Thursday, 30 June 2016
Last updated 12 hours ago
Apr 12 2011 | 1:11pm ET
Prosecutors are in plea talks with hedge fund founder Samir Barai, one of 12 people arrested in the Justice Dept.'s insider-trading crackdown.
Barai admitted last Monday that he had an analyst at his firm, Jason Pflaum, listen in on phone calls with former Primary Global Research consultant Winifred Jiau in which the latter offered confidential information. Pflaum would both feed Barai questions and write down the tips allegedly provided by Jiau, Barai said in the "proffer session" with prosecutors and the Federal Bureau of Investigation, a meeting used to determine if a defendant will cooperate.
Pflaum has pleaded guilty and is cooperating. Jiau has pleaded not guilty; the FBI memo from the proffer session emerged in a government filing responding to Jiau's motion to suppress wiretaps of her phone calls.
"One of Pflaum's job responsibilities was to listen in to the conference calls in order to assist Barai in performing his function as portfolio manager," the memo reads. "Due to his hearing impairment, Barai needed assistance in understanding the full content of the telephone conversations."
The government filing also included excerpts of electronic messages exchanged by Barai and Pflaum during the phone calls with Jiau, discussing her demand for "additional payments from Barai in order to pay her inside sources" at Marvell Technology Group and Nvidia Corp. Prosecutors say Barai paid her as much as $10,000 a month for tips.
"Can u confirm amt?" Barai asked after Jiau allegedly demanded an extra $2,000 for each of her sources. "What is she saying?"
"Each source 2k," Pflaum told his boss. "Need to commit now."
Later, Pflaum reminded his boss, "Don't forget ur promise. She will be watching her mailbox!"
The filing also shows some of the code that prosecutors say Jiau used to hide her illegal activities.
"As Jiau put it in another e-mail to Barai days later, her 'cooks don't talk to me without sugar. They are not my boyfriends,'" prosecutors wrote. "Cooks" allegedly meant sources and "sugar" money.