Marilyn Star \nNEW YORK - Porn stars are known for working inside, but Marylin Star may have put a new twist on it - she's accused of accused of pocketing over $80,000 from inside trading, getting merger tips from one boyfriend, an investment banking firm CEO, and passing them on to another boyfriend, an industrialist.
The Securities and Exchange Commission says Star got advance merger information from James McDermott, until last June the CEO of Keefe, Bruyette & Woods, Inc., who represented or had relationships with most of the firms involved in the merger activity. She then passed the information on to a second boyfriend, Anthony Pomponio, head of industrial diamond wheel maker Pomponio Industries.
Star is named in both a federal criminal indictment and an SEC civil action under her real name, Kathryn B. Gannon. McDermott and Pomponio are free on bail, facing federal securities fraud charges in Manhattan. Star, who's a Canadian citizen but has a home in Florida, is believed to be a fugitive in Canada. However, her Web site (www.marylinstar.com) remained accessible as of Tuesday afternoon.
The SEC says Star made at least $88,135 from the insider trading, while McDermott also transferred "at least" $37,000 to Star in the period in question in certified checks and wire transfers to her Miami bank. The merger activities occurred between June 1997 and April 1998, the SEC charges, during which period McDermott and Star were said to have been lovers.
The complaint says McDermott would give Star the information, and she would, in turn, purchase securities in "relatively unknown" regional banks, including California State Bank, Central Fidelity Banks Inc., First Commerce Corp., Advanta Corp., First Commercial Corp., and Barnett Banks, Inc. Each of those banks, the complaint charges, was either in merger talks with potential partners or had finished merger deals in hand with Star's stock tradings.
"In addition," the SEC complaint charges, "with respect to all but one of (Star's) bank stock purchases, Keefe, Bruyette represented the targets in the merger…or was otherwise associated in some way with one of the parties to the transaction."
Star is said to have met Pomponio at an adult video convention in Atlantic City at the time she was intimate with McDermott. The SEC says Star would tip off Pomponio about information she gleaned from McDermott, even bragging to him that she had escort clients in New York "who were well-connected Wall Street types". Pomponio, "with knowledge of the reliability of the material nonpublic information concerning pending mergers obtained from (Star), according to the SEC, would deal in advance of five of the mergers, pulling down "at least" $86,378 himself.
