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White Collar Week with Jeff Grant, Podcast Ep. 19: Guest, Richard Lee: Insider Trading Charges Dismissed

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White Collar Week with Jeff Grant

It’s the Isolation that Destroys Us. The Solution is in Community.

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Podcast Ep. 19, Richard Lee: Insider Trading Charges Dismissed on White Collar Week

On the podcast today, we have Richard Lee. Richard is best known for having been a trader at Steve Cohen’s hedge fund, SAC Capital, and for having insider trading charges against him dismissed after a 7 year fight to clear his name.

Richard initially pleaded guilty to insider trading charges in 2013, and upon discovery of new evidence in 2017, he moved to withdraw his original plea. On June 21, 2019, a federal court judge for the Southern District of New York granted Richard’s motion to vacate his guilty plea, and then on Nov 27, 2019, federal prosecutors dismissed all charges against him.

I first met Richard in 2013, soon after he first pleaded guilty. We’ve been friends and have worked together closely ever since. On the podcast today, Richard and I discuss the entire story that led to his incredible outcome.

So coming up, Richard Lee. Insider trading charges dismissed. On White Collar Week. I hope you’ll join us. – Jeff

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If you have a friend, family member, colleague or client with a white collar justice issue, please forward this email; they can reach us anytime – day or night! Our contact info: http://prisonist.org/contact-us.

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Guests on this Episode:

Richard Lee

Richard Lee is a former Portfolio Manager at S.A.C. Capital Advisors, LLC (“SAC”).  Prior to SAC, Richard was a project manager for the Clinton Foundation in South America, working in sustainable development and social venture capital in partnership with other NGOs and the United States Agency for International Development.  Earlier, Richard was part of a Clinton Foundation team which implemented the widespread use of antiretroviral therapies to treat people living with HIV/AIDS in the Caribbean and Africa.

Richard previously was a Managing Director and Portfolio Manager at Citadel, LLC and a Research Analyst at Farallon Capital Management, LLC.  He began his career at McKinsey & Company.  Richard is a graduate of Brown University.

Richard lives in Chicago, IL with his wife and two daughters.

You can contact Richard at rlee97@protonmail.com 

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You can find all episodes of our podcast “White Collar Week with Jeff Grant” on our website prisonist.org, our Facebook page, Podbean, YouTube (video), SoundCloud, Apple Podcasts, Spotify, LinkedIn, Instagram and Twitter.

Information About our White Collar Support Group…

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Louis Reed/Babz Rawls Ivy PSA:

Some very kind words from my dear friends Louis L. Reed and Babz Rawls Ivy in this brief PSA. Thank you Louis and Babz! – Jeff

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All Episodes, Season One:

Link here to Podcast Ep. 20: Glenn E. Martin & Richard Bronson: Reinventing Yourself After Prison

Link here to Podcast Ep. 19: Insider Trading Charges Dismissed, with Guest Richard Lee

Link here to Podcast Ep. 18: Is Your Life a Movie? The Producers, with Guests: Lydia B. Smith, Bethany Jones & Will Nix

Link here to Podcast Ep. 17: #TruthHeals: Systemic Abuse & Institutional Reform with Vanessa Osage, feat. Guest Co-Host Chloe Coppola

Link here to Podcast Ep. 16: Politicians, Prison & Penitence, with Guest: Bridgeport, CT Mayor Joseph Ganim

Link here to Podcast Ep. 15: A Brave Talk About Suicide, with Guests Bob Flanagan, Elizabeth Kelley, & Meredith Atwood

Link here to Podcast Ep. 14: Recovery & Neighborhood, with Guest: TNP’s Tom Scott

Link here to Podcast Ep. 13: Everything but Bridgegate, with Guest: Bill Baroni

Link here to Podcast Ep. 12: The Truth Tellers, with Guests: Holli Coulman & Larry Levine

Link here to Podcast Ep. 11: The Blank Canvas, with Guest: Craig Stanland

Link here to Podcast Ep. 10: The Ministers, with Guests: Father Joe Ciccone & Father Rix Thorsell

