John Kinnucan, the Broadband Research LLC founder who challenged authorities to arrest him for more than 18 months, pleaded not guilty to insider-trading charges and remains in custody because he’s unable to make bail.
The analyst entered his plea today before U.S. District Judge Deborah Batts in New York.
Kinnucan was indicted Feb. 21 by a federal grand jury in New York, accused of passing inside tips to hedge fund clients about SanDisk Corp. (SNDK), OmniVision Technologies Inc. (OVTI) and other companies. He was arrested Feb. 16 at his home in Portland, Oregon, by Federal Bureau of Investigation agents.
He “befriended” employees of public technology companies, obtained nonpublic information from them and passed it to his fund manager clients, prosecutors in the office of Manhattan U.S. Attorney Preet Bharara allege.
Batts said last month that Kinnucan can be released on $5 million bail, rejecting government claims that he had engaged in a “campaign” of threats against prosecutors and agents handling his case.
The judge last week ordered him taken to New York to face trial. Thomas Hester, a lawyer in Oregon who was representing him, told Batts in a letter that Kinnucan couldn’t raise the $100,000 in cash and property necessary to secure the bail. She set the next hearing in the case for June 18.
The judge today appointed Jennifer Brown and Sarah Jane Baumgartel, federal defenders in New York, to represent Kinnucan. Both declined to comment after court on whether they would seek his release pending trial.
Assistant U.S. Attorney Avi Weitzman told Batts his office expected to turn the government’s evidence over to Kinnucan’s lawyers within the next month.
“There are wiretaps of thousands of telephone calls, tens of thousands if not hundreds of thousands of documents produced by public companies and the hedge fund clients of John Kinnucan,” Weitzman said. “The discovery is voluminous and should take defense counsel some time to read.”
Prosecutors argued at a Feb. 23 hearing that Kinnucan should remain in custody because he posed a danger to the community and to authorities handling his case. They pointed to at least 24 menacing voice-mail messages on the office phones of prosecutors and FBI agents, as well as at the homes of two cooperating witnesses.
Batts said that while “the vile, filthy, inflammatory, insulting language” Kinnucan used with prosecutors and agents was “mind-boggling,” she ruled that she didn’t consider it a direct threat.
Kinnucan announced in October 2010 to his hedge fund clients that he had refused a request by FBI agents in New York to wear a recording device and inform on his clients, which presaged more than two dozen insider-trading arrests.
He sent an e-mail that month to about 20 hedge-fund and mutual-fund clients, including SAC Capital Advisors LP and Citadel Asset Management, alerting them about the government’s insider-trading crackdown by Bharara’s office, the FBI and the U.S. Securities and Exchange Commission.
He faces as long as 20 years in prison if convicted of securities fraud.
The case is U.S. v. Kinnucan, 12-cv-163, U.S District Court, Southern District of New York (Manhattan).
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