The man who shuttled inside information between corporate attorney Matthew Kluger and Wall Street trader Garrett Bauer, perhaps for 17 years, pleaded guilty in federal court, then proceeded to provide federal prosecutors with new disclosures.  Kenneth Robinson, 45, who agreed to cooperate with the government’s case against co-defendants Kluger and Bauer, said that at least one other person - someone not previously disclosed - was involved in the suspected scheme.

Last Wednesday, federal prosecutors in New Jersey filed charges accusing Mr. Kluger of stealing secret information from his law firms about pending mergers and leaking it to Mr. Bauer, who used the inside information to buy the stocks of companies involved in the deals.  The operation netted the men more than $34 million - above their earlier estimate of $32 million. 

Kenneth "Middleman" Robinson said he shuttled the information - and cash - between Mr. Kluger, 50, and Mr. Bauer, 43;  the men went to great lengths to avoid detection, plotting their actions on pay phones and prepaid cellular phones.  Prosecutors say Mr. Kluger began the scheme in 1994, when he was a summer associate at the Wall Street law firm Cravath Swaine & Moore.  He continued leaking the information, with some interruptions, when he joined Skadden, Arps, Slate, Meagher & Flom and Wilson Sonsini Goodrich & Rosati.  Mr. Robinson said in court on Monday that Mr. Kluger also leaked inside information while he was a lawyer at Fried Frank.

Mr. Robinson, 45, further disclosed for the first time that he passed along inside information from Mr. Kluger to at least one other (unnamed) person - about 10 years ago.   The scheme halted in 1999, when the men apparently feared that authorities were on their trail, but restarted in 2001, when Mr. Kluger worked at Fried Frank, Mr. Robinson said.

Mr. Robinson said that, over the course of 17 years, Mr. Bauer traded on insider tips re: 15 or so M&A deals, though he couldn't recall an exact number. 

        Robinson's Plea Agreement.   Kenneth Robinson signed a plea agreement that could send him to prison for up to 7 years.  Judge Katharine Hayden, however, said that she could decide to overrule the agreement, as well as impose thousands of dollars in fines.  Mr. Robinson is the linchpin of the government’s case.  Reportedly, government investigators searched Robinson's home on or about 3/8/11 and, shortly thereafter, he started secretly recording conversations with Mr. Kluger and Mr. Bauer, his close friends.  Judge Hayden agreed to let Mr. Robinson remain free on a $2 million bond until his sentencing hearing, which is scheduled for July.

        Garrett Bauer's Hearing.   In a separate hearing on Monday afternoon, Mr. Bauer was released on a $4 million bond into the custody of his mother.  He'll remain on electronic monitoring in his $6.7 million home on the Upper East Side of Manhattan.  He also has been banned from trading securities.  Authorities have seized many of Mr. Bauer’s assets, including $290,000 from Citibank accounts, $11.6 million from a trading account and about $9 million from a Goldman Sachs account.   [Dealbook, 4/11/11]