(Bloomberg) – A San Diego investor on trial for financial fraud told a jury he used a corporate account that mixed investor money with his to pay for trips to a strip club and casinos, but denied doing anything illegal.
Donald Blakstad testified in a Manhattan court and said he used an account for his company – Midcontinental Petroleum – for personal and business expenses because there is a lien on his accounts for unpaid taxes. Personal expenses also included the purchase of a Bentley.
Blakstad said he also deposited his own money into the account, which covered personal expenses. “I was not using investor money,” he said in response to questions from Assistant US Attorney Edward Imperatore.
Prosecutors say Blakstad defrauded investors by using their money to cover some of his personal expenses. During the trial, they portrayed Blakstad as a big spender who frequently hosted group dinners at chic San Diego steakhouses and seafood restaurants, took a note for a group trip to New York, and bought cars. luxury.
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Blakstad is also accused of using inside information of Martha Patricia Bustos, an employee of Illumina Inc., to trade securities in connection with earnings announcements.
In a move that is rare in such trials, Blakstad took the witness stand and addressed the jury directly, denying the charges.
He said he did not trade using material non-public information and that Bustos, whom he still considers a friend, never gave him specific figures related to profits, such as income or profit. per share, which she said she did.
He bought put options on October 10, 2016, hours before Illumina made a pre-announcement of its results that lowered the share price. Blakstad made over $ 2.5 million in profit on his trade.
Imperatore asked Blakstad if he understood this to be a regular earnings release or an unanticipated announcement.
“I don’t understand the difference, to be honest with you,” Blakstad replied.
He said there were reports around August 2016 that Thermo Fisher Scientific Inc. may have been looking to buy Illumina for $ 30 billion, which caused the San Diego-based biotech firm’s inventory to increase.
Blakstad said he bought the puts in October, mainly because if an acquisition was not announced, “I had a strong sense that the stock would come down.”
Blakstad told the jury that he did not have a personal bank account because a lien had been placed on his accounts for unpaid taxes. That’s why, he said, he used the company’s account for personal expenses. He disputes owing the government money.
Although Blakstad made millions of dollars trading Illumina securities from 2015 to 2019, he did not file taxes in those years, which he said was a mistake.
“I should have filed a tax return,” Blakstad said, mumbling at times.
The case is US v. Blakstad, 19-cr-00486, US District Court, Southern District of New York (Manhattan).
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