A former executive at expert- networking firm Primary Global Research LLC, James Fleishman, was found guilty of helping pass confidential information to fund managers as part of an insider-trading scheme. Fleishman, of Santa Clara, California, was found guilty yesterday by a Manhattan federal jury of conspiracy to commit securities fraud and conspiracy to commit wire fraud. The jury deliberated for about six hours before reaching a verdict. U.S. District Judge Jed Rakoff set sentencing for Dec. 21. Until then, Fleishman, who faces as long as 25 years in prison, remains free on bond. He and his lawyer, Ethan Balogh, declined to comment as they left the courthouse. “We had enough evidence to find the defendant guilty of both counts,” said jury foreman Ben Stein, who works in the information-technology sector of a financial-services business. “It was not easy, but we had lots of evidence.” Since November, 15 people have been charged by federal prosecutors in the office of Manhattan U.S. Attorney Preet Bharara in a probe of expert networkers and hedge fund managers. Twelve have pleaded guilty, including Noah Freeman, a former portfolio manager with SAC Capital Advisors LP, and Samir Barai, the founder of Barai Capital Management LP. Fleishman, 42, was the second to go to trial. Winifred Jiau, a former Primary Global consultant who was convicted at trial in June of securities fraud and conspiracy, is scheduled to be sentenced today in Manhattan federal court. Prosecutors said Fleishman obtained and passed confidential data from technology company employees who were moonlighting as consultants for Mountain View, California-based Primary Global. The secret tips were given to fund managers who paid Primary Global for consultation calls, prosecutors said. The case is U.S. v. Nguyen, 11-cr-32, U.S. District Court, Southern District of New York (Manhattan). Lawsuits/Pretrial Full Tilt Paid Board With Players’ $440 Million, U.S. Says Full Tilt Poker paid board members more than $440 million using funds it had told its online poker players would be available to them for withdrawal at any time, U.S. prosecutors said. Manhattan U.S. Attorney Preet Bharara’s office yesterday asked U.S. District Judge Leonard B. Sand for permission to add the new allegations to a civil forfeiture case first filed against Full Tilt, PokerStars, Absolute Poker and other businesses in April. “Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and public alike about the safety and security of the money deposited with the company,” Bharara said in statement. The forfeiture action parallels criminal charges also brought by Bharara against the poker companies and 11 people, alleging bank fraud, money laundering and illegal gambling. Prosecutors said that after the U.S. enacted a law in 2006 barring banks from processing payments to offshore gambling websites, Full Tilt, PokerStars

1. News:
**BLOOMBERG

2. Primary Global, Full Tilt Poker,
BP, BofA in Court News
A former executive at expert- networking
firm Primary Global Research LLC, James
Fleishman, was found guilty of helping pass
confidential information to fund managers as part
of an insider-trading scheme. Fleishman, of Santa
Clara, California, was found guilty yesterday by a
Manhattan federal jury of conspiracy to commit
securities fraud and conspiracy to commit wire
fraud. The jury deliberated for about six hours
before reaching a verdict. U.S. District Judge Jed
Rakoff set sentencing for Dec. 21. Until
then, Fleishman, who faces as long as 25 years in
prison, remains free on bond. He and his
lawyer, Ethan Balogh, declined to comment as

3. the courthouse. “We had enough evidence to find
the defendant guilty of both counts,” said jury
foreman Ben Stein, who works in the information-
technology sector of a financial-services business.
“It was not easy, but we had lots of evidence.” Since
November, 15 people have been charged by federal
prosecutors in the office of Manhattan U.S.
Attorney Preet Bharara in a probe of expert
networkers and hedge fund managers. Twelve have
pleaded guilty, including Noah Freeman, a former
portfolio manager with SAC Capital Advisors
LP, and Samir Barai, the founder of Barai Capital
Management LP. Fleishman, 42, was the second to
go to trial. Winifred Jiau, a former Primary Global
consultant who was convicted at trial in June of
securities fraud and conspiracy, is scheduled to be
sentenced today in Manhattan federal court.

4. Prosecutors said Fleishman obtained and passed
confidential data from technology company
employees who were moonlighting as consultants
for Mountain View, California-based Primary
Global. The secret tips were given to fund
managers who paid Primary Global for
consultation calls, prosecutors said. The case is
U.S. v. Nguyen, 11-cr-32, U.S. District Court,
Southern District of New York (Manhattan).
 Lawsuits/Pretrial
Full Tilt Paid Board With Players’ $440
Million, U.S. Says Full Tilt Poker paid board
members more than $440 million using funds it
had told its online poker players would be
available to them for withdrawal at any time, U.S.
prosecutors said.

