MOSCOW — A Moscow court freed three alleged accomplices to the murder of a prominent journalist and Kremlin critic Thursday, ending a trial that further tainted the reputation of Russia’s criminal-justice system.

A jury took two hours to acquit two Chechens and a former police officer who were charged with tracking journalist Anna Politkovskaya from a supermarket to her Moscow apartment block two years ago, where a gunman shot her to death in an elevator. Prosecutors said they will appeal, and Ms. Politkovskaya’s newspaper colleagues said they will redouble their own investigation into her killing.

The verdict is an enormous setback to prosecutors and human-rights crusaders who hoped that Russia’s court system could bring the killers to justice. The death of Ms. Politkovskaya, whose reporting on Russian atrocities in Chechnya won her a slew of international awards along with a host of enemies, cemented Moscow’s reputation as a world capital of high-profile, politically tinged murders, few of which have been solved.

“I have a feeling of unbelievable shame,” said Vsevolod Bogdanov, head of Russia’s Union of Journalists, after the verdict. Gennady Gudkov, head of the security committee in Russia’s parliament, said the verdict “portrays in the worst possible way the reputation of the government, not to mention the security services.”

Stung by international outcry, the Kremlin said it ordered a thorough investigation into the killing. But Ms. Politkovskaya’s colleagues said the hunt was marred from the start by Russia’s security services, saying they stonewalled investigators and leaked bits of information that allowed some suspects to escape. Russia’s security services said they cooperated with the investigation.

Police never arrested a mastermind for the killing, and the alleged triggerman, Rustam Makhmudov, fled Moscow and is now living in Europe, according to officials. The three men who stood trial were relatively minor players who allegedly determined Ms. Politikovskaya’s whereabouts and guided the killer to her door.

Prosecutors presented mobile-phone records in court to show the brothers, Dzhabrail and Ibragim Makhmudov, were in the vicinity of Ms. Polikovskaya’s apartment at the time of the killing. Dzhabrail Makhmudov was accused of driving his brother, Rustam Makhmudov, to the building. Prosecutors said Ibragim Makhmudov warned of Ms. Politkovskaya’s impending arrival with a phone call.

The former police officer, Sergei Khadzhikurbanov, allegedly planned details of the attack, recruited the brothers and supplied them with a pistol with a silencer.

The trial was in many ways a reminder of the deficiencies of Russia’s court system, which remains largely unreformed since Soviet times despite years of Kremlin promises to bring the rule of law to Russia. Rules of evidence are fuzzy and jurors, often suspicious of what prosecutors try to tell them, are inclined to acquit defendants far more than judges.

The defendants’ lawyer, Murad Musayev, argued prosecutors came nowhere near proving their clients’ guilt. In final arguments Tuesday, Mr. Musayev accused the prosecution of fabricating evidence and dismissed their case as “dust, fluff and ash.”

After the verdict, Ms. Politkovskaya’s colleagues praised the openness of the trial but said prosecutors were hurt by the lack of cooperation from Russia’s successor to the KGB, the Federal Security Service.

A former FSB agent, Pavel Ryaguzov, wasn’t directly accused of being part of the murder but was accused of extortion in another aspect of the case and sat throughout the trial in a cage in the courtroom with the defendants.

Sergei Sokolov, chief editor of Ms. Politkovskaya’s newspaper, Novaya Gazeta, said that authorities never made a proper search of Mr. Ryaguzov’s office. He said the FSB also refused to hand over information that could have been crucial to the case, such as telephone wiretaps of people connected to the suspects. “I think that if the investigators were allowed to work effectively, then we would have seen different results,” he said.

Write to Alan Cullison at alan.cullison@wsj.com

Ex-AIG Executive Is Sentenced to 4 Years

By AMIR EFRATI

A former American International Group Inc. executive was sentenced in Hartford, Conn., to four years in prison for his involvement in a conspiracy that caused losses to AIG investors.

Christian Milton, who was vice president of AIG’s reinsurance business, faced about 20 years in prison, according to federal sentencing guidelines.

Mr. Milton, of Wynnewood, Pa., also will undergo a two-year supervised release after prison and pay a $200,000 fine.

Separately, AIG is making retention payments of about $450 million to employees at its AIG Financial Products unit, according to people familiar with the matter. In a statement, AIG noted it adopted the retention program months before last year’s government bailout, and also said it was cutting $800 million in deferred compensation to AIG FP employees.

