Kenneth T. Robinson, the middleman in a $32 million insider trading scheme, is scheduled to plead guilty as early as April 11 in federal court in Newark, New Jersey, according to people familiar with the matter.
Robinson was the middleman between attorney Matthew H. Kluger and stock trader Garrett D. Bauer, who were charged this week in Newark in an insider trading scheme spanning 17 years, the people said. Kluger and Bauer were charged in a Federal Bureau of Investigation complaint that referred to Robinson as co-conspirator #1, or CC-1, the people said.
On March 8, agents from the FBI and Internal Revenue Service raided CC-1’s house in Long Beach, New York, and confronted him about suspicious trades in his accounts and “numerous instances of structuring cash into and out of” his bank accounts, according to the FBI complaint.
After that raid, CC-1 began to help the government secretly record conversations with Kluger, who had worked at several prominent law firms, and Bauer, who traded stocks out of his Manhattan home, according to the FBI.
CC-1 primarily worked in the mortgage loan business, according to the FBI complaint. Bauer and Kluger independently formed “long-term, close personal friendships” with CC-1 after separately meeting him through their jobs two decades ago, the FBI said.
Kluger worked with the middleman at a real-estate company in Manhattan in 1991, and he met Bauer after that when they worked at a venture capital firm, Weiss, Peck & Greer, the FBI said.
A call to Robinson’s house wasn’t immediately returned. Rebekah Carmichael, a spokeswoman for U.S. Attorney Paul Fishman, declined to comment.
Kluger, 50, and Bauer, 43, also were accused by the U.S. Securities and Exchange Commission in a civil complaint that referred to the middleman who, according to the people, was Robinson.
Kluger stole non-public data on companies including Sun Microsystems Inc., 3Com Corp. and Acxiom Corp. (ACXM), authorities said. Bauer made more than $30 million on the scheme, the middleman more than $875,000, and Kluger more than $500,000, Fishman said after their arrests on April 6.
The criminal case is U.S. v. Bauer, 11-mj-3536, U.S. District Court, District of New Jersey (Newark). The SEC case is Securities and Exchange Commission v. Kluger and Garrett D. Bauer, 2:11-cv-01936, U.S. District Court, District of New Jersey (Newark).
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