Link here to Podcast Ep. 09: Small Business Edition, with Guest: Taxgirl Kelly Phillips Erb

Link here to Podcast Ep. 08: The Academics, with Guests: Cathryn Lavery, Jessica Henry, Jay Kennedy & Erin Harbinson

Link here to Podcast Ep. 07: White Collar Wives. with Guests: Lynn Springer, Cassie Monaco & Julie Bennett. Special Guest: Skylar Cluett

Link here to Podcast Ep. 06: Madoff Talks, with Guest: Jim Campbell

Link here to Podcast Ep. 05: Trauma and Healing when Mom goes to Prison, with Guests: Jacqueline Polverari and Her Daughters, Alexa & Maria

Link here to Podcast Ep. 04: One-on-One with Tipper X: Tom Hardin

Link here to Podcast Ep. 03: Compassionate Lawyering: Guests, Chris Poulos, Corey Brinson, Bob Herbst & George Hritz

Link here to Podcast Ep. 02: Substance Abuse & Recovery During COVID-19: Guests, Trevor Shevin & Joshua Cagney

Link here to Podcast Ep. 01: Prison & Reentry in the Age of COVID-19: An Evening with Our White Collar Support Group.

Link here to Podcast Ep. 00: White Collar Week with Jeff Grant: What is White Collar Week?

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Jeff Grant

What is the White Collar Justice Community?

Welcome to White Collar Week with Jeff Grant, a podcast serving the white collar justice community. It’s the isolation that destroys us. The solution is in community.

If you are interested in this podcast, then you are probably already a member of the white collar justice community – even if you don’t quite know it yet.  Our community is certainly made up of people being prosecuted, or who have already been prosecuted, for white collar crimes. But it is also made up of the spouses, children and families of those prosecuted for white collar crimes – these are the first victims of white collar crime. And the community also consists of the other victims, both direct and indirect, and those in the wider white collar ecosystem like friends, colleagues, prosecutors, defense attorneys, judges, law enforcement, academics, researchers. Investigators, mitigation experts, parole & probation officers, corrections officers, reentry professionals, mental health care professionals, drug and alcohol counselors, – and ministers, chaplains and advocates for criminal and social justice reform. The list goes on and on…

Our mission is to introduce you to other members of the white collar justice community, to hear their very personal stories, and hopefully gain a broader perspective of what this is really all about. Maybe this will inspire some deeper thoughts and introspection? Maybe it will inspire some empathy and compassion for people you might otherwise resent or dismiss? And maybe it will help lift us all out of our own isolation and into community, so we can learn to live again in the sunshine of the spirit.

Along the way, I’ll share with you some of the things I’ve learned in my own journey from successful lawyer, to prescription opioid addict, white collar crime, suicide attempt, disbarment, destruction of my marriage, and the almost 14 months I served in a Federal prison. And also my recovery, love story I share with my wife Lynn Springer, after prison earning a Master of Divinity from Union Theological Seminary in NYC, pastoring in an inner city church in Bridgeport CT, and then co-founding with Lynn in Greenwich CT, Progressive Prison Ministries, the world’s first ministry serving the white collar justice community. It’s been quite a ride, but I firmly believe that the best is yet to come.

So I invite you to come along with me as we experience something new, and bold, and different – a podcast that serves the entire white collar justice community. I hope you will join me.

Blessings, לשלום

Jeff

Rev. Jeff Grant, J.D., M.Div. (he, him, his) 
Co-founder, Progressive Prison Ministries, Inc., Greenwich CT & Nationwide
Co-host, The Criminal Justice Insider Podcast
Host, White Collar Week
Mailing: P.O. Box 1, Woodbury, CT 06798
Website: prisonist.org
Email: jgrant@prisonist.org
Office: 203-405-6249
Donations (501c3): http://bit.ly/donate35T9kMZ
Psychology Today: https://www.psychologytoday.com/us/therapists/jeff-grant-woodbury-ct/731344
LinkedIn: https://www.linkedin.com/in/revjeffgrant
not a prison coach, not a prison consultant

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Thank you for listening to White Collar Week.

