Cooperation cited as NY Lehman broker skips prison
Mar 23, 2012, 11:21 PM
Associated Press
NEW YORK (AP) – A former Lehman Brothers broker who shared secrets about pending mergers he learned from his wife’s work at a public relations firm dodged prison time Friday by helping prosecutors build an insider trading case that led to the convictions of four others after several people including a former Playboy model and two lawyers made millions of dollars.
U.S. District Judge William Pauley cited the extraordinary cooperation by 38-year-old Matthew Devlin when he said prison time was unnecessary and placed him on probation for three years. But he still spoke harshly of the crime, which was described in court as earning more than $2 million in profits for friends of Devlin who learned tips about deals handled by the high-powered firm where his wife worked. Authorities say the crimes were part of an insider trading ring that garnered nearly $5 million in illegal profits.
The judge told Devlin he was “motivated by a desire for something more even when you had it all.”
Devlin pleaded guilty to four counts of conspiracy to commit securities fraud and one count of securities fraud. Without cooperation, federal sentencing guidelines would have called for a sentence of three to four years in prison.
The judge said the crimes “go to the heart of the financial system, the strength of which this nation depends upon.” He ordered Devlin to pay a $10,000 fine. Devlin already has forfeited the $23,000 he earned for himself through his tips.
The judge noted that Devlin was a rising star at Lehman Brothers, earning much more money than most Americans, when he took secrets from March 2004 through July 2008 about more than a dozen pending mergers and acquisitions from his wife, Nina Devlin, a partner at Brunswick Group LLC, an international public relations firm.
“There would have been no crime here if Mr. Devlin hadn’t started the ball rolling down the hill because he was the source of the inside information,” the judge said, calling the crimes “tragic and senseless.”
Devlin, sobbing as he spoke, called his crimes “reckless, selfish and inexcusable.”
“I’m a different man today,” he said.
Devlin added that he would spend each day of his life trying to rebuild relationships with his family, friends and colleagues, “some of whom will never speak with me again.”
His lawyer, Joan Loughnane, had urged leniency, saying he had sacrificed his career, reputation and trust with his wife, leaving him “completely humbled.”
Assistant U.S. Attorney Reed Brodsky said Devlin began cooperating within a day of being approached by FBI agents. He said Devlin secretly taped conversations with his friends, enabling the government to successfully prosecute four others, including two men it might never otherwise have learned about.
Those Devlin tipped included a business partner and a Miami Beach, Fla., trader, both of whom were his friends. Prosecutors said the business partner and the trader made more than $3 million in illegal profits. The trader was sentenced to 2 1/2 years in prison for his role while the business partner got six months.
Authorities say the trader shared some of his gains and tips with his girlfriend, a former Playboy playmate.
Authorities said the business partner and Devlin in January 2006 exchanged instant messages in which they so treasured the information Devlin took from his wife that they began referring to him and his wife as the “golden goose.”
Devlin’s wife was in court Friday, and the judge noted that she and the rest of Devlin’s family have remained supportive.
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