U.S. seeks to tell jury about porno actress in insider case

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Source: Reuters

By: Gail Appleson

(NEW YORK, NY) — Federal prosecutors argued on Friday they should be allowed to inform a jury about the occupation of a porno actress who allegedly got inside tips from a former chief executive officer of Keefe, Bruyette & Woods Inc.

The former investment banking firm CEO and Chairman James McDermott Jr., 48, of Briarcliff Manor, N.Y., is scheduled to go on trial next month in Manhattan federal court for allegedly giving non-public information to the adult actress with whom he was having an affair.

McDermott’s lawyers are seeking a court ruling that would prevent the government from disclosing to the jury that McDermott’s lover, Kathryn Gannon, worked as an adult actress, exotic dancer and escort. The defense lawyers said in court papers that such evidence “can only be intended to incite and inflame the jury” against their client.

U.S. District Judge Kimba Wood said during a pre-trial hearing on Friday she was concerned the information would prejudice the jury and suggested that the government refer to Gannon only as an actress and dancer. The judge is expected to issue a formal ruling at a later date.

Federal prosecutors argued that evidence about Gannon’s background is crucial to show the jury she would not have had access to such non-public information without her relationship with McDermott.

They said the information was also relevant to show McDermott’s motivation in giving tips to Gannon despite the risks to his reputation and the possibility of criminal charges.

“The fact that McDermott had an intimate relationship with an adult film actress is relevant to his intent,” prosecutors said in court papers supporting their arguments. “For example, Gannon’s status as an adult film actress may fairly lead the jury to conclude that McDermott felt the need to impress her by providing inside stock tips as a means of demonstrating his influence within the world of finance.”

McDermott, Gannon and Anthony Pomponio, another man with whom she was involved, were indicted in January for their role in the alleged two-year insider trading scheme.

Gannon, 30, uses the name Marylin Star in adult films and in a sexually graphic Internet Web site, court papers said. She is currently living in Canada.

The charges are based on allegations that McDermott stole confidential information from his firm about six upcoming mergers involving regional banks and gave it to Gannon. She, in turn, allegedly passed the tips to Pomponio. Prosecutors alleged Gannon and Pomponio made more than $170,000 in illegal profits based on the non-public information.

Prosecutors said that because information about Gannon’s occupation is “potentially distracting and inflammatory,” they would “strictly refrain” from any effort to sensationalize her occupation.

“Indeed, any reference to her occupation… will be brief and conclusory,” prosecutors said in court papers. “We have no intention of offering any detailed evidence regarding Gannon’s occupation, such as titles of her films, the existence or content of her adult Web site and the like.”

Prosecutors also said they do not intend to offer photos “depicting Gannon in a sexual context” but only to show a neutral photograph of her face, such as a driver’s license photo.