An insider trading scandal involving former porn actress Kathryn Gannon (a.k.a. Marylin Star) was scheduled to begin with opening arguments today.
Former investment banking CEO James McDermott is accused of passing advance bank merger information in 1998-99 to Gannon, who's alleged to have pocketed over $80,000 in stock activity based on that information. Industrialist Anthony Pomponio is accused of receiving such merger information from Gannon and pocketing over $80,000 himself in similar stock activity based on it.
Gannon, a former mistress of both McDermott and Pomponio, remains in seclusion in her native Vancouver, British Columbia, with her fiancé, Michael Gillies.
U.S. District Judge Kimba Wood - whose problems involving Social Security taxes for her domestic help blocked her nomination as President Clinton's Attorney General in 1993 - is hearing the case. Last month, she ruled prosecutors wouldn't be allowed to tell the jury about Gannon's life as an exotic dancer and porn actress, on grounds it might prejudice or distract a jury. Wood also ruled prosecutors could not bring in evidence suggesting prostitution in Gannon's background.
The case rocked Keefe, Bruyette and Woods, Inc., the investment-banking firm McDermott headed until his June 1999 resignation - which ended up derailing the firm's plans for an initial public offering. Earlier reports suggested he resigned when he knew he was under federal investigation over whether he'd passed merger information to Gannon.
Gannon, who also has a home in Florida, has made almost no public statement since she retreated to Canada. Her friend Marc Medoff, president of Adult Press Service, has maintained the former porn actress wants to tell the straight story and negotiate a prudent return to the U.S. to do so.
