A former Wells Fargo investment banker and two other people accused in an $11 million insider trading conspiracy have reached plea agreements with federal prosecutors in Charlotte, joining six others who admitted guilt in the case in December.
Investigators have said John Femenia used his position at Wells Fargo to find out about upcoming acquisitions the bank was advising on, then tipped off friends and business partners so they could buy stock in the companies involved.
The trading ring made money when the deals were publicly announced, leading the companies stocks to rise. Femenia then received kickbacks in cash and gold bars, the indictment says.
The prosecution is among a string of high-profile insider trading cases brought by federal officials in recent years. While many of the cases have centered on New York, this one extended beyond Wall Street. Much of the alleged insider trading occurred while Femenia worked in Charlotte. He moved to New York last year.
Femenia reached an agreement last week to plead guilty to insider trading conspiracy and money laundering conspiracy, according to documents filed in federal court in Charlotte. The two counts carry a combined maximum of 15 years in prison and $500,000 in fines.
He has also agreed to pay restitution. The final amount will be determined by the court at sentencing.
Shawn Hegedus and Danielle Laurenti, also of New York, reached agreements to plead guilty this week, according to court documents. Hegedus agreed to plead to the same counts as Femenia, and Laurenti agreed to plead to an insider trading conspiracy charge.
Lawyers for the three did not return phone calls seeking comment.
According to Decembers indictment, Femenia passed confidential information to both Hegedus, a high school friend, and Laurenti, Hegedus girlfriend. They then traded on the information.
Hegedus and Laurenti also passed the information on to others who traded on it. Six other defendants in that part of the case pleaded guilty in December. They were from Charlotte; Georgetown, S.C.; Greer, S.C.; Miami and Encinitas, Calif.
The allegations became public in December when the U.S. Securities and Exchange Commission filed a civil complaint and the U.S. attorney in Charlotte pursued criminal charges. Prosecutors said the insider trading lasted from March 2010 to December 2012 and netted the participants $11 million in proceeds.
All of the figures facing criminal charges in the case have now pleaded guilty or reached plea agreements. Prosecutors said the investigation is ongoing.
Gold bars, casinos
Participants in the scheme tried to launder money made on the trades by buying and selling gold bars and running some through Las Vegas casinos, according to the indictment.
The indictment also accuses Femenia and Hegedus of fraudulently taking out a $900,000 mortgage to purchase a luxury home in the Chatelaine neighborhood of Waxhaw for Hegedus. Investigators said Femenia used his name and false salary and employment information to obtain the loans.
Hegedus is scheduled to enter his plea at a hearing on Monday, according to court filings. Laurentis hearing is set for Wednesday and Femenias is scheduled for Oct. 1.
The SEC has won judgments against two of the players in the ring ordering them to make restitution, according to court filings. But the agencys case against Femenia, Hegedus, Laurenti and others is ongoing.
Wells Fargo has said it is cooperating with the SEC and the U.S. attorneys office. The bank placed Femenia on leave in December when the SECs suit was first filed. By the next week, Wells said he was no longer with the company.
Rothacker: 704-358-5170; Twitter: @rickrothacker Dunn: 704-358-5235; Twitter: @andrew_dunn
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