Acceleration

Goodwin Procter Founders Went to Harvard. Goodwin are also White Collar Crime Defenders. This Article Explains the Synergy.

Mathew Matoma graduated from Stanford Business School – presumably omitting his Harvard Law expulsion from his application – and wound up at SAC Capital.

LIT COMMENTARY

In this article from 2014 David Lat of Above the Law discusses a very public case where a former Harvard Grad was jailed for one of the largest insider dealing trades on Wall St. Goodwin defended him but he lost and according to the dealbreaker article below, he’s stuck inside for 4 more years as of 2019, which was earmarked, according to Wikipedia, as a potential early release date.

Prior to Martoma’s release he tried to have his conviction overturned which failed and the US Supreme Court petition was denied.

We bring up this old article to remind y’all that Goodwins’ founders both went to Harvard.

The Mathew Martoma lesson to learn here is that Goodwin, like Martoma, are prepared to go ‘above and beyond’ – be it white collar crimes defense or breaching lawyers ethical rules of professional conduct. However, Goodwins’ Greed has not been jail, it’s been protection by the courts and bars due to the size of their entity and who owns an interest in this corrupt law firm / Wall Street run entity with offices in Germany and a landlord in Boston who is none other than Deutsche Bank.

Harvard Law Students Are The Best — At Making Up Fake Transcripts

Jan 13, 2014 | LIT Republished; June 14, 2020

It’s Harvard Law School’s world, and the rest of us are just living in it.

1999: ARLO DEVLIN-BROWN writes that you never know where you’ll run into a classmate. He is prosecuting MATHEW MARTOMA (née Ajai Mathew Thomas) on insider trading charges in Lower Manhattan.

Devlin-Brown has asked U.S. District Judge Paul Gardephe  for permission to talk about Matt’s expulsion from Harvard for doctoring his transcript, so get ready for fireworks! The trial is expected to last several weeks, so for anyone who missed WILLIAM PULLMAN and Lisa Frank’s Christmas Eve nuptials, it would be a great opportunity for a mini-reunion!

That is Bess Levin’s imagined entry for the next edition of Harvard Law School alumni news, offered over at our sister site Dealbreaker. It’s based on a New York Times piece marveling at the many HLS folks involved in this major insider trading trial (which also include Martoma’s lawyer, Richard Strassberg of Goodwin Procter, and Lorin Reisner, chief of the criminal division of the U.S. Attorney’s Office).

A takeaway from the Martoma matter: HLS students are the best! At forgery and fraud, that is.

Years before he allegedly cheated on Wall Street, Mathew Martoma, then known as “Ajai Mathew Thomas,” cheated at Harvard Law School by fabricating his transcript when applying for clerkships. It was a sophisticated effort that fooled multiple jurists. Which D.C. Circuit judges came thisclose to hiring him as a law clerk?

The gory details appear in the government’s motion in limine, which seeks to admit evidence about Martoma’s faking of his HLS grades under this theory:

The prosecution argues in court papers that Mr. Martoma’s deception is relevant to show that he has the technical knowledge to alter computer files. That could be relevant, prosecutors say, if Mr. Martoma’s lawyers seek to argue he never received a copy of a confidential report that discussed problems with a clinical trial for an experimental Alzheimer’s drug being developed by Elan and Wyeth [the companies whose stock Martoma allegedly traded based on inside information].

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And here is what Mathew Martoma — known back then as Ajai Mathew Thomas, before he changed his name — reportedly did while at HLS, according to Harvard’s Administrative Board (which handles disciplinary matters for the university):

One B+, one A-, and four As — those are some very strong grades (back when HLS had a standard A-based grading system). No wonder Martoma scored interviews with three members of the Most Holy D.C. Circuit — Judge Douglas H. Ginsburg, Judge A. Raymond Randolph, and Judge David B. Sentelle — as well as an offer that Martoma ended up not accepting. (I wonder which judge made the offer.)

Why didn’t Martoma end up taking the offer? It seems that his self-inflated grades got discovered by that point, as set forth in the Ad Board findings:

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I do wonder how the clerk detected that Martoma’s transcript was off. Was there an inconsistency between a grade and a recommendation? Should Martoma have gotten a Sears Prize with such grades, making his not having such a prize — the names are publicly announced — suspicious? (I don’t know if one B+ back then would have killed Sears Prize chances; HLS tipsters, feel free to enlighten me.)

