Criminal Complaint Against 2 Insider Traders With Shades of 'Wall Street

8/9/2019 Criminal Complaint Against 2 Insider Traders With Shades of 'Wall Street'

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Approved:

Before:

LEXANDER J WILLSCHERMARISSA MOLWILLIAM J . STELLMACHAss i s t an t United Sta t e s AttorneysHONORABLE GABRIEL W. GORENSTEINUnited Sta tes Magis t ra te JudgeSouthern Dis t r i c t of New Yf.rO M1\ G 5 6


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and knowingly, d i rec t l y and i nd i r e c t ly , by the use of the meansand i n s t rumen ta l i t i e s of i n t e r s t a t e commerce, and of the mails ,and of f ac i l i t i e s of na t iona l secu r i t i e s exchanges, would and diduse and employ, in connect ion with the purchase and sa le ofs ecu r i t i e s , manipulat ive and d e cept iv e d ev ic es and contrivancesi n v io la t ion of Ti t l e 17, Code of F ederal R egulations , S ec tion240.10b-5 by: (a) employing devices , schemes and a r t i f i c e s todefraud; (b) making untrue s ta temen ts o f mater ia l f a c t andom itt in g to s t a t e mater ia l fac t s necessary in order to make thes ta tements made, in the l i gh t of the circumstances under whichthey were made, not misleading; and (c) engaging in a c ts ,prac t i c e s and courses of bus iness which operated and wouldoperate as a f raud and dece i t upon persons , a l l in v io la tio n ofTi t l e 15, United Sta tes Code, Sect ions 78j (b) and 78f f , and Ti t l e17 , Code of Fede ra l Regul at ion s, Sect ion 240.10b-5.

Overt Acts3. In f urth era nc e of the conspiracy and to e f f ec t thei l l e g a l o b je cts th ere of , IGOR POTEROBA and ALEXEI P. KOVAL, a /k / a"Aleksey Koval ," th e defendants , committed the fol lowing ove r tac t s , among o ther s , in the Southern Di s t r i c t of New York andelsewhere:a . On o r about July 12, 2005, POTEROBA asked a bankerabout the s t a tus of the acqu i s i t ion of G uilfo rdPharmaceutica ls , Inc. ("Gui l ford") , a companywhose secu r i t i e s t raded on the NASDAQ under the

t r ad ing symbol "GLFD," and was informed t ha t theGui l ford board of di rec tors would decide onSunday, July 17, 2005;

b. On o r about July 13, 2005, POTEROBA asked KOVAL bye-mai l to give him a ca l l ;c. On o r about Ju ly 13, 2005, POTEROBA sen t an e-mail

to KOVAL s t a t i ng : "Keep me pos ted as to how Manyf requent f l i e r miles you 've got t h i s fa r and howmany you plan to get by Friday[ . ]" POTEROBA l a t e rcontinued: ; "Plans fo r a t r ip look f ine so fa r" ,and "Worst case we can ge t a refund by Monday[.]";d. On o r about July 14, 2005, KOVAL responded toPOTEROBA: "As I mentioned, I j u s t go t in to th i sf requent f l i e r program. I got f ive thousand ofs ign- in bonus miles but th inking maybe i f I f ly

of ten , I wi l l ge t add i t iona l th ree to f ive Kmi l e s . . " ;2


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e . On or about Ju ly 14/ 2005/ KOVAL wiredapproximate ly $5/000 from a persona l bank accounti n to a t r ad ing account held in the name of a coconsp i ra to r not named as a defendant herein ("CC1" and the "CC-1 Terra Nova Account") and/ on o rabout July 15/ 2005/ the CC-1 Terra Nova Accountpurchased 2/100 shares of G uilfo rd common s tockfo r a t o t a l cos t of approximate ly $4 / 983 j

f . On o r about January 22/ 2007/ POTEROBA and KOVALexchanged a se r i e s of emails re la ted to a weddingr eg i s t ry a t Macy/s during which POTEROBA s ta ted toKOVAL/ " sa le ends on Fr iday"jg. Between January 22/ 2007 and F rid ay / Ja nu ary 26/2007/ KOVAL/ using the CC-1 Terra Nova Account/purchased 500 shares of common s tock and 25 ca l lopt ion c on tra cts fo r Molecular Devices Corporat ion("Molecular") / a company whose s ecur i t i e s t radedon the NASDAQ under the sYmbol "MDCC"j

h. On o r about Friday/ January 23/ 2009/ POTEROBAmade three ca l l s to KOVALji . On o r about Monday/ January 26/ 2009/ KOVALpurchased 14/000 shares of PharmaNet DevelopmentGroup/ Inc. ("PharmaNet") / a company whosesecu r i t i e s t raded on the NASDAQ under the sYmbol"PDGI/" using the CC-1 Terra Nova Account j andj . Between on o r about January 26/ 2009/ and on orabout February 2/ 2009/ KOVAL purchased a t o t a l ofapproximate ly 30/000 shares of PharmaNet throughthe CC-1 Terra Nova Account.

