Ex-Axius CEO Kaufman Asks Judge to Throw Out Stock Case

Axius Inc.’s former chief executive officer Roland Kaufman accused the U.S. government of violating Swiss and United Arab Emirates laws by recording phone calls as part of stock-manipulation probe.

Kaufman, a Swiss citizen, on Nov. 16 asked a judge in Brooklyn, New York, federal court to dismiss an indictment alleging he tried to artificially inflate the stock of Dubai-based Axius, a maker of wind- and sun-powered boilers. Robert Nardoza, spokesman for Brooklyn U.S. Attorney Loretta Lynch, declined to comment on Kaufman’s claims.

Kaufman and Swiss financial professional Jean-Pierre Neuhaus were accused of scheming to bribe brokers to buy the company’s stock and increase the price. The scheme turned out to be a government sting operation, according to court filings.

In an affidavit filed on behalf of Kaufman on Nov. 16, attorney Mohammed Hassan Al Baher said that U.S. law enforcement agents must receive permission to covertly record U.A.E. residents’ phone calls. In another affidavit, attorney Sonja Maeder said the same is true of Switzerland.

“I believe this to be the case even if the ‘consensual recording’ is done as part of a U.S. law enforcement investigation from U.S. soil and is solely to support a prosecution for violations of United States law,” Maeder said.

‘Manufactured’ Case

The U.S. violated Swiss and U.A.E. laws in gathering recordings of phone conversations of both Kaufman and Neuhaus, a lawyer for Kaufman, Eric Snyder, said in a Nov. 16 memorandum. He said the government “manufactured” its case against his client after failing to apprehend two previous targets.

The U.S. actions amounted to “outrageous government conduct” that calls for dismissal of the indictment, Snyder said in the filing. Short of a dismissal, evidence seized under search warrants should be suppressed, he said.

Kaufman is free on a $2.5 million bond, according to court records. Neuhaus, who is being held in federal custody, pleaded guilty on Oct. 10 to a single count of conspiracy before U.S. District Judge John Gleeson. He is scheduled to be sentenced on Feb. 15, 2013.

The case is U.S. v. Neuhaus, 12-cr-00439, U.S. District Court, Eastern District of New York (Brooklyn).

-- Editors: Andrew Dunn, Glenn Holdcraft

Before it's here, it's on the Bloomberg Terminal. LEARN MORE