More than a dozen Jews, including one believed to have fled to Israel, are among 30 people charged in an alleged decade-long insider trading scheme run out of major law firms, the U.S. Justice Department said on Wednesday.
Two unsealed complaints accuse the group of reaping tens of millions of dollars by using confidential information on mergers and acquisition deals obtained through law firms, where scheme leaders were employed. Conspirators allegedly passed information on to business associates, friends and relatives for trading purposes.
The network used burner phones, coded language and falsified research documents, prosecutors allege. The group also allegedly used “going to Israel tomorrow” and phrases about flight departures as code to share timelines related to illegal activities.
The U.S. Securities and Exchange Commission charged some of the 30, 19 of whom were arrested, the Justice Department said.
“With today’s arrests, the FBI has dismantled a large-scale, decade-long, international organized criminal network of corporate attorneys and financial professionals, who are accused of stealing and trading on material, nonpublic information from several of our nation’s leading law firms,” stated Ted Docks, special agent in charge of the FBI’s Boston Division.
“Everyone charged today is accused of scoring significant profits from expected market moves and making out like bandits,” Docks stated. “That’s not merely gaming the system. It’s a federal crime.”
The Justice Department said that one of those charged, God Izraelov, fled to Israel.
David Bratslavsky, a tech entrepreneur who, more than a decade ago, served as executive director of the U.S.-Israel Business Council and as associate for policy and planning at the Conference of Presidents of Major American Jewish Organizations, is alleged to have traded on inside information and then provided kickbacks to Nicolo Nourfachan, head of the operation and college friend.
Nourfachan, a corporate attorney who had worked at several large law firms, and New York lawyer Robert Yadgarov are accused of being at the center of the scheme.
The two allegedly recruited lawyers and others as inside information sources in return for large sums of cash, with tips from the two passed on to traders, the department alleges.
Nourfachan’s brother, Lorenzo, was also charged.
Three brothers, Brian, Mark and Simon Fensterszaub, and Simon’s brother-in-law, Joseph Suskind, were also hit with charges, as were Suskind’s relatives, Yisroel Horowitz and Gavryel Silverstein.
Simon Fensterszaub’s co-worker, Eliyahu Kavian, and friends Boruch Hatanian and Joseph Izsak, are also listed as defendants, as is Kavian’s brother, Daniel.
“The trading on unannounced financial news alleged here not only violated the securities laws, but it also took advantage of the special access and ethical duties that come with a law license,” stated Leah Foley, U.S. attorney for the District of Massachusetts.
“If the American people believe that trading is only for the connected, they will keep their investment and retirement savings out of the markets, which will hurt our economy,” she stated.
