Arthur Cutillo, a former lawyer with the well-known Ropes & Gray law firm who admitted leaking corporate secrets in exchange for $32,500 in cash, was sentenced on Thursday to 2-1/2 years in prison for his part in a sweeping insider trading case.
Cutillo's name featured prominently at a trial that ended on June 13 with the conviction of three traders on securities fraud and conspiracy charges brought by federal prosecutors in New York in a crackdown on insider trading at hedge funds.
Cutillo said at his plea proceeding in January that he received $32,500 in cash for providing inside information to trader Zvi Goffer about merger activity involving computer network equipment maker 3Com Corp and Canadian drug company Axcan Pharma Inc in 2007.
Zvi Goffer once worked for the Galleon Group hedge fund, whose founder, Raj Rajaratnam, was also found guilty on insider trading charges after a separate high-profile two-month-long trial that ended on May 11.
During Thursday's sentencing by District Judge Richard Sullivan, the court heard how Cutillo, who is married with four young children, once earned $200,000 a year as a lawyer but since his November 2009 arrest and disbarment, had worked as a waiter for as little as $2.13 an hour.
The judge remarked on the notoriety of the insider trading cases, what he called their negative impact on the nation's economy and the need for deterrence because Cutillo had breached a lawyer's sacred trust of clients.
Every lawyer in New York, every lawyer in the country is going to pay attention to this sentence, Sullivan said before imposing the prison term of 30 months.
Cutillo, 34, will report to prison on September 16. The judge ordered a forfeiture amount of $378,000 jointly with Zvi Goffer and Cutillo's former Ropes & Gray colleague Brien Santarlas.
Goffer, his brother Emanuel Goffer and their former partner at Incremental Capital LLC trading firm, Michael Kimelman, plan to appeal their convictions. Cutillo did not testify at the trial but Santarlas told the jury that he and Cutillo conspired to find confidential information about the firm's clients.
Cutillo told Sullivan when he pleaded guilty in January that he and Santarlas provided another lawyer, Jason Goldfarb, with information about the two companies. He said Goldfarb, an old college roommate of Cutillo, passed it on to Goffer.
I just want to apologize for everyone that I hurt by what I did, Cutillo said on Thursday as his wife sat in the courtroom. I am and always am going to be ashamed.
Santarlas, Goldfarb, the Goffer brothers, Kimelman and others will be sentenced separately later this year.
Rajaratnam will be sentenced on September 27, according to an order issued on Thursday by District Judge Richard Holwell postponing the proceeding from July 29.
The case is USA v Goffer et al, U.S. District Court for the Southern District of New York, No. 10-00056.
(Editing by Steve Orlofsky, Gary Hill)