Japan’s Nikkei 225 index and New York Dow index at a securities firm in Tokyo, Tuesday, April 3, 2018. Asian stocks have fallen for a second day amid jitters about U.S.-Chinese trade tensions and mounting scrutiny of technology companies. (AP Photo/Eugene Hoshiko)

United States Attorney Brandon J. Fremin announced this week that U.S. District Judge John W. deGravelles sentenced KELLY LIU,  age 33, of Baton Rouge, Louisiana, to 16 months in federal prison following her convictions for securities fraud (insider trading) and conspiracy to commit securities fraud.  The Court also sentenced LIU to pay a fine of $7,500 and to serve 1 year of supervised release following her term of imprisonment.

In May of this year, a jury found LIU and her two co-defendants guilty as charged in connection with an insider trading scheme related to the 2012 acquisition of the Shaw Group (“Shaw”) by Chicago Bridge and Iron Company (“CB&I”).  According to evidence presented at trial, in mid-2012, Shaw was considering a potential merger opportunity.  At the time, LIU was working in Shaw’s Financial Planning and Analysis Department on Essen Lane.  In July 2012, Shaw and CB&I came to an agreement on an offer for CB&I to buy Shaw.  This merger between the two companies was publicly announced on July 30, 2012 (“the public announcement”).  As a result of the public announcement, Shaw’s stock price rose by around 55 percent.

The evidence at trial established that, prior to the public announcement and through her job at Shaw, LIUobtained inside information that Shaw was going to be acquired by another company.  She subsequently passed the inside information to Victory Ho (“Ho”), through another individual, and to her former boyfriend, Salvador J. Russo, III (“Russo”), for their use in trading Shaw stock and options.  Documents and testimony presented at trial also showed that, in the months leading up to the public announcement, LIU was assisting a Ho family business with obtaining financing and insurance on a real estate project in Morgan City, Louisiana.

Based on the information provided by LIU, Ho and Russo purchased Shaw stock and options before the public announcement.  Through these purchases, Ho reaped almost $300,000, and Russo secured a profit of approximately $4,000 on a $5,000 investment.

On October 24, 2018, co-defendant Victory Ho, age 39, of Morgan City, was sentenced to 32 months in federal prison, ordered to forfeit over $300,000 and to pay a $15,000 fine, following his convictions in the same insider trading scheme.

On October 30, 2018, co-defendant Russo, age 35, of Baton Rouge, was sentenced to 16 months in federal prison following his convictions in the same scheme.

United States Attorney Fremin stated, “This investigation and prosecution of another company insider should serve as a strong deterrent to others in the future.  It is crucial that investors in the Middle District of Louisiana and across the country know that federal law enforcement will devote substantial resources to safeguard and protect a level playing field in the financial markets.  Once again, I appreciate the team of agents from FBI, Secret Service, and IRS-Criminal Investigation, along with the staff and prosecutors from my office, who devoted countless hours to this investigation and prosecution.”

Passing private information regarding stock transactions in the hopes that it will yield big returns for certain insiders is not savvy investing; it’s criminal activity,” stated Thomas J. Holloman, III, IRS – Criminal Investigation Special Agent in Charge. “Today’s sentence reinforces our commitment to every American that IRS – Criminal Investigation will work diligently to protect the assurances of market integrity that should be afforded to all investors.

Tara McLeese, Resident Agent in Charge of the Secret Service Baton Rouge office stated “The justice delivered in this case highlights a successful joint investigative effort undertaken by several agencies in the Baton Rouge area. The United States Secret Service will continue our relentless pursuit of those who seek to endanger the financial integrity of the United States for their own benefit and will continue to work in unison with our federal, state and local partners.”

FBI Special Agent-in-Charge Eric J. Rommal stated, “The FBI New Orleans Field Office will continue to work with our federal, state, and local partners to uphold the integrity of the nation’s securities and commodities markets.  The selfish, illegal, and unethical behavior of Kelly Liu will not be tolerated.  Corporate insiders like Kelly Liu, and her co-conspirators, Ho and Russo, who unjustly enrich themselves using material non-public information, will be held accountable for their actions.”

This matter is being handled by the U.S. Attorney’s Office for the Middle District of Louisiana and the Baton Rouge offices of the FBI, Secret Service, and IRS-Criminal Investigation.  It is being prosecuted by Assistant United States Attorneys Chris Dippel and Patricia Jones.

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