Businessman Sentenced to Federal Prison for Insider Trading in the Shaw Group
United States Attorney Brandon J. Fremin announced that on October 24, 2018, U.S. District Judge John W. deGravelles sentenced VICTORY HO, age 39, of Morgan City, Louisiana, to 32 months in federal prison following his convictions for securities fraud (insider trading) and conspiracy to commit securities fraud. The Court further sentenced HO to 2 years of supervised release following his term of imprisonment. HO was also ordered to forfeit over $300,000 and to pay a $15,000 fine.
Following a three week trial in May of this year, a jury found HO and his co-defendants guilty as charged in connection with an insider trading scheme related to the 2012 acquisition of the Shaw Group (“Shaw”) by Chicago Bridge and Iron Company (“CB&I”). According to evidence presented at trial, in mid-2012, Shaw was considering a potential merger opportunity. At the time, Kelly Liu was a Shaw employee working in the Financial Planning and Analysis Department. In July 2012, Shaw and CB&I came to an agreement on an offer for CB&I to buy Shaw. This merger between the two companies was publicly announced on July 30, 2012 (“the public announcement”). As a result of the public announcement, Shaw’s stock price rose by around 55 percent.
The evidence at trial established that, prior to the public announcement and through her job at Shaw, Liu had obtained inside information that Shaw was going to be acquired by another company and had passed the inside information to HO, through another individual, and to Salvador Russo, III (“Russo”), for their use in trading Shaw stock and options. Thereafter, HO and Russo purchased Shaw stock and options before the public announcement. HO sold his Shaw options after the public announcement had caused Shaw’s stock price to rise and reaped almost $300,000 from his illegal insider trading.
During the sentencing hearing, the Court found that HO had obstructed justice through his testimony at the trial.
United States Attorney Fremin stated, “This multi-agency investigation and the resulting sentence should send a strong message to insiders and potential tippees that insider trading will not be tolerated and may very well result in a significant federal prison sentence. This type of crime, which threatens the integrity of financial markets where millions of citizens invest their money, will be aggressively pursued by federal agents and prosecutors across our country. I truly appreciate the efforts of the FBI, IRS-Criminal Investigations, U.S. Secret Service, and the prosecutors and staff within this office, who worked tirelessly to uncover, investigate, and bring this case to trial. I also want to thank the Securities and Exchange Commission for their efforts and for providing one of their financial economist to testify at trial.”
FBI Special Agent-in-Charge Eric J. Rommal stated, "The nation's economy is increasingly dependent on the success and integrity of the securities and commodities markets. White collar crimes like securities market violations cause significant losses each year to the U.S. market. Today, the first of three defendants convicted at trial was sentenced. In an effort to enhance his personal finances, this defendant conspired to manipulate the stock market and take advantage of insider information. The noteworthy sentence handed down today, the announcement made by U.S. Attorney Fremin and the dedicated work by the men and women of the FBI, Secret Service, IRS-CI and Securities and Exchange Commission reinforces our belief in our criminal system that justice will prevail."
“Victory Ho is a prime example of someone who, for his own personal benefit, cheated American taxpayers and investors by using information he received illegally,” said Thomas J. Holloman, III, Special Agent in Charge, IRS – Criminal Investigation. “With both law enforcement and financial investigation expertise, IRS Criminal Investigation special agents are uniquely qualified to assist state and federal law enforcement and other regulatory agencies with these types of cases.”
This matter is being handled by the U.S. Attorney’s Office for the Middle District of Louisiana and the Baton Rouge offices of the FBI, Secret Service, and IRS-Criminal Investigation. It is being prosecuted by Assistant United States Attorneys Chris Dippel and Patricia Jones.