By Sarah N. Lynch
WASHINGTON, Dec 13 (Reuters) - A former Wells Fargo banker
was arrested on Thursday on charges of fraud, conspiracy and
money laundering resulting from an insider-trading scheme that
netted its participants $11 million, the Justice Department
John Femenia, 31, stole non-public information about
upcoming mergers from the bank, in exchange for kickbacks from
his high school friend, Shawn Hegedus, 32, and Hegedus'
girlfriend, Danielle Laurenti, 31, prosecutors said.
Hegedus, Laurenti and six others used the information to
trade on, the department said.
Hegedus, who is facing the same charges as Femenia, and
Laurenti, who is facing the same charges except for bank fraud,
are fugitives, the Justice Department said.
The remaining six defendants, a web of friends and
acquaintances, who allegedly obtained the nonpublic information,
have all agreed to plead guilty to conspiracy to commit
The criminal charges against Femenia come roughly one week
after the U.S. Securities and Exchange Commission filed related
A Wells Fargo spokeswoman previously told Reuters that the
bank only learned about the SEC's civil charges against Femenia
a day before they were filed and immediately placed him on
Femenia worked for Wells Fargo as a banker, first in
Charlotte and later in New York City, according to the
"Mr. Femenia is no longer employed at Wells Fargo and we are
continuing to assist the SEC and U.S. Attorney with their
actions." a spokeswoman for the bank said on Thursday.
Scott Morvillo, an attorney representing Femenia in the
criminal and civil matter, was not immediately available to
comment. Attempts to reach Femenia, Hegedus and Laurenti were
Starting in March 2010, Femenia learned about a pending
acquisition through the course of his work. He allegedly called
Hegedus, and gave him the details in exchange for payoffs,
according to the indictment.
Hegedus and Laurenti also traded on the information using a
brokerage account in the name of certain entities they
controlled, the indictment alleged. Hegedus also called an
acquaintance, who allegedly traded on the information and then
again passed the tip on to others.
Femenia is accused of leaking information about four pending
mergers, according to the indictment.
Femenia's kickbacks in exchange for the information came in
several forms, from gold bars to cash, the department said.
In one instance, prosecutors from the U.S. Attorney for the
Western District of North Carolina said Hegedus bought 550 gold
bars with proceeds from the trading, while Femenia sold four of
them for $70,877 to a precious metals dealer.
In addition, the department accused Hegedus and Laurenti of
laundering the insider-trading proceeds through a Las Vegas
casino, and it accused Femenia and Hegedus separately of
committing mortgage fraud with the purchase of a luxury home in
Additional reporting by Rick Rothacker)
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