Lawyer Implicated in Insider Case Gets 366 Days in Prison

Fighting back tears, the only lawyer implicated so far in the Dennis B. Levine insider trading scandal was rebuked Friday by U.S. District Judge Robert Sweet as “a symbol of the sickness of our society” and then sentenced to a year and a day in prison.

The lawyer, 32-year-old Ilan K. Reich, was also ordered to serve five years probation for helping Levine, the scheme’s ringleader, make $742,819 in illegal stock profits.

Reich, a partner and rising star at the prestigious Wall Street law firm of Wachtell, Lipton, Rosen & Katz until his illicit association with Levine was exposed last summer, is the third of Levine’s accomplices to be sentenced.

Former Shearson Lehman Bros. Vice President Ira B. Sokolow also drew a 366-day prison sentence, and former Goldman, Sachs investment banker David S. Brown was sentenced earlier this month to 30 days in jail and a $10,000 fine. Levine, a former managing director for the Wall Street investment firm of Drexel Burnham Lambert, is scheduled to be sentenced next month.

‘Criminal Conduct, Stupidity’

Reich had pronounced himself “guilty of criminal conduct, guilty of gross stupidity and guilty of betraying my family and my (law) partners” when he pleaded guilty last October to illegally tipping Levine in 1984 to confidential information about pending acquisitions involving G. D. Searle and SFN Cos. But on Friday, he made an emotional plea for leniency.

“I am ashamed,” the lanky and prematurely graying Reich told the court. But “my life has (already) been shattered” by a scheme that made $12 million for Levine but nothing for Reich himself. Reich, who has since been disbarred, voluntarily withdrew from Levine’s trading ring in August, 1984, five months before he was named a partner at Wachtell, Lipton, and never accepted the money due as his share of the illicit trading.

Reich’s lawyer, Robert G. Morvillo, said: “He has (already) lost his status as a superstar lawyer” and added that Reich has agreed to pay a civil penalty of $485,000, which represents the bulk of his assets.

Reich will become eligible for parole in four months. He could have been gotten 10 years in prison and $101,000 in fines.