(T i t l e 18/ United Sta tes Code/ Sect ion 371.)COUNTS TWO THROUGH FOUR(Secur i t i e s Fraud)

4. On o r about th e da tes se t fo r th below/ in theSouthern Dis t r i c t of New York and elsewhere / IGOR POTEROBA andALEXEI P. KOVAL/ a /k / a "A leksey Kova l/ " the defendants /unlawful ly / wi l l fu l l y and knowingly / d i rec t l y and i nd i r e c t ly / byth e use of the means and i n s t rumen ta l i t i e s of i n t e r s t a t ecommerce/ and of the mails / and of the f ac i l i t i e s of na t iona lsecu r i t i e s exchanges/ in connec ti on w i th the purchase and sa le of

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secu r i t i e s , d id use and employ manipulat ive and decep t ive devicesand cont r ivances , in v io l a t i on of Ti t l e 17, Code o f Federa lRegu la tio ns , S e ctio n 240.10b-5 , by: (a) employing dev ices ,schemes and a r t i f i c e s to defraud; (b) making unt rue s ta teme nts o fmate r i a l f a c t and omit t ing to s t a t e mater ia l fac t s necessary inorder to make th e s ta tem en ts made, in th e l i gh t of theci rcumstances under which they were made, n ot m is le ad in g; and(c) engaging in a c ts , p ra c t ic e s and courses o f bus iness whichopera ted and would opera te as a f raud and dece i t upon persons, towi t , KOVAL and CC-1 both executed th e s ecur i t i e s t r ansac t ionsl i s t e d below based on mater ia l , nonpubl ic in fo rmat ion t ha tPOTEROBA provided to KOVAL:

COUNT DATE SECURITY TRANSACTIONTWO Ju ly 13, 2005 Gui l fo rd Purchased 9,980

to Ju ly 19, Pharmaceutica ls , shares of common2005 Inc . s tock and 198 ca l lopt ions , and so ld450 shares ofcommon s tock

THREE January 22, Molecular Purchased 5002007 to January Devices shares of common26, 2007 Corporat ion s tock, 25 ca l lopt ions , and soldshor t 3 ca l lopt ions

FOUR January 26, PharmaNet Purchased 182,4902009 to Development shares of commonFebruary 2, Group, Inc . s tock2009

(T i t l e 15, United Sta tes Code, Sect ions 78j (b ) & 78f f ;Ti t l e 17, Code o f F ed eral R eg ula tio ns, Sect ion 240.10b-5;and Ti t l e 18, United S ta t e s Code, Sect ion 2 .)

The bas i s fo r my knowledge and the foregoing charge i s ,in pa r t , as fol lows:

5. I have been a Spec i a l Agent with th e FBI fo rapproximate ly e igh t yea rs . I am cur ren t ly ass igned to a squadre sp on sib le fo r i n v es ti g a ti n g v i o la t io n s of the f edera lsecu r i t i e s laws and re la ted of fenses . I have pa r t i c ipa t ed innumerous i nves t i ga t i on s of such offenses and I have made andp a rt ic ip a te d in making a r r e s t s of ind iv idua l s fo r pa r t i c ipa t ingin such of fenses .

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6. The i nforma ti on cont ai ned i n t h i s Complaint i sbased upon my p e r s o n a l knowledge, as well as i nfo rma t ion ob ta in eddur ing t h i s i n v e s t i g a t i o n , d i r e c t l y o r i n d i r e c t l y , from o t h e rs o u r c e s , as i n d i c a t e d below. Because t h i s a f f i d a v i t i s preparedf o r l i m i t e d purposes , I have n o t s e t f o r t h each and every f a c t Ihave l e a r n e d i n c onne ct io n w it h t h i s i n v e s t i g a t i o n . Wherec o n v e r s a t i o n s and events a r e r e f e r r e d t o h e r e i n , they a r e r e l a t e di n substance and i n p a r t u n l e s s i n d i c a t e d otherwise. Wheref i g u r e s and c a l c u l a t i o n s a r e s e t f o r t h h e r e i n , they a r eapproximate.