5. Manhattan U.S. Attorney Preet Bharara’s office
yesterday asked U.S. District Judge Leonard B.
Sand for permission to add the new allegations to a
civil forfeiture case first filed against Full
Tilt, PokerStars, Absolute Poker and other
businesses in April. “Full Tilt insiders lined their
own pockets with funds picked from the pockets of
their most loyal customers while blithely lying to
both players and public alike about the safety and
security of the money deposited with the
company,” Bharara said in statement. The
forfeiture action parallels criminal charges also
brought by Bharara against the poker companies
and 11 people, alleging bank fraud, money
laundering and illegal gambling. Prosecutors said
that after the U.S. enacted a law in 2006 barring
banks from processing payments to offshore

6. gambling websites, Full Tilt, PokerStars and Absolute
Poker worked around the ban to continue operating in
the U.S. Ireland-based Full Tilt, Absolute Poker of
Costa Rica and PokerStars, based on the Isle of Man,
were the leading online poker sites doing business
with U.S. customers. Bharara’s office said in
yesterday’s filing that Full Tilt management’s payment
processing had so degraded by last year that it was
crediting website players with money never collected
from their accounts. L. Barrett Boss, an attorney for
Full Tilt, didn’t immediately reply to telephone and e-
mail messages seeking comment on prosecutors’
filing. The civil forfeiture case is U.S. v. PokerStars,
11-cv- 2564, U.S. District Court, Southern District of
New York (Manhattan). The criminal case is U.S. v.
Tzvetkoff, 10-cr-336, U.S. District Court, Southern
District of New York (Manhattan).

7. News Corp. (NWS) Said to Get Letter
From U.S. in Bribery Probe
News Corp. (NWSA) was sent a letter by U.S.
prosecutors investigating foreign bribery,
requesting information on alleged payments
employees made to U.K. police for tips, according
to a person with knowledge of the matter. The letter
is part of an effort by the U.S. Justice Department
to determine whether News Corp. violated the
Foreign Corrupt Practices Act, or FCPA, according
to the person, who declined to be identified
because the matter isn’t public. News Corp. fell 1.7
percent on the news. The inquiry advances an
existing U.S. probe that is reviewing claims that
victims of the Sept. 11, 2001, attacks had their
phones hacked by News Corp. employees.

8. The letter doesn’t carry the same legal force as a
grand jury subpoena, which would compel a response
under law. Earlier this year, it was revealed that
reporters at New York-based News Corp.’s News of
the World had hacked the voicemail accounts of
celebrities and a young girl who had been kidnapped
and murdered. Investigators subsequently began
looking into allegations that the tabloid’s staffers
made payments to police officers in return for
confidential information. The FCPA, enacted in 1977,
makes it a crime for U.S. businesses or their
employees to pay off representatives of a foreign
government in an attempt to gain a commercial
advantage. Federal prosecutors have broad discretion
to interpret the law and its definition of who qualifies
as a government official. In July, News Corp.
retained attorney Mark Mendelsohn of Paul Weiss

9. Rifkind & Garrison LLP, according to the Wall
Street Journal, which is owned by News Corp. Prior
to joining the law firm, Mendelsohn had overseen
the Justice Department’s FCPA investigations.
Suzanne Halpin, a spokeswoman for News Corp.,
didn’t immediately return calls seeking comment on
the letter. Last week, she declined to comment on the
probe. Jerika Richardson, a spokeswoman for
Manhattan U.S. Attorney Preet Bharara, whose
office initiated the FCPA investigation, declined to
comment.
 BP Says It Didn’t Hide Information About Gulf
Well Blowout
Plc (BP) said it didn’t hide information about a
possibly dangerous condition in the Macondo oil
well before or after it blew out in April 2010,

10. killing 11 people and triggering the biggest U.S.
offshore oil spill. BP personnel determined that a
sand layer above the blast site was water-bearing
rather than a gas-containing “hydrocarbon zone” and
provided supporting data to its well partners before
the blowout, according to a court filing yesterday.
BP investigators reported publicly after the
explosion that this may have been gas-containing
sand, while determining it wasn’t a cause of the
incident, the company said in the filing. A
Halliburton Co. (HAL) unit that provided cementing
services for the well asked a federal court in New
Orleans Sept. 1 to allow it to add a claim of fraud in
its lawsuit against BP over the spill, contending
concealment of the hydrocarbon zone. Halliburton
shouldn’t be allowed to add the new claim, BP said
in its filing. “There is no evidence that BP held the

