A federal judge in Manhattan ruled that John Kinnucan, the Broadband Research LLC founder indicted for insider trading, can be freed on $5 million bond, rejecting prosecutors’ claims he engaged in a “campaign” of threats.
U.S. District Judge Deborah Batts agreed to release Kinnucan on the bond, ordering it be secured by $100,000 cash and property and signed by four financially-responsible people.
Prosecutors today argued Kinnucan, 54, posed a danger to the community and a threat to authorities handling his case, citing at least 24 menacing voice-mail messages he left after hours at the office phones of federal prosecutors and Federal Bureau of Investigation agents and also at the homes of two cooperating witnesses during the last two months.
Batts said prosecutors had come “extremely close” to convincing her he should remain in custody before trial because he posed a danger to the community, prosecutors and agents.
“The vile, filthy, inflammatory, insulting language the defendant has used frequently with officers of the government, and even worse with potential witnesses against him, is mind-boggling,” she said in court. “However reading it, I cannot say there is direct threat, although he is certainly intimidating people or attempting to do so.”
Batts agreed with prosecutors to place restrictions upon Kinnucan, prohibiting him from using the telephone or computer to contact anyone except his lawyer.
“What you have done is disgraceful,” Batts told Kinnucan. “The defendant is to have no contact with any device, no computer, no cell phones, no regular phones. He is not to have contact with anyone. If you call anyone, if you use any kind of device, you will be remanded,” she said.
“Yes, your honor,” said Kinnucan, who attended the hearing in federal court in Oregon with his court-appointed lawyer, via a videoconference hookup.
Assistant U.S. Attorney Chris LaVigne in court today played excerpts of six invective and anti-Semitic-filled voice-mails.
“Too bad Hitler is not around, you should be in the gas chamber,” Kinnucan said in one message on a federal prosecutor’s office phone in December.
LaVigne argued the defendant now has even more incentive to act upon his threats, noting that Kinnucan made his calls before his Feb. 16 arrest. He also said there was precedent for pre-trial holding a defendant who’d threatened prosecutors and agents, citing the case of Gambino crime family boss John Gotti.
“In the last two months Mr. Kinnucan has engaged in a campaign of obstruction, harassment and intimidation,” LaVigne said. “These are the actions of a calculated man dead set upon acting.”
Thomas Hester, Kinnucan’s court-appointed lawyer in Oregon, argued his client was “no John Gotti” and had recently been under stress, which triggered the recent spate of calls, including the recent deaths of two brothers and his mother. He also said there was “antipathy” between his client and the government because Kinnucan felt he was the target of the investigation.
Kinnucan had been examined by a doctor after his arrest who determined he may be suffering from “dis-inhibition triggered by alcohol.” Hester said Kinnucan’s wife told him her husband recently began drinking between two to three bottles of wine a day.
“The messages he left are indefensible, they are filled with invective, and they are plain wrong and he apologizes,” Hester said.
Hester cited the ruling from the federal judge in Oregon who granted his release, saying the calls were “an aberration resulting from numerous stressors and a reaction to his situation.”
After saying he was approached by two FBI agents, Kinnucan in November 2010 publicly announced he rebuffed federal agents attempting to win his cooperation in a U.S. insider trading investigation being conducted by the FBI’s New York office and the Manhattan U.S. Attorney’s Office.
“I never did answer your subpoena, I f----d up your investigation,” Kinnucan said in a voice-mail for one of the agents with the FBI who approached him in Oct. 2010. “You thought you’d f---k with me, I shut down your whole investigation, ha, ha, ha.”
Kinnucan has been in U.S. custody since he was arrested Feb. 16 at his home in Portland Oregon. Batts yesterday ordered Kinnucan detained until she reviewed an order issued from U.S. District Judge Janice Stewart in Portland, Oregon, releasing Kinnucan.
Kinnucan has lost most of his clients when news of the federal probe first broke in late 2010 and is in the midst of having his home foreclosed, Hester said today.
Batts ordered Kinnucan to appear in federal court in New York on March 5 and directed that he notify prosecutors of his travel itinerary and where he will be staying in New York.
“When he is coming, how he is coming, where he is staying, when he’s leaving and how he’s leaving,” she said.
Prosecutors in the office of U.S. Attorney Preet Bharara in Manhattan won an indictment of Kinnucan on Feb. 21. He is accused of passing inside tips to hedge fund clients about SanDisk Corp., OmniVision Technologies Inc. and other companies.
The case is U.S. v. Kinnucan, 12-cv-163, U.S District Court, Southern District of New York (Manhattan).