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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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