Mr. Milton’s considerably shorter sentence might be a good sign for the executive’s onetime boss at AIG, former Chief Executive Maurice R. “Hank” Greenberg, who remains under scrutiny by investigators, according to people familiar with the case.

Mr. Milton will have less of an incentive to cooperate with the government in a potential case against Mr. Greenberg in exchange for lower prison terms, these people said. It is the second short sentence issued in the matter. Former Gen Re Chief Ron Ferguson received a two-year sentence.

Mr. Milton, 61 years old, works with Mr. Greenberg at an insurance firm Mr. Greenberg heads, C.V. Starr & Co. “We’re disappointed in the sentence but we’re confident we will get the conviction reversed,” said Fred Hafetz, a lawyer for Mr. Milton.

The executives were convicted of helping AIG improperly inflate its reserves by $500 million in 2000 and 2001. The disclosure of the fraud in 2005 came amid an accounting scandal at AIG that cost Mr. Greenberg his job. Mr. Greenberg has maintained his innocence. Lee Wolosky, a lawyer for Mr. Greenberg, declined to comment. A spokesman for the U.S. attorney’s office in Connecticut declined to comment on whether it would appeal Mr. Milton’s sentence.

Write to Amir Efrati at amir.efrati@wsj.com

Legal System Struggles With How to React When Police Officers Lie

By AMIR EFRATI

It’s one of the most common accusations by defendants and defense attorneys — that police officers don’t tell the truth on the witness stand.

Of course, defendants themselves can be the ones lying, but the problem of police perjury — and what can be done about it — is being debated anew. Fueling the discussion are recent court cases in New York City and Boston that indicated officers may have lied and a U.S. Supreme Court ruling this month that could have broader implications for cases in which improperly obtained evidence is in dispute.

Questionable testimony by police comes up most often in firearm- or drug-possession cases in which officers often testify that a defendant had a bulge in his pocket — which they thought might be a gun — or dropped drugs in plain sight as they approached him, giving the officers the right to seize the contraband. Defense lawyers say in many of these cases, officers are “testilying” and that the guns or drugs were actually discovered when their clients were unjustly frisked by officers. They also say testilying frequently occurs in more serious cases.
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In Boston, a federal judge last week ruled that a police officer there falsely testified at a pretrial hearing in a gun-possession case about the circumstances of the defendant’s arrest. The judge, Mark Wolf, is considering sanctions against the prosecutor for not immediately disclosing that the officer’s testimony contradicted what he told prosecutors beforehand.

A federal judge in Brooklyn, N.Y., last fall ruled that a U.S. marshal and a New York City police officer lied when they testified that a defendant dropped two bags of drugs in front of them and then invited the officers to his apartment, where he revealed a large cache of cocaine.

Though few officers will confess to lying — after all, it’s a crime — work by researchers and a 1990s commission appointed to examine police corruption shows there’s a tacit agreement among many officers that lying about how evidence is seized keeps criminals off the street.

To stem the problem, some criminal-justice researchers and academic experts have called for doing polygraphs on officers who take the stand or requiring officers to tape their searches.

A Supreme Court ruling this month, however, suggests that a simpler, though controversial, solution may be to weaken a longstanding part of U.S. law, known as the exclusionary rule. The 5-4 ruling in Herring v. U.S. that evidence obtained from certain unlawful arrests may nevertheless be used against a criminal defendant could indicate the U.S. is inching closer to a system in which officers might not be tempted to lie to prevent evidence from being thrown out.

Criminal-justice researchers say it’s difficult to quantify how often perjury is being committed. According to a 1992 survey, prosecutors, defense attorneys and judges in Chicago said they thought that, on average, perjury by police occurs 20% of the time in which defendants claim evidence was illegally seized.

“It is an open secret long shared by prosecutors, defense lawyers and judges that perjury is widespread among law enforcement officers,” though it’s difficult to detect in specific cases, said Alex Kozinski, a federal appeals-court judge, in the 1990s. That’s because the exclusionary rule “sets up a great incentive for…police to lie.”

Police officers don’t necessarily agree, says Eugene O’Donnell, a former police officer and prosecutor who teaches law and police studies in New York. “Perjury is endemic in the court system, but officers lie less than defendants do because generally they aren’t heavily invested in the outcome of the cases,” he says.

Testilying may have taken off after a 1961 Supreme Court decision boosted the exclusionary rule by requiring state courts to exclude — or throw out — some evidence seized in illegal searches, such as when police frisk people without probable cause or search a residence without a warrant.

