It was supposed to be a retirement gift, but it turned out to be a crime.
Joe Lewis, the British billionaire-owner of the Tottenham Hotspur Football Club, spent long hours on his private jet with his two pilots, Patrick J. O’Connor and Bryan L. Waugh, during which the men often discussed stock trading.
The pilots — who were approaching retirement — were employed by one of Lewis’ portfolio companies, which didn’t offer them any formal retirement plan. So Lewis decided to help them out with secret stock tips, federal investigators say.
But the tips were based on insider information that Lewis had gathered through his investment in various companies and that he wasn’t at liberty to discuss, according to charges brought by the U.S. attorney’s office in Manhattan and by the Securities and Exchange Commission.
To further help O’Connor, 66, of Preston Hollow, N.Y., and Waugh, 64, of Lynchburg, Va., Lewis allegedly lent them each $500,000 to make a purchase in a biotech firm he knew was about to make a major announcement that would send its stock price skyrocketing, the charges allege.
“Think the Boss has inside info. Otherwise why would he make us invest,” O’Connor wrote in an encrypted text to a friend, according to a court document filed by the SEC. “Boss lent [Waugh] and I $500,000 each for this. [I’m] pretty sure he knows the outcome.”
The SEC alleges Waugh and O’Connor each made over $200,000 in profit on the deal.
Lewis, 86, has been charged along with Waugh and O’Connor with insider trading by federal prosecutors in Manhattan, who allege the billionaire investment tycoon regularly lavished his employees and friends with illegal stock tips that lined their pockets with millions of dollars in ill-gotten gains. The three turned themselves in on Wednesday to face charges in New York.
Lewis’ attorney, David Zornow, called the charges a mistake.
“The government has made an egregious error in judgment in charging Mr. Lewis, an 86-year-old man of impeccable integrity and prodigious accomplishment. Mr. Lewis has come to the U.S. voluntarily to answer these ill-conceived charges, and we will defend him vigorously in court,” he said.
Lawyers for O’Connor and Waugh didn’t immediately respond to messages seeking comment.
The men were additionally hit with civil accusations by the SEC, which also named Lewis’ former girlfriend, Carolyn W. Carter, 33, as having allegedly received hundreds of thousands of dollars as the result of illegal stock tips.
Others who benefited from Lewis’ loose lips included staff on his private, $250-million super yacht, the Aviva, prosecutors said.
The SEC said that Carter — a beauty pageant queen who was once Miss U.S. Virgin Islands — had received extensive stock advice from Lewis in the years she was romantically involved from 2013 through 2020.
During that time, the SEC says Lewis — who is worth $6.1 billion according to estimates by Forbes — gave Carter around $100,000 a year and gave her frequent tips on how to invest it, often based on inside information he received through his own investments.
In 2019, the SEC alleged that while the two met at a luxury hotel in South Korea, Lewis gave Carter a heads up that a special acquisition company he was involved with was about to receive a PIPE investment that would send the stock soaring. Investigators say that within three hours, Carter purchased $700,000 worth of the company’s stock and made nearly $175,000 in profit the next day when the move was announced.
A message sent to Carter wasn’t immediately returned.
This post was originally published on Market Watch
