Lawyer charged in insider scheme freed on bail

AP News
Posted: Apr 15, 2011 2:22 PM
Lawyer charged in insider scheme freed on bail

A judge granted bail Friday to a Virginia man accused of providing confidential information from several law firms for what authorities say was a $37 million insider trading scheme.

Matthew Kluger was to be released on $1 million bond, secured by $500,000 in cash from his parents, who live in California. He must follow home detention rules set when he returns to his home in Oakton, Va.

Kluger, 50, faces multiple insider trading, money laundering and obstruction counts and is facing at least 15 years in prison if convicted, Assistant U.S. Attorney Judith Germano told U.S. Magistrate Mark Falk.

Kluger didn't speak or enter a plea during his court appearance Friday. His attorney, Alan Zegas, said his client had made no indication that he planned to plead guilty. Falk agreed to allow Kluger some latitude under his home confinement so that he can care for his three children.

Kluger is alleged to have used his positions at several prominent law firms beginning in the mid-1990s to pass inside information on upcoming mergers and acquisitions to a middleman. The middleman, mortgage broker Kenneth Robinson of Long Beach, N.Y., pleaded guilty this week to his role in the scheme.

After the FBI and IRS searched Robinson's home in early March, Robinson secretly recorded phone calls with Kluger and co-defendant Garrett Bauer for the government. In one call excerpted in the criminal complaint, Kluger tries to dissuade Robinson from giving information to investigators and tells him, "It's going to kill them, but they don't have enough," referring to a supposed lack of evidence against them.

Bauer, of New York, whom authorities say made stock trades for the three men based on the information Kluger passed through Robinson, was released on bail this week. He faces charges similar to Kluger's.

The criminal complaint alleges that between 2005 and 2011, Kluger used his position at the Washington, D.C., office of Wilson Sonsini Goodrich & Rosati to help the trio reap millions on about a dozen mergers and acquisitions, including more than $11 million on Oracle's acquisition of Sun Microsystems in 2009.