Relevant Ent i t i e s and Ind iv iduals7. Based on in format ion a v a i l a b l e t o t h e p u b l i c over

t h e I n t e r n e t , documents provided by employers, and lawenforcement d a t a b a s e s , I have l e a r n e d t h a t :a . At a l l t imes r e l e v a n t t o t h i s Complaint , IGORPOTEROBA, t h e defendant , was employed as ani nves tment banker i n t h e Heal thcare Group of UBSS e c u r i t i e s LLC ("UBS"), a r e g i s t e r e d broker-

d e a l e r . Since approximate ly i n o r about 2006,POTEROBA has served as an Execut ive D i r e c t o r a tUBS;b. Between i n o r about J u l y 2009 through a t l e a s t i n

o r a bo ut Octo be r 2009, ALEXEI P. KOVAL, a / k / a"A leks eyKoval," t he defendant , was employed as ap r i c i n g manager. Between i n o r about May 2006through a t l e a s t 2009, KOVAL was employed as ap r i c i n g group s u p e r v i s o r . Between i n o r aboutJune 2000 through i n o r about 2006, KOVAL wasemployed a t an a s s e t management company;

c . Between i n o r about J u l y 2007 through i n o r aboutMay 2008, CC-1 was employed i n Toronto. CC-1 i sb e l i e v e d t o be c u r r e n t l y r e s i d i n g i n Russ ia ;

d. POTEROBA, KOVAL and CC-1 emigra ted from Russia ands t u d i e d a t the U n i v e r s i t y of New Haven: POTEROBAgraduated i n 1995; CC-1 graduated i n 1997; andKOVAL a t t e n d e d i n 1996. I n a d d i t i o n , POTEROBAgraduated from Baruch College , C i t y U n i v e r si ty ofNew York, i n 1997, and KOVAL graduated from t h a ti n s t i t u t i o n i n 1998; and

e . Between i n o r about 1997 and i n o r about 2000,POTEROBA, KOVAL and CC-1 used the same o r s i m i l a r5


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addresses in New York Ci ty .Ins ider Trading Scheme

General Overview8. Based on a l l of the sources of informat ionre fe renced here in , inc luding a l l of the fac t s and circumstances

descr ibed in de t a i l below, I have p ro ba ble cau se to be l ieve thefol lowing:a . From a t l ea s t in o r about 2005 through a t l e a s t in

o r a bo ut F eb ru ary 2009, IGOR POTEROBA and ALEXEIP. KOVAL, a / k / a "Aleksey Koval ," the defendants ,and othe rs known and unknown, consp i red to and d idengage in a scheme to defraud by d isc los ingmate r ia l , nonpublic in fo rmat ion ( the "Ins ideInformation") and/or execut ing secu r i t i e st ransac t ions based on Ins ide Informat ionper t a in ing to a t l e a s t the fol lowing s ixcompanies: Gui l fo rd , Molecular , PharmaNet, ViaCel l , Inc . ("Via Cel l " ) , MillenniumPha rmaceutic als , I nc . ("Mil lennium") , and IndevusPharmaceut icals , Inc . ("Indevus") (co l l ec t ive ly ,the "Heal thcare Companies") i and

b. The means by which POTEROBA and KOVAL ef fec tua tedthe fraudulent scheme were as fo llo ws: POTEROBAo bta in ed th e Ins ide Informat ion in the course ofh is employment with UBS regarding ce r t a in mergersand acqu i s i t ions involving th e Heal thcareCompanies, and then, in v io l a t i on of h is du t ies oft r u s t and conf idence , d isc losed the Ins ideInformat ion to KOVAL, who in turn disc losed theIns ide Informat ion to CC-l. KOVAL and CC-l thenexecuted secu r i t i e s t ransac t ions based on theIns ide Information, earn ing a t o t a l p ro f i t of a tl e a s t approximate ly $870,000 from the scheme.

Conf iden t i a l i ty9. Based on my ana lys i s , re sea rch , and review ofdocuments, my work on p r i o r i nves t iga t ions r e l a t i ng to inves tmentbanks, and my conversa t ions with p er so nn el a t UBS, the United

Sta tes Secu r i t i e s and Exchange Commission ("SEC"), and o therind iv idua l s , I know t ha t investment b an kers su ch as IGORPOTEROBA, th e defendant , have a duty of conf iden t i a l i t y to t h e i remployers and t h e i r c l i en t s t h a t r equ i res bankers not to d isc lo se

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Ins ide Informat ion to o thers and p roh ib i t s them from t r ad ingbased on t ha t Ins ide Informat ion. I also know t ha t UBSd i s t r ibu te s po l i c i e s and procedures to i t s employees t ha tdescr ibe the investment bankers ' duty of conf iden t i a l i t y andproh ib i t ions on t r ad ing based on t h a t Ins ide Informat ion. I alsoknow t ha t UBS employees, inc luding POTEROBA, spec i f i ca l l yacknowledge t h e i r review of those po l i c i e s .

