(CN) – A retired underwear seamstress in Croatia must pay the SEC more than $5 million for her role in an inside trading scheme perpetrated by two ex-Goldman Sachs employees, a federal judge in Manhattan ruled.
Sonja Anticevic, 68, was promised millions of dollars in return for allowing her analyst nephew, David Pajcin, to make illegal trades through accounts in her name, the SEC claimed.
Pajcin and his colleague, Goldman associate Eugene Poltkin, previously pleaded guilty to orchestrating a “widespread and brazen international scheme of serial insider trading” that netted nearly $6.8 million.
Seventeen people were charged after a number of “suspicious” trades were made on the eve of Adidas AG’s takeover of rival Reebok.
U.S. District Judge Kimba M. Wood said the Croatian woman failed to respond to three of the four complaints served to her by the SEC, and then failed to show up at her deposition in January.
Anticevic’s lawyer, Jonathan Kaye, withdrew as her attorney in July. The court sent a copy of the order, translated into Croatian, to her last known address in Croatia before a default judgment was entered.
No attorney has since filed a notice to represent her.
Judge Wood ordered Anticevic to disgorge more than $2.6 million to the SEC, and to pay more than $3 million in civil penalties, equal to 1.5 times her ill-gotten gains.
She also issued a permanent injunction enjoining Anticevic from committing future securities violations.
The scheme began when Pajcin and Poltkin recruited an analyst at Merrill Lynch to feed them information on pending mergers and acquisitions.
The Adidas-Reebok deal was one of six possible deals the two were informed about.
The SEC called trades made by Anticevic “highly suspicious,” as she had never traded Reebok stock before.
She bought 1,997 shares for $130,000 shortly before the acquisition. The stock jumped by 30 percent after the deal was announced, resulting in a $2 million profit. The account “immediately liquidated its entire position in the call options,” according to the SEC.
The brokerage firm was instructed to transfer $870,000 to a bank account in Salzburg, Austria, but the account was frozen by the SEC first.
Anticevic was the first person charged in connection with the trades.
In a separate scheme, Pajcin and Poltkin traded on confidential information gleaned from a federal grand jury investigation into Bristol-Myers Squibb, from Pajcin’s longtime friend, who was a juror.
Pajcin also sought to improve his trades by recruiting a friend to get a job with BusinessWeek magazine in order to swipe advanced copies from the printer.
After pleading guilty and cooperating with the investigation, Pajcin is believed to have fled the country.