(Adds details of investigation, bail hearing and comment from
By Joseph Ax and Nate Raymond
NEW YORK Aug 26 U.S. prosecutors on Tuesday
charged an executive of a New York investor relations firm with
insider trading, accusing him of using nonpublic information to
earn more than $538,000 in illicit profits.
Michael Lucarelli, a former director of market intelligence
at Lippert/Heilshorn & Associates, was arrested early Tuesday
morning at his Manhattan apartment, a spokesman for the FBI
said. A criminal complaint made public in federal court charged
Lucarelli with 13 counts of securities fraud.
A separate civil lawsuit by the U.S. Securities and Exchange
Commission charged Lucarelli with an even broader insider
trading scheme in which the regulator said he amassed more than
$950,000 in illegal profits.
The case is the latest in a string of insider trading
prosecutions under Manhattan U.S. Attorney Preet Bharara, whose
office has since October 2009 secured convictions of 81 people.
Bharara said in a statement that despite the "well-known
parade" of convictions, Lucarelli "was not deterred and violated
both his company's policies and his responsibility to its
clients by trading on material nonpublic information for his
personal financial gain."
The criminal complaint said Lucarelli's illegal trades began
in August 2013 and continued until earlier this month.
Oscar Michelen, Lucarelli's lawyer, declined to discuss the
case in detail and said he wanted to review it with his client.
Lucarelli, 51, appeared in court and was released on
Lucarelli is accused of trading in several companies that
were clients of his firm, including TREX Co Inc, FAB
Universal Corp, PhotoMedex Inc, LCA-Vision
Inc, Pacific Ethanol Inc, Dot Hill Systems Corp
and Lifetime Brands Inc.
Authorities said Lucarelli opened several brokerage accounts
without divulging his employment at Lippert/Heilshorn, where he
had access to the companies' financial announcements before they
were publicly released.
Keith Lippert, a founder of Lippert/Heilshorn, in an
interview said the FBI first approached him July 22. The firm
cooperated in the probe, following authorities' request to not
immediately fire Lucarelli, he said.
"They strongly suggested that we keep business as usual so
they could conduct their activities," he said.
According to the complaint, federal agents obtained a search
warrant for Lucarelli's office and on July 24 found a draft copy
of a press release from TREX containing its second quarter
results dated Aug. 4, 2014 in his locked briefcase.
The investigators photographed the release and returned it
to the briefcase in order to keep Lucarelli unaware of the
probe, the complaint said.
During the following week, one of Lucarelli's brokerage
accounts purchased more than 37,000 shares of TREX. Most of the
shares were sold on Aug. 4 for a profit of nearly $90,000, the
The case is U.S. v. Lucarelli, U.S. District Court, Southern
District of New York, No. 14-mj-1878.
(Editing by Grant McCool)