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Friday, January 10, 2014

The Martoma trial begins

This afternoon, attorneys offered opening arguments in the trial of Mathew Martoma, one of the SAC Capital traders who allegedly engaged in inside trading.  As I reported yesterday, evidence has surfaced indicating that Martoma was expelled from Harvard Law School in 1999.  Yesterday, I speculated that this history -and his likely failure to disclose it to organizations later in his life (including Stanford Business School) would have made it very difficult for Martoma to become a criminal cooperator.  

Today, we learned more about Martoma's problems at Harvard.  The allegations, to put it mildly, are shocking [go to page 13 if you want to see the primary document]. 

According to the Findings of Fact and Decision of the Administrative Board of Harvard Law School, which conducted a hearing on the matter, Martoma: (a) changed several of his first year grades on his transcript [Civ Pro - from a B to an A; Criminal Law, B to an A; and Contracts, B+ to an A, which gave him first year grades of 4A's, an A- and a B+]; (b) included this transcript in his clerkship application to 23 federal judges, including appellate judges on the DC Circuit; (c) conducted interviews with Judges Randolph, Ginsburg and Sentelle, knowing at the time that they had the "wrong" transcript in their possession; and (d) pretended to have "withdrawn" the applications voluntarily on February 1st when in fact he did not actually withdraw the applications until February 2nd, when Harvard's Registrar and Dean of Students confronted him.

Martoma (whose last name at the time was "Thomas" - he changed it after he left law school) claimed he intended only to impress [um, defraud?] his parents, and that he never expected the transcripts to reach the appellate judges.  How did they make their way to the DC Circuit?  Martoma told the Administrative Board that his brother inadvertently used the wrong transcript [that Martoma just left lying around???] to stuff Martoma/Thomas' judicial clerkship application envelopes.  

Why is any of this relevant to today's trial for insider trading?  According to the government's filing, Martoma's prior history demonstrates his ability to fabricate and alter computer evidence, and to the extent the defense wishes to make an issue of the absence of certain computer forensic evidence (the insider who leaked information to Martoma claims he sent Martoma an email and yet there is no evidence of that email on Martoma's computer, if I'm reading this correctly), the government wishes to preserve its ability to show Martoma's skill in altering computer evidence.  

No word yet on whether the court has ruled on the government's motion, although I assume it will wait to see how the trial unfolds. 

Meanwhile, I couldn't help but note that two members of the 12-member jury were lawyers.  One works for PriceWaterhouseCooopers and the other is a labor/employment lawyer who has worked on FCPA investigations.  I am curious how this may (or may not) affect the ultimate verdict.  

Posted by Miriam Baer on January 10, 2014 at 10:33 PM | Permalink


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