Strauss-Kahn, Insider Trading, Abbott Labs in Court News

Former International Monetary Fund chief Dominique Strauss-Kahn’s sexual-assault case was thrown out by a Manhattan judge after his accuser was found to have lied about events surrounding the alleged attack.

New York State Supreme Court Justice Michael Obus yesterday granted District Attorney Cyrus Vance Jr.’s request to dismiss the indictment. Obus earlier rejected the accuser’s bid for a special prosecutor in the case and an appeals court yesterday refused to reverse that decision.

The dismissal came about three months after Strauss-Kahn, once a potential French presidential candidate, was pulled off a flight at John F. Kennedy International Airport on May 14 and arrested for allegedly attempting to rape a hotel maid.

The experience has been “a nightmare for me and my family,” Strauss-Kahn, 62, said in a statement after Obus ruled. “We are obviously gratified that the district attorney agreed with my lawyers that this case had to be dismissed. We appreciate his professionalism and that of the people who were involved in that decision.”

The accuser, Nafissatou Diallo, told police that Strauss- Kahn attacked her when she went to clean his suite at the Sofitel in midtown Manhattan. During an investigation, Diallo, 33, admitted to lying about the circumstances of the incident and other matters. Prosecutors said those lies made it impossible to pursue the case. Kenneth Thompson, a lawyer for Diallo, accused Vance yesterday of abandoning his client.

Obus didn’t say when Strauss-Kahn will be able to return to France, where investigators are probing allegations that he tried to rape French writer Tristane Banon eight years ago, a claim he has denied. He will also have to defend a civil suit Diallo filed in New York state court seeking unspecified damages.

The criminal case is People v. Strauss-Kahn, 11-02526, New York State Supreme Court (New York County); the civil case is Diallo v. Strauss-Kahn, 11-307065, New York State Supreme Court (Bronx County).

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Lawsuit News

Primary Global CEO ‘Co-Conspirator’ in Scheme, U.S. Alleges

Unni Narayanan, the chief executive officer of Primary Global Research LLC, an expert networking firm, was a “co- conspirator” in an insider-trading scheme, prosecutors claimed in court papers.

The government’s allegation was made public yesterday in a filing by a defense attorney for James Fleishman, a former Primary Global sales manager facing an Aug. 29 insider-trading trial in Manhattan federal court. The defense lawyer, Ethan Balogh, attached a July 15 letter from prosecutors that listed the “identity of co-conspirators” as Narayanan, Chief Operating Officer Phani Saripella and other Primary Global employees.

The government identified the individuals in response to a defense request for the names of people allegedly involved in the insider scheme.

Primary Global, based in Mountain View, California, is at the center of a nationwide probe of insider trading at hedge funds, technology companies, banks and consulting firms.

The firm connects investors with employees of public companies who purportedly provide them with insight into specific markets.

Winifred Jiau, a consultant for Primary Global, was convicted of leaking insider information in June.

Neither Narayanan nor Saripella has been criminally charged with wrongdoing. Dan Charnas, a spokesman for Primary Global, declined to comment. Reached at his home in California, Narayanan also declined to comment, as did Ellen Davis, a spokeswoman for U.S. Attorney Preet Bharara in New York.

Prosecutors say Fleishman, of Santa Clara, California, helped pass leaks from Primary Global’s consultants to the firm’s clients.

The defense filing by Balogh also includes an Aug. 15 letter from prosecutors that names four other Primary Global consultants as co-conspirators who allegedly leaked inside information about sales numbers, shipment forecasts and profit margins.

They are employees of STMicroelectronics NV (STM), AT&T Wireless, Samsung Semiconductor Inc. and Broadcom Corp. (BRCM) None of the individuals has been criminally charged.

A call to Geneva-based STMicroelectronics wasn’t answered. Mark Siegel, an AT&T spokesman, John Lucas, a spokesman for Samsung Semiconductor, and Karen Kahn, a spokeswoman for Broadcom, declined to comment.

The case is U.S. v. Fleishman, 11-cr-32, U.S. District Court, Southern District of New York (Manhattan).

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New Suits

Abbott Sued by MedImmune Over Respiratory Drug Distribution

MedImmune LLC sued an Abbott Laboratories unit in a dispute over the distribution of drugs created to combat respiratory tract infections.

MedImmune, a unit AstraZeneca Plc (AZN), accused Abbott International LLC of reneging on an agreement to seek European market approval for distribution of MedImmune’s developmental drug, Numax, and of trying to parlay a U.S. Food and Drug Administration request for additional testing of that medicine into grounds for reducing the price Abbott paid for exclusive rights to distribute an FDA-approved forerunner, Synagis, outside the U.S.

In a complaint filed in federal court in Greenbelt, Maryland, on Aug. 21, MedImmune asked for findings that it is under no obligation to discontinue development of Numax, and that the event that would have triggered a reduction in the price Abbott must pay for distributing Synagis hasn’t happened.

