CRIME

Delaware multimillionaire gets prison

Sean O'Sullivan
The News Journal

PHILADELPHIA – Former eBay executive Christopher Saridakis of Greenville, Delaware, was sentenced to 15 months in prison for insider trading Wednesday by a U.S. District Court judge.

Saridakis, 45, tipped off two family members and two friends in 2011 to the pending sale of GSIC – where he was chief executive officer – to eBay days before the sale was announced. The tip allowed those individuals to realize more than $300,000 profit, according to prosecutors.

Christopher Saridakis leaves court Wednesday after sentencing in Philadelphia. The former eBay executive lives in Greenville, Delaware

"There has to be consequences," District Judge Stewart Dalzell told Saridakis before imposing the sentence.

In brief comments to the court, Saridakis apologized for his actions and said he was not going to make excuses for his behavior. "I know what I did was wrong," he said, "I'm humiliated, embarrassed and ashamed."

Saridakis said he thought he was doing a friend a favor.

His attorneys argued that probation was sufficient punishment for the former executive, because he had already been punished by the adverse publicity, the loss of prestige and the $664,800 civil settlement he reached with the U.S. Securities and Exchange Commission in May.

"He had a bright future and that is over because of this. His career is over," said Saridakis attorney Richard Zack, adding his client agreed to a lifetime ban on being an officer or director of any publicly traded company as part of his settlement with the SEC.

Zack argued that most insider trading cases do not result in jail time because they are resolved with a civil settlement.

Columbia Law Professor John C. Coffee Jr., who specializes in corporations, securities regulation and white-collar crime, said Saridakis' sentence was not unusual.

"It is not a large sentence but it is more than most cooperating defendants get," he said.

At the same time, the evidence indicated this was an intentional tip to make a friend wealthy and was not due to inadvertent gossip.

"He was in effect giving (his friend) a gift," Coffee said.

Coffee agreed with Zack that the conviction will have a serious and long-lasting effect on Saridakis' career in that even without the SEC ban, Wall Street will never again want anything to do with him. "You can't bring back a convicted felon," he said.

Widener Law Professor Lawrence A. Hamermesh said in the past five years, the government and the SEC have been much more aggressive about insider trading and this sentence seems to reflect that.

At Wednesday's sentencing, Assistant U.S. Attorney Joel Goldstein strongly objected to the defense request for probation and asked the judge for a sentence within the guideline range of two-and-a-half to three years. He argued that while Saridakis accepted responsibility and cooperated after his arrest, that may have been more a function of recognizing the strength of the case against him rather than remorse.

Goldstein said the $664,800 SEC penalty was a pittance for a multimillionaire like Saridakis. The judge noted that Saridakis is worth about $32 million, so the penalty amounted to about 2 percent of his assets.

Federal prosecutors had text messages from Saridakis to a friend days before the sale to eBay asking the friend if he owned stock in GCSI, an e-commerce company. When the friend answered, "no" Saridakis responded, "You should … soon."

The man, Saridakis' former business partner Jules Gardner, then bought 25,000 shares and saw his investment nearly double in value days later. Gardner also tipped off others, who benefited.

Saridakis had once been hailed as an Internet pioneer and visionary and worked as chief digital officer of Gannett Co. – owner of Delawareonline and The News Journal – from 2008 to 2010.

Zack noted Saridakis did not personally benefit from any of the inside trades and had no previous criminal record.

Several people offered character testimony Wednesday on behalf of Saridakis including his wife, a former business partner and Paul Calistro, the executive director of the West End Neighborhood House in Wilmington, where Saridakis has been volunteering.

The most powerful testimony came from Rory Murray, the widow of a 9/11 victim. She was working for Saridakis in 2001 and told the judge that Saridakis went out of his way to help her try and get information during those chaotic days and accommodated her at work after she became a single working mother.

"For that I'm forever grateful," she said.

Saridakis was also well known in the Wilmington community for his philanthropic contributions, including his support of the arts and more than 65 letters of support were sent to the court.

In the end, Judge Dalzell dismissed the prosecution request for a guideline sentence as too severe but he also described a sentence of probation as a "slap on the wrist." Dalzell agreed with the government that a message of deterrence had to be sent to other high ranking executives that might be inclined to do their friends a "favor."

"The integrity of the market is crucial" he said, adding that Saridakis' actions were a serious breach of trust.

In addition to jail time, Dalzell also ordered Saridakis to pay a $10,000 fine and $100 in court costs. The judge, however, gave Saridakis until December to report to prison.

Afterward, Saridakis declined comment. Zack issued a brief statement saying Saridakis had now "resolved all matters with the government and wishes to move forward with his life."

Contact Sean O'Sullivan at (302) 324-2777 or sosullivan@delawareonline.com or on Twitter @SeanGOSullivan