Please subscribe, rate and review the podcast if you loved it – it helps others suffering in silence find us if they need us!

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Want to be a guest on the Show? Have a connection you’d like to make?

Email us! info@prisonist.org

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Credits:

Host: Jeff Grant, J.D., M.Div.

Production: Chloe Coppola

Audio Engineering: George Antonios: https://georgeantonios.com

Video Engineering: Todd Nixon

Art Direction: Greyskye Marketing, LLC: https://greyskye.com

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It’s the Isolation that Destroys Us. The Solution is in Community.

Progressive Prison Ministries, Inc. is the world’s first ministry supporting the white collar justice community. Founded by husband and wife, Jeff Grant and Lynn Springer in Greenwich CT in 2012, we incorporated as a nonprofit in Connecticut in 2014, and received 501(c)(3) status in 2015.  Jeff has over three decades of experience in crisis management, business, law (former), reentry, recovery (clean & sober 17+ years), and executive and religious leadership. As Jeff was incarcerated for a white-collar crime he committed in 2001, he and Lynn have a first-hand perspective on the trials and tribulations that white-collar families have to endure as they navigate the criminal justice system and life beyond.

Progressive Prison Ministries, Inc. is nonsectarian, serving those of all faiths, or no faith whatsoever. To date we have helped over three hundred fifty (350) individuals, and their families, to accept responsibility for their actions and to acknowledge the pain they have caused to others.  In accordance with our commitment to restorative justice, we counsel our members to make amends as a first step in changing their lives and moving towards a new spiritual way of living centered on hope, care, compassion, tolerance, empathy and service to others. Our team has grown to over ten people, most with advanced degrees, all of whom are currently volunteering their time and resources.

Progressive Prison Ministries’ goal is to provide spiritual solutions and emotional support to those who are feeling alone, isolated, and hopeless. We have found that these individuals are suffering from a void but are stuck, and don’t know what to do about it. Our objective is to help them find a path to a healthy, spirit-filled place on the other side of what may seem like insurmountable problems. Many of those we counsel are in a place where their previous lives have come to an end due to their transgressions. In many cases their legal problems have led to divorce, estrangement from their children, families, friends and support communities, and loss of a career. The toll this takes on individuals and families is emotionally devastating. White-collar crimes are often precipitated by other issues in the offenders’ lives such as alcohol or drug abuse, and/or a physical or mental illness that lead to financial issues that overwhelms their ability to be present for themselves and their families and cause poor decision making. We recognize that life often presents us with such circumstances, sometimes which lead us to make mistakes in violation of the law.

All conversations and communications between our ordained ministry, and licensed clinical relationships, and those we serve fall under state privilege laws. This is one reason that attorneys often allow and encourage their clients to maintain relationships with us while in active prosecution or litigation situations.

If you, a friend, family member, colleague or client are suffering from a white collar criminal justice issue or are experiencing some other traumatic or life-altering event, and would like to find a path to a healthy, spirit-filled place on the other side of what seems like insurmountable problems, please contact us to schedule an initial call or appointment.

Copyright 2020, All Rights Reserved, Progressive Prison Ministries, Inc.

 

Bloomberg: SAC’s Richard Lee Admitted to Insider Trading. Then He Cleared His Name

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  • Ex-portfolio manager’s 2013 guilty plea was tossed in June
  • Lee says he confessed to a 2009 trade he didn’t remember

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A Testimonial From Richard Lee: “Thank you Jeff for your counsel throughout these past several years. My family and I are grateful to you and Lynn, and are glad to be a part of the important work you are championing in the criminal justice community.” – Richard Lee, Illinois. Link to additional Testimonials here.

Richard is a member of our confidential online White Collar Support Group that meets on Mondays, 7 pm ET, 4 pm PT. Our 185th meeting is on Monday, December 30, 2019.

Richard Lee Photographer: Taylor Glascock/Bloomberg

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Richard Lee doesn’t remember the trades that upended his life.

