Former Apple lawyer accused of insider trading says charges unconstitutional

Posted:
in General Discussion edited April 2020
Gene Levoff, Apple's former senior director of corporate law, continues to fight charges of insider trading and on Monday asked that his indictment be dismissed citing an argument of constitutionality.


Gene Levoff | Source: Bloomberg


Levoff was formally indicted by the U.S. Attorney's Office for the District of New Jersey in October for conducting multiple stock trades made based on information learned from early access to Apple's revenue and earnings disclosures.

According to his lawyer, Kevin Marino, the prosecution is unconstitutional because Levoff's actions are not expressly prohibited by any one criminal law, reports Bloomberg.

"The definition of insider trading is wholly judge-made: Every element of the crime and the scope of regulated individuals subject to it was divined by judges, not elected legislators," Marino said in a court filing. "This alone renders the criminal prosecution of insider trading unconstitutional."

As noted by Bloomberg, courts have failed to examine the constitutionality of a federal common law of insider trading despite years of upholding criminal indictments in such cases.

Whether the tactic will succeed is unclear, as the Supreme Court dealt with a similar, albeit not identical, insider trading case as recently as 2016. At the time, the highest court in the land appeared to have no problem with the process's constitutionality.

As part of Apple's Disclosure Committee, Levoff had access to company financials prior to public reporting. According to prosecutors, he used that information to seek unjust enrichment through a series of beneficial stock trades that generated $227,000 in profits and avoided $377,000 in potential losses. The conduct dates back to 2011 and intersects with a blackout period tied to Apple's wider trading policy. Ironically, Levoff was in charge of the initiative and would sometimes perform illicit trades after notifying others of the restrictions.

Levoff faces six counts of security fraud and six counts of wire fraud, each of which carries a maximum penalty of 20 years in prison. In addition, the securities fraud counts carry a $5 million fine, while the wire fraud counts rate a fine of $250,000 or twice the gain derived from or loss caused by the offense.

Apple in a statement to AppleInsider last year said Levoff's indiscretions were first brought to its attention in 2018. A thorough investigation led to his dismissal that same year.

Levoff is currently out on bail after being formally charged by the U.S. Securities and Exchange Commission in February of 2019.
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Comments

  • Reply 1 of 24
    crowleycrowley Posts: 10,371member
    Ballsy dude.
    longpathGeorgeBMac
  • Reply 2 of 24
    maestro64maestro64 Posts: 5,036member
    I would like to this play out to the end at the Supreme Court.
    longpath
  • Reply 3 of 24
    longpathlongpath Posts: 386member
    The notion that SCOTUS has examined some involving insider trading but not this specific issue shouldn’t surprise anyone familiar with SCOTUS. For a long time, the only SC case on Amemdment 2 was US v Miller, and they never looked at the constitutionality of the National Firearms Act because the plaintiff literally didn’t show up to present the argument. If neither side in cases before SCOTUS raise an issue in their argument, they generally won’t even look at that matter. Even in cases where the court considered a particular argument, in rare instances, they will reverse a previous position, in spite of the legal tradition of Stare Decisus. Dred Scott is an example of a case whose fundamental finding was subsequently reversed by a later court.
    DAalseth
  • Reply 4 of 24
    Anilu_777Anilu_777 Posts: 360member
    Constitutionality??? What a sneaky way to try to get away with something. 
    GeorgeBMac
  • Reply 5 of 24
    geekmeegeekmee Posts: 587member
    I am not a lawyer, but it sounds like he’s trying to tie this up in court by appealing an angle that was not considered in his case, which obligates SCOTUS to hear it, correct? That would make his real defense an attempt to delay and prolong the case, by distraction.
    edited April 2020 longpathGeorgeBMac
  • Reply 6 of 24
    seanismorrisseanismorris Posts: 1,624member
    crowley said:
    Ballsy dude.
    Will that make him more, or less, popular in prison?
    avon b7StrangeDayscincyteeGeorgeBMac
  • Reply 7 of 24
    I do know that there are people who support the idea that insider trading should be legal. Commentator George Will, I believe, holds this point of view. I think this lawyer is gambling that the political direction of the highest court would be sympathetic to this argument. After all, the Supreme Court declared that laws restricting campaign contributions of independent entities as a violation of freedom of speech.
    GeorgeBMac
  • Reply 8 of 24
    tyler82tyler82 Posts: 1,010member
    I’m rich, the rules don’t apply to me defense. 
    dewmeGeorgeBMac
  • Reply 9 of 24
    seanismorrisseanismorris Posts: 1,624member
    the monk said:
    I do know that there are people who support the idea that insider trading should be legal. Commentator George Will, I believe, holds this point of view. I think this lawyer is gambling that the political direction of the highest court would be sympathetic to this argument. After all, the Supreme Court declared that laws restricting campaign contributions of independent entities as a violation of freedom of speech.
    LOL

    Stock manipulation is good for someone, right?
    GeorgeBMac
  • Reply 10 of 24
    asdasdasdasd Posts: 5,686member
    judge made law is essential to common law systems. Anyway I’m pretty sure there’s legislation on this. 
    GeorgeBMac
  • Reply 11 of 24
    larryjwlarryjw Posts: 945member
    Interesting take on insider trading. 

