Case 2:18-cr-00368-GEKP Document 1 Filed 08/29/18 Page 1 of 16

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA
v.
DAMILARE SONOIKI
MARVIN MYCHAL KENDRICKS

:

CRIMINAL NO. 18-

:

DATE FILED:

:

VIOLATIONS:
18 U.S.C. § 371 (conspiracy to commit
securities fraud – 1 count)
15 U.S.C. §§ 78j(b), 78ff, and 17 C.F.R.
§§ 240.10b-5 and 240.10b5-2 (securities
fraud – 1 count)
18 U.S.C. § 2 (aiding and abetting)
Notice of forfeiture

:
:
:

INFORMATION
COUNT ONE
THE UNITED STATES ATTORNEY CHARGES:
At all times material to this Information:
1.

Beginning on or about July 11, 2013, through on or about May 26, 2015,

Defendant DAMILARE SONOIKI, a resident of New York, New York, was an associate at a
global investment bank with headquarters in New York, New York (hereinafter “Investment
Bank”). Among other things, Investment Bank advised clients regarding potential mergers and
acquisitions. Defendant SONOIKI worked in the technology, media and telecommunications
group of Investment Bank. As an associate at Investment Bank, defendant SONOIKI had a
fiduciary duty to Investment Bank’s clients to maintain the confidentiality of ongoing
negotiations. Defendant SONOIKI also understood Investment Bank’s prohibition on the
purchase or sale of any security of an Investment Bank client while Investment Bank personnel
possessed non-public information concerning such security or client.

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2.

Defendant MARVIN MYCHAL KENDRICKS, a resident of Philadelphia,

Pennsylvania, and Fresno, California, was an acquaintance of defendant DAMILARE SONOIKI.
Defendant KENDRICKS was a linebacker for the Philadelphia Eagles, a National Football
League franchise.
3.

OptionsXpress was a service of the Charles Schwab Corporation, a bank and

brokerage firm based in San Francisco, California, that provided customers an electronic trading
platform for investing in financial instruments, specializing in the trading of options contracts. A
call option contract gives the owner the right to buy a specified amount of an underlying stock at
a specified price (the “strike price”), before a specified date (the “expiration date”), after which
the call option will expire and become worthless. The expiration date for all stock options
expiring in a given month generally occurs on the third Friday of that month. A call option
becomes more valuable as the price of the underlying stock increases relative to the strike
price. A person who buys a call option typically believes that the price of the underlying stock
will increase, and a person who buys a call option with a short-term expiration typically believes
that the price of the underlying stock will increase in the short term.
4.

The United States Securities and Exchange Commission (the “SEC”) was an

independent agency of the United States which was charged by law with the duty of protecting
investors by regulating and monitoring, among other things, the purchase and sale of publicly
traded securities. Pursuant to the Securities Exchange Act of 1934, 15 U.S.C. § 78a, et seq., the
SEC promulgated Rule 10b-5, 17 C.F.R. § 240.10b-5, which prohibits any act or omission
resulting in fraud or deceit in connection with the purchase or sale of any security. Call option
contracts are securities regulated by the SEC.

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COMPUWARE ACQUISITION BY THOMA BRAVO
5.

Compuware Corporation (hereinafter “Compuware”) was a software company

with headquarters in Detroit, Michigan. Compuware was a publicly-traded company, and
Compuware stock was registered under Section 12(g) of the Securities Exchange Act of 1934
and was traded on the National Association of Securities Dealers Automated Quotations
(“NASDAQ”) under the ticker symbol “CPWR.”
6.

In or around July 2014, Compuware was in discussions with Thoma Bravo, a

private equity firm, regarding a merger deal. Investment Bank represented Compuware in this
transaction. Thoma Bravo was to acquire all of the publicly held shares of common stock of
Compuware.
7.

The merger discussions between Compuware and Thoma Bravo were material,

non-public information.
8.

On or about September 2, 2014, Thoma Bravo announced that it would acquire

Compuware for $2.5 billion. On August 29, 2014, the last trading day prior to this public
announcement of the merger, Compuware common stock traded in the range of $8.86 to $8.99
per share. Following the merger announcement, Compuware shares rose to a high of $10.20, an
approximate 13.5 percent increase over the share price prior to the announcement.
MOVE ACQUISITION BY NEWS CORPORATION
9.

