PaineWebber Ex-Employee Charged With Fraud

Federal prosecutors Tuesday charged a disgruntled former employee of UBS PaineWebber with fraud and accused him of trying to sabotage the brokerage’s computer network with an electronic “logic bomb.”

The Justice Department’s New Jersey district accused Roger Duronio, 60, of planting the logic bomb in about 1,000 of PaineWebber’s 1,500 networked computers.

So-called logic bombs are pieces of software code buried within another program that are designed to disrupt computer systems. They are often delivered by e-mail.

Duronio, a computer systems administrator, resigned Feb. 22 from PaineWebber after complaining about his salary and bonuses. The logic bomb he allegedly constructed from November 2001 until February of this year was activated March 4, U.S. Atty. Christopher Christie said in a statement.

Duronio could not immediately be reached for comment.

Prosecutors allege that Duronio attempted to profit from planting the logic bomb by betting that the stock of UBS, PaineWebber’s parent company, would fall.

He allegedly bought more than $21,000 of put options, which grants an investor the right to sell a certain amount of underlying stock at a certain price. Put options increase in value when the stock price declines.

UBS’ New York-traded shares fell 72 cents to $49.82 on Tuesday.

Duronio is charged with securities fraud and one count of computer-related fraud. The charges carry combined maximum sentences of 20 years in prison and fines of more than $1.25 million.

Duronio’s logic bomb, the government charged, deleted files and led to $3 million in costs for PaineWebber to assess and repair the damage.