(Updates with judge’s comment in third paragraph.)
Feb. 22 (Bloomberg) -- John Kinnucan, founder of Broadband Research LLC, was ordered released from jail, a day after he was indicted for passing tips to hedge fund clients about SanDisk Corp, OmniVision Technologies Inc. and other companies.
Kinnucan, who was arrested last week, appeared in federal court in Portland, Oregon, today where U.S. District Judge Janice Stewart ordered him released at a detention hearing that was held over from Feb. 17.
“Keep your mouth shut,” Stewart told Kinnucan, after prosecutors cited what they said were threatening voice-mail messages he left for agents of the Federal Bureau of Investigation and an assistant U.S. attorney.
Kinnucan, a so-called expert networker, is accused in a securities-fraud and conspiracy indictment of helping pass inside tips from employees of public companies to his clients at two hedge funds in a scheme that ran from 2008 to 2010. Federal prosecutors in New York, where the case is pending, didn’t identify the funds.
Kinnucan, 54, has denied receiving illegal tips and insisted the information he gave clients was publicly available. In October 2010 he publicly said that he refused a request by FBI agents to wear a wire and inform on his fund manager clients.
Kinnucan had been held in U.S. custody since his Feb. 16 arrest at his Portland home. Prosecutors said he poses a danger to the community, citing the voice-mail messages.
On Dec. 6, prosecutors said Kinnucan left a voice mail for an unnamed prosecutor: “Remember me? The guy who you tried to destroy, you scummy piece of s--t.” Kinnucan added, according to prosecutors, “Ah, too bad Hitler’s not around. He’d know what to do with scum like you.”
In court today, Kinnucan said his comments, while “mean spirited and wrong,” weren’t “intended to convey threats.”
“I have never been a violent person,” he told the judge.
Stewart rejected a request from Assistant U.S. Attorney Christopher LaVigne that the case be postponed until a judge in New York may rule on Kinnucan’s request to be released. Stewart didn’t require Kinnucan to post a bond.
Kinnucan will be required to wear an electronic monitor, remain employed and not speak to prosecutors or FBI agents on the case, Stewart said. He won’t be permitted to consume drugs or alcohol or keep alcohol in his house, Stewart said, adding that she didn’t think he would flee.
Kinnucan will appear in Manhattan federal court on March 8.
Donald Barnetson, a former executive at Milpitas, California-based SanDisk, pleaded guilty in New York on Feb. 17 and said he conspired with Kinnucan to leak inside information about his company. Prosecutors said other insiders who worked with Kinnucan included employees at Flextronics International Ltd., F5 Networks Inc. and SanDisk.
The case is U.S. v. Kinnucan, 12-cv-163, U.S District Court, Southern District of New York (Manhattan).
--With assistance from Patricia Hurtado and Bob Van Voris in New York. Editors: Mary Romano, Glenn Holdcraft
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