Move, Inc. (hereinafter “Move”) was a real estate listing company based in San

Jose, California. Move was a publicly-traded company, and Move stock was registered under
Section 12(g) of the Securities Exchange Act of 1934 and was traded on the NASDAQ under the
ticker symbol “MOVE.”

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10.

In or around September 2014, Move was in discussions with News Corporation

regarding a merger deal. Investment Bank represented News Corporation in this transaction.
News Corporation was to acquire all of the publicly held shares of common stock of Move.
11.

The merger discussions between Move and News Corporation were material,

non-public information.
12.

On or about September 30, 2014, News Corporation announced that it would

acquire Move for $950 million. The day prior to the public announcement of the merger, Move
common stock traded in the range of $14.73 to $15.39 per share. Following the merger
announcement, Move shares rose to a high of $21.13, an approximate 37 percent increase over
the share price prior to the announcement.
SAPIENT ACQUISITION BY PUBLICIS
13.

Sapient Corporation (hereinafter “Sapient”) was a marketing and consulting

company based in Boston, Massachusetts. Sapient was a publicly-traded company, and Sapient
stock was registered under Section 12(g) of the Securities Exchange Act of 1934 and was traded
on the NASDAQ under the ticker symbol “SAPE.”
14.

In or around October 2014, Sapient was in discussions with Publicis Corporation

(hereinafter “Publicis”) regarding a merger deal. Investment Bank represented Sapient in this
transaction. Publicis Corporation was to acquire all of the publicly held shares of common stock
of Sapient.
15.

The merger discussions between Sapient and Publicis were material, non-public

information.

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16.

On or about November 3, 2014, Publicis announced that it would acquire Sapient

for $3.7 billion. On October 31, 2014, the last trading day prior to the public announcement of
the merger, Sapient common stock traded in the range of $16.93 to $17.66 per share. Following
the merger announcement, Sapient shares rose to a high of $24.73, an approximate 40 percent
increase over the share price prior to the announcement.
OPLINK ACQUISITION BY KOCH INDUSTRIES
17.

Oplink Communications LLC (hereinafter “Oplink”) was a company based in

Fremont, California that manufactured and sold optical components. Oplink was a publiclytraded company, and Oplink stock was registered under Section 12(g) of the Securities Exchange
Act of 1934 and was traded on the NASDAQ under the ticker symbol “OPLK.”
18.

In or around October 2014, Oplink was in discussions with Molex, a subsidiary of

Koch Industries, regarding a merger deal. Investment Bank represented Molex and Koch
Industries in this transaction. Koch Industries was to acquire all of the publicly held shares of
common stock of Oplink.
19.

The merger discussions between Oplink and Molex and Koch Industries were

material, non-public information.
20.

On or about November 19, 2014, Koch Industries announced that it would acquire

Oplink for $445 million. The day prior to the public announcement of the merger, Oplink
common stock traded in the range of $21.18 to $21.56 per share. Following the merger
announcement, Oplink shares rose to a high of $24.22, an approximate 12 percent increase over
the share price prior to the announcement.

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THE CONSPIRACY
21.

From in or about July 2014 to in or about March 2015, in Philadelphia, in the

Eastern District of Pennsylvania, and elsewhere, defendants
DAMILARE SONOIKI
and
MARVIN MYCHAL KENDRICKS
conspired and agreed, together and with Person #1, known to the United States Attorney, and
with others known and unknown to the United States Attorney, to commit an offense against the
United States, that is, to commit securities fraud in violation of Title 15, United States Code,
Sections 78j(b) and 78ff, and Title 17, Code of Federal Regulations, Section 240.10b-5.
MANNER AND MEANS
22.

It was a part of the conspiracy that defendants DAMILARE SONOIKI and

MARVIN MYCHAL KENDRICKS, unlawfully, willfully and knowingly, directly and
indirectly, by use of the means and instrumentalities of interstate commerce, and the facilities of
national securities exchanges, would and did use and employ manipulative and deceptive devices
and contrivances, in violation of Title 17, Code of Federal Regulations, Section 240.10b-5, by:
(a) employing devices, schemes and artifices to defraud; (b) making untrue statements of
material facts and omitting to state material facts necessary in order to make the statements
made, in the light of the circumstances under which they were made, not misleading; and (c)
engaging in acts, practices and courses of business which operated and would operate as a fraud
and deceit upon any person, in connection with the purchase and sale of a security, in violation
of Title 15, United States Code, Sections 78j(b) and 78ff, and Title 17, Code of Federal
Regulations, Section 240.10b-5.
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23.

