United States of America v. Afshin "Alex" Farahan

St. Paul, Minnesota criminal law lawyer represented defendant charged with insider trading conspiracy involving a medical device company's nonpublic business acquisition deal.



Afshin "Alex” Farahan, 55, of Los Angeles, admitted that beginning in January 2018 through at least August 2020, he and co-defendants Doron "Ron” Tavlin, 66, of Minneapolis, and David Gantman, 56, of Mendota Heights, willfully engaged in an insider trading conspiracy. The conspiracy involved nonpublic information about the acquisition of Company B, an Israeli-based company that specialized in robotics for spinal procedures, by Company A, an Ireland-based medical device company that primarily operated from its executive headquarters in Minneapolis. Tavlin, a former vice president of Company B, learned material, nonpublic information about Company A's potential acquisition of Company B. In violation of his duty to the company, Tavlin tipped this information about the acquisition to his friend, Farahan, who then tipped the information to Gantman and instructed him to keep the information secret. Farahan knew that Company A's imminent acquisition of Company B would likely result in an increase in Company B's stock price. Farahan and Gantman used the nonpublic information to quickly purchase substantial amounts of Company B securities throughout August and September 2018. Specifically, between August 13, 2018, and September 17, 2018, Farahan purchased approximately $1,031,359 in Company B securities. On September 21, 2018, the day after Company B publicly announced its acquisition by Company A, Farahan and Gantman each sold all of their Company B securities for a combined profit of more than $500,000. Farahan's total share of the profit was approximately $247,500.



According to court documents, Farahan further admitted that, after the acquisition occurred, Tavlin learned that the Financial Industry Regulatory Authority (FINRA) was investigating certain trades of Company B securities that occurred prior to the publicly announced acquisition. As part of its inquiry, FINRA asked insiders who knew about the secret acquisition negotiations, which included Tavlin, whether they knew any of the parties who traded in Company B securities leading up to the public announcement. In January 2019, Tavlin responded to FINRA's inquiry by falsely denying that he recognized any names on a list of persons and entities that purchased Company B securities, which included Farahan and Gantman's names.



According to court documents, Farahan also admitted that it was part of the insider trading conspiracy that Tavlin and Farahan agreed that Farahan would pay money to Tavlin in exchange for the material, nonpublic information that Tavlin provided to him. For example, in October 2019, Farahan gave Tavlin a $25,000 check in exchange for the information that Tavlin had provided about Company B leading up to the acquisition.



Farahan pleaded guilty yesterday before Senior U.S. District Judge Donovan W. Frank to one count of conspiracy to engage in insider trading. A sentencing hearing will be scheduled at a later time.



This case is the result of an investigation conducted by the FBI.



18:371 CONSPIRACY

(1)

15:78j(b) and 78ff(a), 17 C.F.R. Section 240.10b-5, and 18:2 AIDING AND ABETTING SECURITIES FRAUD

(2-17)



Assistant U.S. Attorneys Matthew S. Ebert and Kimberly A. Svendsen are prosecuting the case.

Defendant pleaded guilty.



08/04/2022 33 Minute Entry for proceedings held before Judge Donovan W. Frank: Initial Appearance, Arraignment, Plea Agreement Hearing as to Afshin Farahan held on 8/4/2022. Retained Counsel present. Reading of Indictment Waived. Guilty Plea Entered Count 1. PSI requested. Defendant released on Bond. See Order Setting Conditions of Release and Appearance Bond. (Court Reporter Lynne Krenz) (las) (Entered: 08/04/2022)

08/04/2022 34 PLEA AGREEMENT as to Afshin Farahan (KNK) (Entered: 08/04/2022)

08/04/2022 35 ORDER Setting Conditions of Release as to Afshin Farahan. Signed by Judge Donovan W. Frank on 8/4/2022. (KNK) (Entered: 08/04/2022)

08/04/2022 36 Personal Recognizance Bond Entered as to Afshin Farahan. Signed by Judge Donovan W. Frank on 8/4/2022. (KNK) Modified text on 8/5/2022 (MKB). (Entered: 08/04/2022)