NEW YORK – Secrets about Apple Inc.’s iPhone were among insider trading tips that led to the arrests Thursday of three employees at public companies and a sales executive at a California expert-networking firm, authorities said as they boosted to six the number of arrests in a wide-ranging Wall Street insider trading probe.

U.S. Attorney Preet Bharara portrayed James Fleishman, 41, a networking executive who worked at Mountain View, Calif.-based Primary Global Research, as central to the scheme that led to the latest arrests. Fleishman was charged with wire fraud and conspiracy for providing confidential information to the firm’s clients, including hedge funds, the prosecutor said.

A criminal complaint filed in U.S. District Court in Manhattan said some of the tips resulted from inside information that was shared about highly confidential Apple sales forecasts information, new product features for the iPhone and a top-secret project known internally at Apple as “K48,” which became the iPad.

Others charged were Mark Anthony Longoria, 44, of Round Rock, Texas; Walter Shimoon, 39, of San Diego; and Manosha Karunatilaka, 37, of Marlborough, Mass. They were charged with wire fraud and conspiracy to commit securities fraud and wire fraud, according to papers filed in federal court in Manhattan.

The new federal insider trading probe targets industry analysts, experts and consultants.

In a release, Bharara said the charges allege that a “corrupt network of insiders at some of the world’s leading technology companies served as so-called ‘consultants’ who sold out their employers by stealing and then peddling their valuable inside information.”

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He said the allegations describe criminal conduct that went “well beyond any legitimate information-sharing or good-faith business practice.”

Longoria worked at Advanced Micro Devices Inc. as a supply chain manager, Shimoon worked at Flextronics International Limited as senior director of business development and Karunatilaka worked as an account manager at Taiwan Semiconductor Manufacturing Co. office in Burlington, Mass.

According to the complaint, Fleishman, of Santa Clara, Calif., was responsible as a sales manager at Primary Global Research for attracting new clients and keeping existing clients happy with the service.

The complaint said Fleishman helped arrange for clients, including hedge funds, to speak with consultants that he knew could provide inside information to the clients.

The complaint said the charges against Shimoon pertained to a business relationship Flextronics had with Apple for camera and charger components for the iPhone and iPod. It said Shimoon illegally provided information that had been given to Flextronics employees about sales forecasts and new product features for Apple’s iPhone.

It said he also spoke of the iPad project, saying on secretly recorded conversations with a government cooperating witness: “At Apple you can get fired for saying K48 … outside of a meeting that doesn’t have K48 people in it. That’s how crazy they are about it.”

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The complaint said Shimoon was also captured on wiretaps promising to get secrets about sales at Research In Motion Ltd., which makes Blackberrys.

Bail was set at $250,000 for Karunatilaka after an initial appearance in federal court in Boston. He was expected to be released later Thursday. His lawyer, Brad Bailey, said he was reviewing the allegations against his client and would decide how to proceed.

Sam Bassett, a lawyer for Longoria, said his client “has been cooperating and intends to continue cooperating.”

It was not immediately clear who would represent Shimoon at an initial court appearance.

York and AP Technology writers Jordan Robertson in San Francisco and Jessica Mintz in Seattle contributed to this report.

 


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