11. pre-incident belief that the sand was hydrocarbon-
bearing, or that it had any intent to conceal,” the
company said in the filing. BP distributed
information about the shallower sand within days
after the incident, the company said. “Had BP
disclosed the higher hydrocarbon zone in April
2010, Halliburton would not have pumped the
cement program unless and until changes were
made to the cement program, changes that likely
would have required BP to redesign the production
casing,” Tara Mullee Agard, a spokeswoman for
Houston-based Halliburton, said yesterday by e-
mail. The Macondo blowout and spill led to
hundreds of lawsuits against London-based BP and
its partners and contractors. The lawsuits over
economic losses and personal injuries have been
combined before U.S. District Judge Carl Barbier

12. in New Orleans. The federal case is In re Oil Spill by
the Oil Rig Deepwater Horizon in the Gulf of
Mexico on April 20, 2010, MDL- 2179, U.S.
District Court, Eastern District of Louisiana (New
Orleans).
 Verizon Must Face Claims Over Idearc
Spinoff, Judge Rules
Verizon Communications Inc. (VZ) must face
claims in a lawsuit accusing it of defrauding
creditors of Idearc Inc. when it spun off the
directory business in 2006, a judge ruled. U.S.
District Judge A. Joe Fish in Dallas denied
Verizon’s request to dismiss claims that the
telecommunications company intended to “hinder,
delay or defraud” creditors and that it aided and
abetted breach of fiduciary duty, according to a
decision filed Sept. 19. “These detailed and

13. particularized allegations show that Verizon had a
motive and opportunity to commit the alleged
actual fraudulent transfers, and they permit the
court to draw a reasonable inference of Verizon’s
intent,” Fish wrote. As a result of the spinoff,
Verizon received $9.5 billion in assets from Idearc
and Idearc was left insolvent, U.S. Bank NA, the
trustee for a litigation trust for creditors, said in a
lawsuit last year. Idearc filed for bankruptcy in
2009. Robert Varettoni, a Verizon spokesman,
declined to comment. The case is U.S. Bank
National Association v. Verizon Communications
Inc., 10-01842, U.S. District Court, Northern
District of Texas (Dallas).

14. Verdicts/Settlements
Gryphon’s Marsh Gets Eight Years in Prison
in Stock-Tip Case
Kenneth Marsh, the “ringleader” behind the
Gryphon Holdings Inc. boiler-room operation on
New York’s Staten Island, was sentenced to eight
years in prison for his role in defrauding almost
5,500 people out of $20 million. Marsh, 44, the
last of the 18 Gryphon defendants to learn his
prison term, was sentenced yesterday by U.S.
District Judge Jack Weinstein in Brooklyn, New
York. He pleaded guilty in April to one count of
securities fraud, admitting he misled investors into
paying for phony stock tips. “The victims were
heard and they told heart-wrenching stories,”
Weinstein said. Gryphon charged clients as little as

15. $99 and as much as $250,000 for access to its
investment recommendations, according to a
related civil lawsuit by the U.S. Securities and
Exchange Commission. The other 17 defendants in
the scheme, including members of its sales force,
all pleaded guilty and got sentences ranging from
three to 25 months. Marsh personally made $1.9
million through Gryphon, according to the SEC
complaint. . “The court endeavored mightily to
balance all of the factors and came up with a fair
and just sentence,” Alan S. Futerfas, one of Marsh’s
lawyers, said after the hearing yesterday. Futerfas
said he would have to discuss with Marsh whether
to appeal the sentence. Marsh, a former stockbroker
who had been barred from the securities industry,
used the fictitious names Michael Warren and Ken
Maseka to pose as two investment advisers with

16. experience working at Goldman Sachs Group Inc.
(GS) and Lehman Brothers Holdings Inc. Seven
former salesmen and Marsh’s ex-wife, Nicole
Marsh, who ran Gryphon with him, cooperated with
prosecutors, according to the government. Nicole
Marsh, 32, was sentenced to three months in prison on
Sept. 14. The criminal case is U.S. v. Marsh, 10-cr-
00480, and the SEC case is SEC v. Gryphon Holdings
Inc., 10-cv-01742, U.S. District Court Eastern District
of New York (Brooklyn).
 Wins Bid to Force Teva to Honor Hepatitis-
Case Accord
Baxter International Inc. won a bid to force Teva
Pharmaceutical Industries Ltd. (TEVA) to pay costs of
defending Nevada lawsuits alleging that the
drugmakers’ sales of the anesthetic propofol led to
patients developing hepatitis.

