A former mortgage broker from Brooklyn admitted on Friday to being the glue that held together an insider trading ring that involved the passing of stock tips on Post-it notes and napkins in meetings at restaurants in Midtown Manhattan and at Grand Central Terminal.
Frank Tamayo, 41, pleaded guilty in federal court in Trenton to securities fraud charges after surrendering that morning to agents from the Federal Bureau of Investigation. Federal prosecutors in New Jersey accused Mr. Tamayo of serving as the middleman in an insider trading scheme that the authorities said also involved a clerk at major New York law firm and a broker at Morgan Stanley.
In March, federal authorities charged Steven Metro, 40, a former clerk with Simpson Thacher & Bartlett, and Vladimir Eydelman, 42, a broker at Morgan Stanley, with securities fraud in the insider trading investigation. But at the time, prosecutors did not identify the middleman and said only that the he was serving as a cooperating witness against his two friends.
The guilty plea from Mr. Tamayo, who is scheduled to be sentenced on Dec. 23, could complicate the defense strategy of Mr. Metro and Mr. Eydelman, who have both pleaded not guilty.
Mr. Tamayo, in pleading guilty to a criminal information, acknowledged obtaining confidential information from Mr. Metro about corporate deals that Simpson Thacher was working on. The former mortgage broker said that he then passed on that information to Mr. Eydelman, who used it make trades that generated $5.6 million in illicit profits over a five-year period.
As insider trading schemes go, the dollars involved weren’t huge. And Mr. Metro is hardly the first employee of a big law firm to be charged with pilfering inside information to trade on. But the scheme was noteworthy because the method the three men used to pass on the inside information seemed to have been taken from an old-fashioned spy novel.
Federal prosecutors in New Jersey contend that Mr. Metro and Mr. Tamayo met at various bars and restaurants in Midtown Manhattan. Mr. Tamayo then wrote the stock symbols for companies on which he had inside information on either Post-it notes or napkins, prosecutors said. Later, Mr. Tamayo met up with Mr. Eydelman, a Colts Neck, N.J., resident, and showed him the notes, according to authorities. Mr. Eydelman memorize the ticker symbols, and then Mr. Tamayo put the notes in his mouth and swallowed them to destroy the evidence, prosecutors said.
Some of the meetings between Mr. Tamayo and Mr. Eydelman are said to have taken place near the information booth at Grand Central Terminal.
The Securities and Exchange Commission filed civil charges against Mr. Tamayo on Friday.
He has agreed to forfeit $1 million and a 2008 Audi Q7 automobile as part of his guilty plea. He could be sentenced to a maximum of 20 years in prison but is expected to receive a much lesser sentence.
An earlier version of this article misidentified a rail center in Manhattan. It is Grand Central Terminal, not Grand Central Station, which is the name of the terminal’s subway stop.