Bloomberg News

Ex-SAC Manager Longueuil Sentenced to 30 Months in Prison

July 29, 2011

(Updates with judge’s comment in fifth paragraph.)

July 29 (Bloomberg) -- Former SAC Capital Advisors LP portfolio manager Donald Longueuil was sentenced to 30 months in prison for his role in an insider trading scheme that the U.S. says includes fund managers, so-called expert networking consultants and technology company insiders.

“I made mistakes,” Longueuil told U.S. District Judge Jed Rakoff before he was sentenced in New York. “I crossed the line. I broke the law.”

Longueuil, 35, pleaded guilty April 28 to a four-year conspiracy to commit securities and wire fraud and to securities fraud in a case that also included former SAC portfolio manager Noah Freeman, Samir Barai, founder of Barai Capital Management, and Jason Pflaum, an analyst who worked for Barai.

Prosecutors said Longueuil, Barai and Freeman were friends who pooled their illegal tips about technology companies in order to get a trading edge, while Pflaum assisted Barai in the scheme. All four men have pleaded guilty to federal charges. Freeman and Pflaum are cooperating with the government in its investigation while Longueuil and Barai aren’t cooperating.

“There is a bedrock of hard facts that can’t be ignored,” Rakoff said before sentencing Longueuil. “The crime was, in the court’s view, not a one-time aberration. The crime was one that has infiltrated too much of the business of this country.”

Destroyed Computers

Longueuil admitted that after reading a newspaper article about a federal probe of Mountain View, California-based Primary Global Research LLC, he went to his office and took pliers to two drives on his computer, destroying them. Prosecutors said he walked 20 blocks and dumped the parts in four different garbage trucks.

Rakoff cited Longueuil’s acts as “a flagrant flouting of the most elementary rule of law and morality.”

One of the sources the three men used for inside information, Winifred Jiau, a former consultant at Primary Global, an expert-networking firm, was convicted in June after a trial in New York.

Longueuil, who worked in SAC Capital’s CR Intrinsic unit in New York from July 2008 to July 2010, was accused of giving information to Freeman. Freemen in return passed material non- public information to Longueuil that he had obtained from other sources including Jiau, according to prosecutors.

As part of the conspiracy, which prosecutors said ran from 2006 to 2010, Longueuil and his co-defendants conspired to obtain inside information about companies including Marvell Technology Group Ltd., Fairchild Semiconductor International Inc., Advanced Micro Devices Inc., Actel Corp. and Cypress Semiconductor Corp., the U.S. said.

‘Tainted’ Life

“I want to counsel others before they cross the line like I did,” Longueuil told the judge today. “I have one life to live and I forever tainted it. I take full responsibility for my mistakes and I am dedicated to rebuilding my reputation.”

Assistant U.S. Attorneys David Leibowitz and Avi Weitzman told Rakoff today that the defendant deserved a term of as long as four years and eight months. They said such a term was necessary “to deter Wall St. professionals like Longueuil from engaging in similar offenses.”

Craig Carpenito, Longueuil’s lawyer, suggested to Rakoff that an 18-month term would be appropriate, calling his client “at best a third-tier tippee” and said Longueuil hadn’t made any profit from inside information he received on Marvell Technology Group Ltd.

Dedicated Effort

Weitzman told Rakoff that Longueuil’s crimes “were no momentary lapse in judgment in an otherwise law-abiding life.”

“This was a long-term, repeated and dedicated effort on the part of Mr. Longueuil, Noah Freeman and Samir Barai to obtain inside information,” Weitzman said.

Carpenito said his client has already been punished as a result of having pleaded guilty and the publicity surrounding the case.

“Living in the Google-age, Internet searches will always identify him first and foremost as an ‘insider trader,’ a convicted felon, and associate him with greed, selfishness and criminality,” Carpenito wrote in court papers.

Longueuil has also agreed to forfeit more than $1.25 million in profits from the scheme. The judge didn’t impose any fines.

SAC Capital, based in Stamford, Connecticut, has said it cooperated with the investigation. Jonathan Gasthalter, a spokesman for SAC Capital, has said Freeman and Longueuil were both dismissed from SAC in 2010 because of poor performance.

Concealed Evidence

Of the 14 people charged by Manhattan U.S. Attorney Preet Bharara’s office since November in the investigation, 12 have pleaded guilty and one, Jiau, was convicted at trial. James Fleishman, a Primary Global sales executive, has pleaded not guilty and is scheduled to go on trial Aug. 29.

“Donald Longueuil thought he could cover his tracks by frantically searching the streets of New York in the middle of the night for places to conceal the evidence of his crimes,” Bharara said in a statement. “It turns out he may have been too smart for his own good, as he now becomes the latest privileged professional to go to jail for brazenly breaking the laws against insider trading.”

The case is U.S. v. Longueuil, 11-cr-00161, U.S. District Court, Southern District of New York (Manhattan).

--Editors: Mary Romano, Andrew Dunn

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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