A former SAC Capital Advisors LP portfolio manager, Lee managed a $1.25 billion fund for his boss Steve Cohen. He had tens of thousands of trades under his belt, so the roughly $10 million in Yahoo Inc. shares he bought on July 10, 2009, didn’t really stand out. But when the FBI approached him in March 2013, saying they had proof the investment was based on an illegal tip, the forgotten trades left him feeling trapped.

Lee wound up pleading guilty to insider trading and became one of eight SAC employees convicted in a sweeping government crackdown. Today, though, Lee is in the clear. After a favorable shift in the law and the emergence of new evidence, a federal judge in June threw out Lee’s guilty plea. Prosecutors last month dropped the case.

“Most people don’t understand,” said Lee, 40. “Why would anyone plead guilty to something that they hadn’t done?”

In his first interview since the case ended, Lee set out to explain why he would admit to insider trading he steadfastly denies took place. According to Lee and his lawyer, the former trader’s ordeal highlights what can happen when a busy investment professional is suddenly called to account for a handful of trades on a single day, years after the fact.

“There’s a misconception that portfolio managers and analysts and trading professionals remember every single trade that they did, regardless of whether it is completely lawful, in the gray area or illegal,” said Greg Morvillo, Lee’s lawyer. “You’re talking about four, four and a half years later. It’s very hard to remember the details of how a day evolved.”

Market Rumors

Prosecutors in Manhattan declined to comment. They initially vowed to retry Lee, pointing out he pleaded guilty to other illegal trades which altogether netted SAC around $1.5 million. But in court papers in November, prosecutors said they were dismissing the charges because of “the difficulty of securing evidence” in a decade-old case. The judge who tossed out his guilty plea in June had declined to take the additional step of declaring him innocent. 

Still, Lee says he’s been vindicated.

“This is a real victory,” said Peter Henning, a law professor at Wayne State University and former federal prosecutor. “This doesn’t happen very often.”

The day of the Yahoo trades, Lee was a high-flyer in the alternative investment world. A 2001 Brown University graduate, he had arrived at SAC from Citadel LP, another elite hedge fund group, after stints at McKinsey & Co. and in private equity. At SAC, he was a member of the special situations group.

According to prosecutors, Lee bought Yahoo based on a call the same day with analyst Sandeep Aggarwal, who passed along a tip from a close friend at Microsoft Corp. that a rumored search engine partnership between that company and Yahoo would soon be announced. News reports on July 16, 2009, of a possible deal sent Yahoo shares up. A Microsoft-Yahoo alliance was announced on July 29, 2009.

Aggarwal pleaded guilty to insider trading in November 2013. Lee’s cooperation led to Aggarwal’s plea, and largely ended there, Morvillo said.

Read More: FBI Pulls Off ‘Perfect Hedge’ to Nab New Insider Trading Class

Lee said he moved in and out of Yahoo almost constantly in 2009, both before and after the Microsoft partnership. He said he didn’t remember his July 10 trades when he was approached on the street in Chicago by two FBI agents four years later, and he doesn’t remember them now. But he’s certain no one would have believed that.

“I felt very deeply that I had not committed insider trading,” said Lee, “but I couldn’t assert that to people because I knew I would just come across like somebody who was actually guilty of it but in denial.”

It didn’t help that his prosecution was part of a larger insider-trading probe targeting SAC and Cohen. The case’s high profile increased the pressure on Lee to plead guilty and cooperate, he said.

Lee pleaded guilty on July 23, 2013, and agreed to be a government witness against others. “I was sobbing in front of the judge and reading this thing I didn’t want to read,” said Lee. “Almost immediately after my guilty plea, I looked at and discussed with my then attorneys at the time about whether I could withdraw it.”

Avoiding Prison

Lee said Richard Owens, his lawyer at the time, advised against that, saying the former portfolio manager’s cooperation could help him avoid prison, where many convicted in the crackdown ended up. Owens declined to comment.

Two days after pleading guilty, Lee found himself cited by then-Manhattan U.S. Attorney Preet Bharara in his announcement of his big case against SAC. Bharara said Lee was part of a group that made SAC a “magnet for market cheaters.”

