(Bloomberg News) Every dawn in the early spring of 2011, Matthew Kluger peered out his window, wondering when federal agents would knock at his door. Kluger, a mergers-and-acquisitions lawyer, says he worried that authorities were closing in on him as the source of illegal tips in a three-man insider-trading ring that had eluded detection for 17 years.

The knock came on April 6, 2011. U.S. agents handcuffed Kluger, hustled him into a Dodge Intrepid, drove to the Federal Bureau of Investigation office in Manassas, Virginia, and laid out the case against him. The evidence included tape recordings of Kluger telling the man he tipped to get rid of a cellular phone that could lead back to him -- and to do it carefully because the authorities had dogs that can sniff out mobiles.

"I really would like to see this phone go bye-bye ASAP," Kluger said, adding: "Do you want this to be our undoing?"

Kluger's account offers a unique view of insider trading by a mid-level lawyer who moved from one powerful firm to another, exploiting his access to partners and confidential documents. It shows how difficult it is to police such activity when conspirators take care to conceal their crimes and trade with discipline. The trio's downfall came only when one of them changed the routine after almost two decades.

Their stealth masked Kluger's ability to steal secrets from some of the most prominent U.S. law firms, including Wilson Sonsini Goodrich & Rosati PC and Skadden, Arps, Slate, Meagher & Flom LLP. The three men made $37 million in profit on deals involving some of the largest technology companies, including Oracle Corp., Adobe Systems Inc., Hewlett-Packard Co. and Intel Corp.

The Confession

Kluger began confessing his crimes to federal authorities the day of his arrest. He first detailed them to Bloomberg News nine days later, after posting bail in Newark, New Jersey, when he needed a ride back to a jail to pick up his heart medicine. He offered additional details in interviews over the next year.

His biggest surprise, he said, was this: At the FBI, he discovered that one of his partners had kept more than 90 percent of the profit. He said he thought they were splitting the money equally.

"Maybe you want to laugh and say of course there's no honor among thieves," Kluger said. "But even when you're doing something you're not supposed to do, I trusted that they were honoring the commitments that they had made."

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