Ex-Expedia IT employee pleads guilty to insider trading

By Nate Raymond

(Reuters) - A former Expedia Inc computer support technician pleaded guilty on Monday to having secretly accessed senior executives' emails in order to engage in insider trading based on confidential information he stole.

Jonathan Ly, 28, entered his plea in federal court in Seattle to one count of securities fraud stemming from an insider trading scheme that prosecutors said netted the San Francisco resident $331,000.

He is scheduled to be sentenced Feb. 28. As part of a plea deal, Ly agreed to repay Expedia the $81,592 it spent investigating the computer intrusion. He also reached a $375,907 settlement with the U.S. Securities and Exchange Commission.

 

"Mr. Ly is deeply sorry for the activity he engaged in and the people and corporation he has impacted," John Runfola, his lawyer, said in a statement.

According to court papers, in 2013, Ly began exploiting his administrative access privileges to secretly review the contents of devices belonging to executives including Expedia's chief financial officer and head of investor relations.

Prosecutors said that using the non-public information he obtained, Ly executed a series of well-times trades in Expedia stock options.

Even after he left the company in 2015, prosecutors said, Ly kept a company laptop and continued accessing the electronic devices and email accounts of Expedia executives.

"The irony of our increasingly digital world is that the greatest threat to our networks is a human one," U.S. Attorney Annette Hayes said in a statement. "In this case, an IT professional used his employer's networks to facilitate a get-rich-quick scheme."

Prosecutors said Expedia ultimately discovered the computer intrusion and reported it to the Federal Bureau of Investigation. Expedia in a statement confirmed it worked closely with law enforcement in the probe.

"Expedia has been and remains committed to a rigorous and continual improvement cycle for all elements of its security posture," the company said in a statement.

The case is U.S. v. Ly, U.S. District Court, Western District of Washington, No. 16-cr-00316.

(Reporting by Nate Raymond in New York; Editing by Lisa Shumaker)