“We disagree with MedImmune’s interpretation of the contract and are working to resolve the matter, Adelle Infante, a spokeswoman for Abbott Park, Illinois-based Abbott Laboratories (ABT), said in an e-mailed statement.

AstraZeneca is based in London. Its MedImmune unit is based in Gaithersburg, Maryland.

The case is MedImmune LLC v. Abbott International LLC 11cv2329, U.S. District Court, District of Maryland (Greenbelt).

Temple-Inland Drops as Guaranty’s Trustee Sues for $1 Billion

Temple-Inland Inc., the cardboard maker fighting a $3.31 billion takeover bid from International Paper Co. (IP), fell $3.49, or 14.06 percent, to $21.33 at 4:02 p.m. in New York Stock Exchange composite trading, the biggest decline since March 2009.

The lawsuit claims that Temple-Inland, which spun off Guaranty Financial Group Inc. (GFGFQ) in 2007, and the former subsidary’s directors and officials caused its failure ‘‘by fraudulently looting” assets exceeding $1 billion. The suit was filed in federal court in Dallas Aug. 22 by Kenneth L. Tepper, the liquidation trustee for Guaranty Financial.

“We do not believe that we have any liability related to the spinoff of Guaranty Financial Group,” Temple-Inland, based in Austin Texas, said in a regulatory filing yesterday. “The company believes that the claims made in this lawsuit are without merit and intends to defend them vigorously.”

The lawsuit claims Guarantee Bank was operated as “a captive finance arm of Temple-Inland’s manufacturing operation” and made risky loans to Temple-Inland customers to sell building products.

The lawsuit also claims that Temple-Inland spun off Guaranty Financial Group after stripping its assets, to avoid “a disastrous cross-default on Temple-Inland’s own debt obligations.” This left Guaranty Financial Group, the Federal Deposit Insurance Corp. and U.S. taxpayers to “suffer the enormous losses defendants created,” according to the lawsuit.

The suit comes after International Paper, the world’s largest paper maker, this month extended its $30.60-a-share offer to acquire Temple-Inland to Sept. 8. Temple-Inland rejected the offer, saying on July 18 it “grossly” undervalues the company.

The lawsuit is Tepper v. Temple-Inland Inc. (TIN), 3:11-cv-02088, U.S. District Court, Northern District of Texas (Dallas).

HP Accuses AU Optronics of Display Panel Price Fixing in Lawsuit

Hewlett-Packard Co. has accused AU Optronics Corp. (AUO) of conspiring to fix prices of thin-film transistor liquid crystal display panels in a complaint filed Aug. 19 in federal court in San Francisco. The lawsuit was filed under seal because of the confidential information about the company’s process for procuring LCD panels.

The lawsuit relates to a pending case filed by purchasers of the screens, used in personal computers, televisions and mobile devices, against LCD makers.

Yawen Hsiao, a spokeswoman for AUO, wasn’t immediately aware of the complaint when contacted by phone yesterday. She declined to comment further.

AUO, Taiwan’s second-largest maker of LCDs, and six of its executives were indicted last year for allegedly conspiring to fix prices of flat-panel screens sold worldwide, the Justice Department said in June 2010. The conspiracy ran from 2001 to 2006, the agency said. Apple Inc. (AAPL), Dell Inc. (DELL) and HP were among the companies directly affected by the alleged scheme, the agency said.

AUO, based in Hsinchu, Taiwan, said at the time “the facts of the case do not warrant such charges.”

The case is Hewlett-Packard Co. (HPQ) v. AU Optronics Corp. (2409), 11-4116, U.S. District Court, Northern District of California (San Francisco).

Trials/Appeals

Ex-Credit Suisse Broker Butler Is Resentenced to Five Years

Former Credit Suisse Group AG (CSGN) broker Eric Butler, convicted by a jury of securities fraud in 2009, won’t have his prison sentence extended after pleading guilty to seven wire-fraud counts stemming from the same actions.

Butler, 39, was resentenced to five years in prison yesterday by U.S. District Judge Jack B. Weinstein in Brooklyn, New York, and ordered to surrender Sept. 9 at the federal prison in Fort Dix, New Jersey. In January 2010, the judge imposed the same penalty for Butler’s jury convictions for securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.

“I regret my actions,” Butler told Weinstein before he was sentenced.

Butler and his partner, Julian Tzolov, were convicted in 2009 of intentionally misleading clients about securities purchased on their behalf.

The federal appeals court in Manhattan in June overturned Butler’s securities-fraud conviction, saying it should have been tried in federal court in Manhattan rather than in Brooklyn. It upheld his two conspiracy convictions. Butler then successfully got the wire-fraud counts moved to Brooklyn and consented to having the securities-fraud count there as well. He also pleaded guilty to the securities-fraud count.

The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).

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To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net.

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

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