17. An arbitration panel properly found that Teva was
bound by an agreement to cover all liability tied to
claims that tainted vials of propofol caused
colonoscopy patients to develop
hepatitis, Delaware Chancery Court Judge Travis
Laster concluded. A Las Vegas jury last year
ordered Teva and Baxter to pay more than $500
million in damages to a Las Vegas school principal
on one such claim. The arbitration finding “is valid
and enforceable,” Laster said in a Sept. 15 ruling.
The accord requires Petach Tikva, Israel-based
Teva to reimburse Baxter for “all
claims, damages, liability or losses” from the
cases, the judge said. The indemnity agreement is
among the evidence a Las Vegas jury is hearing in
the trial of three more cases alleging Teva and
Baxter officials sold propofol in oversized vials that
encouraged medical personnel

18. to reuse the containers for multiple patients. Las
Vegas residents contend they got hepatitis C from
the tainted vials. Denise Bradley, a U.S.-based
spokeswoman for Teva, declined to comment on
the judge’s ruling. Deborah Spak, a spokeswoman
for Deerfield, Illinois-based Baxter, didn’t
immediately return a call for comment on the
decision. The Delaware case is Baxter International
Inc. (BAX) v. Teva Pharmaceuticals USA Inc.,
6819, Delaware Chancery Court (Wilmington.) The
Nevada case is Sacks v. Endoscopy Center of
Southern Nevada LLC, 08A572315, District Court
for Clark County, Nevada (Las Vegas).
• IBM Offers to Settle EU Antitrust Probe,
Second Case Closed
International Business Machines Corp. (IBM)
offered to resolve a European Union investigation

19. into claims the company blocked competition
from rival providers of maintenance services for
mainframe computers. The European
Commission, the Brussels-based EU antitrust
regulator, yesterday asked for comments on IBM’s
commitments to ensure the availability of spare
parts and technical data. The commission also
closed a separate probe over IBM’s mainframe
computers after three competitors dropped
complaints. The commission in 2010 opened
investigations into Armonk, New York-based IBM
over possible conduct that may have blocked
competitors in mainframe software and
maintenance contracts by restricting access to parts.
While IBM has shifted its focus away from
hardware toward its more profitable software and
services businesses, the mainframe operations have
high gross margins and help pull in revenue for

20. pragmatic approach and determined that these
commitments do not constitute a significant issue for
them and that it’s preferable to get a settlement and
put this probe behind them instead of fighting till the
end,” Christian Riis-Madsen, an antitrust partner in
Brussels at law firm O’Melveny & Myers LLP, said
by telephone. The company said in an e-mailed
statement that it “welcomes” the commission’s
decision “to close the investigation of IBM’s
mainframe and associated intellectual property
rights.” The company said it also looked forward to
providing the basis for the final resolution of the
probe into maintenance practices.
 Yukos Wins Partial Victory Over Russia in
European Court
A European court handed a partial victory to
former managers of Yukos Oil Co.,

21. ruling that Russia had violated the company’s
rights while rejecting a political motivation behind
tax claims that led to its bankruptcy. Russia
infringed on the company’s property rights with
penalties imposed concerning the 2000-2001 tax
assessments and left Yukos inadequate time to
prepare a case, precluding a fair trial, the European
Court of Human Rights said. “The crux of Yukos’s
case was essentially the speed with which it was
required to pay and the speed with which the
auction had been carried out,” the Strasbourg,
France-based court said in a statement on its
website yesterday. Yukos’s main assets, now owned
by state-run OAO Rosneft, were seized and
auctioned off by the government in 2004 to settle
more than $30 billion of tax claims. Yukos owner
Mikhail Khodorkovsky, who is in prison serving 13

22. years for crimes including tax evasion and fraud,
maintains the charges were fabricated because he
opposed then-President Vladimir Putin. Putin, now
prime minister, has denied any involvement in the
case. The court said it wasn’t prepared to decide on
a demand for compensation in excess of $100
billion by Russia’s once-largest oil producer. The
same court awarded Khodorkovsky almost 25,000
euros ($34,200) in May, saying he was held in
“inhuman and degrading conditions.” “For
Khodorkovsky, to see the European Court of
Human Rights rule that the case against his
company was lawless with human rights violated
on several counts was certainly a victory, if a
partial one,” said Masha Lipman, an analyst at the
Carnegie Moscow Center research group. Yukos
failed to prove the tax case against it was politically

