The Federal Bureau of Investigation has agreed to settle a lawsuit over wiretaps that allegedly captured intimate phone calls between convicted Galleon Group ex-trader Craig Drimal and his wife.
The settlement comes as an FBI agent faces a criminal investigation for leaking details of a separate insider-trading investigation to the New York Times and Wall Street Journal. In that case, Las Vegas gambler Billy Walters may try to escape insider-trading charges based on the leaks, which a federal judge said left him feeling “shocked.”
Arlene Villamia Drimal sued 16 current and former FBI agents who tapped Drimal’s phone during an insider trading investigation that also brought down Galleon Group co-founder Raj Rajaratnam. The agents “wrongfully intercepted” more than 180 private calls between her and her husband from November 2007 to January 2008, Arlene Drimal said in her complaint, filed in 2012 in Connecticut federal court.
Arlene Drimal claimed the agents were required to stop listening to wiretaps once it became apparent they were between husband and wife. Such conversations are considered confidential and can’t be used in court.
Agents improperly listened to many of the calls, including one instance that the U.S. Attorney in New York later characterized in court papers as “indefensible,” according to Arlene Drimal’s complaint. Arlene Drimal didn’t make the content of the calls public, other than to say that many “involved deeply personal and intimate issues.”
A judge in 2011 said he was “deeply troubled” by the agency’s failure to stop listening to unrelated, personal calls.
A federal appeals court threw out Arlene Drimal’s lawsuit in May, but said it could go forward if it focused on fewer people. The judge overseeing the case then allowed some claims to proceed against three of the defendants. The settlement was disclosed in a Dec. 5 court filing in which government lawyers said the agreement had been approved by the FBI and was being reviewed by the Department of Justice.
Arlene Drimal’s lawyer, John R. Williams, didn’t immediately respond to voice-mail ande-mail requests for comment. Tom Carson, a spokesman for the U.S. Attorneyin Connecticut and Kelly Langmesser, a spokeswoman for the FBI in New York,also didn’t immediately return voice-mail and e-mail messages.
Craig Drimal was sentenced to 5 1/2 years in prison in 2011 after pleading guilty to making $6.47 million from trading on inside information obtained from lawyers working on transactions involving 3Com Corp. and Axcan Pharma Inc. He was released from prison in September.
Walters was charged in May with trading shares of Dean Foods Co. based on inside tips from Thomas Davis, the company’s former chairman, who pleaded guilty and is cooperating with investigators. Walters pleaded not guilty. Golfer Phil Mickelson, who was also investigated by the FBI, reached an agreement with the SEC to return proceeds of almost $1 million. He wasn’t accused of wrongdoing.
Rajaratnam was convicted in 2011 of 14 counts of conspiracy and securities fraud after a trial in 2011. He’s serving an 11-year prison sentence.
(c) 2017, Bloomberg ยท Bob Van Voris
