IBM’s Moffat Says Chiesi ‘Played Him’ for Inside Tips

Robert Moffat, the former International Business Machines Corp. executive who pleaded guilty in the Galleon Group LLC insider-trading scheme, said accused tipster Danielle Chiesi “played him” to obtain tips.

Moffat, 54, who pleaded guilty to securities fraud and conspiracy in March, made the claim in court papers seeking leniency when he’s sentenced Sept. 13. Moffat claimed he had an “intimate relationship” with Chiesi, 44, a former executive at New York-based New Castle Funds LLC who was arrested along with Galleon Group co-founder Raj Rajaratnam.

“Ms. Chiesi was not the passive recipient of information from Mr. Moffat,” his lawyers said in the court filing today. “To the contrary, she manipulated or ‘played’ him to obtain information she could use to New Castle’s advantage.”

Moffat, who started at IBM as a junior programmer in 1978, admitted that he leaked Chiesi information about IBM, Lenovo Group Ltd. and Advanced Micro Devices Inc. He said he wasn’t asked to cooperate with prosecutors in the case and hasn’t done so.

Prosecutors yesterday asked U.S. District Judge Deborah Batts to sentence Moffat to six months in prison. Moffat is seeking probation.

Danielle Chiesi

Moffat met Chiesi in 2002 and the two became professional friends, according to the papers filed by Moffat today. Chiesi often told Moffat her ideas about how IBM could best present itself to investors.

Photographer: Peter Foley/Bloomberg

Moffat, who who pleaded guilty to securities fraud and conspiracy in March, is asking for seeking leniency when he’s sentenced Sept. 13. Close

Moffat, who who pleaded guilty to securities fraud and conspiracy in March, is asking... Read More

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Photographer: Peter Foley/Bloomberg

Moffat, who who pleaded guilty to securities fraud and conspiracy in March, is asking for seeking leniency when he’s sentenced Sept. 13.

“Over time, Bob’s relationship with Ms. Chiesi became an intimate one,” according to the filing. “Bob’s personal relationship with Ms. Chiesi unfortunately led him to lose sight of the principles that he had lived by.”

Moffat provided the tips to Chiesi in 2008, violating his duty to IBM to keep the information secret, according to the brief.

Moffat told Batts in a letter pleading for leniency that he made no money from the trades. Today’s filing includes Moffat’s letter and others submitted to the judge on his behalf. The full letters were not released to the public.

“I believe my actions stemmed from misplaced trust, letting ‘my guard down’ and a misguided desire to appear important and knowledgeable to show Ms. Chiesi that I was ‘in the know’ about important matters,” Moffat said in his letter.

‘Pain of Betrayal’

In a separate letter to Batts, Moffat’s wife, Amor Moffat, said she is “able to look beyond the pain of betrayal and stand firmly by his side in support.”

“I do not regret the choices I’ve made in staying with Bob both in support of him as a person, and as a wife who still firmly believes in and loves her husband,” Amor Moffat wrote.

Moffat said the stress of the case has exacerbated his wife’s multiple sclerosis. He said he has been ostracized by former friends and colleagues at IBM and lost $65 million in benefits he probably would have received had he stayed at the company.

The case is U.S. v. Moffat, 10-CR-270, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in federal court in New York at rvanvoris@bloomberg.net.

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