A group of high-profile corporate lawyers stands accused of using odd code names like “rabbis” to refer to certain mergers, while engaging in insider trading regarding major deals for over a decade, reportedly earning millions in the process. Federal prosecutors have provided this information.
Nicolo Nurafchan, who once worked as a mergers and acquisitions attorney at Goodwin & Latham, allegedly accessed his law firm’s confidential database to obtain sensitive transaction documents for at least 20 corporate deals.
A Boston federal court unsealed an indictment on Wednesday, revealing that Nurafchan, 43, along with associate Robert Yadgalov, 45, accumulated significant wealth by creating a detailed insider trading network tied to major acquisitions involving companies like Anadarko Petroleum, Care.com, Enstar Group, iRobot, KnowBe4, Qualcomm, SailPoint, and Tim Hortons.
The group reportedly tried to conceal their operations by using coded language, including terms like “rabbi,” “doctor,” and “surgery.”
At one point, it was noted that co-conspirator Simon Fensterzaub, 50, expressed interest in “Ravi’s surgery,” which was a code for an upcoming contract, then casually asked about “Ravi’s” well-being.
Another alleged co-conspirator, Gabriel Silverstein, 43, humorously replied that “he was in stable condition,” signifying that an acquisition announcement was likely to proceed as planned.
The indictment doesn’t specify which law firms were targeted, but it’s been reported that Wachtell Lipton, Rosen & Katz, Latham & Watkins, and Goodwin Procter are involved.
This alleged operation is said to have taken place from around 2014 to 2024 and includes 30 defendants across two indictments.
Law enforcement apprehended 19 individuals in states like New York, Florida, and California, while two suspects based in Russia and Israel remain unaccounted for.
This purported insider trading network has ties to Occidental Petroleum’s rough $55 billion purchase of Anadarko Petroleum and Burger King’s acquisition of Tim Hortons for about $11 billion, as stated in the indictment.
Participants reportedly referred to ongoing acquisitions and trading opportunities as “escapes,” advising one another to have “passports ready” when deals were “in motion.” Insiders were often labeled “travel agents” and “pilots.”
In a text discussion about upcoming transactions, Fensterzaub allegedly remarked, “I can’t let this ship go!” After one successful merger announcement, he noted, “It’s time to take the money and run.” Another time, he mentioned, “I received a call from the flight attendant who stated they’re waiting for the pilot to finalize the details of the flight. Then we can schedule takeoff.”
In a clever twist, members of this group used “coffee” to discuss insider information and material non-public data.
Prosecutors noted that one co-conspirator sent messages like “Good morning coffee” and “I’m at work if you want coffee,” hinting at insider knowledge.
Additionally, payments were camouflaged with coded terms like “gifts,” “donations,” and “manila envelopes.”
Authorities revealed that the operation took significant steps to evade detection by regulators, utilizing burner phones, encrypted messaging apps, offshore accounts, and encouraging in-person meetings while instructing participants to switch off their devices.
Funds were allegedly funneled through foreign dummy companies, disguising kickbacks as “business loans” and frequently using cash transactions to remain under the radar.
Some traders reportedly opened brokerage accounts under family members’ names or through offshore entities in locations like Switzerland, Panama, and the British Virgin Islands.
The group even aimed to minimize their digital footprint by extracting sensitive data from law firms, officials stated.
Separately, the Securities and Exchange Commission has accused Nurafchan of searching confidential trade databases for deals he was not involved in and viewing documents in a way that avoided leaving a trace of his access.
As investigations progressed, there was a noticeable rise in paranoia among the co-conspirators. At one point, Fensterzaub said, “We’re playing with fire,” while Silverstein remarked that the situation felt “scary and sickening,” according to the indictment.
Several defendants are also facing charges for lying to the FBI, attempting to obstruct the investigation, and persuading witnesses to refrain from cooperating with authorities.
A spokesperson for Wachtell Lipton announced that the individuals involved had left the firm over four years ago and emphasized that there are no allegations of wrongdoing against the firm itself. They assured complete cooperation with the U.S. Attorney’s Office.
Similarly, Goodwin and Latham expressed regret about the actions of a former employee while confirming their full cooperation with law enforcement.
The newspaper has reached out to Nurafchan, Yadgalov, and various law firms for further comments.
