Croatian crooks and other E. European crooks

[Prof Steven P Hill]

Dear colleagues:

Some of you will recall this amazing case of the multi-million dollar 
"insider trading" scandal (A.P. story attached below) when it was in 
the headlines a year or two ago.  At that time everyone focussed on 
the most implausible aspect of the case.  A poor little old lady, 
retired seamstress and part-time janitress in Croatia, who probably 
wasn't even extremely literate in her own language, suddenly 
reaped a couple million U.S. dollars of ill-gotten profits by trading 
on the stock and options of "Reebok" sneakers, before Reebok 
revealed to the public that it was going to be bought out by Adidas 
sports footwear.  

Everybody smelled a rat somewhere in the case -- there had to be 
some Wall Street slicker, who made the big hit but somehow 
managed to hide behind a little old lady in  Croatia (!) as his "front."  
And a few months later it was revealed that there was indeed a "rat."  
The little old Croatian lady had a nephew named David Pajcin, 
presumably born in former Yugoslavia but now living in the USA, 
holding a finance degree from Notre Dame, and  employed on 
Wall St. (where he had access to inside information about 
impending stock market deals). Everything began to make sense.

This latest development in the "Croatian Crooks Case" (see below) 
reveals that our Wall Street insider Pajcin had several accomplices, 
some of whose Slavic-East European names indicate that they, too, 
may  have been born in various states of the former Soviet bloc. 

Best wishes to all,
Steven P Hill,
University of Illinois.
__ __ __ __ __ __ __ __ 

AP [Associated Press]
Postal Worker Nabbed for Insider Trading
Thursday May 11, 6:02 pm ET 

NEW YORK (AP) -- A postal worker who served on a grand jury 
was arrested Thursday after authorities said he provided secret 
developments about a probe of accounting fraud at Bristol-
Myers Squibb Co. to people who created a massive inside trading 
operation.
Jason Smith, 29, of Jersey City, N.J., was charged with insider 
trading for his role in what authorities called a greed-driven 
larger effort to make millions of dollars illegally in the securities 
markets through any means possible.
The specifics in the wider case were announced last month -- 
a scheme allegedly benefiting from an analyst giving tips 
about pending business mergers and from illegally obtained 
early copies of a market-moving column in Business Week magazine.
[ .... ]
During a brief court appearance in Manhattan, bail was set at 
$3 million and home detention and electronic monitoring were 
ordered for Smith, who was not expected to immediately meet the 
conditions. His lawyer, Frank Handleman, declined to comment.
Smith served from 2003 to 2005 on a New Jersey grand jury that 
was investigating accounting fraud accusations against Bristol-Myers 
and several of its executives. He allegedly leaked the grand jury 
information to a former Jersey City high school friend, David 
Pajcin, a former Goldman Sachs analyst who is cooperating 
with the government.
Prosecutors say Pajcin then teamed with Eugene Plotkin, of 
Manhattan, a Harvard-educated Goldman Sachs Group Inc. 
analyst, to trade on the information and to tip others to trade 
in Bristol-Myers securities.
Authorities said the plot involving grand jury information 
did not result in any profits, though the wider scheme is 
estimated to have made profits of about $7 million for 
the participants.
[....]
In April, the FBI arrested Plotkin and his college friend, 
Stanislav Shpigelman, 23, of Brooklyn, accusing them of 
benefiting from the scandal. Shpigelman was an analyst 
at Merrill Lynch & Co. Inc.'s mergers and acquisitions division.
A criminal complaint filed in U.S. District Court in Manhattan 
also accused Smith of participating in other attempts by 
Plotkin and Pajcin to gain inside information and trade on 
that information.
If convicted, Smith faces a maximum of 45 years in prison.
The Securities and Exchange Commission also brought civil 
insider trading charges against Smith. The earlier case included 
claims that Plotkin and Shpigelman discussed getting strippers 
to coax stock tips from investment bankers with inside 
knowledge of pending mergers and acquisitions.
The case was discovered by regulators who noticed unusually 
high trading volume before a merger announcement.
A closer look showed that a 63-year-old retired seamstress in 
Croatia -- the aunt of one of the defendants [ Pajcin ] -- had 
made more than $2 million, Schonfeld said previously. The SEC 
added Smith to a civil insider trading complaint that already 
accused 13 others in the case.
__ __ __ __ ___ __ ___ __ ___ __ __ ___ _

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