Billionaire Joe Lewis, 87, has avoided jail for insider trading, being sentenced to probation and a $5 million fine. Once a rags-to-riches success story, Lewis faced a low point in his career, pleading guilty to passing confidential trading information. Despite his immense wealth and charitable endeavours, Lewis’s actions struck at the heart of financial markets. While spared prison due to health concerns, the repercussions of his choices echo throughout his once-glamorous life.
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By Ava Benny-Morrison, Bob Van Voris and Chris Dolmetsch
A visibly shaking Joe Lewis, the 87-year-old UK billionaire who pleaded guilty to insider trading, was spared jail time by a federal judge in New York.
US District Judge Jessica Clarke at a hearing Thursday sentenced Lewis to three-years’ probation and a $5 million fine. An attorney for Lewis said that any incarceration would be “catastrophic.”
“You have before you a frail 87-year-old man with significant health challenges whose condition has only deteriorated since the indictment” in July, his attorney, David Zornow, said shortly before sentencing.
His guilty plea in January marked a low point in Lewis’ rags-to-riches story from humble beginnings in London’s East End to building a multi-billion-dollar investment empire and at one point owning a majority stake in the English Premier League’s Tottenham Hotspur Football Club. He had been charged with passing confidential trading information to his private pilots and a girlfriend.
While a majority of insider-trading cases result in prison time, the defense and prosecutors in Lewis’ case agreed his age and myriad of health issues meant he would suffer more than most behind bars.
Clarke said that it was difficult to impose a sentence sparing Lewis from prison given the need to prevent others from committing similar crimes, but that his personal circumstances warrant leniency.
“Crimes like insider trading strike at the heart of our financial markets,” she said. “The integrity of our markets rely on the idea that there is a level playing field.”
Lewis, wearing an eye patch ahead of scheduled surgery in London and supported by his children and granddaughter, was remorseful when addressing the judge.
“I made a terrible mistake. I broke the law. I’m ashamed, sorry and hold myself accountable,” he said.
The founder of investment firm Tavistock Group, which has stakes in more than 200 companies including luxury hotels, resorts and sports, Lewis was charged with securities fraud last July and surrendered to authorities in New York. Lewis’ private pilots — Bryan ‘Marty’ Waugh and Patrick O’Connor — were also charged with trading on inside information that their boss passed on.
The information included yet-to-be-published clinical trial results related to a biotech company Lewis invested in. According to the indictment, a Mirati Therapeutics board member, who also worked at Lewis’ hedge fund, told the billionaire about confidential, positive clinical trial results that the company planned to announce publicly.
Lewis loaned his pilots $500,000 each to buy Mirati shares ahead of the trial results being made public. On another occasion in 2019, Lewis learned that Australian Agricultural Company — a beef producer Tavistock was a major shareholder in — had suffered material losses due to flooding. Lewis passed the information to O’Connor and Waugh, urging them to offload their AACo shares.
O’Connor pleaded guilty to securities fraud and conspiracy and is due to be sentenced in May while Waugh is fighting the charges.
After voluntarily traveling to the U.S to face indictment, Lewis reached a deal with federal prosecutors in January, agreeing to plead guilty to three counts of securities fraud, including conspiracy.
As part of his plea deal, Lewis — as well as any entity owned or controlled by Lewis — had to resign from the boards of US public companies. He also had to given up his stake in Boxer Capital, the firm for his biotech investments that has earned him more than 7,500% in returns.
In arguing for a sentence of probation, Lewis’ attorney also pointed to his charitable efforts, from donating 50 acres of land and millions of dollars to establish a medical school in Florida to building affordable housing in the UK and a primary school in the Bahamas.
“I would suggest that the true measure of this man is the eight decades of life he lived before these unfortunate events,” Zornow said.
For the past nine months, to adhere to his bail restrictions, Lewis hasn’t been able use his prized superyacht, Aviva, which has long served as his part residence, part office.
But once he pays his fine, the US Government will release its hold over the 322-foot vessel, allowing the 87-year-old to set sail again.
Lewis is worth an estimated $7.3 billion, according to the Bloomberg Billionaires Index.
24 Months
Prosecutors said Lewis faced sentencing guidelines between 18 and 24 months, but conceded his health, age and otherwise law-abiding life justified a lighter punishment.
Still, Assistant US Attorney Jason Richman said that it’s important everyone understands that no matter who you are, you can’t do what Lewis did. Lewis was a dramatic success story and chose to abuse his access to information.
“The defendant didn’t need to do this,” Richman said. “He had billions and has billions of dollars.”
Lewis — a UK citizen who risked being placed in immigration detention after any prison term served — will now be able to leave the US voluntarily and travel back to the Bahamas.
“Mr. Lewis is grateful that the court has imposed a probationary sentence that considers his age and health issues,” said his spokesman, Mark Herr. “As Mr. Lewis has previously said he regrets the events that led to the day.”
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