Bloomberg News

Clay Capital’s Turner Gets Year in Prison in Insider Case

April 16, 2012

James F. Turner II, chief investment officer of the hedge fund Clay Capital Management LLC, was sentenced to one year in prison for insider trading that prosecutors said made more than $2.5 million.

Turner, 45, was sentenced today in federal court in Newark, New Jersey, where he admitted Dec. 19 that he illegally traded in shares of Autodesk Inc. (ADSK:US), Moldflow Corp (MFLO:US). and Salesforce.com Inc. (CRM:US), U.S. Attorney Paul Fishman said in a statement. U.S. District Judge Dennis Cavanaugh also imposed a $25,000 fine.

Clay Capital ran the Clay Fund from 2007 to 2010, the U.S. Securities and Exchange Commission said in a parallel civil suit. Turner admitted he got tips from Scott Vollmar, his brother-in-law and a director of business development at Autodesk, and from Scott Robarge, a college friend and manager at Salesforce.com.

Turner, of Traverse City, Michigan, pleaded guilty to one count of securities fraud. He faced as many as 20 years in prison. Joseph Bush, his attorney, didn’t immediately return a call seeking comment.

Vollmar, of Florence, Oregon, and Robarge, of Louisville, Colorado, pleaded guilty to conspiracy to commit securities fraud. They are to be sentenced May 14. Turner, Vollmar and Robarge were sued Aug. 31 by the SEC over the scheme.

Turner and three partners founded Clay Capital as a hedge fund in June 2006 to use the “investment prowess” of Turner, according to the SEC. He had worked as a securities analyst and portfolio manager for two financial services companies and a hedge fund, the agency said.

Assets Liquidated

While the investments of Turner and his partners remain in the Clay Fund, its other assets were liquidated and distributed in December 2010, the SEC said.

Turner admitted that from January 2008 to May 2008, Vollmar gave him confidential information about Autodesk’s interest in acquiring Moldflow. Turner bought $2.3 million in shares of Moldflow for Clay Capital and $3.5 million for himself and family members, he admitted.

After Autodesk, a software company in San Rafael, California, announced on May 1, 2008, that it was buying Moldflow, Turner sold all of the shares. He made $650,000 in illegal profits for Clay Capital and $1.1 million for his family, the government said.

Turner separately generated $590,000 in illicit profits by betting that Autodesk shares would fall after its earnings announcement and lowered its earnings forecast on Feb. 26, 2008, he admitted. Vollmar previously tipped him that the company would have trouble meeting its earnings targets.

Turner also reaped $224,000 in illicit profits after Robarge tipped him that Salesforce.com, a software company in San Francisco, would exceed the earnings estimates of analysts for the quarter ended Jan. 31, 2008, according to court documents.

The case is U.S. v. Turner, 2:11-cr-00868, U.S. District Court, District of New Jersey (Newark).

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.

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


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Companies Mentioned

  • ADSK
    (Autodesk Inc)
    • $61.35 USD
    • 0.32
    • 0.52%
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