Ex-Investment Adviser Allen Seeks Probation for Fraud

Scott Allen, a former Mercer LLC investment adviser, says he shouldn’t be sent to prison for insider-trading because he’s assisted the U.S. on several investigations since pleading guilty to the scheme in March.

Allen, of Atlanta, admitted in federal court in New York in March to supplying nonpublic information to John Bennett, an independent film producer and a longtime friend. He now says he deserves a term of home confinement, community service, probation or all three for aiding the government in investigations in New York and in Atlanta.

Bennett, of Norwalk, Connecticut, pleaded guilty in November to participating in the scheme in which he earned $2.6 million on tips he received illegal trades using information from a friend about the April 2008 acquisition of Millennium Pharmaceuticals Inc. by Takeda Pharmaceutical Co. and about the September 2009 purchase of Sepracor Inc. by Dainippon Sumitomo Pharma Co.

“There is no question that Mr. Allen violated the law and that he knew his conduct was wrong when he engaged in it,” his lawyer Brian McEvoy wrote in a memo to U.S. District Court Judge Deborah Batts in New York, who is presiding over the case.

“Since pleading guilty, Mr. Allen has cooperated extensively with and has provided substantial assistance to the government in both this case and in another ongoing federal criminal case.”

Sentencing Range

While Allen faces a sentencing guideline range of between 46 to 57 months for his role in the scheme, McEvoy cited Allen’s cooperation, the low risk of recidivism and lesser prison terms imposed upon other insider-trading defendants as reasons his client shouldn’t be sent to prison. Federal sentencing guidelines are recommendations and not binding upon the court.

McEvoy also said in court papers filed today that his client provided the government with information that Lawrence Robbins, an independent film producer, was involved in the insider-trading scheme with Bennett and alleges that Robbins and Bennett “conspired to obstruct justice by agreeing that Bennett would lie to the government to conceal Robbins’s participation in the conspiracy,” McEvoy said in court papers.

As a result of Allen’s assistance, the government won’t seek a reduced sentence for Bennett for his assistance and would seek an enhanced term because of this alleged obstruction of justice, McEvoy alleged in court papers.

McEvoy didn’t return a call seeking comment about the case. Henry Mazurek, a lawyer for Bennett, and Gerald Shargel, a lawyer for Robbins, both declined to comment on McEvoy’s assertions about their clients.

FBI Agents

Allen has also assisted prosecutors and agents with the Federal Bureau of Investigation in Atlanta with another separate case, McEvoy said, pertaining to a “large-scale scheme to embezzle company funds” allegedly by an executive of an Atlanta-based company where Allen has worked since January, McEvoy said.

Allen provided the FBI with documents as well as a company laptop and attempted to make consensually-recorded telephone calls with the executive, McEvoy said.

Stephen Emmett, an agent with the FBI in Atlanta, said he didn’t have an immediate comment on McEvoy’s assertions. A spokesman for Atlanta U.S. Attorney Sally Quillian Yates didn’t immediately return a voicemail message left at the office seeking comment about Allen’s claims.

Manhattan Prosecutors

Manhattan prosecutors wrote to Judge Batts in July saying they weren’t until recently aware that Allen had been providing assistance to the FBI and federal prosecutors in Atlanta in what they described as a “fully overt investigation in Georgia.

Assistant U.S. Attorney Michael Levy in New York said in the July 17 memo to the court that the target of the Atlanta investigation was ‘‘fully aware’’ of the government’s investigation in Georgia.

Levy also said ‘‘the scope of the defendant’s assistance to the FBI in that matter ‘‘is likely to be a point of dispute at sentencing,’’ and added that Atlanta prosecutors have told his office ‘‘the defendant mas merely provided assistance of the type and character that one would ordinarily expect from an executive at a company that has been the victim of a crime.’’

‘‘Put simply, the defendant may not declare himself to be a cooperator and insist that he needs more time to complete his cooperation, all over the objection of the law enforcement agencies he claims to be cooperating,’’ Levy wrote.

The case is U.S. v. Bennett, 11-cr-927, U.S. District Court, Southern District of New York (Manhattan).

(Corrects name of FBI agent in 12th paragraph of story published on Aug. 15.)
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