The British billionaire Joe Lewis pleaded not guilty on Wednesday to orchestrating what prosecutors called a “brazen” insider trading scheme by passing tips about companies in which he invested to friends, private pilots, and a former girlfriend.
Lewis, whose family trust controls a majority of the Tottenham Hotspur football team, entered his plea before U.S. Magistrate Judge Valerie Figueredo in Manhattan federal court.
The case has made waves in Argentina: Lewis is at the center of controversies around land access rights and a covert trip made by judges, politicians and businessmen last year to his Lago Escondido ranch in Río Negro province.
Prosecutor Nicolas Roos says Lewis would be released on US$300 million bond secured by his yacht, named the Aviva, and private aircraft.
Two of Lewis’ pilots, Patrick O’Connor and Bryan Waugh, also pleaded not guilty to related insider trading charges, after being accused of making millions of dollars in illegal profit from Lewis’ tips. Their bail was set at US$250,000 each.
Lewis founded the investment firm Tavistock Group and is worth US$6.1 billion according to Forbes magazine. The 86-year-old wore a gray suit to his arraignment and was not handcuffed.
David Zornow, his lawyer, said in a statement that prosecutors made an “egregious error” in bringing charges, and said his client had traveled to the United States voluntarily to defend himself against the charges.
Lawyers for O’Connor and Waugh declined to comment after the hearing.
A spokesperson for Tottenham said in a statement: “This is a legal matter unconnected with the club and as such we have no comment.”
Prosecutors said that in 2019 Lewis lent each pilot US$500,000 and encouraged them to buy stock in oncology company Mirati Therapeutics before it released favorable clinical results.
O’Connor texted a friend that he thought “the Boss has inside info,” according to the indictment.
After Mirati announced the positive results, its share price increased 16.7% in one day, and both pilots repaid Lewis for his loans.
In wiring Lewis the repayment, Waugh indicated the money was a “loan payback for MRTX.”
Mirati did not immediately respond to a request for comment.
“None of this was necessary”
Lewis was charged with 16 counts of securities fraud and three counts of conspiracy, for alleged crimes spanning from 2013 to 2021, and could theoretically face decades in prison.
Prosecutors said Lewis controlled board of director seats at several companies and deputized employees to serve on boards, which gave him access to inside information that he then passed to others.
“None of this was necessary,” Damian Williams, the U.S. Attorney in Manhattan, said in a statement. “Joe Lewis is a wealthy man.”
Insider trading has long been a focus of Williams’ office, dating to 2009 when a crackdown began under one of his predecessors, Preet Bharara.
O’Connor and Waugh, who are residents of New York and Virginia, respectively, each face seven counts of securities fraud and one count of conspiracy.
Separately on Wednesday, the U.S. Securities and Exchange Commission filed a civil insider trading case against Lewis, O’Connor, Waugh, and Lewis’ former girlfriend Carolyn Carter.
The SEC said Lewis learned in July 2019 that a biotechnology company in which he had invested would raise capital through a private investment in public equity, a transaction that tends to raise a company’s share price.
Despite being bound by a confidentiality agreement, Lewis allegedly told Carter, 33, about the transaction in a luxury hotel room in South Korea, where they were staying.
Carter then bought $701,000 of stock in the company, which the SEC did not name, and earned about $172,000 in profit after news of the private placement caused the stock price to soar.
A lawyer for Carter did not immediately respond to a request for comment. Carter is not facing criminal charges.
“When insiders like Lewis take advantage of their access, it erodes public trust and confidence in the fair and efficient operation of our markets,” Gurbir Grewal, director of the SEC’s enforcement division, said in a statement.
Lewis in Argentina
Lewis’s 12,000-hectare property in Patagonia has been the focal point of at least two controversies. His ranch in Lago Escondido (Hidden Lake) was covertly used as a retreat by judges, politicians, and businessmen on October 13, 2022. Some of them have been indicted for allegedly receiving illegal gifts from the Clarín media group, suspected of having paid for the trip.
Lewis’s employees also block the route to lake Escondido itself, despite Argentine law establishing that lakes are public and must be accessible. This has put the billionaire at loggerheads with the Río Negro provincial judiciary. Each year, activists attempt to march to the lake.
This year, Lewis’s private security workers injured nine people when they clashed with the march. The case has been under litigation since 2005. Last year, the government requested a judicial takeover of “Hidden Lake,” Lewis’ firm registered as a farming company in Lago Escondido because they consider it to be “a front” to stop anyone from reaching the lake.
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