Immediately after the decision, Mapp v. Ohio, studies showed that the number of annual drug arrests in the U.S. — most cases are prosecuted in state court — didn’t change much but there was a sharp increase in officers claiming that suspects dropped drugs on the ground. “Either drug users were suddenly dropping bags all over the place or the cops were still frisking but saying the guy dropped the drugs,” says John Kleinig, a professor at John Jay College of Criminal Justice.

This month’s Supreme Court decision added an exception to the exclusionary rule by holding that the prosecution of an Alabama man for drug- and firearm-possession charges was valid, even though the contraband was found after the man was wrongly arrested and searched. Police officers had mistakenly thought he was subject to an arrest warrant.

Throwing out evidence because of wrongful searches and arrests “is not an individual right and applies only where its deterrent effect outweighs the substantial cost of letting guilty and possibly dangerous defendants go free,” wrote Chief Justice John Roberts.

Civil liberties advocates and defense lawyers say losing the exclusionary rule would harm the public. “We’d risk far greater invasions of privacy because officers would have carte blanche to do outrageous activity and act on hunches all the time,” says JaneAnne Murray, a criminal defense lawyer in New York.

Write to Amir Efrati at amir.efrati@wsj.com

Cyber-Scams on the Uptick in Downturn

By M.P. MCQUEEN

The bear economy is creating a bull market for cyber-crooks.

Experts and law-enforcement officials who track Internet crime say scams have intensified in the past six months, as fraudsters take advantage of economic confusion and anxiety to target both consumers and businesses.
[Web Crook Illustration] Harry Campbell

Thieves are sending out phony emails and putting up fake Web sites pretending to be banks, mortgage-service providers or even government agencies like the Federal Bureau of Investigation or the Federal Deposit Insurance Corp. Cellphones and Internet-based phone services have also been used to seek out victims. The object: to drain customer accounts of money or to gain information for identity theft.

Avivah Litan, vice president with Internet-technology research company Gartner Inc., said clients are telling her that cyber-assaults on many banks have doubled in the past six months in the U.S. and other parts of the world, including the U.K., Canada, Mexico and Brazil. Though most are thwarted by computer-security defenses, such as spam filters and fraud-detection systems, that still leaves potentially millions of victims.

“They are all experiencing a lot more attacks, and a lot more ATM fraud” aimed at depositors’ accounts, Ms. Litan said.

More than 800 complaints have been logged by the National White Collar Crime Center in Richmond, Va., so far this year from checking-account customers in the U.S. about mysterious, unauthorized transactions of $10 to $40 that appear on monthly statements. Craig Butterworth, a spokesman for the center, a federally funded group that assists police agencies, said investigators suspect a data breach or “phishing” campaign, where deceptive emails and text messages are used to acquire personal information, such as Social Security numbers, user names and passwords. Separately, a “penny” scam of phantom credit- and debit-card charges from 21 cents to 48 cents has generated 300 complaints, Mr. Butterworth said.

The FBI’s Internet Crime Complaint Center confirms a increase in cyber-attacks. In its most recent Internet Crime Report, the FBI said it received 207,000 complaints about crimes perpetrated over the Internet in 2007, the latest year for which data are available, amounting to nearly $240 million in reported losses, or $40 million more than a year earlier. Organized groups in the U.S. and elsewhere are behind many of the crimes, experts say.

Until recently, most attacks were scattershot, with spam emails blasted randomly to thousands of computer users at once. Now crooks are starting to single out specific targets identified through prior research, a tactic called “spear phishing.” In these attacks, emails are sent to the offices of wealthy families or to corporate money managers, for example. They address potential victims by name and company or appear to come from an acquaintance.
Executives Targeted

In one such attack, hundreds of senior executives across the globe received personally addressed emails in last April, saying they were being subpoenaed to testify before a grand jury by the U.S. District Court in San Diego, according to a federal courts spokesman in Washington, D.C. When users clicked on a link containing the attachment, their computers were infected with malicious software. The case was referred to the FBI, the spokesman said.

Panos Anastassiadis, chief executive of Cyveillance, an Internet security firm in Arlington, Va., that also examined the case, suspects fraudsters were trying to get “first-quarter financial results of publicly traded companies a week before everybody else.”

Mr. Antastassiadis himself received an email but didn’t open it because he says he knew better. He estimates that almost half of the recipients opened the documents, exposing themselves to the malware. Many also forwarded the bogus messages to their legal departments — infecting them, too. Mr. Anastassiadis said an organized-crime ring based in Eastern Europe is believed responsible.

