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Insider trading suspect: Are his threats ominous?

Insider trading case leads to arrest of suspect. Federal prosecutors say he should stay jailed because he threatened them during the insider trading investigation.

By Larry Neumeister and Tim FoughtAssociated Press / February 19, 2012

This photo released by the Multnomah County (Ore.) Sheriff shows John Kinnucan of Portland, Ore., earlier this month. He is accused of obtaining secrets about publicly traded companies in an insider trading case.

Multnomah County Sheriff/AP

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PORTLAND, Ore.

Federal prosecutors said Friday that they received a series of threating, bigoted and obscene voicemail messages from one of two suspects in an insider trading case, and he should be kept behind bars.

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John Kinnucan appeared in federal court in Portland after he was arrested Thursday on conspiracy and securities fraud charges.

He didn't enter a plea. U.S. Magistrate Judge John Acosta said Kinnucan would remain jailed, and a detention hearing was scheduled for Wednesday.

The government alleges that Kinnucan, as president of Broadband Research LLC, used inducements to pump information out of public company insiders. Then, the government said, he would sell the information to clients such as hedge funds and money managers as if it were the product of legitimate research.

In New York, a former employee of a California high-tech company pleaded guilty in the case Friday and agreed to cooperate with prosecutors.

Kinnucan has been under investigation since 2010.

The government said in court papers that even though the charges are "nonviolent, white-collar offenses," Kinnucan should be kept in custody until he stands trial because of the "ominous tirades" that began in December and ended Sunday.

Six assistant U.S. attorneys got the abusive messages, prosecutors said in the court documents. Kinnucan also made threats to one cooperating witness and attempted to contact another, the filing said.

The filing contained excerpts from the voicemails consisting largely of obscenities and racial and ethnic epithets.

"Yeah, too bad Hitler's not here. He'd know what to do with you," it quoted a Dec. 5 message as saying.

Kinnucan was represented by a public defender, T.J. Hester, and Acosta said that could continue until Kinnucan files an affidavit about his finances.

Hester said in court that he had just received the case and hadn't fully reviewed the allegations. He asked for copies of the voicemails. Calls to him later for comment about the government filing were not immediately returned.

Prosecutors want to transfer Kinnucan to New York for trial.

In Manhattan on Friday, Donald Barnetson, a former employee of California memory card maker SanDisk Corp., pleaded guilty in federal court to a conspiracy charge, agreeing to cooperate with federal authorities investigating insider trading.

Barnetson entered the plea to conspiracy to commit wire fraud and securities fraud. Authorities said he fed tips about SanDisk to Kinnucan's company.

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