Poteroba ' s Access to Ins ide Informat ion a t UBS10. I know from speaking with a sen io r execut ive ofUBS's Investment Banking department and from reviewing documentsfrom UBS th a t in o r about Apr i l 2006, IGOR POTEROBA, th edefendant , rece ived new job r e sp o n s ib i l it ie s t ha t provided him

with access to in s ide informat ion about many of UBS's dealsr e l a t i ng to companies in th e heal thcare f i e l d .Ins ide r Trading in the Secur i t i e s of Gui l ford11. From my review of, among o th er th in gs , e-mai l s ,t rad ing records , bank records , phone records , and corpora tedocuments obta ined in the course of t h i s i nves t iga t ion , inc ludingdocuments from UBS and Gui l ford , I have l ea rned t ha t :a . At a l l t imes r e levan t to t h i s Complaint , Guil fordwas a bio-pharmaceut ical company based inBalt imore , Maryland, whose secu r i t i e s t raded on

the NASDAQ under the t r ad ing sYmbol "GLFD";b. On or about March 16, 2005, rep resen ta t ives of

Gu ilf or d d is cu s se d with UBS investment bankers theposs ib i l i t y of Guilford se l l i ng i t s e l f to a t h i rdpar ty ;c. On o r about March 16, 2005, UBS investmentbankers , inc luding IGOR POTEROBA, the defendant ,met to di scuss the Guilford t ransac t ion ;d. On o r about June 10, 2005, MGI Pharma ("MGI")conf iden t i a l ly advised Gui l ford t ha t MGI would pay$3.75 per share to a cqu ir e Gu ilf or d;e . On o r about Ju ly 8, 2005, UBS bankers discussedwith the board of di rec tors of Gui l ford UBS's due

d i l igence regarding MGI and i t s of f e r ;f . On or about July 12, 2005, a t approximate ly 9:16p.m. , IGOR POTEROBA, the d ef en dant , e -ma ile d

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ALEXEI P. KOVAL, a /k /a "A leksey Kova l, " thedefendant , s ta t ing :Cal l me tomorrow . i f I 'm on th el i ne , have me i n t e r rup ted . . One ofyour f r iends from US ca l l ed and sa idt ha t she would l i ke to get toge ther withyou a g a i n . . Let me know how mucht ime you want to spend with her. . Weshould arrange t h i s meeting ASAP .I r eca l l you had some th ings put away onmy beh a l f . . l e t me know what ' s l e f t

. otherwise hope to t a lksoon .g. Approximately twen ty minu te s l a t e r , POTEROBA emailed a member of the UBS team working on the

Guilford acquis i t ion: "wha t's th e dea l wi th G?"The o ther UBS banker responded t ha t UBS wouldl ea rn Gu i lf or d 's d ec is io n fol lowing a te lephonec on fe re nc e w it h the Guil ford board of d i r ec t o r s ono r about the evening of Sunday, July 17, 2005;

h. On o r about July 13, 2005, a t approximate ly 1:20p.m. , POTEROBA e-mai led KOVAL, s ta t ing : "can youp Is give me a ca l l i t [ r ] i e d you a couple oft imes and the ca l l i s not going t h r ough . ." ;i . Late r t ha t same day, between approximate ly 2 p.m.and 4 p.m., records fo r b roke rage a ccoun ts held by

CC-l and a co-conspira tor not named as a defendanthere in ("CC-2") r e f l e c t the fol lowing:i. At approximate ly 2:00 p.m., CC-l ' s TDAmer it ra de a ccoun t ( the "CC-l TD Am Account")purchased 2,400 shares of Gui l ford commons tock fo r a t o t a l cos t of approximate ly$5,435; andii. At approximate ly 3:48 p .m. , CC-2's TDAmer it ra de a ccoun t ( the "CC-2 TD Am Account")purchased 3,450 shares of Guil ford common

stock and 150 September 2.5 ca l l opt ions in

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Guil ford . 1j . On o r about Ju ly 13 r 2005 r a t approximate ly 8:37

p .m ' r POTEROBA e-mailed KOVAL r s t a t i ng : "Keep meposted as to how Many f requent f l i e r miles yourvego t t h i s f a r and how many you p lan to ge t byFr iday [ .] wi l l be in Boston tomorrow [ .] Plansfo r a t r i p look f ine so f a r [ . ] Worst case we cange t refund by MondaYr hopeful ly we do no t " . Asind ica ted above r POTEROBA had prev ious ly beenadvised by a member of the DBS Gui l fo rd team t ha tth e Guil ford board of d i r e c t o r s would reach adec i s ion on the evening of Ju ly 17 r a Sunday.