The use of cellphone text messages is a fairly new tactic. Earlier this month, customers of Associated Bank, a unit of Associated Banc-Corp, were among the recipients of email and cellphone text alerts warning them that their credit cards had been deactivated. The message directed them to call a telephone number and leave their account information. Customers of Norway Savings Bank in Maine were also among those hit by cellphone text messages about their debit cards shortly before Christmas.

In another case, emails bearing the logo of Franklin Bank of Jacksonville, Texas, which failed on Nov. 7, were circulating throughout Texas in November and December that also sought account numbers, personal-identification numbers and passwords from recipients. Prosperity Bank, which assumed all the deposits of the failed bank, said customers didn’t lose any money.

In another new twist, scammers using Internet-based phone service are faking the caller-IDs of banks and other businesses in telephone phishing scams. Because the phone ID bears the name of a real company, victims have been tricked into supplying personal information. Some customers of the Bank of Lancaster County in central Pennsylvania, which became part of the PNC Financial Services Group Inc. in August, were targeted in this type of scam last summer, a PNC spokesman confirmed. Because of federal regulations and bank policy, any customers’ money lost would have been reimbursed, he said.

Difficult times are also causing more people to fall prey to job- and business-opportunity scams that have migrated to the Internet from postal mail.
Job Board Scam

A 68-year-old woman in Pennsylvania, who asked that her name not be used because she is still being victimized, said she searched an online job board not long ago and received a “work-at-home” offer by email. The “job” was to cash checks that would be delivered by parcel post. She was to keep 10% of the money and return the rest. Skeptical, she took the first check to her bank, where a clerk promptly declared it a fake and confiscated it. After threatening to report the sender to police, the woman thought she had avoided trouble, but she hadn’t.

“Suddenly I am getting phone calls from all over the country saying why did you send me these emails and checks? They are using my name and address. I have gotten calls from at least 30 or 35 people from all over the country, from California to Florida to Pennsylvania,” she said.
Watching for Grammar

Identity thieves frequently post fake ads on job boards to ensnare victims, and they’ve become increasingly sophisticated in recent years, says Pam Dixon, executive director of the World Privacy Forum, a nonprofit public-interest research group. “It used to be you could pick them out by their bad grammar, but now it’s much more difficult,” she says. “You really have to be careful.”

The Pennsylvania woman notified police and also contacted Identity Theft 911, a fraud-resolution company based in Scottsdale, Ariz., for help. The outfit, which provides the ID-theft resolution under contract with insurance companies, employers and credit unions, used credit monitoring and fraud alerts to try to prevent the incident from spiraling out of control.

Brian Lapidus, chief operating officer for the Fraud Solutions division of Kroll Inc., a company that also helps businesses and individuals resolve cases, said his company is fielding a growing number of calls from wary recipients of similar emails pitching too-good-to-be-true jobs, loans and sweepstakes offers. Even when advised of the risks, many respond anyway, Mr. Lapidus says.

“People want to believe that even in this economic climate, the cloud has a silver lining,” he said.
—Sarah E. Needleman contributed to this article.

Write to M.P. McQueen at mp.mcqueen@wsj.com

U.S. Says Ex-Agent Passed Secrets to Russia From Jail

By EVAN PEREZ

WASHINGTON — A former Central Intelligence Agency official imprisoned for spying for Russia continued to pass information and collect money from his old handlers while behind bars, according to U.S. prosecutors.

Harold James Nicholson, 58 years old, used his 24-year-old son, Nathaniel, to restart contacts with Russian spies in Mexico, Peru and Cyprus, according to an indictment against father and son filed in U.S. District Court in Portland, Ore. Both father and son were arraigned Thursday on charges of money laundering and acting as agents of a foreign government.

Authorities say convicted spy Harold Nicholson, above, passed information through his son, Nathaniel, below, to his former Russian handlers.

A Federal Bureau of Investigation agent’s affidavit filed in court provides a spy-novel narrative from 2006 to 2008. U.S. officials claim Harold Nicholson tutored his son in spy tradecraft and Nathaniel Nicholson tried to hide his activities as he reached out to Russian contacts on trips abroad, buying his plane tickets with cash.

Prosecutors allege the elder Mr. Nicholson, who was serving a 23-year sentence, was seeking to recover money, and perhaps a “pension,” that his Russian contacts owed him for past work, in order to help his financially struggling family. Even behind bars, Mr. Nicholson still held value to the Russians, who wanted to figure out how he was caught and how much U.S. investigators knew of Russian spying in the U.S., prosecutors say.

