Make that 37 convictions in Manhattan US Attorney Preet Bharara’s aggressive Wall Street insider-trading probe.
The crusading lawman passed the three-dozen mark yesterday with the unsealing of a guilty plea by Anthony Scolaro, a former money manager for hedge fund Diamondback Capital Partners.
Scolaro pleaded guilty late last year to illegal trades tied to the 2007 acquisition of pharmaceutical company Axcan Pharma.
The former trader, who ran a healthcare fund at Diamondback before he was let go for poor performance in 2009, has agreed to cooperate with federal investigators. His plea deal was signed four days before FBI agents raided Diamondback offices and three other hedge funds last Nov. 22.
Whether Scolaro’s plea was instrumental to the high-profile raids — which toppled the $3 billion Greenwich hedge fund Level Global — is unclear. People close to Diamondback, which managed up to $5.5 billion in the wake of the raids, say the feds were focused on the firm’s technology trades, not healthcare stocks, which Scolaro traded.
Shortly after the raids, Diamondback placed Todd Newman, a technology portfolio manager, on a leave of absence. The feds were interested in Newman and one of his subordinates, sources close to Diamondback said.
Scolaro got the 2007 merger tip on Axcan from Franz Tudor.
Tudor, a former trader at Galleon Group and Schottenfeld Group, played a key role in the arrests of the three hedgies now on trial for insider trading, including former Galleon trader Zvi Goffer, prosecutors say.
Tudor, who has also been charged and pleaded guilty, wore a body wire for up to a year while working at a third firm co-founded by Goffer called Incremental. The 37-year-old trader was wired up as recently as Oct. 13, 2009 — mere days before the arrests that nabbed billionaire Raj Rajarantam — and recording his peers on a boat tour around Manhattan that was sponsored by Incremental, sources told The Post.
Prosecutors yesterday opened the trial centering on Goffer and his two Incremental parters — his brother, Emanuel Goffer, and partner, Michael Kimelman — by saying Goffer bribed lawyers for illegal merger tips and shared those tips with his co-defendants.
Goffer’s lawyer, William Barzee, told the jury that his client often “lied … about having an edge,” including during a conversation taped by David Slaine, an informant posing as an investor.
“He kind of lies. He plays the Wall Street game,” Barzee says.
Barzee also says Goffer fibbed when he told his former boss, convicted insider trader Rajaratnam, that he had inside sources because he was worried about his job.
But Rajaratnam “sees right through this” and fires him anyway, Barzee said.