Star Witness in Insider-Trading Case Describes Far-Reaching Scheme
Insider-trading is a ‘sport’ overseas, Marc Demane Debih told investigators
As Marc Demane Debih was flown out of Serbia last May, as a prisoner in U.S. custody, he told federal agents on the plane that an “unbelievable” number of people were committing insider trading. It was a “sport” overseas, Mr. Demane told the agents, according to investigative records described in court. Mr. Demane said he could name names.
In at least 19 interviews with federal authorities, and hours of trial testimony in a Manhattan courtroom this week, Mr. Demane—now a cooperating witness for the government—did just that.
In testimony that ranged far beyond the allegations in the case at hand, Mr. Demane portrayed a global insider-trading network whose members—most of whom haven’t been charged by U.S. authorities—reaped tens of millions off stolen information on scores of publicly traded companies.
He named a jet-setting French art collector, whom he said he paid more than $12 million for insider tips. He named investment bankers in London, who he said leaked information on their clients; he named stock traders from Israel, Greece and Switzerland who he said paid him for information. He identified a London socialite, a Greek photographer and reporters at Canadian and U.S. media outlets where he said he and others planted stories to move companies’ stock prices.
Mr. Demane testified in the continuing trial of Telemaque Lavidas, a New York businessman charged for his role in the alleged insider-trading network. Prosecutors at the Manhattan U.S. attorney’s office say Mr. Lavidas leaked information about a publicly traded biotechnology company to a Greek trader, who passed the information to Mr. Demane and others who made profitable trades.
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In opening arguments Monday, Assistant U.S. Attorney Daniel Tracer called the alleged scheme “a simple story of greed and corruption,” saying Mr. Lavidas was a “critical link in that corrupt chain.” Mr. Lavidas, 39 years old, has pleaded not guilty to seven counts, including securities fraud and conspiracy.
Lawyers for Mr. Lavidas say their client wasn’t a source of inside information and wasn’t aware of the alleged insider-trading ring.
One of Mr. Lavidas’s lawyers, Jonathan Streeter, drew a contrast between Mr. Lavidas—a U.S. citizen and graduate of Columbia University—and Mr. Demane, a trader “practiced in the art of deception,” now “desperately trying” to mitigate his prison sentence.
Mr. Demane, who was arrested in Serbia in 2018 and extradited to the U.S., played a central role in the alleged ring—he testified that he made around $70 million through insider trading. He pleaded guilty in October to a sealed 38-count indictment, and figures prominently in the cases that emerged from the government’s yearslong investigation, including the indictment against Mr. Lavidas.
A lawyer for Mr. Demane didn’t respond to a request for comment.
On the witness stand, Mr. Demane didn’t say much about Mr. Lavidas—the two met just once, at a 2011 dinner in Manhattan, and had minimal communication afterward, he said. Mr. Demane said he never got inside information directly from Mr. Lavidas.
Rather, Mr. Demane testified that the Greek trader, Georgios Nikas, told him he could get inside information about Ariad Pharmaceuticals Inc., from Mr. Lavidas and his father, a member of Ariad’s board of directors. On the witness stand, Mr. Demane described multiple occasions in 2013 and 2015 when Mr. Nikas provided valuable guidance about Ariad, saying it came from Mr. Lavidas.
Mr. Lavidas’s father wasn’t charged in the matter. Mr. Nikas was charged in the same indictment as Mr. Lavidas but remains at large, as do others charged in related indictments unsealed last fall.
A lawyer for Mr. Nikas declined to comment.
Dressed in navy prison scrubs and speaking with a thick accent, the 49-year-old Mr. Demane told the jury that he started trading when he was based in Geneva in around 2005. At first, he said, he traded mostly based on rumors he picked up from other traders, who had inside sources. He watched ways they hid the origin of their tips, for example, by hiring analysts to concoct reports justifying stock positions, Mr. Demane told the jury.
In London, in 2008, Mr. Demane got his first source: an investment banker at JP Morgan who gave him information related to a mining company, he testified. Mr. Demane passed the information to a friend—it is safer not to trade on your own source’s information, he explained to the jury.
In around 2010, Mr. Demane said, he stole information from his then-girlfriend, a London-based investment banker at Goldman Sachs. He passed information on several of her clients, companies in the mining industry, to Mr. Nikas, Mr. Demane said.
Mr. Demane cultivated other sources in London, including another banker at Goldman Sachs, Bryan Cohen, whom he paid for information that he passed to friends or traded on through a fund he and Mr. Nikas set up. Mr. Cohen was arrested in October in a related case and pleaded guilty earlier this week to a count of conspiracy.
In 2012, Mr. Demane testified, he was introduced to John Dodelande, a French art collector. Mr. Dodelande claimed to have sources at investment banks, two of which Mr. Demane eventually identified as Moelis & Co. and Centerview Partners LLC.
Two former bankers at Moelis and Centerview have been charged in the alleged insider trading ring, but remain at large.
Mr. Demane testified that Mr. Dodelande gave him information on more than 15 deals, mainly corporate takeovers. In exchange, Mr. Demane said, he paid Mr. Dodelande more than $12 million.
Mr. Dodelande hasn’t been charged, but was an unnamed co-conspirator in the indictments filed in October, according to a person familiar with the investigation. Mr. Dodelande, whose website lists a business address in Tbilisi, Georgia, couldn’t be reached for comment.
The government finished with witness testimony Thursday. The defense is expected to rest early next week.
Write to Rebecca Davis O’Brien at Rebecca.OBrien@wsj.com
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