WASHINGTON—Melissa A. Mahler, 43, an attorney formerly licensed to practice law in New York, has been sentenced to 24 months of probation in connection with her making a false statement to the United States Securities and Exchange Commission (SEC).
The sentencing was announced today by Robert D. Okun, the Acting U.S. Attorney in this case, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Mahler, of Rochester, N.Y., was sentenced November 3, 2011 in the U.S. District Court for the District of Columbia by the Honorable Chief Judge Royce C. Lamberth. In addition to the term of probation, Chief Judge Lamberth ordered her to pay a fine of $2,500 and to serve 100 hours of community service. As part of the plea agreement, Mahler agreed to forfeit $63,750.
Mahler pled guilty in January 2010 to one count of making a false statement to the SEC. As part of her plea, Mahler acknowledged that from approximately September 2003 through December 2004, she practiced law as an attorney at the law firm of Nixon Peabody, LLP, specializing in corporate and securities law. She admitted that, in or about July 2004, one of her clients, an executive of a publicly traded company, informed her of a plan to sign a letter of intent for an acquisition of a privately held company. Soon after learning this non-public information, in breach of her duty to maintain the confidentiality of that information, Mahler used it for her own benefit and purchased 10,000 shares of the publicly traded company.
Two days later, shortly after the publicly traded company announced publicly that it had entered into a letter of intent to acquire the privately held company, Mahler sold her shares and realized a gain of approximately $5,800 on her unlawful trade.
Mahler admitted that she falsely denied placing the order when questioned by attorneys from the SEC concerning her July 2004 stock transactions. Mahler also admitted that she falsely informed the SEC attorneys that she initially learned about the purchase of the 10,000 shares after she received her account statement and that her husband had authority to make purchases on her account.
In addition, as part of her cooperation agreement, Mahler admitted her involvement in a separate transaction with Shelly S. Singhal, the chief executive officer of a Newport Beach, Calif. investment banking firm. Mahler’s cooperation led to the indictment on May 10, 2011 against Singhal and two others, Loretta Fredy Bush and Dennis L. Pelino, concerning alleged securities fraud involving a publicly traded Chinese company, Xinhua Finance Limited.
Mahler’s cooperation also led, in part, to a plea agreement by Robert S. Brown, an attorney who pled guilty in November 2009 to obstruction of justice before The Honorable Henry H. Kennedy Jr. in connection with, among other things, Brown’s involvement with Singhal and others concerning transactions related to Xinhua Finance Limited. As part of their plea agreements, both Mahler and Brown have agreed to cooperate in the investigation.
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