It was further part of the conspiracy that, as detailed below, from at least on or

about July 1, 2014, through at least on or about March 26, 2015, defendant DAMILARE
SONOIKI provided MARVIN MYCHAL KENDRICKS, directly and indirectly, with
information regarding Investment Bank clients, including material, non-public information about
pending merger and acquisition deals.
24.

It was further part of the conspiracy that defendant MARVIN MYCHAL

KENDRICKS relied on the material, non-public information he received from defendant
DAMILARE SONOIKI to buy call option contracts in Compuware, Move, Sapient, and Oplink,
prior to the public merger announcement.
25.

It was further part of the conspiracy that defendant MARVIN MYCHAL

KENDRICKS sold call options contracts in Compuware, Move, Sapient, and Oplink, for a
substantial profit after the public merger announcement.
26.

It was further part of the conspiracy that, in addition to using cellular telephone

calls and text messages, Defendant DAMILARE SONOIKI communicated with defendant
MARVIN MYCHAL KENDRICKS using Facetime, a proprietary videotelephony product of
Apple, Inc. Defendants SONOIKI and KENDRICKS used Facetime to share non-public
information regarding Investment Bank clients in an attempt to avoid law enforcement detection.
27.

It was further part of the conspiracy that Defendant DAMILARE SONOIKI

communicated with Person #1 as a buffer to provide non-public information regarding
Investment Bank clients to defendant MARVIN MYCHAL KENDRICKS. Person #1 then used
that information to make trades on behalf of defendant KENDRICKS.

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28.

It was further part of the conspiracy that defendant MARVIN MYCHAL

KENDRICKS and Person #1 made small, legitimate trades in defendant KENDRICKS’s
OptionsXpress account to mask the success of the trades that they made based on non-public
information provided by defendant DAMILARE SONOIKI.
29.

It was further part of the conspiracy that defendant MARVIN MYCHAL

KENDRICKS provided defendant DAMILARE SONOIKI with cash and tickets to Philadelphia
Eagles games in return for non-public information regarding Investment Bank clients.
30.

The total amount of profit that defendant MARVIN MYCHAL KENDRICKS

made as a result of trading in the options of Compuware, Move, Sapient, and Oplink was
approximately $1,198,075.
OVERT ACTS
In furtherance of the conspiracy and to accomplish its object, defendants DAMILARE
SONOIKI and MARVIN MYCHAL KENDRICKS committed the following overt acts, among
others, in the Eastern District of Pennsylvania and elsewhere:
1.

On or about July 14, 2014, defendant DAMILARE SONOIKI, having learned

about the Compuware acquisition from others at Investment Bank, sent a text message to
defendant MARVIN MYCHAL KENDRICKS asking defendant KENDRICKS to call him.
2.

On or about July 19, 2014, defendant MARVIN MYCHAL KENDRICKS opened

an account at OptionsXpress.
3.

On or about July 24, 2014, defendant MARVIN MYCHAL KENDRICKS

transferred $80,000 from his brokerage account at UBS to his bank account at Wells Fargo.
Defendant KENDRICKS then transferred $80,000 into his account at OptionsXpress.

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4.

On or about July 26, 2014, defendant MARVIN MYCHAL KENDRICKS sent

defendant DAMILARE SONOIKI a text message saying that he, defendant KENDRICKS, had
deposited $80,000 into his account at OptionsXpress, stating: “Yo so the 80 is there.”
Defendant SONOIKI replied: “nah u should keep number 95.” In this text message exchange,
defendants SONOIKI and KENDRICKS used cover language to make it appear that they were
discussing defendant KENDRICKS’s football jersey number, which was 95, rather than the
transfer of funds into OptionsXpress.
5.

On or about July 30, 2014, defendant DAMILARE SONOIKI logged into the

OptionsXpress account of defendant MARVIN MYCHAL KENDRICKS and purchased 1000
call option contracts to purchase Compuware by September 2014 for $10 per share at a cost of
$21,535.60.
6.

Between on or about August 1, 2014, and on or about August 5, 2014, defendant

DAMILARE SONOIKI accessed the OptionsXpress account of defendant MARVIN MYCHAL
KENDRICKS and purchased an additional 1,400 call option contracts to purchase Compuware
by September 2014 for $10 per share at a total cost of $30,147.18.
7.

