The prosecutors with SAC Capital in their crosshairs

Reuters

By Bernard Vaughan and Joseph Ax

NEW YORK, Nov 17 (Reuters) - When U.S. Attorney PreetBharara announced at a televised press conference on Nov. 4 thatSteven A. Cohen's SAC Capital Advisors would plead guilty toinsider trading, two prosecutors stood quietly to his right.

In coming weeks those two assistant U.S. attorneys, AntoniaApps and Arlo Devlin-Brown, will get their turn in the spotlightas they prosecute the first two SAC Capital employees to go totrial.

Both Harvard Law School graduates in their 40s, Apps andDevlin-Brown traveled different paths to the Justice Department,where they have employed notably dissimilar styles.

Apps, an Australian native and former national-caliberfigure skater in the United States, flipped the usual careertrajectory on its head by abandoning a lucrative partnership inprivate practice to become a government lawyer.

Devlin-Brown, whose understated courtroom demeanor belieshis past as a national collegiate debate champion, made his markby successfully leading the office's 2011 crackdown on onlinepoker companies.

This week, Apps will begin trying the government's caseagainst former SAC fund manager Michael Steinberg, whileDevlin-Brown goes to trial in January against another formermanager at the hedge fund, Mathew Martoma.

Apps and Devlin-Brown, together with fellow prosecutor JohnZach, have led the government's criminal case against SACCapital, the crown jewel in a broad insider trading probe thathas netted 76 individual convictions since 2009.

In addition to its guilty plea, SAC - a Connecticut firmthat managed $14 billion before investors began withdrawingtheir money - will pay $1.2 billion to resolve both criminal andcivil claims and wind down its advisory business.

Unlike many criminal prosecutions, complex insider tradingcases require more participation from prosecutors earlier in theprocess, said Doug Leff, an FBI agent who worked on the SACcases with Apps and Devlin-Brown.

"We have to consult with prosecutors, literally from theopening bell, in order to make sure the facts we're uncoveringwill support prosecution under an accepted theory of insidertrading," said Leff.

'DELIGHTFUL IRON FIST'

Apps, who has been involved in more than 20 insider tradingcases, is known as a no-nonsense prosecutor with a courtroomstyle that leaves little room for levity.

During the 2011 trial of James Fleishman, a former salesrepresentative charged with passing inside information to hedgefunds, U.S. District Judge Jed Rakoff tried to have fun withApps after she announced she would call a "short witness."

"Five foot eight, or shorter?" asked Rakoff.

"The only way short currently matters, I think, to anyone inthe courtroom means short in length of time," Apps replied,before pivoting to another matter.

But former colleagues say that despite that her strictstyle, Apps is typically upbeat, with a seemingly boundlessamount of energy. Chris Todd, a former colleague at theWashington law firm Kellogg, Huber, Hansen, Todd, Evans & Figel,described her as a "delightful iron fist."

After earning law degrees from Harvard and Oxford, Appsworked for three years at the Washington, D.C., law firm Fried,Frank, Harris, Shriver & Jacobson before joining Kellogg Huber,where she became a partner in 2001.

Throughout her time in private practice, she continued tocompete in figure skating, which she had taken up as a younggirl in Australia. In 1997 she placed third at the U.S. nationalchampionship for adults.

Former colleagues at both firms said she would wake upbefore dawn to hit the rink, then put in 15-hour days at theoffice.

Apps became a U.S. citizen in part so she could apply towork as a federal prosecutor, joining the New York office in2007. Friends have said her goal from the start was to prosecutesecurities cases.

AN UNASSUMING DEBATER

In April 2011, on what was dubbed "Black Friday" in onlinepoker circles, the Justice Department announced it had broughtmoney laundering and other charges against 11 people, includingthe founders of the three largest Internet poker companies inthe United States.

Devlin-Brown, who joined the U.S. Attorney's office in 2005from the law firm Wilmer Cutler Pickering Hale and Dorr, led thegovernment's prosecution, which upended the massive online pokermarket. Last year one firm, PokerStars, agreed to pay $731million to settle related civil claims against it and Full TiltPoker, which it absorbed as part of the agreement.

In recent years the Vermont native has worked on his shareof insider trading cases, including successful prosecutionsagainst two former SAC employees, Richard Lee and RichardChoo-Beng Lee, and securities analyst Sandeep Aggarwal, all ofwhom pleaded guilty and are cooperating with the government.

The erstwhile collegiate debater cuts a quiet, unassumingfigure in court, several former colleagues and defense lawyerssaid.

"He's very understated, but that shouldn't fool anyone, ashe's a sharp litigator," said Reed Brodsky, a former assistantU.S. attorney who now works for Gibson, Dunn & Crutcher.

Avi Weitzman, another lawyer at Gibson Dunn who worked withDevlin-Brown as a prosecutor on several insider tradinginvestigations, recalled a trial early in Devlin-Brown's careerin which he had to cross-examine an older, low-income womancharged with cashing fraudulent checks.

"He eviscerated the defense involving a very sympatheticdefendant, and he did so with humor and grace," Weitzman said.

SIGNATURE ISSUE

Six former SAC employees have pleaded guilty to insidertrading, helping prosecutors build their case against the hedgefund.

Steinberg, the highest-ranking SAC employee charged so far,goes to trial on Tuesday accused of using tips passed to him byanother SAC manager, Jon Horvath, to trade securities of DellInc and Nvidia Corp.

Apps will have the benefit of evidence from Horvath, who hascooperated with the government since pleading guilty inSeptember 2012 and is expected to testify.

Apps will face off against Barry Berke, a partner at KramerLevin Naftalis & Frankel, who is representing Steinberg.

For his part, Martoma is accused of using non-publicinformation from Sidney Gilman, a neurologist supervising theclinical trial of a new drug, to trade shares in Elan Corp Plcand Wyeth, which is now part of Pfizer Inc.

Like Horvath, Gilman is cooperating with prosecutors andDevlin-Brown is expected to call him to the stand.

Devlin-Brown's opponent is Richard Strassberg of GoodwinProcter, representing Martoma.

The two trials are the latest insider trading cases in whathas become the signature issue for U.S. Attorney Bharara.

SAC Capital's guilty plea on Nov. 8 left open thepossibility that Cohen himself could still face charges ifwarranted, and Bharara has emphasized that the investigationremains active.

"Insider trading prosecutions are to Preet what the mobprosecutions were to Giuliani," Weitzman said, in reference toformer New York City Mayor Rudy Giuliani, who made a name forhimself as U.S. Attorney by aggressively going after the mafia.

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