Former HR consultant avoids prison in U.S. for insider trading

NEW YORK (Reuters) - A former human resources consultant from Atlanta who admitted to participating in a $1.1 million insider trading scheme with a film producer avoided prison on Tuesday, as a federal judge rejected prosecutors’ request for him to be incarcerated.

Federal prosecutors in Manhattan had argued that a sentence of 37 to 46 months was reasonable for Scott Allen, who worked at the large human resources consulting firm Mercer Inc prior to his 2011 arrest.

But U.S. District Judge Deborah Batts cited Allen’s “charitable service and good works” and his family responsibilities in imposing no prison time and ordering him with the producer, John Bennet, to forfeit $1.18 million.

Allen, 49, in court apologized for his conduct.

“I made the most tragic mistake in my life eight years ago,” he said. “I take full responsibility for my actions.”

Allen pleaded guilty in 2012 to conspiracy and securities fraud charges, admitting that he provided tips about drug-company mergers that Mercer was consulting on to Bennett, a film producer and former investment professional.

His plea came amid a string of cases against dozens of people by the office of Manhattan U.S. Attorney Preet Bharara in a campaign against insider trading.

Prosecutors said Allen tipped Bennett about Takeda Pharmaceutical Co Ltd’s $8.8 billion acquisition of Millennium Pharmaceuticals Inc in 2008 and Dainippon Sumitomo Pharma Co Ltd’s $2.6 billion deal for Sepracor Inc in 2009.

The tips enabled Bennett to make made more than $1.1 million making illegal trades ahead of the merger announcements, prosecutors said.

In exchange, prosecutors said, Bennett shared a cut of his profits with Allen, who received more than $100,000 in cash.

Bennett pleaded guilty in 2011. He was sentenced last month to time served.

Allen’s sentencing had been delayed after he uncovered two criminal schemes at Brightlink Communications, an Atlanta-based telecommunications company, which hired him in 2011 after his indictment.

In court papers, Allen’s lawyer, Brian McEvoy, said his client discovered in 2012 that Brightlink CFO Clive Marsh was “conducting a large-scale scheme to embezzle company funds,” and contacted the Federal Bureau of Investigation.

Marsh pleaded guilty in 2013 to wire fraud and was sentenced to 46 months in prison.

Allen has since 2013 meanwhile assisted the FBI in an ongoing probe of a “potentially large-scale cyber fraud ring,” McEvory wrote, after discovering someone hacked Brightlink’s network.

The case is U.S. v. Allen, U.S. District Court, Southern District of New York, No. 11-0997.

Reporting by Nate Raymond in New York; Editing by Bernard Orr