Harold Nicholson was a former CIA station chief in Malaysia and later worked as an instructor for trainees at the agency’s Langley, Va., headquarters. He was convicted of espionage conspiracy under a plea agreement in 1997. Prosecutors say he gave Russian spies the identity of the CIA’s Moscow station chief as well as information on new CIA trainees. Federal agents stopped him as he attempted to fly to Switzerland to hand over classified documents to agents for the SVR, the successor agency to the Soviet Union’s KGB. He is the most senior CIA official ever convicted of spying for a foreign government.
[Nathaniel Nicholson ] Associated Press

Matthew G. Olsen, acting assistant attorney general for national security, said in a statement that “these charges underscore the continuing threat posed by foreign intelligence services.”

An attorney for the father and son couldn’t be reached for a comment.

FBI agents monitored the father and son, using email and telephone wiretaps and tracking devices on the son’s car to keep tabs on the 24-year-old’s alleged spy activities, according to documents filed by prosecutors.

Along the way, the father offered proud words of encouragement to his son. A birthday card the father sent the son last year, according to prosecutors, read: “You have been brave enough to step into this new unseen world that is sometimes dangerous but always fascinating. God leads us on our greatest adventures. Keep looking through your new eyes. I understand you and me.”

Federal agents stopped Nathaniel Nicholson as he returned from meeting contacts in Lima, Peru, in December 2007. Without telling him, the agents photocopied a notebook he carried that agents say contained coded notes about his alleged meetings with Russian spies. The notebook also contained instructions for a meeting he later had at a TGI Friday’s restaurant in Nicosia, Cyprus, with a Russian contact, according to the FBI affidavit.

FBI agents monitoring an email account attributed to Nathaniel Nicholson said that in October 2008, he sent a coded email as instructed by his Russian contact, confirming an upcoming meeting in Cyprus.

The email, according to the FBI affidavit, read: “Hola Nancy! It is great to receive your message! I love you too. I hope to see you soon! The best regards from my brother Eugene! - Love Dick”

Prosecutors claim the son collected nearly $36,000 in trips overseas intended to help family members pay off debts. The father expressed hopes of relocating to Russia when he left prison, prosecutors say.

In one letter, the father sent physical data such as his height and weight to his son, and prosecutors think the information was to be used by the Russians to provide him travel documents upon his release.

Write to Evan Perez at evan.perez@wsj.com

New Mexico Man Charged In White-Powder Mailings

By STEPHANIE SIMON

Infuriated by losses in the stock market, a New Mexico man sent financial institutions a series of angry emails — and followed up with dozens of threatening letters containing suspicious powder, federal authorities said Tuesday.

Richard Leon Goyette, 47 years old, who also uses the name Michael Jurek, was arrested at the airport in Albuquerque, N.M., on Monday. He is charged with the federal crime of conveying false information, which carries a penalty of up to five years in prison per offense. Federal authorities said that last fall, Mr. Goyette sent envelopes filled with white powder to multiple offices of J.P. Morgan Chase & Co.’s Chase bank, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision.

According to a complaint filed by U.S. authorities last week in federal court in Amarillo, Texas, notes in the envelopes warned that anyone breathing the powder would die within 10 days. The notes echoed the deadly anthrax scare of 2001. In reality, the powder was harmless, akin to blackboard chalk.

Mr. Goyette is in federal custody and couldn’t be reached for comment. He hasn’t yet retained a lawyer, authorities said.

In an initial court appearance Tuesday, Mr. Goyette didn’t contest plans to transport him to Amarillo, where the letters were postmarked. Once there, he will have a second hearing and a lawyer will be appointed for him if he doesn’t hire one, authorities said.

Federal Bureau of Investigation agents said Mr. Goyette appeared to be distraught at losing more than $63,000 when stock he held in Washington Mutual Inc. crashed in value after the bank was placed in federal receivership in September, 2008. J.P. Morgan Chase bought the bank’s assets at a fire-sale price.

Within days of Washington Mutual’s collapse, federal authorities allege, Mr. Goyette emailed parties involved in the transaction, saying he had “paid a terrible price” and blaming his losses on “those who will do whatever it takes to defraud, steal, manipulate and screw over average stockholders.” Authorities allege he warned that he would “pursue any path to get the return of my investment.”

