(Reuters) - A Boston-area real estate developer was sentenced on Monday to two years in prison for engaging in insider trading based on a tip about a merger that a bank executive passed him on a cocktail napkin over drinks at a country club.
Robert Bray, 78, was also ordered by U.S. District Judge William Young in Boston to pay a $1 million fine and forfeit $299,762 in illegal proceeds after a federal jury in January found him guilty of securities fraud.
Bray is expected to appeal, according to court records. His lawyer, who had sought a sentence of six months of home confinement, did not immediately respond to a request for comment.
Prosecutors said Bray, the owner of real estate development company R&B Construction, was tipped about Eastern Bank Corp’s planned acquisition of Wainwright Bank & Trust Co, by John O’Neill, then a senior vice president at Eastern Bank.
The men were friends and members of Oakley Country Club in Watertown, where Bray in June 2010 told O’Neill that he needed to make a “big score” to complete a development project and asked for a stock tip, prosecutors said.
O’Neill then wrote the name “Wainwright” on a napkin and passed it to Bray, prosecutors said.
Bray subsequently called his broker to ask how he could buy 25,000 shares of Wainwright, which he acknowledged sounded “ridiculous” and “crazy” given the thinly-traded nature of the stock, prosecutors said.
He bought 31,000 Wainwright shares over the next two weeks before its $163 million acquisition by Eastern Bank was announced, prosecutors said, enabling him to earn about $300,000.
O’Neill pleaded guilty to conspiracy to commit securities fraud in December 2014 and testified at Bray’s trial. He is scheduled to be sentenced on Thursday.
The case is U.S. v. Bray, U.S. District Court, District of Massachusetts, No. 14-10356.
Reporting by Nate Raymond in New York; Editing by Andrew Hay