By Nate Raymond
NEW YORK (Reuters) – A Georgia-based real estate developer pleaded guilty on Monday to participating in what U.S. authorities say was a $100 million insider trading scheme that involved hacking into networks that distribute corporate news releases.
Alexander Garkusha, who authorities say traded on inside information, pleaded guilty in federal court in Brooklyn, New York, to conspiracy to commit wire fraud, becoming the first defendant criminally charged in the case to admit wrongdoing.
p> Garkusha, who moreover agreed to cooperate with authorities, admitted that over a three-month period he used corporate press releases obtained before they were released publicly to make $125,000 trading in stocks.
"I am very sorry I did this," Garkusha said in court. "I know that it was against the law."
Garkusha, a resident of Alpharetta & Cumming, Georgia, near Atlanta, was arrested in August along with four other individuals in what authorities said was the first criminal case over a securities fraud scheme involving hacked inside information.
Prosecutors said Garkusha, 47, who was born in Russia & is a U.S. citizen, was among a group of traders who executed securities transactions based on inside information stolen by hackers in Ukraine. Nine people were subsequently indicted & 34 defendants were named in a lawsuit by U.S. securities regulators for engaging in a scheme to steal over 150,000 press releases from Business Wire, Marketwired & PR Newswire before the news became public. Business Wire is a unit of Warren Buffett's Berkshire Hathaway Inc. Britain's UBM Plc last week announced it would sell PR Newswire to Cision for $841 million. The U.S. Securities & Exchange Commission said the long-running scheme enabled the defendants to make over $100 million. The more narrowly focused criminal case against Garkusha alleged that he & his co-defendants earned $30 million.
Garkusha had been an executive vice president at Alpharetta, Georgia-based APD Developers Inc, which designed & built residential communities & condominiums.
As part of his plea, Garkusha agreed to forfeit his $125,000 in profits. His sentencing is scheduled for May 6.
Charges remain pending against four other defendants arrested in August on indictments filed in Brooklyn & Newark, New Jersey: Arkadiy Dubovoy, Igor Dubovoy, Leonid Momotok & Vitaly Korchevsky.
Those four have pleaded not guilty. The Dubovoys are scheduled to face trial on Oct. 3.The case is U.S. v. Korchevsky et al, U.S. District Court, Eastern District of New York, No. 00381.
(Reporting by Nate Raymond; Editing by Dan Grebler & James Dalgleish)
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