k. On o r about Ju ly 14 r 2005 r KOVAL wiredapproximate ly $ 5,0 00 from a personal bank accounti n to a t rad ing account he ld in th e name of "CC-1"( the "CC-1 Terra Nova Account")2 i1 . On o r about Ju ly 14 r 2005 r a t approximate ly 6:52

a .m' r KOVAL responded to th e emai l referenced insubparagraph (11) ( j ) : "As I mentioned r I j u s t goti n to t h i s f requent f l i e r program. I go t f ivethousand o f s ign- in bonus miles bu t th inking maybeif I f ly of ten r I wi l l ge t addi t iona l th ree tof ive K miles . " ;

m. At approximately 7:32 a .m' r POTEROBA r ep l i ed : "Onth e f requent f l i e r program t o p ~ c you mentioned r Ith ink you should s ign up fo r ano the r f l i gh t r i fyou canr s ince they are provid ing bonus mileagesoon rr .

n. Onor ab out Ju ly 15 r 2005 r a dd it io na l trad in g in

1 A " ca l l option" gives the purchaser the r i gh t to buy ace r t a in number o f shares ( typ ica l ly 100 shares) o f an under lyingsecur i ty a t a spec i f i ed pr i ce r un t i l th e spec i f i ed exp i ra t ionda te of th e c a l l opt ion ( typ ica l ly the t h i rd Friday of aspec i f i ed month). Thus r a "September 2.50 c a l l option" inGui l fo rd gives th e purchaser of the opt ion th e r i gh t to buy 100shares of Gui l fo rd s tock from th e s e l l e r of the opt ion a t a pr iceo f $2.50 per sharer un t i l the t h i r d Friday of September.

2 At th e t ime t ha t t h i s t r ade was made r th e account was kepta t RushTrade Secur i t i e s r which l a t e r became Terra Nova Financ ia l rLLC.9


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Guilford secu r i t i e s o ccurred a s fol lows:i . The CC-l Terra Nova Account purchasedapproximate ly 2,100 shares of Gui l ford common

s tock fo r a t o t a l cos t of approximate ly$4,983 .

ii. The CC-2 TD Am Account purchased anaddi t iona l 48 September 2.50 c a l l opt ions inGui l ford and so ld 450 shares o f G uilfordcommon s tock;

o. On or about July 18, 2005, KOVAL wired anotherapproximate ly $4,8 00 from a personal bank accountassoc ia ted with KOVAL in to the CC-l Terra NovaAccount;p. On o r about the evening of Ju ly 18, 2005, the

Guilford board of d i r ec to r s , in a meeting at tendedby UBS bankers , approved the MGI t ender of fe r ; andq. On o r about July 19, 2005, the CC-1 Terra NovaAccount purchased approx ima tely 2,030 shares ofGuil ford common s tock a t a cos t of approximately

$4,780 .12 . On o r about July 21, 2005, it was publ ic lyannounced t ha t Guil ford would be acqui red by MGI fo rapproximate ly $3.75 per share , and Gui l ford ' s share pr i ce rose toapproximate ly $3 .40 .13. On o r about Ju ly 27, 2005, the CC-2 TD Am Accountexerc i sed 70 September 2.50 c a l l opt ions in Gui l ford .14 . Between on o r about Ju ly 21 through on o r aboutJuly 27, 2005, the CC-l TD Am Account, the CC-2 TD Am Account,and the CC-l Terra Nova Account so ld a l l of t h e i r remainingGui l ford s tock and ca l l opt ions fo r an aggregate p ro f i t ofapproximate ly $22,020 , which represented a re turn ofapproximate ly 46 percent .I n s ide r Trading in the Secur i t i e s of Molecular15 . From my review o f , among o the r th ings , e-mai l s ,t rading records , bank records , phone records , and corpora tedocuments , inc luding do cuments from UBS ~ n Molecular, I l earnedt ha t :

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a . At a l l t imes r e levan t to t h i s Compla in t, Mo l ecu la rwas a biomedical company based in Sunnyvale,Cal i fo rn ia , whose s ecur i t i e s t raded on th e NASDAQunder th e sYmbol "MDCC"i

b. On o r about November 7, 2006, th e Board ofDirec to rs o f Molecular author ized UBS to ac t asMolecu lar ' s exclusive f inanc ia l advisor inc onne cti on w ith a p o te nt ia l s ale t r ansac t ion i

c . On o r about January 20, 2007, Molecular receivedf i na l bids from po t en t i a l bidders , and Molecular ' sboard of d i rec to rs author ized UBS to nego t ia teexclus ively with th e highes t b idder , MDS Inc .("MDS") i

d. On o r about January 21, 2007, and January 22,2007, two ca l l s were placed from the ce l l phonenumber of ALEXEI P. KOVAL, a /k /a "Aleksey Koval ,"th e defendant , to th e ce l l phone number of IGORPOTEROBA, the defendant . Following those ca l l s ,on or about January 22, 2007, th e CC-l Terra NovaAccount purchased 300 shares of Molecular commons tock , ten March 25 Molecular ca l l options, f iveFebruary 22.50 Mo le cu la r ca l l opt ions , and soldshor t th ree Apri l 25 Molecular ca l l opt ions i

