If you like insider trading cases, lawyers, and highly-elaborate efforts at cover-ups, U.S. v. Garrett Bauer and Matthew Kluger is the case for you.

The Criminal Complaint filed yesterday against Kluger, a former lawyer with Wilson Sonsini Goodrich & Rosati, among other firms, and his two alleged co-conspirators presents some fascinating evidence of an insider trading scheme that allegedly netted over $32 million, as well as the painstaking efforts that the three individuals made to keep their scheme under the radar.

The following allegations are included in the Criminal Complaint:

The scheme allegedly extended back to 1994, when Kluger was a summer associate with the Cravath law firm and hooked up with Bauer and an unidentified Coconspirator 1 ("CC-I "). Based on the information Kruger got from the law firm, Bauer made profitable trades and paid Kluger and CC-I their share of profits in cash that he obtained from numerous ATM withdrawals. Numerous trades based on information obtained from Cravath and later Skadden Arps occurred from 1994-1999.

The scheme was suspended from 1999-2005, but got going again after Kluger joined Wilson Sonsini

in December 2005. Between 2006 and 2011, the scheme trading in at least 11 separate companies based on inside information.

Kluger used his law firm's document management system to obtain inside information about deals other lawyers were working on. In an effort to avoid detection, he never actually opened the documents. Instead he simply viewed the titles of documents and other basic information that was available through the system to deduce the parties and transactions involved. According to the complaint, Kluger was able to determine the companies involved despite the use of code names by the law firm because the earliest documents in the system "would always have the real name and as the deal got closer they would go to a code name."

The efforts employed by the men to protect their scheme from detection were broad and elaborate:

They communicated with each other via "throwaway phones" paid for with cash and tossed out after each new proposed transaction.

Bauer paid Kluger and CC-I their profits in cash (a total of $685,000 in cash for the 11 deals) by using multiple ATMs on consecutive days. He'd give CC-1 the money, and Kluger would then drive from his home in Virginia to Long Island, New York to meet CC-l and obtain his share.

Flush with cash, CC-l and Kluger would then make multiple cash deposits into bank accounts they maintained in amounts under $10,000 ("structuring") to keep the banks from reporting their deposits. CC-I also hid some cash in safe deposit boxes.

Transcripts from many telephone calls between CC-1 and both Kluger and Bauer show the emotions and fears of the men as they learned the FBI had contacted CC-1. Among other things, Bauer wanted CC-1 to burn ("burn it in a fire") $175,000 in cash that might have Bauer's fingerprints on it. Kluger wanted CC-1 to dispose of his most recent throwaway phone "somewhere that has nothing to do with, with you. They have dogs that can sniff, that can sniff for cell phones. They train them for prisons."

There is much more in the Criminal Complaint, which I highly recommend to lawyers and others with an interest in insider trading.

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