“I was at home watching it on TV,” Lee said. “It was surreal.”

The battle between Bharara and SAC riveted Wall Street at the time. While Cohen himself wasn’t accused of wrongdoing, SAC itself later pleaded guilty and paid a record $1.8 billion fine to resolve insider-trading claims. The firm later changed its name to Point72 Asset Management LP and agreed to manage only Cohen’s money.

But as the SAC case faded from the headlines, it continued to hang over Lee, who was still awaiting sentencing. Meanwhile, a federal appeals court in December 2014 threw out the convictions of two fund managers and said prosecutors needed stronger evidence in certain types of insider trading cases.

Read More: What’s Next for Criminalization of Insider Trading?: Matt Levine

After that ruling, Lee decided to get a second opinion on his case. A minister who works with white-collar defendants introduced him to Morvillo, who represented one of the fund managers in the 2014 appeals court case.

But Lee’s new lawyer said there wasn’t an immediate way around the guilty plea. The problem, Morvillo said, was that Lee never got to see most of the government’s evidence against him because he pleaded guilty so quickly. It was only in May 2017, after the government provided documents so that Lee could prepare for sentencing, that they saw an instant message Lee sent Cohen the day of the Yahoo trade.

Contrary to the government’s theory, the message showed Lee had bought virtually all of the Yahoo shares before his call with Aggarwal, not after. In August 2017, more than four years after Lee pleaded guilty, Morvillo asked the court to allow Lee to withdraw his plea under the change of law or find him innocent based on this new evidence. Prosecutors conceded they did not get the instant message themselves until a month after Lee pleaded guilty.

U.S. District Judge Paul Gardephe tossed his plea based on the 2014 ruling, saying it was “insufficient” because Lee didn’t say that he knew how the corporate insiders benefited from their leaks, as the law now requires.

Read More: Ex-SAC Trader Lee Wins Insider-Case Dismissal, After Guilty Plea

The case behind him, Lee says he has no plans to return to the financial industry. He spent much of the last several years at home as primary caregiver to his two daughters. He did some work for a relative’s startup and explored switching careers to medicine or dentistry. Lee now works as a consultant to a Chicago software company.

It was tough focusing on a career as the legal fight dragged on. “At times I felt very guilty because I just didn’t feel like I was mentally present,” he said. “I was in my head much of the time.”

But he doesn’t think he deserves anyone’s pity. “I have a family, fine friends. Everyone has a hard life. This is mine,” Lee said.

White Collar Wonder: All Charges Dropped Against Our Ministee Richard Lee

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A Testimonial from Richard Lee: “Thank you Jeff for your counsel throughout these past several years. My family and I are grateful to you and Lynn, and are glad to be a part of the important work you are championing in the criminal justice community.” – Richard Lee, Illinois. Link to additional Testimonials here.

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Ex-SAC Trader Lee Wins Insider-Case Dismissal After Plea

Reprinted from Bloomberg, Nov. 7, 2019, 12:02 PM

  • Richard S. Lee had agreed to cooperate with prosecutors
  • A new trial was scheduled for December; now the case is over

A former trader at SAC Capital Advisors LP who admitted to making illegal insider trades, cooperated with the government, and later sought to withdraw his guilty plea has prevailed in his years-long fight to clear his name.

Federal prosecutors on Thursday dismissed their case against Richard S. Lee, who was the center of a prosecution the U.S. brought against the hedge fund in 2013, according to court records.

Lee pleaded guilty in July 2013, days before then-U.S. Attorney Preet Bharara unveiled unveiled a sweeping indictment claiming SAC orchestrated a massive insider-trading scheme. He was one of at least eight SAC fund managers or analysts who were charged in the government’s attack on illicit trading. SAC, which changed its name to Point72 Asset Management LP, eventually pleaded guilty and agreed to pay a record $1.8 billion penalty.