e . On o r a bou t Ja nu ar y 22, 2007, POTEROBA and KOVALexchanged a se r ie s of e-mai l s . For example:i . At approximately 4:44 p.m. , POTEROBA e-mailedKOVAL, with the "Subject" l ine reading: "Letme know i f you've s t a r t ed your weddingre gis try a t Macys", and th e t ex t reading:"Happy to t a lk about sa les i tems and

e tc ... sa le ends soon ... so hurry up." iii. At approximately 5:20 p.m. , KOVAL responded:"Yep, I have s e t it up. Bet t e r do it nowwhen they have sa le . [ . .J It i s alwaysgood idea to know about coupons ava i lab le . It r y to follow up on th e r eba tes programs

cur ren t ly in p lace bu t of ten miss many due toth e lack of time. Thanks fo r point ing it outto me. Although wedding day i s not ye tannounced, I hope to get a l l the importanti tems ahead of t ime: I even s t a r t ed buyingsmall things t ha t usua l ly no t important un t i l

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you need them. Regards ," ;iii. At approximate ly 5:22 p.m. , POTEROBA r ep l ied :"Good po in t s .... sa le ends on Friday .... see i fyou can get reg i s t e red fo r as many i tems as

poss ib le ...more you ge t now ...more yousave .... We should s t a r t tr ac kin g th eseevents more ac t ive ly .... Happy to help youprepare fo r the b ig day!";

f . A r ep resen ta t ive of Macy's has advised me t ha t asearch o f Macy's b us in es s r ec or ds was unable tof ind any r eg i s t ry fo r e i t he r KOVAL o r h is wife ;

g. Between on o r about January 22, 2007 and on o rabout Fr iday , January 26, 2007, the CC-1 TerraNova Account purchased in t o t a l 500 shares ofMolecular common stock and 25 ca l l opt ionc on tra cts fo r Molecular ;

h. On o r about Monday, January 29, 2007, a tapproximate ly 8:00 a.m. , it was pub l ic ly announcedt ha t Molecular would be acquired by MDS fo r $35.50per share ; and

i . Between on o r about January 29, 2007, and on o rab ou t F eb ru ary 8, 2007, th e CC-1 Terra NovaAccount sold a l l 500 shares of Molecular commons tock and 25 ca l l opt ion c on tra cts fo r Molecular;the CC-1 Terra Nova Account a l so bought threeApri l 25 Molecular ca l l opt ions to c lose i t s shor tpos i t ion ; as a r e su l t , the CC-1 Terra Nova Accountreaped a to ta l p ro fi t of $26,689, represent ing ar e tu rn o f approximate ly 149 pe rcen t .

Ins ide r Trading in the Secur i t i e s o f PharmaNet16. From my review o f, among o ther th in gs , e -m ails ,t rad ing records , bank records , phone records , and corpora tedocuments , inc luding documents from UBS and PharmaNet, I learned

t h a t :a. At a l l t imes r e levan t to t h i s Complaint, PharmaNetwas a globa l drug development se rv ices companybased in Princeton, New Je rsey , whose s ecur i t i e s

t raded on the NASDAQ under the symbol "PDGI"ib. On o r about December 18, 2008 , PharmaNet announced

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t h a t it was pursuing s t r a t e g i c a l t e r n a t i v e s ,i n c l u d i n g a p o t e n t i a l s a l e of t h e company, andt h a t it had r e t a i n e d UBS as i t s a d v i s o r ;

c . From on o r about December 22, 2008 through on o rabout January 13, 2009, PharmaNet and UBS workedwith a number of i n t e r e s t e d b i d d e r s regarding dued i l i g e n c e reviews, and on o r about January 12 and13, 2009, UBS s e n t i n v i t a t i o n s t o each p o t e n t i a la c q u i r e r o f PharmaNet r e q u e s t i n g they submit a" b e s t and f i n a l " o f f e r ;

d. On o r about January 13, 2009, a t approximately8:53 p.m. , IGOR POTEROBA, the defendant , forwardedan e-mai l t o a member of the Heathcare Groupi n d i c a t i n g t h a t a UBS c l i e n t was i n t e r e s t e d i nl e a r n i n g more about t h e PharmaNet o p p o r t u n i t y , anda t approximate ly 10:35 p.m. , the group head emailed POTEROBA, s t a t i n g :

Process i s i n 8 t h inning any way. Noo t h e r buyers ( c e r t a i n l y not sponsors)w i l l be considered.