The rest, as they say, is history. Martoma got busted for what Bess Levin rightly calls his “dazzling array of lies,” unsuccessfully tried to defend himself before the Ad Board, and got expelled from Harvard Law School.

Our hero then changed his name (from “Ajai Mathew Thomas” to “Mathew Martoma”), graduated from Stanford Business School (presumably omitting his HLS expulsion from his application), and wound up at SAC Capital, Steve Cohen’s super-successful — but super-indicted — hedge fund. While at SAC Capital, Martoma earned a $9 million bonus, in connection with the Elan/Wyeth trades he’s now on trial for.

A guy who can’t graduate from Harvard Law winds up making a $9 million bonus while still in his thirties. This is why lawyers, even HLS grads, feel envy towards Wall Street people.

Until those same HLS grads, like prosecutor (and college debate star) Arlo Devlin-Brown, send those Wall Street people to prison. Revenge of the nerds, indeed.

(Flip to the next page to read the complete government motion in limine in United States v. Martoma. The juicy factual material begins on page 13 of the PDF.)

Mathew Martoma’s Insider Trading Conviction Is Upheld

Aug. 23, 2017 | LIT Republished; June 14, 2020

A federal appeals panel upheld on Wednesday the insider trading conviction of Mathew Martoma, a former portfolio manager for Steven A. Cohen, in what prosecutors once called the most lucrative insider trading scheme of all time.

Lawyers for Mr. Martoma, who is serving a nine-year prison sentence, had argued, in light of a recent ruling by the Supreme Court, that the jury in the trial had not been properly instructed and that the evidence the government presented was not sufficient to support a conviction.

But in a 2-1 decision, the panel of the United States Court of Appeals for the Second Circuit found that “the district court’s jury instruction was not obviously erroneous.” It added that the government had “presented overwhelming evidence that at least one tipper had received a financial benefit from providing confidential information to Martoma,” a reference to a standard for proving insider trading.

The dissenting opinion, by Judge Rosemary S. Pooler, may set the stage for Mr. Martoma’s lawyers to ask for the entire appellate court to consider the appeal. The other two judges on the panel were Robert A. Katzmann and Denny Chin.

Richard Strassberg, Mr. Martoma’s lawyer, did not respond to requests for comment.

Joon H. Kim, the acting United States attorney in Manhattan, said in a statement that his office, which brought case, was “gratified by the Second Circuit’s affirmation of Mathew Martoma’s conviction” and that “the strength of our securities markets rests on their integrity and fairness.”

In considering the appeal of Mr. Martoma’s 2014 conviction, the appeals court tackled a contentious question in white-collar law: What do prosecutors have to prove to secure an insider trading conviction that hinges on confidential tips?

Late last year, the Supreme Court, in Salman v. United States, upheld an insider trading conviction, finding that the government did not have to prove a tangible benefit was given when one brother tipped another about coming deals.

That left some question as to whether prosecutors in New York would need to prove a meaningful close relationship between the tipper and the recipient of material, nonpublic information in cases involving people who were not relatives.

A debate over what it means to receive a benefit has gone on since another decision by the Second Circuit court in 2014, United States v. Newman. The case brought to the fore the issue of how much authority prosecutors have to apply a “gift test” to any situation in which the insider and the recipient of nonpublic information are not related or close.

Mr. Martoma’s lawyers had argued that the Supreme Court ruling in the Salman case applied only to insider trading cases involving close family members or personal friends.

But the three-judge panel said on Wednesday that after the Salman ruling, the requirement in the Newman case that prosecutors must show the tipper and recipient of inside information had a “meaningfully close personal relationship” among other things was no longer valid. The panel noted it was rare to take issue with a precedent set by another appellate panel but said that was necessary in the wake of the Salman ruling.

”We respectfully conclude that Salman fundamentally altered the analysis underlying Newman’s ‘meaningfully close personal relationship’ requirement such that the ‘meaningfully close personal relationship’ requirement is no longer good law,” a majority said in the Martoma case.

The panel noted that a doctor with whom Mr. Martoma had cultivated a friendship to receive confidential information about a drug trial received a substantial financial benefit in exchange, $1,000 a meeting. The court also said that another doctor and insider with whom Mr. Martoma met received about $1,500 for an information session.

With the Martoma decision, it is unclear how much of the ruling in Newman still stands given how the Salman decision and now this case have diminished it.

