James McDermott, the former investment banker who's accused of passing insider-trading tips to Kathryn Gannon - also known as porn star Marylin Star - has pleaded not guilty before a Manhattan federal judge.
McDermott, whose tenure as the head of a Wall Street bank merger specialty firm until an investigation into his activities began, was Gannon's lover for fourteen months, during which he's accused of giving her advance information on mergers which she's accused of parlaying into stock deals netting her over $80,000. Gannon is also accused of passing the information on to another lover, industrialist Anthony Pomponio, who's also accused of bringing in over $80,000 in trading action based on that information.
Gannon remains in seclusion in her native Canada with her fiance, Michael Gillies, having fled there following a warrant issued for her arrest after McDermott and a Pomponio surrendered to authorities. A federal indictment was handed down last week, and a warrant was re-issued for her arrest.
Pomponio also pleaded not guilty before U.S. Magistrate Kevin Fox. He stood with McDermott during the court session.
Marc Medoff, the head of Adult Press Service and a close friend of Gannon, says she is still working "very diligently" with friends and attorneys to resolve the situation, according to APBNews.com. "(She) is a very public, very friendly, very outgoing person," he tells the crime news service. "It's very against Kathryn's nature to be hiding in any form. Kathryn has no plans to spend the rest of her life being unable to come into the United States." Gannon had made her home in Miami.
But federal criminal charges - which carry five year prison sentences for conspiracy, ten years for each insider trading count, and fines up to $1.25 million apiece for each of the three - aren't all that dog Gannon, McDermott, and Pomponio - the Securities and Exchange Commission is pushing a civil lawsuit against them. And if found liable in that suit, they'd each have to return their profits and face three times that at least in penalties.
APBNews says the case has been assigned to U.S. District Judge Kimba Wood - best known as having been nominated for Attorney General by President Clinton but having to give up the nomination over questions involving whether she paid the taxes for household help she'd once hired.
