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Former Paul Hastings Tax Associate Spared Prison for Insider Trading
Mark Hamblett
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(September 30, 2009 - Wednesday) - Southern District of New York Judge Victor A. Marrero ordered Holzer to spend nine months in a halfway house, on weekends if he chooses, although the guidelines range for his crimes, as well as the U.S. Department of Probation, called for a minimum of one year behind bars.
Holzer, 35, choked back sobs as he appealed to Marrero for leniency in sentencing him for single counts of securities fraud and conspiracy to commit securities fraud.
"I've embarrassed myself, my friends, my family and my colleagues," he told the court. "I want you to know. I need you to know, that you'll never find Eric Holzer in this kind of situation again."
The guidelines called for a sentencing range of between 12 and 18 months in prison, but Marrero said he agreed with the probation department's assessment that this was "a good person who made a terrible mistake."
Paul Shechtman of Stillman Friedman & Shechtman, who represents Holzer, said his client would be disbarred on the day of sentencing.
Holzer was among several people charged on Dec. 18, 2008, in connection with a $4.8 million scheme to profit from information that former Lehman Brothers employee Matthew Devlin gleaned from his wife, Nina Devlin, a partner at the public relations firm Brunswick Group LLC.
Ms. Devlin, who has not been charged in the case, was unaware the information she shared with her husband on mergers and other transactions of Brunswick Group clients, was traded on by his friends, including Holzer.
Mr. Devlin pleaded guilty to securities fraud and four counts of conspiracy in December 2008 as part of a cooperation deal with prosecutors. He helped the government gather enough information to charge Holzer; Jamil Bouchareb, a Florida day trader; Frederick E. Bowers, a former Lehman Brothers Holding Inc. broker; and Daniel A. Corbin of Miami Beach.
According to a companion civil suit filed by the Securities and Exchange Commission in the Southern District, Holzer, Bouchareb, Bowers and Corbin were among a group of clients and friends who were fed tips by Mr. Devlin on 13 planned deals from 2004 to 2008, including mergers, hostile takeovers and a share buyback.
In return for the tips, Mr. Devlin received cash, a Cartier watch and other benefits from currying favor with clients and friends.
Holzer, who pleaded guilty on May 7, admitted to earning trading profits of $119,347. He was ordered to forfeit that much Tuesday by Marrero, pay a fine of $15,000 and serve five years on probation.
Shechtman called his client "a star tax lawyer," the "person other associates went to" for help, and "a sure thing for partner."
"That is no more," Shechtman told the judge.
Shechtman emphasized his client's pro bono work, the hours he devoted to charity and his selflessness with friends, including 35 year-old Cheryl Horowitz, who was allowed to rise and tell the court that, after she was diagnosed with cancer and other illnesses and ran into financial problems, Holzer "was my guardian angel and my godsend," by helping her arrange to pay medical bills
Holzer was prompted to plead guilty because of evidence obtained by prosecutors, including taped conversations with Mr. Devlin, the cooperator, who has yet to be sentenced.
Mr. Devlin, who referred to his wife as "the Golden Goose," told Holzer in 2008 that his name had appeared on a Brunswick Group watch list of people whose trading had attracted scrutiny.
On Sept. 4, 2008, while wearing a wire, Mr. Devlin mentioned the watch list to Holzer, saying, "Remember, and that's why we stopped?"
He also asked Holzer if he had a "back story" if he was ever questioned by the authorities. Holzer was recorded as responding, "Oh, yeah, I've got a back story," and, "Oh yeah, I'm not worried about it."
Assistant U.S. Attorney Joan Loughnane took issue with Shechtman's claim that Holzer voluntarily stopped trading because he had an ethical wake-up call. She was trying to draw a distinction between the cases of Holzer and his co-defendant, Bowers.
Bowers, who was tipped off to three deals by Mr. Devlin, was sentenced on Sept. 16 to three years probation, 2,000 hours of community service and a $15,000 fine by Judge George B. Daniels.
"Mr. Bowers never traded on the inside information he received, he passed it on to a client of his and that was it," Loughnane said. "Mr. Holzer was trading for his own benefit on two separate occasions and involved a relative in trading on those deals."
And Bowers, she said, "stopped on his own account because he became uncomfortable. Mr. Holzer stopped because his name appeared on a watch list."
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