Defendant “Wiped” Her Laptop…But That Didn’t Help. “A Trial of the Heart”.
He was a high-level partner at Ernst & Young. She was an employee of a trading firm. They met at “AshleyMadison.com”, a website designed to help people search for extramarital affairs. Soon the Ernst & Young partner was feeding insider information with his new friend… and using a Yahoo Finance page to do it.
James Gansman, the Ernst & Young partner was also a Manhattan attorney. He was enjoying his new relationship with Donna Murdoch, an employee of Keystone Equities Group. Gansman, who was privy to the inside scoop as a merger consultant at E & Y, began to create a “game” with Ms Murdoch…giving her tidbits of information about the deals he was working on and then teasing her to try to “guess” which companies were involved.
“Before deals happened…there would be sort of this guessing game that he started where he would say, “I got a new deal and let’s see if you can guess the name of the company.”
-Donna Mudock describing insidertrading tips provided by James Gansman
At some point, the two would play their game remotely while each of them were logged on to a Yahoo Finance page. Ultimately, Ms. Murdock apparently “guessed” right, and used her position at Keystone Equities Group to trade on 18 deals, netting over $400,000 in profits between 2005 and 2007. Unfortunately, this little game caught the attention of SEC investigators who thought Ms. Murdock’s trading around the timing of key deals was just a little suspicious. The investigation was on.
Murdock wiped her laptop when she became aware of the investigation. That didn’t help. Investigators were able to recover valuable Electronically Stored Information (ESI) from other sources. Murdock finally cut a deal and testified against Mr. Gansman. He was convicted on 6 counts of securities fraud.
- We told you…It’s on a computer. Remember, perpetrating a fraud or other misconduct almost always involves the creation of electronic evidence on a computer or server. Target these devices during your investigation or during discovery.
- Computer wiping does not kill your case. In fact, in some cases it can help. In this case, for example, prosecutors were able to use the wiping as indication of the defendant’s criminal intent to destroy evidence. The use of wiping software almost always creates new electronic evidence that can help prove your case.
- ISPs and Web Service Providers have data you can get. Don’t forget to go after those records and ESI as needed. Some web providers, for example, have sophisticated logging features and are required to preserve ESI related to user activity. The duration that they preserve the data, however, varies widely, sodon’t wait too long to place your request for ESI from data hosting companies, ISPs, or web sites. Not sure how to get this data from an ISP? Give us a call, we can help.