Bloomberg News

Expert Networker John Kinnucan’s Release Delayed by Judge

February 24, 2012

(Updates with details of request in third paragraph.)

Feb. 23 (Bloomberg) -- A Manhattan federal judge delayed the release from jail of John Kinnucan, the founder of Broadband Research LLC who was indicted for insider trading, just hours after an Oregon judge ordered him freed.

U.S. District Judge Deborah Batts in Manhattan yesterday ordered Kinnucan detained until she reviews an order from U.S. District Judge Janice Stewart in Portland, Oregon, releasing Kinnucan. Batts will hold a hearing this afternoon.

Manhattan federal prosecutors, who won an indictment of Kinnucan on Feb. 21, asked Batts to delay Kinnucan’s release after losing yesterday’s bail argument in Portland. Kinnucan, a Portland resident who was arrested there last week, is accused of passing tips to hedge fund clients about SanDisk Corp., OmniVision Technologies Inc. and other companies. The charges are pending in Manhattan, where Kinnucan will appear on March 8.

“The defendant is ordered detained, until such time as this court has an opportunity to review” Stewart’s order, Batts wrote yesterday in a one-page ruling.

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. Prosecutors 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.

‘Mean Spirited’

Kinnucan has been held in U.S. custody since his Feb. 16 arrest. Prosecutors said he poses a danger to the community, citing threatening voice-mail messages they said that he left with a prosecutor, a witness and agents of the Federal Bureau of Investigation.

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 yesterday, 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 yesterday turned down a request by prosecutors that she delay her ruling until a New York judge may consider the case. She didn’t require Kinnucan to post a bond.

Conditions

Stewart required that Kinnucan wear an electronic monitor, remain employed and not speak to prosecutors or FBI agents on the case. He is not to be permitted to consume drugs or alcohol or keep alcohol in his house, she said, adding that she didn’t think he would flee.

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 Bob Van Voris in New York. Editors: Stephen Farr, Andrew Dunn

To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net; 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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