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Guilty Plea in Insider-Trading Case

Courts: Authorities say former auditor had advance knowledge of Tribune Co.'s acquisition of Times Mirror Co.

January 23, 2002|STUART SILVERSTEIN | TIMES STAFF WRITER

A onetime senior auditor for Times Mirror Co., the former owner of the Los Angeles Times, has agreed to plead guilty to federal securities fraud in an insider-trading case tied to Tribune Co.'s acquisition of Times Mirror.

Federal authorities said Tuesday that the former corporate auditor, Daniel J. Wooten III, netted nearly $77,000 in illicit profit by buying 2,285 shares of stock in Times Mirror based on confidential information about the takeover.

The authorities said Wooten, who plans to plead guilty to one count of fraud, bought the stock in early March 2000, only days before the $6.8-billion deal with Tribune was announced.

At the time of his stock purchases, Wooten already had left Times Mirror and was working as a controller for Rustic Canyon Group, a venture capital firm in Santa Monica that worked on the takeover.

According to a criminal information and plea agreement filed in U.S. District Court in Los Angeles by prosecutors Tuesday, Wooten learned at a Rustic Canyon staff meeting March 6 that a Tribune-Times Mirror deal was about to be announced.

Two days later, Wooten used his online stock brokerage account to start accumulating Times Mirror shares, according to the court papers. He sold his shares at a profit of $76,652 on March 13, 2000, the day the deal was announced in a transaction that lifted the value of Times Mirror shares about 60%.

David Z. Seide, the prosecutor handling the case for the U.S. attorney's office in Los Angeles, said authorities quickly detected suspicious stock trading that led them to Wooten. He said Wooten, upon being confronted by federal investigators, confessed to the illegal trading.

Under the plea agreement, Wooten is required to pay back all of the illicit profit. In addition, the U.S. attorney's office will recommend to a federal judge that Wooten pay an additional criminal fine of $3,000 and receive three years of probation, including six months of home detention. Wooten is scheduled to be arraigned in federal court Monday.

Wooten, 38, of Torrance, faced 10 years in federal prison, but Seide said he is recommending a lighter sentence because of Wooten's cooperation.

In addition to agreeing to plead guilty to a criminal charge, Wooten also plans to enter into a civil settlement with the Securities and Exchange Commission, authorities said. Under the terms of that agreement, Wooten would be subject to a permanent injunction barring him from further securities fraud.

Robert L. Corbin, a lawyer representing Wooten, released a prepared statement saying: "This is a tragic situation. Mr. Wooten has an excellent reputation and has obeyed the law his entire life. He acted alone while committing this impulsive act and will pay for it throughout his life.

"Mr. Wooten accepts responsibility for his conduct, has cooperated fully with the government's investigation and has voluntarily taken steps to undo any harm he has caused, including efforts to resolve all outstanding issues with the SEC."

Corbin said Wooten currently is working as a part-time consultant.

Seide said the probe into possible insider trading in the Tribune buyout is continuing, but he declined to identify potential targets.

Spokesmen for Tribune and Rustic Canyon said they had no indication that anyone with their organizations was a target.

Rustic Canyon is headed by Thomas Unterman, a former Times Mirror chief financial officer. The firm was an advisor in the takeover to the Chandler Family Trust, which had been the controlling shareholder in Times Mirror.

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