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In SDNY SEC Ties MobileEye Insider Trading to Jet Flight to NY While Defendants Ask Judge Berman for Summary Judgment

By Matthew Russell Lee

SDNY COURTHOUSE, March 28 – An insider trading action by the SEC was under heavy fire on March 28 in the U.S. District Court for the Southern District of New York courtroom of Judge Richard M. Berman. The SEC had in 2017 grand alleged that "Ariel Darvasi and Amir Waldman were in possession of material nonpublic information about the impending acquisition when they purchased Mobileye securities" just prior to its acquisition by Intel. But on March 28 the defendants' lawyers, moving for summary judgment, mocked the arguments. They said Waldman was "not a direct insider;" they said suspicious trades are not enough, mere contact with an insider is not enough. The SEC lawyer responded with tales of MobileEye's founders private jet flight to New York to nail down the Intel deal. Much of the argument came down to whether a response by Waldman during deposition, that he had been aware of the trip - "yes" - before the words, for the merger, were said, should go to a jury. The defendants insisted on their video. There was no other media in the court room but Inner City Press, still without its electronics. So what of general deterrence? What of transparency? In the SDNY there is no comprehensive calendar, and for now the Press that seeks to report on as much as possible is still restrained. We'll have more on this. Back on March 20 in a lawsuit brought by Sony the correct meaning of natural evolution, Darwinistic or as term of art, was debated for an hour before SDNY Judge Jed S. Rakoff. Sony's lawyer began by pointing out the executives who traveled from Tokyo and London for this argument, at which there was only one media present: Inner City Press. Judge Rakoff began by criticizing the pro hace vice lawyers for defendant EVS Codec Technologies, LLC for ignoring the local rules and not saying undisputed or disputed with citatation for each paragraph in Sony's motion to dismiss. But Sony didn't provide citations either and on balance EVS Codec gave as good as it got. Did the covenant not to sue which only covered upgrades, enhancements and natural evolutions carry over to new codec (audio to 0/1 digital) technology? It was EVS which better explained the differences between AMR to EVS, as Judge Rakoff returned several times to an analogy between the evolution, natural or otherwise, from the Model T to the Cadillac. Judge Rakoff said he will issue a "who will win" ruling in a week, with something longer to follow, in this case 1:18-cv-09518-JSR, Sony Mobile Communications Inc. v. EVS Codec Technologies, LLC. It's a big money case, but there was no other media covering it. It is hard to know, in the SDNY courthouse, what is going on; it is harder still to cover it with laptop and, yes, smart phone taken at the metal detectors. Is the entire courthouse, at least publicly, only about Trump? The beat goes on, between Bronx murders and attempts to seize the Colombian FARC rebels' condos and bank accounts with BB&T. Across Pearl Street earlier on March 20, plaintiffs pursuing assets of the Revolutionary Armed Forces of Colombia or FARC before SDNY Judge Andrew L. Carter named the banks involved, including not only Citigroup, Safra and UBS but also BB&T, which is applying to the US Federal Reserve to buy Suntrust. The plaintiffs' lawyers described the bank accounts, condominia in the Four Seasons and luxury ships of 100 and 200 feet. Some are being pursued in Florida but also in New York. Judge Carter wanted to know the difference between the two actions. Raymond James, the financial institution, appeared to be the only answer. But on the kingpins and other banks, we'll have more. Back on March 6 in the SDNY a union official who pled guilty to insider trading last August was sentenced by Judge Alison Nathan to three month of imprisonment, apparently to be served in a half-way house in the Philadelphia area. While Judge Nathan said she'd read somewhen that Jhonatan Zoquier might go back to work for the union in an administrative position. But he says he's working construction for his uncle. He traded on inside information for a year, 17 times, with 9 trades profitable. He information was provided by Daniel Rivas, then of Bank of America. The government's sentencing submission said "they had known each other since childhood and lived together in New York as young adults. Rivas has repeatedly referred to Zoquier as his best friend. Zoquier refers to Rivas in his submission as “like a brother to him.” (Def. Let. at 12.) In March 2016, Zoquier began trading on Inside Information offered to him by Rivas, after Zoquier expressed the desire for additional money, including for his upcoming wedding. Zoquier ultimately traded in at least seventeen stocks based on information from Rivas, profitably so in nine stocks. Zoquier earned profits of more than $30,000 from his trading, between March 2016 and April 2017." Zoquier's lawyer told Judge Nathan, no one is watching this case to be deterred. But Inner City Press was there watching. And afterward it was wondered if the 90 days will take longer, if they will be served only on the weekends. Earlier on March 6 a man who was in the passenger's seat of a jeep in The Bronx with kilos of heroin and 14 kilos of cocaine was sentenced to 51 months imprisonment on by SDNY Judge P. Kevin Castel. His name was Edmundo Aispuro and as Judge Castel told it, he was not the mastermind. He apologized to his son Max, aged six, who was in the courtroom; his lawyer asked that he serve his time in Oregon near his family. Castel wondered pointedly what Aispuro has thought about the families who'd be destroyed by all these drugs, moved around in a suitcase on wheels. He advised Aispuro to, as Rilke puts it, change his life. Back on February 15 when Gustavo Salvador pled guilty to selling oxycodon in The Bronx before SDNY Judge Paul A. Engelmayer, his two lawyers tried to argue for a suspended remand based on the cold in the MDC Brooklyn. Judge Engelmayer turned them down saying he had personal knowledge that the heat was back on; not surprising. Surprising, though, was that a Bronx oxy dealer was represented by the white shoe Goodwin Proctor lawfirm. Was it pro bono? Their representation goes back at least until Thanksgiving, before the MDC Brooklyn conditions became public. In the audience, a young child then a baby cried. The volume of oxy pills was in the thousands, according to the indictment. The sentencing guidelines run from 57 to 71 months. Judge Engelmayer said he said something else on his schedule coming up, should the sentencing be rescheduled? It went forward. Goodwin Proctor. Later on February 15: on East 104th Street in Manhattan last April 24, multiple gunshots to the chest killed 17-year old Samuel Ozuna. A week later, 24-year old Gary Turner was arrested and charged. When Turner on February 15 changed his plea to guilty in the U.S. District Court for the Southern District of New York, Azuna's family members sat on one side of the courtroom. On the other, separted by security officers, were supporters of Turner. In the back, the only media in the room, was Inner City Press.

