Don Chu was arrested in Franklin Township in New Jersey this morning, bright and early at 6 am, without incident, the FBI said. He was due to fly to Taiwan on November 28, which is apparently why feds moved quickly to take him into custody.
The FBI said 56-year-old Chu was nabbed for conspiracy charges connected to his employment at an “expert-networking” company.
That expert networking firm is reportedly Primary Global Research, where Chu worked.
Chu’s alleged scheming involved promoting PGM’s consultation services by arranging for insiders at publicly-traded companies to provide “material, nonpublic information to [the firm’s] hedge fund clients,” which could then be used for “executing profitable securities transactions”, aka, could help to net those funds some extra cash.
The complaint against Chu documents his relationship with Richard Lee, which began in 2008. Lee is the co-founder of Spherix Capital LLC and an SAC Capital alumnus, who pleaded guilty and is cooperating with prosecutors in its probe of the Galleon Group hedge fund.
He has been charged on two counts of conspiracy:
- One count of conspiracy to commit securities fraud, which carries a potential penalty of 5 years in prison and a fine of $250,000 or twice the gross gain or loss from the offence.
- One count of conspiracy to commit wire fraud and fraud in connection with securities, which carries a maximum potential penalty of 25 years in prison and a fine of $250,000 or twice the gross gain or loss from the offence.
According to the FBI:
Chu… served as a liaison for [PGM] to consultants and sources of information in the United States and elsewhere. CHU promoted [PGM’s] consultation services by arranging for [PGM] consultants to provide Inside Information regarding certain public companies’ earnings releases for the purpose of executing profitable securities transactions.
The complaint details some specific instances of what the Feds claim is illegal activity:
The full document:
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