Winans Gets 18-Month Jail Term, Fine : Stiff Sentence Handed Ex-Journal Reporter

A federal judge Tuesday sentenced former Wall Street Journal reporter R. Foster Winans to 18 months in jail and a $5,000 fine for leaking information about articles to be published in the newspaper to a stock-trading ring.

U.S. District Judge Charles E. Stewart, who on June 24 found Winans guilty of 59 counts of securities, mail and wire fraud and conspiracy at the end of a non-jury trial, also sentenced him to five years’ probation and 400 hours of community service.

Although Winans faced a maximum sentence of five years on each of the counts, his sentence is still one of the stiffest jail terms imposed by a federal judge in an insider-trading case here in the last five years.

Winans, formerly one of two principal writers of the Journal’s influential “Heard on the Street” column of stock-market intelligence, had been charged with passing advance information about the content and scheduling of his columns and others in 1983 and 1984 to Peter Brant, a leading stockbroker at Kidder, Peabody & Co.

Both men lost their jobs after the scheme was exposed. Brant and two partners paid Winans $31,000 for the information, the prosecution alleged, while turning a profit of more than $600,000 from their trading.

David Carpenter, Winans’ roommate and a co-defendant in the case, was sentenced to a fine of $1,000 and three years’ probation, including 200 hours of community service. Carpenter had contended that, for the most part, he was ignorant of the scheme.

A third defendant, former Kidder, Peabody stockbroker Kenneth Felis, an associate of Brant’s, is scheduled to be sentenced today.

Lawyers for Winans and Carpenter said they are considering an appeal of their convictions. Stewart suspended Winans’ sentence pending the outcome of an appeal.

Brant earlier pleaded guilty to several fraud counts, and he cooperated with the prosecution. His sentencing date has not been set.

David W. C. Clark, Brant’s lawyer and principal client, is still the subject of a grand jury investigation, prosecutors say, but has not been indicted.

Winans, interviewed after the sentencing, said: “The sentence sounded fair. It’s the judge’s decision.”

Still, although sentences have been getting stiffer in stock-fraud cases involving the misuse of confidential information, Winans’ jail term is exceeded or equaled by that imposed in only one of the 21 such cases dealt with by the Manhattan federal court since 1980, prosecution documents indicate.

In that case, involving the misuse of corporate-merger information from the New York law firm of Sullivan & Cromwell, one defendant was sentenced in June to 3 1/2 years in prison and another to 18 months, both after pleading guilty. Eight conspirators had been accused of turning profits of $1.6 million.

Winans’ sentencing came after a minor imbroglio regarding a book about his case that he has contracted to write for an unidentified publishing house. In a pre-sentencing memorandum to Judge Stewart, Assistant U.S. Atty. Peter Romatowski argued that an outline that Winans circulated to publishers tended to glorify his role in the scheme and cast doubt “that the defendant has learned anything positive from his own criminal conduct.”

Winans countered with a letter to Stewart assuring him that the outline and manuscript embrace “the same measure of shame and remorse that I have expressed repeatedly over the last 18 months.”

Of the “handful” of publishers who viewed the outline, he said, only one expressed interest, offering him a $35,000 advance payable over three years. In contrast, he said, he has incurred attorney’s fees of nearly $200,000.

“While my career as a working newsman in mainstream journalism is over,” he wrote, “I still have my writing skills. It is the activity which holds the greatest promise of providing a means of support.”

Winans, Carpenter and Clark still face civil charges filed by the Securities and Exchange Commission. Brant and Felis have settled those charges by agreeing to an injunction against fraud and by giving up their profits from the illicit trading.