LI broker pleads guilty in $32M scheme

Long Beach resident Kenneth T. Robinson pleaded guilty Monday to his role in a $32-million insider trading scheme, the U.S. attorney's office in Newark announced.

Robinson, 45, a mortgage broker and acquisitions attorney, admitted to conspiring with two others to invest more than $109 million over the past 17 years and netting more than $32 million in illicit profits.

According to the criminal complaint, the fraud began in 1994 when Matthew Kluger, a mergers and acquisitions attorney, passed on private information about upcoming deals to Robinson, who in turn passed that information on to Garret Bauer, a professional trader.

The middleman in the transactions was identified in a complaint filed Wednesday against Kluger and Bauer as "CC-1," a co-conspirator heard in recorded conversations among the three. The recordings were made with Robinson's knowledge in cooperation with the Federal Bureau of Investigation, according to a Department of Justice spokeswoman.

Kluger, 50, of Oakton, Va., and Bauer, 43, of New York, have not yet entered pleas on 17 charges filed against them that include securities fraud, money laundering and obstruction of justice.

Bauer would buy shares in the companies and sell them after the mergers and acquisitions were announced and give cash to Kluger and Robinson, Robinson admitted in federal court in Newark. The three used that technique in at least 15 company transactions, according to the complaint.

Over the past six years, the three tried to hide their tracks by conversing about the deals on pay phones and disposable prepaid cell phones, according to the complaint.

Robinson admitted he bought about 65,000 shares of 3Com Corp. stock before its 2009 purchase by Hewlett-Packard was announced and about 32,000 shares of McAfee Inc. stock before its 2010 purchase by Intel Corp. was announced.

Under a plea agreement on one count of conspiracy to commit securities fraud and two counts of securities fraud, Robinson would face 70 to 87 months in prison and forfeit $175,000. Sentencing is scheduled for July 26.