Attorney Jason Goldfarb was ordered to serve three years in prison Friday for being the link between Zvi Goffer’s insider traders and two lawyers at Ropes & Gray who stole confidential information from firm clients.
Southern District Judge Richard Sullivan handed down that sentence after hearing emotional pleas from nearly a dozen family, friends and clients of Mr. Goldfarb who urged the judge to keep the defendant out of prison.
The judge said he was confident that Mr. Goldfarb, 33, would never stray again, but the need to deter others, specifically attorneys, from illegally trading on privileged and confidential client information, required a prison term.
“This is a serious crime, it needs to be treated seriously,” the judge said, faulting Mr. Goldfarb and his supporters for treating the scheme as a “momentary lapse” or an “impulsive act.”
“A message needs to be sent to a broader audience,” Judge Sullivan said, as lawyers need to know that if they engage in insider trading “they’re going to be destroyed financially, they’re going to be disgraced, they’re going to be disbarred, and, yes, they’re going to go to jail.”
Mr. Goldfarb told the judge, “I stand before you a broken man,” and he promised it was an “impossibility” that Judge Sullivan would ever see him again. “You only have one life to live,” Mr. Goldfarb said. “I have forever tainted mine.”
Mr. Goldfarb, formerly with the personal injury firm of Brecher Fishman Pasternak Walsh Tilker & Zeigler, pleaded guilty to a single count of securities fraud on April 21, admitting he obtained inside information from Brien Santarlas and Arthur Cutillo of Ropes & Gray and then passed it on to Mr. Goffer. Each of the three attorneys received $32,500 from Mr. Goffer in a scheme in which they used disposable cell phones and safe deposit boxes to hide the cash.
Judge Sullivan tried to drive home the point that this was far more than an isolated incident or an uncharacteristic misstep by Mr. Goldfarb.
It was rare for a sentencing judge to allow so many people to speak for the defendant, who submitted more than 60 letters of support.
The judge also made an unusual move by having Assistant U.S. Attorney Richard C. Tarlowe play back one of the taped recordings used during the trial of Mr. Goffer, a conversation between Mr. Goldfarb and Mr. Goffer in which Mr. Goffer said there was a lot more money to be made.
“Everyone of us should be set for life within a year or two if things are played right,” Mr. Goldfarb could be heard saying on the tape.
Later, the judge said he thought the phone calls played at trial showed that Mr. Goldfarb and his coconspirators had a sense that what they were doing “is dangerous and exciting.”
Mr. Cutillo, 34, who was Mr. Goldfarb’s college roommate, pleaded guilty in January and was given a 30-month sentence by Judge Sullivan on June 30 (NYLJ, July 1).
Mr. Santarlas, 34, pleaded guilty and cooperated with the government, testifying at the Goffer trial and detailing how he and Mr. Cutillo skulked around Ropes & Gray picking up bits of gossip, accessing firm computers and checking out copy machines for documents on transactions involving companies such as Axcan Pharma Inc. and 3Com Corp. (NYLJ, May 24). Mr. Santarlas has yet to be sentenced.
That trial ended in the fifth day of deliberations with the conviction of Zvi Goffer, his brother Emanuel and Michael Kimelman for securities fraud and conspiracy (NYLJ, June 14).
Mr. Tarlowe prosecuted that case as well along with Assistant U.S. Attorney Andrew Fish.
After hearing from the Goldfarb supporters, many of whom gave tearful statements as to his devotion to family and friends, his love of the legal profession and his tireless work for clients, Mr. Tarlowe said the friends and family are really “another category of victims in this case.”
While it was all well and good that Mr. Goldfarb was a devoted servant to his clients, Mr. Tarlowe reminded the court, Mr. Goldfarb did more than just break the law.
“He actively encouraged and facilitated the commission of crimes by other attorneys as well,” Mr. Tarlowe said.
The prosecutor also disputed Mr. Goldfarb’s claim that he was cooperative with authorities, saying the government met with Mr. Goldfarb and his attorney for two proffer sessions but, “We made the decision we didn’t need his cooperation.”
Mr. Tarlowe urged the judge to give Mr. Goldfarb a sentence at the upper end of the guidelines range of 37 to 46 months to send a message that there is a price to pay for committing insider trading, “a crime that is difficult to detect and a crime that is difficult to prosecute.”
Defense lawyer Michael L. Soshnick of Mineola had asked for a noncustodial sentence and said Mr. Goldfarb said he did not engage in these crimes for greed, but for his mother, who had been diagnosed with cancer and needed help with her medical bills.
Mr. Goldfarb’s mother, Nancy, was among those who spoke at the hearing, pleading with the judge, “Try in your heart to be lenient.”
Mr. Soshnick said Mr. Goldfarb was a special case, a man who had shown unusual dedication to his clients.
“We all know lawyers who don’t like being lawyers who wish they had never gone to law school,” Mr. Soshnick said. “This is not one of them.”
But Judge Sullivan said he did not appreciate the “lobbying effort” by Mr. Soshnick to have supporters of Mr. Goldfarb urge no prison time as part of “a campaign to get me to buy a series of talking points.”
He told Mr. Soshnick he “may have done a disservice to your client and his family by asking for non-custodial sentence.”
But then, Judge Sullivan added, “Ultimately, it doesn’t really matter because my sentence is not going to be determined by the strategy” of the lawyers.
The judge ordered Mr. Goldfarb to surrender in 60 days to begin serving his prison sentence.
@|Mark Hamblett can be contacted at email@example.com.