    But, he’s also an attorney working for Apple, with fiduciary responsibilities, and reasonably clear attorney-client limitations. Legal ethics alone makes his alleged actions problematic.

    I don’t think any court will bite at this defense given his former position with the company. 
  • Reply 12 of 24
    maestro64 said:
    I would like to this play out to the end at the Supreme Court.
    Would the conservatives on the SC really want to rule in favor of judges not being able to define laws? Sure, the GOP likes to say they oppose "legislating from the bench", but the reality is that's exactly what they're hoping for by packing the courts with conservative judges. And just look at Bush v. Gore, which was a majority conservative decision from the SC. Does the Constitution say that the SC gets to determine who wins a presidential election? No. Was there a legal precedent for the SC to declare Bush the winner of Florida when nobody actually knew for sure who had the most votes in Florida? No. But they did it anyway. 
    dewmeGeorgeBMac
  • Reply 13 of 24
    MplsPMplsP Posts: 3,686member
    Several years ago, one of the big criminal defense lawyers in town got a ticket for driving in the carpool lane. He tried to fight it because the sign said “2+ person carpools” but did not say “2+ person carpools only” This strikes me as the same - a slimy lawyer trying to get away with something he knows is illegal based strictly on a technicality he made up after the fact.
    GeorgeBMac
  • Reply 14 of 24
    red oakred oak Posts: 950member
    Think of the amount of Apple RSU $ he could have earned by just doing his job 

    What a dumb f***
    StrangeDays
  • Reply 15 of 24
    dewmedewme Posts: 4,405member
    Wouldn’t a ruling in his favor have a universal chilling effect on everyone who invests in any “publicly traded company?” This goes against everything that being a company principal with fiduciary responsibility entails. At its core this is about trust. Who the hell would invest in a company that they cannot trust? Yes, there is always risk involved in investing, but without the existence of a trust relationship you may as well invest in a drug cartel.   
    GeorgeBMac
  • Reply 16 of 24
    cincyteecincytee Posts: 376member
    According to his lawyer, Kevin Marino, the prosecution is unconstitutional because Levoff's actions are not expressly prohibited by any one criminal law, reports Bloomberg.
    No, he didn't break any one criminal law; he broke lots of them. :D
    GeorgeBMac
  • Reply 17 of 24
    davendaven Posts: 646member
    Next line of defense... politicians do it so why can't I?
    GeorgeBMac
  • Reply 18 of 24
    GeorgeBMacGeorgeBMac Posts: 11,421member

    "The definition of insider trading is wholly judge-made: Every element of the crime and the scope of regulated individuals subject to it was divined by judges, not elected legislators," Marino said in a court filing. "This alone renders the criminal prosecution of insider trading unconstitutional."

     
    LOL....  And if it had been made explicitly by "elected legislators" he would argue that it was a political problem rather than a legal one!

    That's one more example of the corruption running rampant throughout the public & private sectors of the country. 
    Meanwhile, honest people just want to earn a paycheck and have some reasonable assurance of safety and securty.

  • Reply 19 of 24
    GeorgeBMacGeorgeBMac Posts: 11,421member
    maestro64 said:
    I would like to this play out to the end at the Supreme Court.

    We already know how they would rule:   and it would be 5:4 in favor of "Do whatever you can get away with.  And, if you get caught, we'll cover for you!"
    dewme
  • Reply 20 of 24
    egrassegrass Posts: 8member
    The Outrage! --> 'I have been charged with crimes made up by courts that never passed by any legislature!!'

    The Reality --> "Levoff faces six counts of security fraud [a statutory crime] and six counts of wire fraud [a statutory crime], each of which carries a maximum penalty of 20 years in prison [the statutory penalty]. In addition, the securities fraud counts carry a $5 million fine, while the wire fraud counts rate a fine of $250,000 or twice the gain derived from or loss caused by the offense [also the statutory penality]"

    Good luck my dude!  For 
    your next one, argue how taxes are unconstitutional.
    GeorgeBMac
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