Less than three weeks later, threatening letters began arriving at Chase branches, the FDIC and the Office of Thrift Supervision in 11 states, according to federal authorities. According to the complaint, a total of 65 letters were received, all but one containing the white powder and a misspelled note: “Steal tens of thousands of people’s money and not expect reprercussions [sic].”

The letters “caused untold emotional distress” among recipients and “immense unnecessary labor and expense” on the part of cleanup crews and emergency responders, said acting U.S. attorney James T. Jacks of the Northern District of Texas.

Officials say they are still investigating several other rounds of threatening — though ultimately harmless — white-powder mailings. In December, envelopes bearing a Dallas postmark were sent to governors’ offices nationwide. In January, white-powder letters arrived at The Wall Street Journal, addressed to several executives and top editors. (See related story.)

Write to Stephanie Simon at stephanie.simon@wsj.com

Charges Levied in Insider Case
UBS Banker, Others Face Counts in Albertson’s Deal

By CHAD BRAY

A UBS AG investment banker, a former co-worker, a family friend and a former classmate have been charged criminally in an insider-trading case that allegedly reaped more than $7 million in illicit profits.

Nicos Achillea Stephanou, a UBS investment banker who has been in custody since his arrest in December, has been charged with conspiracy and two counts of securities fraud. The charges against 34-year-old Mr. Stephanou, of London, were announced publicly Thursday.

On Thursday, Joseph Contorinis, a former portfolio manager for a hedge fund in Jefferies Group Inc.’s asset-management unit and former co-worker of Mr. Stephanou; Michael Koulouroudis, a close family friend of Mr. Stephanou, according to court documents; and George Paparrizos, a former classmate of Stephanou’s at the University of California-Berkeley, court documents said, were charged with conspiracy and securities fraud. Each fraud charge carries as long as 20 years in prison if convicted.

Mr. Contorinis, 44, of Fort Myers, Fla.; and Mr. Koulouroudis, 59, of Brooklyn, N.Y.; were arrested Thursday by the Federal Bureau of Investigation in New York. Mr. Paparrizos, 37, of Foster City, Calif., was arrested in California on Thursday.

Federal prosecutors in Manhattan have alleged that Mr. Stephanou worked on the acquisition of Albertson’s Inc. in 2006 and had access to nonpublic information through his work about a proposed acquisition of ElkCorp by a private-equity firm in 2006. He allegedly tipped others about the deals before they became public.

Mr. Contorinis allegedly reaped the largest illicit profits from the scheme, netting $7.2 million for a hedge-fund account he controlled. Prosecutors alleged Mr. Contorinis received a tip from a banker about the acquisition of Albertson’s before the public announcement of the deal in January 2006. Albertson’s was sold in 2006 to a consortium of investors that included Supervalu Inc., CVS Caremark Corp. and an investor group led by Cerberus Capital Management LP.

On Thursday, the Securities and Exchange Commission separately brought civil charges against seven people in the matter, including Messrs. Stephanou, Koulouroudis, Contorinis and Paparrizos. The SEC says the plot resulted in more than $8 million in illegal profits and losses avoided.

The SEC also brought charges against Ramesh Chakrapani, a suspended Blackstone Group executive and former co-worker of Mr. Stephanou’s at Credit Suisse First Boston, now part of Credit Suisse Group.

Mr. Chakrapani also faces criminal and civil charges in a separate insider-trading plot involving shares of Albertson’s. “Mr. Chakrapani is adamant that he never violated his duties to his employer and we expect him to be fully exonerated,” said Michael Sommer, his lawyer. Mr. Sommer noted none of the criminal complaints that became public Thursday allege a connection to his client.

Michael F. Bachner, a lawyer for Mr. Koulouroudis, and Christopher J. Morvillo, a lawyer for Mr. Stephanou, both declined to comment Thursday. A lawyer for Mr. Contorinis didn’t return a phone call for comment, while a lawyer for Mr. Paparrizos, in custody in California, wasn’t immediately located Thursday.

Tom Tarrant, a Jefferies spokesman, confirmed Mr. Contorinis left Jefferies a year ago and declined further comment. A UBS spokeswoman said the company has and will continue to assist authorities in their inquiry.

In January, when Mr. Chakrapani was arrested, a Blackstone spokesman said the firm was “shocked by this alleged breach of the law and violation of our own compliance policies and ethical standards,” and added that the firm was cooperating. He repeated those comments Thursday.

Write to Chad Bray at chad.bray@dowjones.com