Bar appeals suspension, seeks disbarment of patent lawyer
State Bar prosecutors will appeal a recommendation that a prominent northern
California patent attorney who pleaded guilty in 2001 to insider trading be
suspended. Instead, the bar wants MALCOLM B. WITTENBERG [#73842], 57, of San
Francisco disbarred.
State Bar Court Judge Pat McElroy recommended in June that Wittenberg receive
a five-year stayed suspension, a three-year actual suspension and five years
of probation as well as credit for the 18 months he has already spent on interim
suspension.
A well-known intellectual property attorney, Wittenberg started the intellectual
property group at Crosby, Heafy, Roach & May of Oakland and chaired the
patent side of the group. Beginning in 1995, he represented Forte Software Inc.
during its startup phase and when it went public, and, according to the bar
court's findings, he followed the com-pany's progress closely.
After he learned that Sun Microsystems was about to acquire Forte, Wittenberg
bought 2,000 shares of Forte stock in two separate purchases, the second three
days before the merger took place. He sold the stock, which had been converted
to shares of Sun Microsystems, two months later, making a profit of $14,000.
One count of the indictment, relating to the first purchase of 1,000 shares,
was dismissed, and Wittenberg pleaded guilty to the second purchase of 1,000
shares of Forte. However, McElroy found that Wittenberg engaged in insider trading
with regard to both purchases and she rejected his denial that he knew about
the merger prior to the first stock buy.
According to McElroy's decision, Wittenberg admitted in his plea agreement
with federal prosecutors that he was a corporate insider, that he possessed
material, non-public information to buy or sell securities and that he used
that information to buy stock, and that he acted with indifference.
The judge concluded that Wittenberg's actions amounted to moral turpitude,
and that he engaged in insider trading in both purchases. However, she rejected
the bar's contention that Wittenberg committed additional acts of moral turpitude
by providing stock tips to his friends. Although he acknowledged telling three
individuals that he had purchased Forte stock, McElroy said, there is no evidence
he revealed any confidential information about the merger.
Wittenberg testified during a three-day hearing in January that some of his
conduct was the result of taking Percocet, a painkiller that was prescribed
after he underwent rotator cuff surgery. The bar, however, charged that he tried
to conceal his actions after the Securities and Exchange Commission began an
investigation.
The judge took into consideration extensive mitigation offered by Wittenberg,
including the testimony of eight character witnesses, all but one of whom has
known him for at least 15 years. He had no prior record of discipline and the
judge found that his conduct was aberrational.
However, she also found that his misconduct harmed the public, as well as diminished
the public trust in the legal profession.
Although the bar wanted Wittenberg to be summarily disbarred, arguing that
he was convicted of a felony involving moral turpitude, its efforts were rebuffed
by the bar court's review department and McElroy said she would not reconsider
the request. "This court does not believe that disbarment, either summary or
otherwise, is the appropriate degree of discipline to be imposed in this case,"
she wrote.
Wittenberg, who was forced to leave Crosby Heafy and now works as patent agent
for Dergosits & Noah in San Francisco, was sentenced to three years of supervised
probation following his conviction, and spent time in a halfway house and confined
at home with electronic monitoring. He also was fined $10,000 and had to forfeit
the $14,000 profit he made on the stock sale.
The bar placed him on interim suspension in November 2001.
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