Crime - Sacto 911

Angry phone calls to government officials could land Tracy investor in prison

Vulgar and vicious is how Tracy investor Kulwant Singh Sandhu turned when he took a stock fraud complaint against Netflix to the Securities and Exchange Commission and the agency didn’t respond to his liking. On the phone and through emails, he grew increasingly angry as he complained again and again over the next six years – a total of 107,000 times.

The SEC and the FBI finally did launch an investigation – into Sandhu. Federal prosecutors charged him with criminal harassment, but dismissed the case when he agreed to cut it out. Within weeks of the December 2013 dismissal, however, Sandhu kicked back into action, bombarding the SEC and other targets with even more telephone rants that contained obscenity-laden threats of sexual violence and suggestions of public hangings and burnings and live burials, according to testimony in his trial last week.

He accused agency officials of treason and said “your f------ bodies” should be “dragged on the streets of the USA.”

In December 2015, the government refiled charges against Sandhu, and after a three-day trial last week, a U.S. District Court jury in Sacramento needed less than an hour of deliberations Thursday to convict him on two counts. Sandhu now faces a two-year prison term and a $250,000 fine. Judge Garland E. Burrell scheduled his sentencing for April 7.

“Kulwant Sandhu made voluminous profanity-laden contacts to federal employees, including numerous and consistent calls for violence against them and others, even though they tried their best to assist him on behalf of their agencies,” U.S. Attorney Phillip A. Talbert said in a written statement. “Public servants should not have to fear for their lives for simply helping a member of the public with official business.”

Assistant Federal Defender Timothy Zindel said he and his co-counsel, Mia Crager, were “very disappointed” by the verdict and plan to appeal it. They argued that Sandhu intended only to “communicate” with the government officials with his angry phone calls, not to harass them.

Zindel said in an interview that the judge should have instructed the jury more clearly on the distinction between the actual act of Sandhu causing the officials’ telephones to ring, which was the basis for the offense charged against him, and the language he used in the phone calls, which is not an element in the statute.

“The jury misread the law,” Zindel said. “If they would have been properly instructed, they would have acquitted him.”

An SEC spokesman in Washington, D.C., declined to comment on the Sandhu trial or on the accusations of stock manipulation the defendant lodged against Netflix. A search of the SEC’s website showed that it investigated Netflix in 2013 when its chief executive officer, Reed Hastings, made an announcement on his personal Facebook page about the company having exceeded 1 billion streaming hours, but that the agency decided against taking an enforcement action. A Netflix spokeswoman did not return phone calls on the Sandhu case.

Sandhu is a U.S. citizen born in India who obtained a university degree in civil engineering in his native country and built a successful semiconductor business, according to court papers filed by his lawyers. Then he became an investor and “was shocked by the mortgage security bubble and implosion of the stock market between 2006 and 2008,” the papers said.

There was no mention in court records of Sandhu owning any Netflix stock during 2010, when his lawyers said he spotted signs of fraud in the behavior of the broadcast streaming company, which is based in Los Gatos.

Officials in the agency’s Office of Investor Education and Advocacy testified at Sandhu’s trial that they became aware of him as early as 2009 – a year before his lawyers say he lodged his first complaint.

“Mr. Sandhu has contacted my office over 100,000 times,” office director Lori Schock told the jury. In another portion of her testimony, Schock put the number at 107,000. Her deputy director, Mary Head, testified that she’d been familiar with Sandhu going back to 2009, and that in 2010, he rampaged that “there was fraudulent activity in Netflix and people were manipulating stock for financial gain.”

Head said she “was respectful” toward Sandhu at first and that she succeeded somewhat it getting him to calm down. “But when I could not produce the results Mr. Sandhu wanted, he became enraged,” Head testified. She said his language became “filthy,” and a recording of one of his voice mails that prosecutors played in open court was replete with profanities and insults directed at her; SEC Chair Mary Jo White; Netflix; former President Barack Obama; his onetime attorney general, Eric Holder; and the SEC enforcement apparatus.

 ‘Mary Head, you f------ bitch,’ or ‘Mary Head, you f------ criminal bitch,’ ” is how he addressed her, the deputy director testified. Asked by Assistant U.S. Attorney James Conolly what else he told her, Head answered, “I think I was to be hanged in public, or bullets were to be shot into various bodily openings.”

Sandhu swarmed her with phone calls over the next five years, Head testified. He also dialed up her boss, Lori Schock, as well as officials at the Financial Industry Regulatory Authority. Sandhu also tracked the SEC’s former enforcement director, Robert S. Khuzami, to his new job with the Kirkland & Ellis law firm in Washington, which represents about 100 of the biggest corporations in the world.

In her closing argument at trial, defense attorney Crager told the jury of her client, “You might think his words are despicable. You might even think his words, like the government said, were intolerable.”

But, she said, “when Mr. Sandhu said those words, it was not a crime.” She said the case came down to Sandhu’s intent, not necessarily his actual words, and that his purpose “wasn’t to make people feel bad, but to get their attention.”

Assistant U.S. Attorney Nirav K. Desai, however, said the case was “about his rage,” about frightening and bullying people, about Sandhu trying to evoke adverse emotional reactions from his human targets – the legal definition of harassment.

“He got answers he didn’t like,” Desai said, “and he exacted punishment.”

Andy Furillo: 916-321-1141, @andyfurillo

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