  SDNY Judge Jesse M. Furman asked Turner the extent of his schooling - 9th grade - and then to explain in his own words what he had done. Turner read a statement full of legal terms of art ("I shot him, resulting in his death") and a woman on Ozuna started to cry. Judge Furman told Turner to speak directly in the the microphone, and slower. Turner said he did the shooting to protect drug territory. The crying on Ozuna's side got louder.

   Judge Furman explained that the plea agreement meant that Turner was waiving his right to appeal any sentence less than 405 months, that is, 33 years. (Turner had faced the death penalty). There was some discussion of whether Turner's allocution was sufficient, since he refused to say he had committed the murder to improve or maintain his position in an organization. These crews are looser, his lawyer said. Judge Furman agreed, and the proceeding was adjourned.

The marshals asked those on Turner's side of the courtroom to leave first. As they did, and Turner was led out in shackles, from Ozuna's side a women screamed, "You piece of sh*t!" This did not make it into the U.S. Attorney's Office press release. There was more crying, and on the way down some said the gun could have been pointed the other way. But this is what happened.

As if in on a different planet but in the same city and courthouse, art gallery owner Mary Boone after pleading guilty to tax fraud was sentenced on February 14 to 30 months in prison to be followed by a year of supervised release with 180 hours of community service. 

Judge Alvin K. Hellerstein of the U.S. District Court for the Southern District of New York said that tax fraud is a crime that can and must be deterred. His sentence provided for 90 hours of community service with the non-profit Free Arts NYC or one like it, and 90 hours of service to New York City Board of Education beginning, he said, in June 2021.

Unlike two recent Judge Hellerstein sentencees, Norman Seabrook and Murray Huberfeld, Boone through her lawyer Robert S. Fink did not announce an appeal and ask for bail pending appeal. On Worth Street outside the SDNY courthouse, Inner City Press asked Boone what she thought of the community service requirement. She did not answer, swarmed by photographers as she awaited the white luxury car she drove off in.  Periscope video here.

  Her tax fraud involved mis-characterizing as deductible business expenses such things as Louis Vuitton and Hermes charges of nearly $20,000, beauty salon bills of $24,380, and $15,000 in jewelry. Fink said this came from mental problems, feeling like the world was ending. He emphasized that Boone has been dropped by Chase Bank and the Century Club and even by her therapist, who felt that reporting on her from the pre-sentencing report made other clients doubt she could keep their confidences.   Judge Hellerstein told Fink he personally fought to keep such PSRs confidential but that other judges who prioritized transparency won out. He emerged after hearing Boone's written statement which pleaded to be kept out to jail to continue her work with his sentence, including the community service. Fink requested the Women's Camp in Danbury, Connecticut. Boone is to turn herself in, on May 15 before 2 pm. Whether as some surmise there will be a whistleblower payment is not known...


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