A former executive on Friday was charged with orchestrating an elaborate insider-trading scheme that involved a kickback of over ten pounds of marijuana, the Securities and Exchange Commission said.
In a complaint filed in the U.S. District Court in the Northern District of Illinois, the SEC alleges that Shane P. Fleming, a former vice president of sales at Life Time Fitness Inc., learned of a merger that would take the company private in 2015. He informed his friend, Bret J. Bershey, who enlisted two friends, Christopher M. Bonvissuto and Peter A. Kourtis, to use the information of the merger and split the profits, the SEC alleges.
Kourtis then tipped off a group of traders, Alexander T. Carlucci, Dimitri A. Kandalepas, Austin C. Mansur, and Eric L. Weller, and asked them to share any profits they made from trading on the information, the complaint said. The six traders purchased 2,000 call options for share of Life Time Fitness, and sold the options for profits of $US866,209 after it was reported that the company was in merger discussions with two private equity firms, the complaint said.
Bonvissuto and Kourtis shared a portion of their profits with Beshey, who gave around $US10,000 in cash to Fleming, the complaint said. The SEC alleges that Carlucci and Mansur also paid kickbacks to Kourtis, and that Weller gave Kourtis at least 10 pounds of marijuana as a kickback.
“Beshey allegedly tried to mask his role in this scheme by recruiting others to trade on inside information rather than trading himself,” Joseph G. Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, said in an announcement. “Through our ever-evolving investigative tools, we were able to thwart Beshey’s efforts at concealment by uncovering trading by his immediate and downstream tippees and tracing those trades back to him.”
The U.S. Attorney’s Office for the Northern District of Illinois also announced criminal charges against all eight defendants on Friday.
Business Insider first noticed this story after a tweet from Axios reporter Dan Primack.
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