David Plate, who admitted to participating in an insider-trading ring with ex-Galleon Group LLC trader Zvi Goffer and testified at his trial, was sentenced to three years’ probation and six months’ house arrest.
Plate, 36, a former trader at Schottenfeld Group LLC, was one of 26 people charged in two overlapping insider-trading cases involving Galleon Group founder Raj Rajaratnam. He pleaded guilty in July 2010 to securities fraud and conspiracy to commit securities fraud and testified at the trial of Goffer, his brother Emanuel Goffer and trader Michael Kimelman.
U.S. District Judge Richard Sullivan in Manhattan, who presided over the case, today called Plate a “significant” prosecution witness who deserved a reduced term because of the help he gave to the government. He cited the recommendation of Assistant U.S. Attorney Andrew Fish, who said Plate provided information about the insider-trading scheme that no other witness knew.
“Your cooperation was substantial and you were a very important witness at the trial,” Sullivan said.
Plate, who was arrested along with 14 others in November 2009, told the U.S. that while working at Schottenfeld, he received inside information from Zvi Goffer about the acquisitions of 3Com Corp. and Axcan Pharma Inc. and traded on that information in his account and in an account he managed for his sister.
He admitted to buying 50,000 shares of Axcan based on insider information that originated with two lawyers at Ropes & Gray LLP.
The counts Plate pleaded to carried a combined maximum sentence of 25 years in prison if he had been convicted at trial, Fish said.
Sullivan said federal sentencing guidelines, which aren’t mandatory, recommended a prison term of 24 months to 30 months. The judge directed that Plate serve six months of his probation under home confinement with electronic monitoring and ordered him to forfeit $289,000.
“Your testimony was believable and compelling and consistent with the evidence,” he told Plate. “There is no other witness who was more important than you and among the cooperating witnesses, you again were the least culpable.”
Sullivan gave his co-defendants Kimelman a 30-month prison sentence and Zvi Goffer a 10-year prison term.
‘Send a Message’
“There is a need to send a message to would-be cooperators that their assistance will be considered,” the judge said. “Mr. Plate earned a break.”
Before the sentence was imposed, Plate apologized to Sullivan and his friends and family for his crimes. He said he was so ashamed that he directed that none of them come to court for his sentencing.
“My crime has cost me everything I’ve ever worked for,” Plate said. He asked forgiveness from his supporters “for allowing myself to take such a cowardly and unlawful shortcut. I am firmly back on the right path now.”
Plate’s lawyer, Roland Riopelle, said after court that under home detention his client will be able to go out during the day to work and attend religious services and for medical emergencies.
Fish told Sullivan today that Plate provided the U.S. with a window into the inner workings of the insider-trading ring Zvi Goffer led. He said Plate was the first to tell the U.S. that the group had used disposable mobile phones and he deciphered instant electronic messages the defendants sent to cover-up their scheme.
Plate also explained to the U.S. which trades were being discussed in wiretaps captured by the agents with the Federal Bureau of Investigation, which had been monitoring the ring since 2007, Fish said.
“He was really able to provide information we had from no other witness,” Fish said. “Everyone was convicted, and I do think it does send a message to the public that the government can prosecute insider trading.”
Rajaratnam, 54, was sentenced to 11 years in prison on Oct. 13. He was also ordered to pay a $10 million fine and forfeit $53.8 million. He was convicted in May on insider-trading charges after a trial.
The case is U.S. v. Goffer, 10-cr-56, U.S. District Court, Southern District of New York (Manhattan).
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org.