'Extraordinary' Insider-Trading Witness Spared Prison

Feb 5 2013 | 2:30am ET

Karl Motey's "extraordinary" cooperation helped prosecutors nail more than 20 insider-traders, and helped him avoid jailtime.

Motey, a former technology stock analyst, secretly recorded more than 400 conversations for the Federal Bureau of Investigation and "played a pivotal role" in the probe into expert-network Primary Global Research, prosecutors said. They weren't the only ones impressed: U.S. District Judge Jed Rakoff, who was on the bench during the two trials Motey testified in, called Motey "a particularly impressive cooperator" before sentencing him to time served—less than a day—and one year of supervised release. Motey was also ordered to forfeit $40,000.

"I think that he has shown that he has definitely learned his lesson," Rakoff said.

"The past four years have been the most shameful and difficult of my life," Motey said. "I sincerely apologize for my mistakes. I've learned a hard and important lesson that will stay with me all of my life."

Motey testified at the trials of former hedge fund manager Doug Whitman and former Primary Global executive James Fleishman. Both men were convicted. He began cooperating with authorities immediately after he was approached by the FBI four years ago and pleaded guilty to securities fraud and conspiracy in 2010.

Motey's sentencing yesterday followed those last week of two other cooperating witnesses, Roomy Khan and Jason Pflaum. Khan, who repeatedly lied to authorities during her cooperation, was sentenced to one year in prison, while Pflaum received only probation.

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