Scandal Rocks Goldman Sachs

A Harvard College graduate, along with a colleague at Goldman Sachs, was arrested Tuesday for insider trading, a scheme that allegedly earned them around $6.7 million.

Eugene M. Plotkin ’00, an associate in Goldman Sachs’ bond research department, and David Pajcin, a former Goldman Sachs bond analyst, have been charged with illicitly soliciting information on Wall Street deals from an analyst and recruiting an individual to leak copies of a business news magazine.

If convicted, Plotkin could face a maximum penalty of 70 years, according to a press release from the U.S. District Attorney’s Office.

“This particular case is unique because you have individuals who are so bold and aggressive, attempting several different schemes,” Supervisory Special Agent for the FBI Press Office Christine Monaco said yesterday.

Plotkin and Pajcin recruited an analyst in Merrill Lynch’s mergers and acquisitions department, Stanislov Shpigelman, to provide information about deals the company was working on, Monaco said.

In exchange for payments, Shpigelman illegally tipped the two men off about approximately six different pending mergers or acquisitions being handled by Merrill Lynch, according to the U.S. District Attorney Office’s criminal complaint.

Plotkin and Pajcin also masterminded another more extensive scheme in which the two recruited “an individual to apply for a job at Business Week Magazine” to obtain confidential information, Monaco said.

Juan Renteria applied for a job at a facility that prints Business Week, using Plotkin and Pajcin as professional references, Monaco added.

Renteria, along with Nickolaus Shuster—who the pair also recruited—passed along the names of stocks “favorably mentioned” in the financial magazine’s “Inside Wall Street” column one trading day before the column was made public, according to the criminal complaint.

This information resulted in the trade of at least 20 different stocks, the complaint said.

Plotkin and Pajcin gave stock tips to Pajcin’s aunt, a seamstress in Croatia, who profited $2 million, The New York Times reported. At one point the two men considered using exotic dancers to gain information from investment bankers, according to The Times.

Plotkin is currently being held on $3 million bail, said Megan L. Gaffney, spokesperson for the U.S. District Attorney’s Office. Pajcin, Shpigelman, Renteria, and Shuster were all arrested, according to the press release.

Plotkin’s lawyer, Martin L. Schmukler, said yesterday that he plans to defend his client “vigorously.”

“Everything that I know about this fellow shows me that he is a wholesome person,” Schmukler said.

Plotkin’s family fully supports his client and hope to get him out on bail before the weekend, he added.

“His family is pledging their home and their savings,” he said.

Monaco expressed confidence in the charges against Plotkin.

“It’s just a shame that someone with a terrific education and terrific intellectual promise used his talents for corrupt purposes,” she said.

Schmukler said yesterday that Plotkin had been suspended from the company. Goldman Sachs spokeswoman Andrea Raphael declined to comment.

According to a statement, Merrill Lynch is cooperating with the investigation and said the allegations were “outrageous, if true.”