Illinois Resident Sentenced to Three Years in Prison for Insider Trading
| U.S. Attorney’s Office April 10, 2014 |
SAN FRANCISCO—Bassam Yacoub Salman was sentenced yesterday to three years in prison and ordered to pay $738,539.42 in restitution for engaging in an insider trading scheme, announced U.S. Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Salman was found guilty by a jury on September 30, 2013, of one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, and four counts of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff. The jury found that between 2004 and 2007, Salman, 54, of Orland Park, Illinois, engaged in securities fraud and insider trading relating to securities issued by United Surgical Partners International Inc. (USPI) and Biosite Incorporated (BSTE).
The charges against Salman were part of a larger, $5.3 million insider trading scheme first charged in 2009 against Maher Fayez Kara, of San Carlos, California, a former investment banker at Citigroup Global Markets Inc. in New York, and Maher Kara’s brother, Mounir Fayez Kara, also known as Michael F. Kara, of Walnut Creek, California. In July 2011, Maher Kara and Michael Kara both pleaded guilty to conspiracy and securities fraud charges.
“Insider trading is a scourge that too often victimizes innocent investors and publicly traded companies alike,” said U.S. Attorney Melinda Haag. “This sentence should warn those who might engage in insider trading that the consequences can be severe.”
“Forming a network of conspirators in an attempt to cheat the marketplace has consequences,” said FBI SAC David Johnson. “Our financial system is designed to benefit honest working people; contradicting this through white-collar crimes such as insider trading have criminal implications.”
Evidence at trial showed that on or about March 23, 2007, Salman, trading in an account owned by his brother-in-law, Karim Bayyouk, caused the purchase of approximately $100,000 in Biosite call options. Salman obtained the inside information about Biosite from Michael Kara, who had first obtained it from his brother, Maher Kara, who worked at Citigroup. Two days later, on March 25, 2007, Biosite announced it was merging with another company. After the merger announcement, Salman sold the options and realized a profit of approximately $947,922. Evidence at trial showed that Salman purchased securities in United Surgical Partners International Inc. using inside information obtained from Michael Kara and, initially, from Maher Kara.
On September 4, 2013, in a separate trial, another federal jury convicted Bayyouk, 49, of Livonia, Michigan, of obstructing and impeding an investigation by the Securities and Exchange Commission (SEC) into securities fraud and insider trading relating to Biosite Incorporated, in violation of 18 U.S.C. § 1505, arising from a telephone interview with the SEC on or about May 31, 2007. Bayyouk is scheduled to be sentenced on April 15, 2014.
The sentence was handed down by the Honorable Edward M. Chen, United States District Court Judge in San Francisco. Judge Chen also sentenced the defendant to a three-year period of supervised release. Salman will begin serving the sentence on July 7, 2014.
Assistant U.S. Attorneys Adam A. Reeves and Robert S. Leach are handling these cases with the assistance of Maryam Beros, Rayneisha Booth, and Patricia Mahoney. The prosecution is the result of a lengthy investigation by the FBI, with substantial assistance from the Division of Enforcement of the SEC’s San Francisco Regional Office.