Zvi Goffer, a former Galleon Group LLC trader, failed to win a reduction of his 10-year prison sentence for passing illegal tips and recruiting members for an insider-trading scheme.
The sentences of Goffer and co-conspirator Craig Drimal, and the conviction of co-conspirator Michael Kimelman were upheld today by the U.S. Court of Appeals in Manhattan. The court said a $10 million forfeiture order against Goffer should be reduced based on a change in how such rulings are calculated.
“Defendants’ sentences were reasonable in light of the magnitude of their theft,” the court said.
Drimal was sentenced to 5 1/2 years in prison after pleading guilty to five counts of securities fraud and conspiracy to commit those offenses. Kimelman, who was convicted at trial of two counts of securities fraud and conspiracy, was sentenced to 30 months.
Goffer, convicted of two conspiracy counts and 12 counts of securities fraud, was accused of recruiting members of the scheme and asking participants to use prepaid cellular phones to communicate their tips.
“Goffer’s corrosive influence on the integrity of the financial markets and on the expectation of trust and confidence between attorney and client required a significant punishment,” the appeals court said.
At a trial in 2011, prosecutors said Goffer, then working as a trader at New York-based Schottenfeld Group LLC, used the tips to impress Galleon co-founder Raj Rajaratnam and land a job at the firm. Goffer started Incremental Capital LLC after he was fired from Galleon.
The scheme involved information leaked by two Ropes & Gray lawyers about companies including 3Com Corp. Prosecutors said he and others to whom he passed the information earned $10 million.
Alexander Martin Dudelson, a lawyer for Goffer, and Michael S. Sommer, a lawyer for Kimelman, didn’t immediately return calls seeking comment on the ruling. Arlene Villamia Drimal, who is Drimal’s wife and attorney, said in a phone interview that she is “not surprised that they stuck to the letter of the law.”
“Of course, I’m disappointed as a wife,” she said. “That’s the way it goes.”
The case is U.S. v. Goffer, 10-cr-00056, U.S. District Court, Southern District of New York (Manhattan).