But after a series of court rulings changed the landscape of insider-trading law, Lee challenged his plea as insufficient. In June, U.S. District Judge Paul Gardephe in Manhattan granted Lee’s request to withdraw the plea but refused to declare him “innocent.” Prosecutors had said they would retry Lee on Dec. 9, but now have dismissed the case.

“Mr. Lee and his family recognize how rare it is for the U.S. Attorney’s office to dismiss a case after a criminal charge is filed,” his lawyer, Gregory Morvillo, said in a statement. ”We obviously agree that dismissing the case is the right result in this situation. Mr. Lee is grateful for the support from his family and friends throughout this long journey.”

A spokesman for U.S. Attorney Geoffrey Berman in Manhattan didn’t have an immediate comment. In a court filing, prosecutors said they’re dropping the case because a decade has passed since the trades at issue and there would be “difficulty in securing evidence” to prove such an old case.

SAC Portfolio

Lee, who managed a $1.25 billion portfolio at SAC, pleaded guilty to conspiracy and securities fraud, admitting he got advance information from a research analyst about Yahoo Inc. and 3Com Corp. in 2009. The Securities and Exchange Commission said in a related lawsuit that Lee generated more than $1.5 million in profits.

In seeking to set aside the guilty plea, Morvillo argued that records showed he had made his trades before receiving information from the analyst. Morvillo also said the case no longer holds up under an appeals court ruling requiring the recipient of a tip to know the tipper acted for a personal benefit in disclosing the information.

On Wednesday, Lee settled the SEC’s suit and agreed to pay more than $130,000 in penalties. Lee, who once worked as a portfolio manager at Citadel, neither admitted nor denied wrongdoing.

The case is United States v. Lee , S.D.N.Y., No. 13-cr-00539, order 11/7/19 .

 

Feds Drop Case Against Ex-SAC Exec Ahead of Trial

Reprinted from Law 360, By Jody Godoy

Law360 (November 7, 2019, 12:41 PM EST) — Manhattan federal prosecutors have dropped insider trading charges against a former portfolio manager at SAC Capital who was headed to trial after getting his 2013 guilty plea vacated for falling short of the legal bar set out in the Second Circuit’s Newman decision.

In a request filed Thursday, prosecutors dropped their case against Richard Lee, citing the fact that the evidence is now 10 years old and that he has paid penalties to the U.S. Securities and Exchange Commission.

“The government has determined that it is in the public interest to dismiss the charges pending against Lee,” prosecutors wrote in the filing.

One of the asset managers swept up in the federal investigation of insider trading at hedge funds, Lee was accused of multiple insider trades, including purchases of Yahoo Inc. stock he made after a call with an analyst, Sandeep Aggarwal, who had learned from a Microsoft insider about an impending collaboration between the two tech companies.

Lee had initially pled guilty to one count of conspiracy and one count of fraud and cooperated with the government, but sought to withdraw his plea in 2017. He argued that the facts he admitted to in his plea were not enough to support a conviction under the Second Circuit’s 2014 decision in U.S. v. Newman .

In that decision, the appeals court said that to prosecute tippees under the Securities Exchange Act, the government must show that they knew an insider was receiving a personal benefit for leaking stock tips.

In June, U.S. District Judge Paul G. Gardephe found that Lee’s plea allocution didn’t tick that box and as such had to be vacated, despite the difficulties prosecutors would face trying the case now. Lee had been scheduled to go to trial on Dec. 9.

Lee’s attorney, Gregory Morvillo, said in a statement that while its rare for prosecutors to drop a case, it was “the right result” in this scenario.

“Mr. Lee is grateful for the support from his family and friends throughout this long journey, and he looks forward to closing this chapter of his life, and beginning the next one,” Morvillo said.

The government is represented by Drew Skinner and Daniel Tracer of the U.S. Attorney’s Office for the Southern District of New York.

Lee is represented by Gregory Morvillo of Orrick Herrington & Sutcliffe LLP.

The case is U.S. v. Lee, case number 1:13-cr-00539, in U.S. District Court for the Southern District of New York.

–Editing by Rebecca Flanagan and Breda Lund.