fbpx
Home / Page One / SEC lawyers sketch case
against former RCSB director

SEC lawyers sketch case
against former RCSB director

Securities and Exchange Commission attorneys outlined what they called “a sort of minimum case” against Farrell in arguments against motions to move the case from Virginia to Rochester for trial. Farrell’s stepmother, wife and former secretary at Gannett Co. Inc. can testify in Virginia without any major inconvenience, SEC pleadings contend.
The commission’s prime witnesses–Frank Vega, a Gannett executive like Farrell, and Washington contractor Gerald Sigal–bargained their way out of the case by agreeing to testify. In addition, telephone, trading and bank records along with background testimony on 1993 merger talks between First Empire State Corp. of Buffalo and RCSB are enough to make an insider-trading case against Farrell and his co-defendant, Rochester contractor Kenneth Vasile, the SEC contends.
Late last year, the SEC named Farrell and five others in a civil suit accusing them of violating federal securities laws by trading in RCSB stock when only bank insiders knew the course of merger talks. Four, including Vega and Sigal, have settled with the SEC.
In current action, the commission wants Vasile and Farrell to cough up approximately $150,000 in profits from the alleged illegal trades. Farrell faces an additional $1.23 million in penalties, while the SEC wants Vasile slapped with a $506,000 fine.
Because the SEC refuses to put possible criminal charges on the bargaining table, Farrell’s attorney says, his client is not talking. Farrell raised his privilege against self-incrimination in response to SEC charges.
Rumblings of Justice Department involvement keep Farrell mute, said attorney John Parinello, explaining that admissions made in the civil suit could boomerang into a jail term.
“It would be like handing my client over (to the Justice Department) on a silver platter,” Parinello said.
Farrell is accused of telling Vasile, Vega and Silva of the merger talks between RCSB and First Empire, and of handing Vasile $180,000 to front for him in illegal stock trades. Vasile is accused of passing news of the possible bank merger to two others–Martin Slater and Peter Mancuso, both of Rochester–who also traded in RCSB stock.
Slater and Mancuso agreed to disgorge profits and pay penalties to get out of the case. Mancuso and Slater made no deal to testify and neither admitted nor denied wrongdoing.
Farrell, Vasile, Mancuso and Slater all raised Fifth Amendment privileges during the SEC investigation, the court documents show.
Silence makes the SEC’s job easier, commission attorneys maintain, entitling the government to damning inferences. This week’s brief argues the SEC might even turn defendants’ Fifth Amendment stance against them, seeking a court order prevent-ing them from producing evidence of any point on which they will not speak.
Farrell had told the Virginia court that forcing a trial outside of Upstate New York would unfairly hike legal costs. In response, the SEC pointed to Farrell’s sale of his Gannett stock for an estimated $657,900 in January.
Because civil parties are not entitled to subpoena witnesses across state lines, the defendants also said, trying the case in Virginia would cripple their defense. Farrell named no names of potential witnesses, the SEC countered, and thus cannot claim a Virginia trial will cost him supporting testimony.
SEC attorneys attacked the defense bid to move the case to Rochester as a delaying tactic, and cited court statistics that show cases move faster on the SEC’s home turf. They also reminded the court that settling defendants so far have paid or agreed to pay almost $262,000 in disgorged profits, the fate of which ultimately will be in the court’s hands.
Allowing a change of venue and thus separating anticipated returns from Farrell and Vasile makes no sense, the SEC insists, since claims made by the injured against profits disgorged from a single scheme should all be made in one place.

x

Check Also

faheem-masood

Rochester Biz Conversations: Faheem Masood, ESL Federal Credit Union

ESL Federal Credit Union President and CEO Faheem Masood talks to the RBJ about managing an organization during a pandemic, the changing relationship with customers, the steps ESL has taken to help the community get through this crisis, and more.

Stephen A. Rossi

A focus on quality in the midst of the pandemic (access required)

Now that we are in the midst of the COVID pandemic, there has been a lot of talk about the ...