Wall Streeter to Admit Guilt in Mail Fraud : Quits Goldman, Sachs After ‘Nightmare’ of 2-Year Investigation

A leading Wall Street executive today said he will plead guilty to one criminal charge of insider trading after a two-year investigation that he said made his life “a nightmare.”

Robert Freeman, who was arrested in his office, Feb. 11, 1987, said in a resignation letter to Goldman, Sachs & Co. officials that he “never conspired . . . to swap inside information” and called the charges he originally faced “totally false.”

But Freeman, head of the firm’s arbitrage operation, said he will plead guilty to mail fraud in connection with trades involving the stock of Beatrice Companies Inc. in early January, 1986. The felony carries a maximum prison term of five years.

Although Freeman no longer faces broad-based criminal charges, Goldman said in a statement that he probably will face civil charges filed by the Securities and Exchange Commission.

Freeman, a 19-year Goldman veteran, was arrested along with Kidder, Peabody & Co. traders Richard Wigton and Timothy Tabor.

The Wall Street Journal reported in today’s editions that the government is expected to drop its investigation of Wigton and Tabor.

The newspaper also said the agreement with the U.S. attorney’s office in Manhattan does not require Freeman to cooperate in the government’s ongoing investigation of insider trading on Wall Street. Such an agreement frees the arbitrager from having to implicate others.

The government voluntarily dropped the initial charges against Freeman, Wigton and Tabor in May, 1987, and indicated that it planned a new indictment, but new charges never were brought.

In an appearance today in U.S. District Court in Manhattan, prosecutors announced the plea agreement, and U.S. District Judge Nina Gershon reassigned the case. Freeman is to appear before Judge Pierre Leval on Sept. 5 to enter his guilty plea.

Goldman, Sachs, which has steadfastly supported Freeman, blasted the government’s handling of the case in a prepared statement.

“Over the past 30 months, Bob has been subjected to an arrest that the prosecutors have since characterized as a mistake, a withdrawn indictment, the promise of new charges in record time, followed by a grueling two-year investigation and a series of highly publicized formal allegations and innuendoes that far exceeded anything he actually did,” the firm said.

For his part, Freeman said that during the investigation, “life has become a nightmare for me and my family and . . . I have been unable to participate in the firm’s activities in a meaningful way.”