After being scooped up by the FBI recently during a federal court hearing in the Northern District of California, Mounir Gad, 35, had just made bail ($50,000—cash) and was on his way back to Los Gatos. He’d been ordered to live, once again, with his parents, his new attorney told the Los Gatan, Nov. 26.
It’s the latest twist in an insider trading scheme with Gad, the former Silicon Valley Bank Vice President, at its center—one that appeared to have finally come to an end just weeks ago.
“His dad will be picking him up,” said James T. Reilly, who recently signed on as his lawyer, but is already in the process of parting ways with Gad. “I filed a motion to withdraw as counsel.”
In a sealed deal, Gad, who worked with SVB’s Sponsor Finance Group arm, pleaded guilty to tipping off his friend, Nathan Guido, to the acquisition of Procera Networks, Inc. in 2015, and to the buyout of Sizmek, Inc. in 2016, netting $27,000—which they shared.
He avoided a grand jury by pleading early, and got two years’ probation.
It wasn’t until after the original sentence was handed down that his lawyer at the time, Thomas D. Stout, of Oakland-based The Stout Firm, P.C., learned letters of support he’d submitted to the court on Gad’s behalf had been altered, Reilly said.
It was Stout who brought the phony references to the court’s attention.
Stout declined to comment for this story.
And so it was that Gad was charged with tampering, identity theft and criminal contempt. He declined to comment when contacted by the Los Gatan and referred questions to a legal representative.
Gad was forced to return to court Nov. 22.
“That hearing never took place,” Reilly said. “The FBI showed up about maybe 15 minutes before the time set for the hearing. So, he was taken into custody at that point.”
The following day, the Department of Justice explained what happened.
‘What I considered, and What i found to be very compelling about this letter, are lies that Mr. Gad put in’—District Judge Lucy H. Koh
“Of the 12 letters submitted, Gad altered three of them without the authors’ knowledge, adding additional language praising (himself),” a spokesperson said in a release. “Additionally, Gad submitted three more letters that were not written by the purported authors and without the purported authors’ knowledge.”
In fact, in a post-sentencing hearing, District Judge Lucy H. Koh said it was the made-up part of one of the letters that had moved her most.
“What I considered and what I found to be very compelling about this letter, are lies that Mr. Gad put in the letter,” Koh said Nov. 10.
That letter writer was in the gallery during the Nov. 3 sentencing.
She reached out to Gad’s lawyer to bring the discrepancy to light, according to the criminal complaint.
As investigators combed through the documents, they discovered Gad had altered two other letters stating he demonstrates “the highest integrity and character,” and for being “productive in a moral and ethical way,” the Justice Department said.
He also submitted a “bogus” letter from his ex-fiancé, and from two other people who’d previously written letters of support in connection with other litigation, prosecutors said.
If convicted on the new charges, Gad faces a maximum penalty of 20 years in prison and a fine of $250,000 for document tampering, and five years in prison and a $250,000 fine for identity theft.
According to a Nov. 27 DOJ sentencing memo, Gad was working for Silicon Valley Bank’s Sponsor Finance Group in Palo Alto in March 2015 when he began advising Francisco Management, L.P. on the takeover of Fremont-based hardware company Procera Networks.
Later, after the new owners—a private equity firm with $10 billion under management—gained control, some Procera staff raised concerns the company might be helping the Recep Tayyip Erdoğan regime in Turkey spy on its citizens, according to Forbes.
As Gad worked on the $240 million deal, back in March and April 2015, he told his friend, Nathan Guido, to buy shares of Procera before the news of the acquisition was public.
He bought 750 shares April 16, 2016.
The sale was announced six days later. Guido entered an order to sell the shares on May 21, 2015, resulting in a $2,200 gain.
Just over a year later, Gad had begun advising Vector Capital on its acquisition of Austin-based Sizmek, an online advertising firm.
He learned of the buyout July 25, 2016.
Using a secret code, Gad shared the ticker symbol with Guido.
His friend got the message and snagged 26,022 Sizmek shares Aug. 1, 2016—two days before the deal was announced to the public.
This time, Guido didn’t wait to sell.
That very same day, he ditched the shares, raking in a $27,000 profit, which they split, the DOJ said.
Sizmek filed for bankruptcy in 2019.