On or about August 15, 2014, defendant DAMILARE SONOIKI accessed the

OptionsXpress account of defendant MARVIN MYCHAL KENDRICKS and purchased an
additional 150 call option contracts to purchase Compuware by November 2014 for $9 per share
at a total cost of $8,480.06.
8.

On or about August 27, 2014, defendant DAMILARE SONOIKI and defendant

MARVIN MYCHAL KENDRICKS exchanged text messages regarding the upcoming
Compuware merger. Defendant KENDRICKS stated: “I’m getting kinda if-y Bruh.” Defendant

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SONOIKI reassured defendant KENDRICKS by responding: “I hear u. it’s still happening, just
taking longer than it was supposed to.”
9.

On or about August 31, 2014, defendant DAMILARE SONOIKI sent defendant

MARVIN MYCHAL KENDRICKS a text message regarding the upcoming Compuware merger,
stating: “Haha … I should have some good news for you really soon.”
10.

On or about September 2, 2014, after Thoma Bravo announced its intention to

acquire Compuware, defendant DAMILARE SONOIKI accessed the OptionsXpress account of
defendant MARVIN MYCHAL KENDRICKS and sold all 2550 of his call option contracts in
Compuware, netting a total profit of $78,423.
11.

On or about September 3, 2014, defendant MARVIN MYCHAL KENDRICKS

sent a text message to defendant DAMILARE SONOIKI stating: “You the man.”
12.

On or about September 5, 2014, defendant DAMILARE SONOIKI, having

learned about the Move acquisition from others at Investment Bank, exchanged text messages
with defendant MARVIN MYCHAL KENDRICKS. That same day, defendant SONOIKI called
defendant KENDRICKS approximately 11 times.
13.

On or about September 5, 2014, defendant MARVIN MYCHAL KENDRICKS

sent a text message to defendant DAMILARE SONOIKI stating: “don’t write.”
14.

Beginning on or about August 5, 2014, and continuing to on or about August 19,

2014, OptionsXpress sent e-mails to defendant MARVIN MYCHAL KENDRICKS to determine
whether there was an unauthorized person making trades in defendant KENDRICKS’s account.
OptionsXpress sent these e-mails to defendant KENDRICKS because OptionsXpress identified
an Internet Protocol (“IP”) address in New York making trades on an account registered to

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defendant KENDRICKS in Philadelphia. Having not gotten a response from defendant
KENDRICKS, by on or about September 4, 2014, OptionsXpress placed a restriction on
defendant KENDRICKS’s account that prevented him from purchasing additional options
contracts. On or about September 5, 2014, defendant KENDRICKS placed a call to
OptionsXpress on a recorded line to have OptionsXpress remove the trading restriction that
OptionsXpress had earlier placed on the account. On this call, defendant KENDRICKS said: “I
am trying to get it [the block] lifted before the market closes. I really need to do that.”
15.

On or about September 15, 2014, defendant DAMILARE SONOIKI placed

approximately three telephone calls to defendant MARVIN MYCHAL KENDRICKS. Later that
same day, defendant KENDRICKS sent a text to Person #1 authorizing Person #1 to make
securities transactions on his behalf, stating: “Delegation has been passed on to you.” Person #1
responded with his telephone number and Facetime account name and told defendant
KENDRICKS: “I’ll be expecting the call.” Later that day, defendant SONOIKI and Person #1
exchanged approximately five telephone calls.
16.

On or about September 16, 2014, Person #1 sent a text message to defendant

DAMILARE SONOIKI, stating: “OK, I’m headed back now, just call me, and I can writer [sic]
it down and do it on his laptop.”
17.

Between on or about September 8, 2014, and on or about September 23, 2014,

defendant MARVIN MYCHAL KENDRICKS purchased call option contracts to purchase Move
stock at a total cost of $71,001.

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18.

On or about October 2 and October 3, 2014, after News Corporation announced

its intention to acquire Move, defendant MARVIN MYCHAL KENDRICKS sold all of his
option contracts in Move, netting a total profit of $278,701.
19.

On or about October 6, 2014, defendant DAMILARE SONOIKI, having learned

about the Sapient acquisition from others at Investment Bank, exchanged approximately seven
telephone calls with Person #1 between 8:25 a.m. and 11:23 a.m.
20.

