picture that emerges from the evidence, most specifically, the wiretaps, the phone calls."
Tarlowe was referring to recorded phone calls that investigators collected during their investigation. At one point, Sullivan requested that one of the tapes be played in which Goldfarb is discussing with Goffer the potential profits they could make from the scheme.
"Every one of us should be set for life within a year or two if things are played right," said Goldfarb.
Sullivan said the evidence showed that Goldfarb was one of the leaders of a "sophisticated scheme that was designed to steal privileged information, confidential information from its clients to be used by hedge fund managers and traders."
He said the crime of insider trading was serious and had to be treated seriously.
"It seriously and significantly undermines confidence in our financial markets," he said.
The case is USA v Goffer et al, U.S. District Court for the Southern District of New York, No.10-056.
(Reporting by Andrew Longstreth)