A Mickey Mouse Caper Ends With Jail Sentence

January 31, 2011

From March 2010 through May 25, 2010, Bonnie Hoxie was a secretary to the Head of Corporate Communications for the Walt Disney Company ("Disney").

Okay, I mean, gee, here I am a Baby Boomer and a somewhat successful lawyer and all but - I gotta tell ya - if ever there was a dream job, it would be working for Disney.  I could get free rides at the theme parks and meet Davy Crockett and Zorro, and, well, it's that whole child of the '50s thing. 

Anyway, getting back to Hoxie, for several months in 2010 when she was a secretary at Disney, she obtained material, nonpublic information, including Disney's quarterly earnings statements (the "Inside Information").  Unfortunately, Hoxie took all that Inside Information and disclosed it to her boyfriend, Yonni Sebbag a/k/a "Jonathan Cyrus".

I'm clapping here for Tinker Bell and hoping that it makes a difference but, oh well, there's cartoons and there's real life. This is real life. Damn, Tink ain't moving. Time. Someone call it.

Sadly, Sebbag decided to do a number of wrong things with the Inside Information. For starters, Sebbag sent anonymous letters to multiple hedge funds and other investment companies, offering to sell the Inside Information in advance of Disney's public announcements of earnings for purposes of illegal insider trading. 

Talk about Pinocchio's nose starting to grow.

Somehow, word got out to the feds about this anonymous tipster.  The next thing you know, undercover Special Agents of the FBI posed as hedge fund traders (the "Tippees") communicate with Sebbag and agree to buy the Inside Information from him. 

On May 8, 2010 (three days in advance of the May 11, 2010, public announcement of Disney's earnings for the second quarter of 2010), Sebbag sent to the Tippees a confidential document titled "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points," which contained a collection of talking points that Disney executives intended to refer to while answering analysts' questions during the May 11, 2010, earnings call. 

On May 11, 2010, roughly two hours in advance of the public announcement, Sebbag notified the Tippees that Disney's earnings per share would beat analysts forecasts.

On May 14, 2010,Sebbag met with two undercover FBI agents in New York and accepted payment of $15,000 cash for the Inside Information. Further, he agreed that he would provide similar confidential information in the future in return for a 30% share of any profits from the insider-trading scheme.

Not that I'm suggesting that Sebbag wasn't a particularly bright bulb or anything, but, how should I put this - maybe they could have cast him as Dopey in Snow White and the Seven Dwarfs?  I mean, seriously, consider these excerpts from his e-mails to the FBI undercover agents (includes original spelling and punctuation):

  • "First of all, i am not a fed, I have no way to prove it at this point but i am not asking you to disclose your identity not i will disclose mine. It is up to you to determine if this is worth the risk as i did. I work for Disney, that is all i can tell you."
  • "I can deliver 3 to 4 days before release. I will email you the report as soon as i have it and you will wire transfer the money to my account after you get ahold of it. I am asking you to make me an offer based on the capital gains from the trade and the risk i am taking delivering this information to you? Also, i am looking to build a strong business relationship with you for future quarters and information."
  • "I dont think we will get caught if we stay discrete and careful. You can count on my discretion as i am counting on yours…"
  • "… $15k sounds great and $30k even better as i hope you will make a killing from Q2 earnings. I promise i will keep you informed of any unanticipated event, i keep my ears wide open here."

On May 26, 2010, Sebbag and Hoxie were arrested and  charged with two counts of conspiracy and wire fraud.  That same day the Securities and Exchange Commission  charged them with a scheme to sell confidential information about Disney's quarterly earnings to hedge funds.

I'm sorry folks but this just isn't going to end well.  Remember Old Yeller?

On January 28, 2011, Sebbag, 30, was sentenced in Manhattan federal court to 27 months in prison for his role in the insider trading scheme.  He was also sentenced to two years of supervised release and ordered to forfeit $15,000 in funds received from the undercover agents. 

Co-defendant, Hoxie, 34,  is scheduled to be sentenced on February 22, 2011, at 11:45 a.m.

Closing Credits

Manhattan U.S. Attorney Preet Bharara said in a press release about the sentencing:

Yonni Sebbag concocted a brazen scheme to exploit his access to valuable, non-public information by attempting to sell it to would-be investors. Sebbag is only the latest person to learn the hard way that trying to earn a quick buck through insider trading will earn you a prison sentence instead. Together with our law enforcement partners, we will continue to protect ompanies against those who steal and trade on their proprietaryinformation.

Ummm . . . not that I want to burst anyone's bubble or anything but, seriously?   Concocted a brazen scheme to exploit his access to valuable, non-public information by attempting to sell it to would-be investors?   With all due respect, this was as Mickey Mouse a crime as I think I've seen in all my years practicing law.  To compare Sebbag's fumblings to anything even remotely resembling a well-thought-out-and-executed crime is quite a stretch - pretty much like Flubber. 

Talking about a prosecutor's wishful thinking, how about we end with this favorite:

When You Wish Upon A Star

When you wish upon a star

Makes no difference who you are

Anything your heart desires

Will come to you


If your heart is in your dream

No request is too extreme

When you wish upon a star

As dreamers do


Fate is kind

She brings to those who love

The sweet fulfillment of

Their secret longing


Like a bolt out of the blue

Fate steps in and sees you through

When you wish upon a star

Your dreams come true