A former technology consultant jailed in a widening investigation of insider trading at hedge funds says she was approached by FBI agents who sought her cooperation in the probe just weeks before her arrest.

Winifred Jiau, the only woman among seven people arrested since November, is also the only defendant who has been denied bail. A Reuters reporter spoke with her for about 20 minutes on Thursday morning in a visiting room at a sprawling jail in northern California, days after the FBI arrested her at her home in Fremont on December 28.

Jiau, 43, a very thin woman whose white jail ID bracelet dwarfed her wrist, said she was sharing a cell with another prisoner. The institution serves bologna every day, a food that the dual U.S. and Taiwan citizen said was unfamiliar to her.

The only thing normal is milk, said Jiau, who wore a yellow jumpsuit and glasses decorated with flower patterns.

Initially the FBI just wanted me to be a cooperating witness, Jiau said. She declined to be more specific, but said she was approached by authorities in early December.

U.S. prosecutors in Manhattan allege Jiau peddled information about computer chipmakers Marvell Technology Group Ltd and Nvidia Corp through an expert network firm in exchange for more than $200,000. She has not yet entered a plea in the case.

The high-profile probe by the FBI, prosecutors and securities regulators into trading on confidential company information at hedge funds stretches back at least three years. It has been ramped up in the last two months to include prosecutions of consultants accused of tipping off hedge funds about confidential information, mostly at tech companies including Apple Computer .


Jiau declined to discuss the specific allegations against her.

I have not decided whether to cooperate with authorities, said Jiau, who spoke by telephone behind a glass partition in the Santa Rita Jail, a detention center for pretrial defendants about 35 miles east of San Francisco.

A spokesman for the FBI declined to comment on Jiau's remarks. A spokeswoman for the office of the Manhattan U.S. Attorney also declined to comment.

Jiau will eventually be sent to New York to make an initial appearance in U.S. District Court there on charges of conspiracy and securities fraud, which carry prison sentences of up to 25 years.

But a Reuters legal analysis suggests that if recent history is any guide, people found guilty tend to receive much lighter sentences than called for by the charges.

Jiau said that she was having difficulty finding an attorney in New York, in part because many law firms had conflicts due to preexisting clients in the probe.

I really need a counsel, Jiau said, adding that she was unprepared for her arrest.

When I was arrested I didn't remember any phone number of someone to contact to help her post bail. Last week, a federal magistrate judge granted Jiau $250,000 bail, but she was held because the person who initially agreed to co-sign the bond withdrew the offer.

A different magistrate judge on Monday then refused to grant her bail, saying she could be a flight risk. The judge said she has no ties to the community because she is not married, has no children, and her immediate family live in Taiwan.

In Thursday's interview Jiau likened her situation to John Kinnucan, an independent research analyst in Oregon who has said publicly that the FBI approached him, but that he refused to cooperate. Kinnucan has not been arrested or charged with any crimes.

Authorities have attempted to gain cooperation of other people whose names have surfaced in the probes.

Agents sought the cooperation of insider trading defendant Manosha Karunatilaka before his arrest last month, a source familiar with the situation has said. Karunatilaka was a manager at Taiwan Semiconductor Manufacturing Company North America in Massachusetts.

Primary Global Research, an expert networking firm, has said Jiau worked with the firm from September 2006 until December 2008. The period roughly corresponds with the time-frame in which prosecutors said Jiau's alleged illegal activity took place.

Jiau worked for Vista, a research firm, before her stint at Primary Global, according to Mark Goldrosen, her San Francisco-based lawyer.

Jiau is scheduled to appear in federal court in San Francisco again on January 12.

The case in U.S. District Court, Northern District of California is U.S. v. Jiau, 10-mj-71093.

(Reporting by Dan Levine, additional reporting by Grant McCool; Writing by Martha Graybow and Dan Levine; Editing by Dave Zimmerman, Phil Berlowitz)