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Albany chief faces ‘largest insider trading’ fine for decade at $50m

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

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Joe Lewis

THE Bahamas-based billionaire who led Albany’s development will pay “the largest financial penalty for insider trading in a decade” at $50m after he yesterday pleaded guilty to perpetrating a securities fraud.

Joe Lewis, the UK national who has been a Bahamas and Lyford Cay resident since 1979, admitted that he was “so embarrassed” as he pled guilty before a Manhattan federal judge to insider trading and related conspiracy charges levied against him by US government attorneys.

The 86-year-old also confessed that he knew what he did was wrong after tipping-off lovers, secretaries, friends and even his private pilots to purchase or offload various corporate stocks using non-public information he accessed in his role as a major global investor.

Mr Lewis, whose family trust is also majority owner of Tottenham Hotspur, the English Premier League club, told Judge Jessica G.L. Clarke that he agreed in 2019 to share secrets he knew about publicly-traded companies with two other people who bought stock in those companies.

He added that he shared confidential tips with another person in July and September of the same year, and that individual bought stocks in the companies. Mr Lewis, who partnered with world-renowned golfers Tiger Woods and Ernie Else to develop Albany, the high-end gated community in south-western New Providence, accessed the information via his Board seat on these companies where he was an investor.

“I knew that I was violating a legal duty not to make those recommendations because the non-public information had been entrusted to me in confidence,” Mr Lewis told the Manhattan court. “I knew at the time what I was doing was wrong, and I am so embarrassed and I apologise to the court for my conduct.”

Mr Lewis did not speak as he left court, and was shielded from photographers by his aides, a lawyer and an umbrella. However, he now faces a potential maximum prison sentence of up to 20 years as a result of pleading guilty to two securities fraud counts.

The one conspiracy count carries a maximum five years, but Federal sentencing guidelines call for a prison sentence of between 18 and 24 months, though Mr Lewis and his attorneys can seek less than that. The sentencing hearing is scheduled for March 28.

Damian Williams, the US attorney for New York’s southern district, who spearheaded Mr Lewis’s prosecution, said: “Today’s guilty pleas once again confirm — as I said in announcing the charges against Joseph Lewis just six months ago – the law applies to everyone, no matter who you are or how much wealth you have.

“Billionaire Lewis abused inside information he gained through his access to corporate board- rooms to tip off his friends, employees and romantic interests. Now, he will pay the price with a federal conviction, the prospect of time in prison, and the largest financial penalty for insider trading in a decade.

“His company, Broad Bay Ltd, who failed to detect and report this misconduct, has also been held to account and will plead guilty and pay more than

$50m in financial penalties.” That sum is broken down into a $15.586m fine and $34.414m in forfeiture.

Yesterday’s guilty plea is a far cry from the defiant tone that Mr Lewis and his attorneys struck just six months ago. For the billionaire then pled ‘not guilty’, while his attorneys blasted what they branded an “egregious error” by the southern New York district attorney’s office in electing to charge Mr Lewis with 16 separate counts of securities fraud and three counts of conspiracy.

David Zornow, of the Skadden Arps law firm, said then in an e-mailed statement to the media: “The [US] government has made an egregious error in judgment in charging Mr Lewis, an 86-year-old man of impeccable integrity and prodigious accomplishment. Mr Lewis has come to the US voluntarily to answer these ill-conceived charges, and we will defend him vigorously in court.”

From a Bahamas perspective, any fall-out from Mr Lewis’ guilty plea and upcoming sentencing is likely to be minimal. Although Albany is responsible for the direct and indirect employment of hundreds of Bahamians

and injects a multi-million dollar impact annually into the economy, it has evolved sufficiently to no longer be overly-reliant on its main founder.

Albany, though, has been seeking to acquire its neighbouring South Ocean property, although consummation of that deal has been placed on hold due to litigation initiated by rival Austrian investor, Dr Mirko Kovats, who also resides at Lyford Cay.

Tavistock Group, the investment vehicle that Mr Lewis used for his world-wide investments, has declared more than 200 interests and corporate holdings spread across 13 countries, Albany’s other deep-pocketed investors also include singer Justin Timberlake.

Insider trading occurs when perpetrators exploit their access to privileged, non-public information to gain an unfair advantage over other investors who lack the same knowledge. They typically use the details to tip-off their family and close friends, using them to buy or sell shares ahead of a public revelation that typically boosts or lowers the stock’s value, thereby enabling all to make significant profits with the initial perpetrator sharing in the windfall.

The original indictment against Mr Lewis alleged that the Lyford Cay billionaire tipped his closest associates to the results of clinical trials. He is purported to have shared information on life sciences groups, Solid Biosciences and Mirati Therapeutics, plus beef producer Australian Agricultural Company and a special acquisition company, BCTG. Life sciences investments are among those that feature in Tavistock Group’s portfolio.

Prosecutors said that in some insider trading cases, Mr Lewis lent money to recipients of his tips, including in October 2019 when he wired $1m to two pilots so they could buy more Mirati shares. The indictment quoted one pilot texting a friend that “boss lent Marty and I $500,000 each for this”, and that he thought “the boss has inside info” and “knows the out- come” because “otherwise why would he make us invest”.

Both pilots allegedly repaid their loans soon after Mirati announced favourable results from a clinical trial, causing its stock price to rise 16.7 percent. “Loan payback for MRTX,” the second pilot wrote in his records.

Mr Lewis, who started out in east London’s restaurant industry, moved to The Bahamas in 1979 and is said to have made his for- tune from currency trading and speculation. According to the Sunday Times’ 2023 ‘rich list’, he has a net worth of some £5.096bn.

He previously owned New Providence Development Company, before exiting the investment and handing the company over to his former business partner, New Orleans-based Terry White, to focus on Albany’s development. Tavistock Group also developed the Lake Nona and Isleworth communities in Florida.

“As part of the guilty plea of Broad Bay Ltd, Lewis and Broad Bay Ltd have agreed Lewis and his companies will resign and relinquish their control over board of director seats and participation in board of director meetings of any corporation publicly traded in the US, will cease owner- ship of certain investments over the five-year period of probation, will cooperate with the government’s ongoing investigation and prosecution,” the US attorney’s office for southern New York said.

Comments

Baha10 5 months, 3 weeks ago

Being fined the price of a single “Albany” Condo seems like a pretty good deal if allowed to keep the rest … kudos to his Lawyers!

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