A New York mortgage broker admitted Monday he was the middle man in an insider-trading scheme authorities say netted more than $30 million in profits over five years.
Kenneth Robinson pleaded guilty in federal court in Newark. Authorities say he conspired with a former lawyer and a former stock trader who were arrested last week.
Lawyer Matthew Kluger, of Oakton, Va., is accused of stealing information on upcoming company mergers from his law firm and passing it to Robinson, of Long Beach, N.Y. Stock trader Garrett Bauer, of New York, is accused of then buying shares for the other two.
During one telephone conversation secretly recorded by Robinson, Bauer discussed burning $175,000 in cash he had handled so authorities couldn't link him to the scheme through his fingerprints, prosecutors say.
"I would burn it in a fire," Bauer says.
It's unknown whether the money was destroyed.
Robinson, 45, faces a maximum penalty of five years in prison for conspiracy to commit securities fraud and up to 20 years on each of two counts of securities fraud.
Kluger and Bauer have not entered pleas. On Monday, Bauer was released on a $4 million bond backed by $2 million in cash provided by his family. He didn't speak during the brief hearing in U.S. District Court in Newark.
Bauer, 43, will be confined via electronic monitoring to his apartment on the Upper East Side of Manhattan, prosecutors said.
Kluger, 50, was arrested last week in Virginia and is being transferred to New Jersey. He and Bauer face multiple counts of insider trading and obstruction and single counts of conspiracy and money laundering.
Assistant U.S. Attorney Matthew Beck said the government seized $290,000 from several bank accounts registered to Bauer, plus about $20 million in two trading accounts and $23,000 taken during a search of his New York apartment.
The U.S. attorney's office raised its estimate Monday of the scheme's illicit gains from $32 million to $34 million.