23. motivated, the court said. The May 31 ruling on
Khodorkovsky’s complaint had also dismissed
claims that his arrest on fraud charges was
politically driven, saying the accusations
required incontestable proof. “The ultimate
resolution on the damages is yet to come and I
think ultimately that that will be resolved in
favor of Yukos stakeholders,” Bruce Misamore,
former chief financial officer of Yukos, said on a
webcast press conference yesterday. The court’s
decision was a compromise, according to
Carnegie’s Lipman. The case is: OAO
Neftyanaya kompaniya YUKOS v. Russia,
14902/04, European Court of Human Rights.

24.  Boston Scientific Wins Dismissal of Suit Over
Sales Group
Sept. 19 that the complaint failed to state a
“cognizable” claim for securities fraud. “Rather
than suggesting an intent to deceive investors, the
facts contained in the complaint exhibit the
defendants engaging in a good faith process to
inform themselves and the public of the risks,”
Woodlock said in a 41-page opinion. Boston
Scientific failed to promptly disclose its decision to
fire some sales representatives after an internal
audit uncovered ethical violations in dealings with
physicians, according to the complaint, filed on
behalf of investors who bought the stock from Oct.
20, 2009, to Feb. 10, 2010. The company, based in
Natick, Massachusetts, disclosed the terminations
in February 2010 after many of the sales personnel

25. were hired by competitor St. Jude Medical Inc.,
court papers showed. Boston Scientific reported in
April 2010 that the disciplinary actions would
result in about $300 million in losses. The company
made the disclosures in a “reasonable time,”
Woodlock said in his ruling. Jonathan Shapiro, an
attorney for one of the plaintiffs, Steelworkers
Pension Trust, didn’t return a phone call seeking
comment on the ruling. The case is In re Boston
Scientific Corp. Securities Litigation, 10-10593,
U.S. District Court, District of Massachusetts
(Boston).
 Former CSK Auto CFO Watson Sentenced to
Two Years in Prison
The former chief financial officer of CSK Auto
Corp. was sentenced to two years in prison for his
role in a scheme to manipulate the

26. company’s earnings and double-bill
customers, federal prosecutors said. Don W.
Watson, 55, of Gilbert, Arizona, was also ordered
Sept. 19 to serve three years of supervised release
and to pay restitution in an amount to be set by the
court at a later date, according to a U.S. Justice
Department statement. Edward Novak, Watson’s
attorney, didn’t respond to a message seeking
comment about the sentencing. O’Reilly Automotive
Inc. (ORLY) this month agreed to pay $20.9 million
to resolve a Justice Department probe of a scheme to
manipulate earnings and double bill at CSK Auto
before O’Reilly bought it in 2008. The investigation
has produced guilty pleas from three former CSK
Auto employees, including Watson, the department
said. The case is U.S. v. Fraser, 09-cr-00372, U.S.
District Court, District of Arizona (Phoenix).

27.  Litigation Departments
SEC Ex-Counsel Referred to Justice Dept. Over
Madoff Work
The U.S. Justice Department should consider whether
a former Securities and Exchange Commission
general counsel violated criminal law by working
on policy related to Bernard Madoff’s fraud when
he had a financial interest in the outcome, the
SEC’s internal watchdog said. In a 119-page report
sent to Capitol Hill yesterday, SEC inspector
general H. David Kotz said he is referring the
conflict-of-interest allegations against David
Becker to prosecutors after receiving guidance
from the U.S. Office of Government Ethics. He
also urged the SEC to overhaul its procedures for
providing ethics advice to agency officials. Becker,
who inherited profits from the Madoff fraud,

28. “participated personally and substantially in
particular matters in which he had a personal
financial interest,” Kotz wrote. The issues Becker
worked on “could have directly impacted his
financial position,” Kotz said in the report. Kotz
opened his probe in March after Becker and his
brothers were sued by the court-appointed trustee
in the Madoff bankruptcy case to recover $1.5
million in what he termed fictitious profits. When
he joined the agency in 2009, Becker told
Chairman Mary Schapiro and William Lenox, then
the agency’s ethics counsel, about his family’s
Madoff investment. Lenox told Becker in May
2009 that he didn’t have a financial conflict of
interest and could work on the policy. A phone call
to William Baker III, Becker’s attorney at Latham
& Watkins LLP, wasn’t immediately returned.