Richard J. Holwell, a former federal judge who has a legal practice, said the decision by the appeals panel “totally undercuts what is left of the Newman decision.”

“Now we’re saying, it’s not just providing a gift of inside info to a friend or relative that is illegal but it is providing a gift of info to anybody knowing they are going to trade that is illegal,” Mr. Holwell said, adding, “It is a very substantial broadening of insider trading laws.”

When it was issued in December 2014, the Newman decision disrupted a crackdown on insider trading by hedge funds.

The convictions of two hedge fund managers, Todd Newman and Anthony Chiasson, were thrown out as a result. The court found that the two men, who were at the bottom of a chain of information that was exchanged, were nothing more than casual acquaintances with some sources of information, making it hard to prove that the inside information had been a gift.

After the Newman decision, Preet Bharara, then the United States attorney in Manhattan, was forced to vacate guilty pleas and indictments against about a dozen hedge fund traders or analysts charged with insider trading.

In her dissent, Ms. Pooler argued that the Supreme Court’s definition of a personal benefit limited the liability of people like stock analysts and even reporters for passing on information to others who might later trade on it.

The appellate panel’s ruling on Wednesday, she said, expanded the government’s theory of gift, in effect stripping away any limiting principle of liability and allowing juries and prosecutors to “seize on this vagueness and subjectivity.”

The Martoma case was among the most prominent prosecutions brought by Mr. Bharara’s office. The appeal had been pending for nearly two years.

Mr. Martoma, the son of immigrants from India, was convicted on charges that he used confidential information related to a clinical trial for an experimental Alzheimer’s drug to make stock trades that reaped $275 million.

His four-week trial in 2014 riveted Wall Street and was the first time that Mr. Cohen, a wildly successful hedge fund manager, was linked to questionable trades at his firm, SAC Capital Advisors.

It was the last case in a nearly decade-long investigation of Mr. Cohen’s Stamford, Conn., hedge fund, which prosecutors called a “veritable magnet for market cheaters.” The firm pleaded guilty to insider trading violations and paid a $1.2 billion penalty in 2013.

A representative for Mr. Cohen declined to comment.

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Mathew Martoma Isn’t Getting Out Of Jail

In trying, though, he did get the definition of insider-trading broadened again. So there’s that.

JAN 14, 2019 ORIGINAL:AUG 24, 2017 | LIT Republished; June 14, 2020

The wheels of justice turn slowly. Too slowly, it turns out, for Mathew Martoma. Like others thrown in prison by Preet Bharara, the former SAC Capital Advisors analyst thought he was in the clear when the Second Circuit Court of Appeals—the very same federal court that would hear his own appeal—ruled that Preet Bharara’s interpretation of insider-trading was perhaps a tad broad, and that one couldn’t really insider-trade in the absence of a “meaningfully close personal relationship.” And after all, could a $1,000 an hour consulting arrangement really qualify as a “meaningfully close personal relationship”? Martoma and his lawyers didn’t think so.

Unfortunately for Martoma, he and his lawyers took a long time coming up with losing arguments for why he shouldn’t spend so much time in jail, but not long enough for the Newman decision to come down before he was actually in jail. Still, his lawyers actually made it to the Second Circuit to make the case that there is no such thing as insider trading anymore, but then while it was taking its time to consider those arguments, the Supreme Court stepped in and redefined insider-trading itself. So the Second Circuit said Martoma had to come up with some new arguments. Unfortunately, Martoma’s lawyers didn’t know that the Second Circuit had decided the Supreme Court decision in Salman meant that Newmandidn’t count anymore.

”We respectfully conclude that Salman fundamentally altered the analysis underlying Newman’s ‘meaningfully close personal relationship’ requirement such that the ‘meaningfully close personal relationship’ requirement is no longer good law,” a majority said in the Martoma case….

“Now we’re saying, it’s not just providing a gift of inside info to a friend or relative that is illegal but it is providing a gift of info to anybody knowing they are going to trade that is illegal,” Mr. Holwell said, adding, “It is a very substantial broadening of insider trading laws.”

So it’s not just bad news for Matt; it’s bad news for everybody. (Assuming this latest interpretation of the latest interpretation of what is and isn’t insider-trading holds up for more than a few months.) And that includes Steve Cohen, who still has to explain to skeptical foreigners why they should trust him when the guy who orchestrated the most lucrative insider-trading scheme in history under his roof is in prison for another four years.

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