Defense seeks light sentence for former Conn. IBM exec, saying crime resulted from an affair

Lawyers blame ex-Conn. IBM exec’s crime on affair

NEW YORK — Lawyers for a former IBM senior executive said Tuesday that an intimate relationship with a hedge fund company employee who later “played” him led him to feed her confidential information that resulted in his insider trading arrest.

In court papers submitted in federal court in Manhattan, lawyers for Robert Moffat blamed an affair with fellow defendant Danielle Chiesi for behavior that led him to plead guilty to conspiracy to commit securities fraud and securities fraud. They asked a judge to sentence him to probation on Sept. 13.

Moffat, 53, of Ridgefield, Conn., was charged along with 20 others in what prosecutors have called the largest hedge fund insider trading case in history. Moffat was once considered a candidate for chief executive officer at IBM.

“That fact that what began as a professional relationship between Ms. Chiesi and himself became intimate is a transgression that haunts Bob terribly,” the lawyers wrote.

They said Moffat met Chiesi in 2002 and over time the “relationship with Ms. Chiesi became an intimate one.”

As a result, they said, Moffat on several occasions in 2008 provided Chiesi with information about three companies, including IBM. At the time, Moffat was senior vice president and group executive at International Business Machines Corp.’s Systems and Technology Group.

The lawyers said Chiesi was not the passive recipient of Moffat’s information.

“To the contrary, she manipulated or ‘played’ him to obtain information that she could use,” the court papers said.

The lawyers said she was also careful not to tell Moffat that she was sharing the information he told her and trading on it.

In a letter to the court, Moffat said his actions were not “driven by greed or the desire to profit.”

He said he believes he instead wanted to “appear important and knowledgeable to show Ms. Chiesi that I was ‘in the know’ about important matters.”

In their own letter to the court, prosecutors asked that Moffat be sentenced to six months in prison, saying his crimes “were surely committed out of arrogance and a misguided belief that he could never be caught.”

They added that “as far as the government has determined his motive was to help a woman with whom he was having an intimate, personal relationship.”

Chiesi, 44, of Manhattan, has pleaded not guilty to charges in the insider trading scheme that could carry a potential penalty of up to 155 years in prison. Chiesi worked for New Castle, the equity hedge fund group of Bear Stearns Asset Management Inc. that had assets worth about $1 billion under management. A message left with one of her lawyers for comment was not immediately returned Tuesday.

She has asked that her trial be separated from the trial of Galleon Group founder Raj Rajaratnam, 52. He too has denied securities fraud charges that were first brought in October.

Once described as one of wealthiest men in the United States, Rajaratnam remains free on $100 million bail. Charges against him carry a potential penalty of up to 185 years in prison.