e . On o r about January 21, 2009, a t approximately11:22 a.m. , POTEROBA was copied on an e-mai l froma n o t h e r member o f t h e Healthcare Group working ont h e PharmaNet t r a n s a c t i o n , i n which t h a t members t a t e d :

We a r e r e c e i v i n g f i n a l b i d s onPharmaNet on Wednesday t h e 28th w ith animportant Board meeting t h e morning o fFriday t h e 30th .f . On o r about F rid ay , J an ua ry 23, 2009, a tapproximate ly 10:20 p.m. , 10:23 p.m. , and10:36 p.m. , c a l l s were p l a c e d from POTEROBA's c e l lphone number t o t h e c e l l phone number o f ALEXEI P.

KOVAL, a / k / a "Aleksey Kova l, " t h e defendant , whichl a s t e d approximate ly t h r e e m in ute s, tw elveminutes , and two minutes r e s p e c t i v e l y ;g. On o r about t h e fol lowing Monday, January 26,2009, t h e CC-1 T e r r a Nova Account purchasedapproximate ly 14,000 s h a r e s of PharmaNet common

s t o c k . The r e c o r d s f o r the CC-1 T e r r a NovaAccount i n d i c a t e t h a t t h e January 26, 200913


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purchase orders were placed v ia the i n t e rne t by anind iv idua l using a par t i cu l a r In t e rne t Protocolnumber (an "IP Number") fo r which, based on myreview of i n t e rne t subscr ip t ion records , I knowt ha t KOVAL was the subscr iber ;

h. In t o t a l , between on o r about January 26, 2009,and on o r ab ou t F eb ru ary 2, 2009:i . The CC-1 Terra Nova Account purchasedapproximate ly 30,000 shares of PharmaNetcommon s tock;ii. The CC-1 TD Am Account purchasedapproximate ly 33,200 shares of PharmaNetcommon s tock;iii. The CC-2 TD Am Account purchased

approximate ly 35,190 shares of PharmaNetcommon s tock;iv . An RBC brokerage account held in the name ofCC-2 ( the "CC-2 RBC Account") purchasedapproximate ly 84,100 shares of PharmaNetcommon s tock.

i . The records fo r the CC-1 Terra Nova Accountind ica te t ha t a l l of the purchase orders (with theexcept ion of 5,000 shares) fo r PharmaNet commonstock were placed v ia the i n t e rne t by anindiv idual using a par t i cu l a r IP number fo r whichKOVAL was the subscr iber ;

j. On o r ab ou t F eb ru ary 3, 2009, p r i o r to the openingof t rad ing , it was pub l ic ly announced t ha tPharmaNet would be acquired by a f f i l i a t e s of JLLPar tners , Inc . fo r $5.00 per share ( the "PharmaNetAnnouncement") ;

k. Following the PharmaNet Announcement:i . The CC-1 Terra Nova Account sold a l l

approximate ly 30,000 shares of PharmaNetcommon s tock , fo r a p ro f i t of $97,878,represent ing a re tu rn of approximate ly 233pe rcen t ;

ii. The CC-1 TD Am Account sold a l l approximately14


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33,200 s h a r e s of PharmaNet common s t o c k , f o ra p r o f i t of $107,378, r e p r e s e n t i n g a r e t u r nof approximate ly 233 p e r c e n t ;iii. The CC-2 TD Am Account s o l d a l l approximate ly35,190 s h a r e s of PharmaNet common s t o c k , f o r

a p r o f i t o f $115,756, r e p r e s e n t i n g a r e t u r no f approximate ly 240 p e r c e n t ; andi v . The CC-2 RBC Account s o l d a l l approximate ly84,100 s h a r e s o f PharmaNet common s t o c k , f o ra p r o f i t of $289,952, r e p r e s e n t i n g a r e t u r nof approximate ly 246 p e r c e n t .

I n s i d e r Trading i n the S e c u r i t i e s o f Via C e l l ,Millennium, and Indevus17. From my review o f , among o t h e r t h i n g s , e - m a i l s ,

t r a d i n g r e c o r d s , bank r e c o r d s , phone r e c o r d s , and c o r p o r a t edocuments, I have seen a s i m i l a r p a t t e r n of I n s i d e Information,communication, and t r a d i n g involving IGOR POTEROBA and ALEXEI P.KOVAL, a / k / a "Aleksey Koval ," t h e defendants , and CC-1 withr e s p e c t t o t h e purchase o f the s e c u r i t i e s o f t h e fol lowingcompanies on t h e fol lowing approximate d a t e s :

a . Via C e l l , whose s e c u r i t i e s t r a d e d on the NASDAQunder t h e symbol "VIAC," between on o r aboutSeptember 20, 2007 and on o r about Sep tember 26,2007;b. Millennium, whose s e c u r i t i e s t r a d e d on the NASDAQunder t h e symbol "MLMN," between on o r about March3, 2008 and on o r about A p r i l 8, 2008; andc . Indevus, whose s e c u r i t i e s t r a d e d on t h e NASDAQunder t h e symbol "IDEV," between on o r aboutDecember 4, 2008 and January 2, 2009.Paymen ts from ALEXEI KOVAL t o IGOR POTEROBA

