U.S. Cites Scramble
to Get Rid of Evidence
By JENNY STRASBURG And MICHAEL
insider-trading case against three hedge-fund
managers and a hedge-fund analyst details
the drama that
unfolded in November after The Wall Street
Journal broke news that the
probe had spread to involve "expert network
in November, CR Intrinsic Investors LLC's Donald
Longueuil, 34 years old,
said he destroyed his flash drive plus two
external hard drives by
ripping them up with two pairs of pliers,
according to the complaint.
told Noah Freeman,
35, who work at SAC Capital Advisors LP's
Boston office, according
to the complaint. "Put 'em into four separate
little baggies, and then
at 2 a.m … 2 a.m. on a Friday night, I put
this stuff inside my black
North Face … jacket … and leave the
apartment and I go on like
a twenty block walk around the city … and
try to find a, a garbage
truck … and threw the s— in the back of
like random garbage trucks,
different garbage trucks … four different
according to the complaint. Mr. Longueuil responded, "It's all …
ripped apart. … Everything's gone."
from Mr. Longueuil's building that showed him leaving his
apartment at 1:52 a.m. on Nov. 20 and returning at 2:33 a.m.,
an agent said in court documents.
to commit securities fraud and wire fraud and obstruction
of justice. A lawyer for Mr. Longueuil hasn't responded to
a request for comment.
fraud and one count of conspiracy to commit securities
fraud and wire fraud, is cooperating with the government
in its investigation, according to his plea agreement and
people close to the situation.
New York, said Mr. Longueuil's account to Mr. Freeman
of destroying documents was "surprisingly and scrupulously
and incriminatingly truthful" and corroborated by video
surveillance of him leaving and returning to his building
in the middle of the night.
defendants' own words," Ms. Fedarcyk said. "For all
their presumed sophistication, they lacked a
mobster's better-honed instincts for conversational
discretion, and that was to our great advantage."
and Barai technology analyst Jason Pflaum, 38, also
allegedly took action after the Journal's article,
published online on Nov. 19 and in print on Nov. 20.
Journal article "10x," or 10 times. Mr. Barai in
electronic messages told Mr. Pflaum to " 'Delete
ur bbm chatr,' [meaning, that Pflaum should
delete his BBM communications with Barai],"
referring to messages transmitted via BlackBerry
Messenger, according to the complaint.
"Yo. Deleted them. Didn't sleep so well last night
. What else do you think we need to do?"
u can," Mr. Barai instructed Mr. Pflaum via
to leave his laptop with his apartment-building
doorman so Mr. Barai could "encrypt it [a]nd
do a dept of defense delete … [s]o it cannot
be undeleted," according to the complaint.
Mr. Pflaum left his laptop with his doorman,
and later the same night Mr. Barai told Mr.
Pflaum that he retrieved it as planned, according
to the complaint.
according to the complaint.
fraud, conspiracy to commit securities fraud
and wire fraud and obstruction of justice.
Mr. Pflaum has already pleaded guilty to securities
fraud and conspiracy to commit securities fraud,
according to prosecutors. Mr. Barai's lawyer
declined to comment.
their inside information on flash drives or external
hard drives to avoid putting it on hedge-fund servers.
stood next to a chart at a news conference
Tuesday with quotes from Mr. Barai's and
Mr. Longueuil's descriptions of trying to
Mr. Bharara said of Mr. Longueuil's alleged
actions. "It may be the first ever documented
use by a portfolio manager of pliers as a tool of the trade."
of hedge-fund employees, Mr. Bharara said the
chart and the charges are "Exhibit A for why we
sometimes have to resort to wiretaps and body
wires to investigate even white collar crime on Wall Street."
documents, and deleting computer files and smashing
flash drives and chasing garbage trucks at 2 a.m. …
it is not because they have been operating legitimately,"
he said. "It is because they have broken the law,
they know it and they don't want to get caught."