Mission Viejo Man Cleared of Charges of Insider-Trading
A federal jury has cleared a Mission Viejo executive of insider-trading charges brought by the Securities and Exchange Commission, evidently believing defense arguments that the accusations were trumped up by an ex-wife.
Dennis W. Evans, 38, was exonerated Friday in U.S. District Court in Los Angeles when the jury rejected claims that he had profited from confidential information about a merger between Ultrasystems Inc.--an Irvine firm where Evans was employed as a controller--and Hadson Corp. in Oklahoma City, Okla.
“This was one of the most difficult times in my life,” Evans said Monday. “I am very, very pleased.”
Evans, a friend and his then-mother-in-law purchased 3,800 shares of Ultrasystems stock on Oct. 29, 1987--the day before the merger was announced. They made a combined profit of $11,115 when the stock’s value soared, in subsequent days, by 49% to $8.75 per share.
During the five-day trial, defense attorney J. Michael Brennan argued that Evans had purchased the stock simply because its market price was at an all-time low and not because he was privy to inside information about the merger.
The SEC claimed that Evans overheard John Dean, chief executive of Ultrasystems’ defense subsidiary, discussing the merger and bought the stock through a friend in an effort to hide the transaction. But Brennan successfully argued that Evans wasn’t aware of the merger and asked a friend to buy the stock because he didn’t want any potential profit to go to his then-estranged wife upon their divorce.
Brennan claimed during the trial that Evans’ wife, Lariette Woodward, learned of the stock purchase and then phoned the SEC, telling the federal agency that Evans was engaging in insider trading.
“Hell hath no fury like a woman scorned,” Brennan told jurors. “Our position was his ex-wife turned him in to the SEC and accused him of insider trading.”
Brennan further claimed that Evans’ former mother-in-law bought stock in Ultrasystems after Woodward told her that Evans was buying the stock. The mother-in-law testified that she couldn’t remember who had told her about Ultrasystems.
SEC attorney Catherine Shea said federal officials haven’t yet decided whether they will appeal the case.
