'Presumption of Innocence'
After the hearing, Bauer attorney Donald Derfner said, "There is still a presumption of innocence."
Kluger appeared without a lawyer yesterday in federal court in Alexandria, Virginia, where a magistrate judge ordered him held without bail. The judge set a preliminary hearing for April 8. Kluger asked the judge to appoint a lawyer for him.
Five calls from March 17 to March 28 are detailed in 12 pages of the FBI complaint. The calls show that Bauer believed his reliance on disposable cell phones would help them escape detection.
"It could get ugly," Kluger is quoted as saying on March 17 in a conversation recorded by the middleman for the FBI. If the FBI looks into his bank accounts and links him to the trades, he said, "I would have not only the financial ruin, but I'd have to-I would have to do time."
Precautions
While speaking on the phone, the trio took precautions, according to the complaint.
At Wilson Sonsini, Kluger didn't pass along information from mergers he was working on personally; he culled information from his firm's computer system on other people's deals, according to authorities. And for those, he was careful not to open computer files so as not to leave an electronic trail, he said in one recorded conversation.
To avoid detection, Bauer paid the middleman and Kluger in cash. Bauer used ATM withdrawals from multiple accounts at Citigroup Inc., sometimes reaching the daily $5,000 withdrawal limit.
Kluger and the middleman structured their cash deposits to be less than $10,000 so they wouldn't trigger reporting requirements, the FBI said. The middleman also stowed cash in safety deposit boxes.