Insider trading probe ensnares 14 more

By Matthew Goldstein and Jonathan Stempel

NEW YORK (Reuters) - Fourteen people were charged with fraud and conspiracy in a dramatic widening of an insider trading scandal that has ensnared hedge fund managers, top Silicon Valley executives and a bevy of white-shoe advisers.

In complaints that read like scripts for the TV series "The Sopranos," prosecutors alleged suspects dropped off bags full of cash, used prepaid cellphones to dodge wiretaps, and used nicknames such as "the Greek."

"As we allege, some of the defendants -- taking a page from the drug dealer's playbook -- deliberately used anonymous, hard-to-trace, prepaid cellphones in order to avoid detection by law enforcement," federal prosecutor Preet Bharara told a news conference.

"When sophisticated business people begin to adopt the methods of common criminals, we have no choice but to treat them as such," he said.

The latest charges involve some of the same companies and individuals implicated in the Galleon Group insider trading scandal that broke three weeks ago. It was not clear whether the illegal networks were linked.

"People will probably ask just how pervasive is insider trading these days? Is this just the tip of the iceberg?" Bharara said. "We don't have an answer to that yet but we aim to find out."

In the largest branch of the investigation unveiled on Thursday, Zvi Goffer, manager of New York-based trading firm Incremental Capital, was accused of leading an insider trading ring that netted $11 million.

Prosecutors said they had uncovered illegal profits of more than $20 million -- on top of the $20 million that authorities say was pocketed by the Galleon group.

The Galleon case is already the biggest hedge fund insider trading scheme in Wall Street history, and in Thursday's complaint one of the suspects admitted to years of insider trading apparently overlapping with his time at a former job at SAC Capital, perhaps the nation's best-known hedge fund.

Raj Rajaratnam, the billionaire founder of the Galleon Group and accused mastermind of an illegal insider trading operation, is free on $100 million bail. On Thursday, he lost a bid to get bail reduced, although a U.S. magistrate judge did ease restrictions on his travel within the United States.

BACK ON THE BEAT?

The Galleon case is turning into one of the biggest insider trading rings since the Ivan Boesky scandals of the 1980s. The Boesky case capped off a gilded age for Wall Street and ultimately brought down Drexel Burnham Lambert. The current case follows last year's financial meltdown that erased fortunes on Wall Street and Main Street alike.

The aggressiveness of the investigation came in marked contrast to years of failure by U.S. regulators to spot the massive Ponzi scheme masterminded by Bernard Madoff.

"The regulatory cops are saying in a very loud voice, 'we're back on the beat,'" said Michael Holland, founder of Holland & Co in New York.

Participants with access to inside information, including a lawyer, a former Moody's analyst and an executive with a wireless networking firm, were charged with leaking confidential information about takeovers and other activities.