Between on or about October 6, 2014, and on or about October 14, 2014,

defendant MARVIN MYCHAL KENDRICKS purchased call option contracts to purchase
Sapient stock at a total cost of $145,784.
21.

On or about November 6, 2014, after Publicis announced its intention to acquire

Sapient, defendant MARVIN MYCHAL KENDRICKS sold all of his option contracts in
Sapient, netting a total profit of $489,078.
22.

On or about the morning of October 31, 2014, defendant DAMILARE SONOIKI,

having learned about the Oplink acquisition from others at Investment Bank, made
approximately four telephone calls to Person #1.
23.

On or about the morning of October 31, 2014, defendant DAMILARE SONOIKI,

having learned about the Oplink acquisition from others at Investment Bank, placed a telephone
call to defendant MARVIN MYCHAL KENDRICKS.
24.

Between on or about October 31, 2014, and on or about November 17, 2014,

defendant MARVIN MYCHAL KENDRICKS purchased call option contracts to purchase
Oplink stock at a total cost of $446,387.

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25.

On or about November 21, 2014, and November 24, 2014, after Koch Industries

announced its intention to acquire Oplink, defendant MARVIN MYCHAL KENDRICKS sold
all of his call option contracts in Oplink, netting a total profit of $351,873.
26.

On or about September 21, 2014, and on or about October 12, 2014, defendant

MARVIN MYCHAL KENDRICKS paid defendant DAMILARE SONOIKI a total of
approximately $10,000 in cash and provided free tickets to Eagles games for the information that
defendant SONOIKI had provided to defendant KENDRICKS regarding clients of Investment
Bank.
All in violation of Title 18, United States Code, Section 371.

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COUNT TWO
THE UNITED STATES ATTORNEY FURTHER CHARGES:
1.

Paragraphs one through 20, 22 through 30, and overt acts one through 11

and 26 of Count One are realleged here.
2.

From on or about July 14, 2014, to on or about September 3, 2014, in

Philadelphia, in the Eastern District of Pennsylvania and elsewhere, defendants
DAMILARE SONOIKI
and
MARVIN MYCHAL KENDRICKS
willfully, directly and indirectly, and by aiding and abetting, by the use of means and
instrumentalities of interstate commerce and of the facilities of a national securities exchange,
used and employed manipulative devices and contrivances in connection with the purchase and
sale of securities, in contravention of the rules and regulations prescribed by the Securities and
Exchange Commission, namely 17 C.F.R. §§ 240.10b-5 and 240.10b5-2, by (a) employing a
device, scheme, and artifice to defraud and (b) engaging in acts, practices and courses of dealing
which would and did operate as a fraud and deceit upon persons in connection with purchases
and sales of Compuware securities.
In violation of Title 15, United States Code, Sections 78j(b) and 78ff, Title 17,
Code of Federal Regulations, Sections 240.10b-5 and 240.10b5-2, and Title 18, United States
Code, Section 2.

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NOTICE OF FORFEITURE
THE UNITED STATES ATTORNEY FURTHER CHARGES THAT:
1.

As a result of the violations of Title 18, United States Code, Section 371,

and Title 15, United States Code, Section 78ff, set forth in this information, defendants
DAMILARE SONOIKI
and
MARVIN MYCHAL KENDRICKS
shall forfeit to the United States of America any property, real or personal, that constitutes or is
derived from proceeds traceable to the commission of such offenses, including, but not limited
to, the sum of $1,198,075, and:
2.

If any of the property subject to forfeiture, as a result of any act or

omission of the defendants:
(a)

cannot be located upon the exercise of due diligence;

(b)

has been transferred or sold to, or deposited with, a third party;

(c)

has been placed beyond the jurisdiction of the Court;

(d)

has been substantially diminished in value; or

(e)

has been commingled with other property which cannot be divided
without difficulty;

it is the intent of the United States, pursuant to Title 28, United States Code, Section 2461(c),
incorporating Title 21, United States Code, Section 853(p), to seek forfeiture of any other

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property of the defendants up to the value of the property subject to forfeiture.
All pursuant to Title 28, United States Code, Section 2461(c) and Title 18, United
States Code, Section 981(a)(1)(C).

WILLIAM M. McSWAIN
UNITED STATES ATTORNEY

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