18. From my review o f , among o t h e r t h i n g s , e - m a i l s ,t r a d i n g r e c o r d s , bank r e c o r d s , phone r e c o r d s , and c o r p o r a t edocuments, I l e a r n e d t h a t ALEXEI P. KOVAL, a / k / a "Aleksey Koval,"t h e defendant , has made payments t o IGOR POTEROBA, t h e defendant .I b e l i e v e KOVAL's payments t o POTEROBA a r e being made i nconnect ion with the i n s i d e r t r a d i n g scheme d e sc ri be d h e re i n .

19. Between on o r about February I I , 2008, and on o r15


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about February 12, 2008, ALEXEI P. KOVAL, a /k / a "A leksey Kova l, "and IGOR POTEROBA, the defendants , emai led each o ther in order tomake plans to meet in New York City on February 12, 2008. Atapproximate ly 4:09 p.m. on February 12, 2008, $5,000 in cash waswithdrawn from a bank account in KOVAL's name a t a t e l l e r windowin New York Ci ty .20. Between in or about May 2008, through on or aboutJune 30, 2008, a t a t ime dur ing which ALEXEI P. KOVAL, a /k /a"Aleks ey Koval," th e defendant , was l i v ing in Pasadena,

Cal i fo rn ia , a t o t a l of approximately $22,377 was withdrawn fromth e CC-1 Terra Nova Account from var ious ATMs loca ted inPasadena, Los Angeles, and Burbank, Cal i fo rn ia . On o r about June27, 2008, KOVAL wrote a check from h is bank account in th e amounto f $20,000, made payable to IGOR POTEROBA, the defendant . In thememo l ine of the check was wri t t en the word "loan".

21. Between on o r about July 18, 2008, through on o rabout July 31, 2008, a t a t ime during which ALEXEI P. KOVAL,a / k / a "A leksey Kova l, " the defendant , was l iv in g in Pasadena,Cal i fo rn ia , a t o t a l of approximately $8,028 was withdrawn fromth e CC-1 Terra Nova Account from var ious ATMs loca ted inPasadena, Cal i fo rn ia . On or about July 30, 2008, KOVAL wrote acheck from h is bank account in the amount of $8,000, made payableto IGOR POTEROBA, the defendant , and POTEROBA's wife . In thememo l i ne of the check were wri t ten th e words "house down".

22. On o r about March 4, 2009, $800 in cash waswithdrawn from a bank account in th e name o f ALEXEI P. KOVAL,a /k / a "Aleksey Koval ," th e defendant , a t a loca t ion in Pasadena,Cal i fo rn ia . On o r about March 5, 2009, $5,000 in cash waswithdrawn from a bank account in KOVAL's name a t a loca t ion inPasadena, Cal i fo rn ia . On o r about March 6, 2009, $5,720 in cashwas deposi t ed in to a bank account in the name of IGOR POTEROBA,th e defendant , a t a loca t ion in Los Angeles, Cal i fo rn ia .

23. On o r about May 26, 2009, IGOR POTEROBA, thedefendant , emai led ALEXEI P. KOVAL, a /k / a "A leksey Kova l, " thedefendant , and wrote: "Any chance you can burn some new musicfo r your NY t r ip [? ] 4-5 cds o r more. Cool jazz o r j u s t p la indi sco . Fri lunch i s on me - i f you can make i t " . KOVALresponded: "Sure ."

a. On o r about June 10, 2009, and on or about June11, 2009, KOVAL and POTEROBA emai led each o ther inorde r to make plans to meet fo r lunch in New YorkCity on June 11, 2009;

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b. At approximate ly 12:37 p.m. on o r about June 11,2009, $5,000 in cash was withdrawn from a bankaccount in KOVAL's name a t a t e l l e r window inEastches te r , New York; and

c. At approximate ly 5:11 p.m. t ha t same day, POTEROBAemai led KOVAL, wri t ing : "Good lunch - - love a l l of5 cds. Many thanks[ . J"

WHEREFORE, deponent prays t ha t a r r e s t warrants bei s sued fo r the above-named defendants and t ha t they be imprisonedo r ba i led as the case may be.

SPECIAL AGENTFEDERAL BUREAU OF INVESTIGATION

Sworn to before me t h i s22nd day of March, 2010

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