Net widens in Galleon investigation

Steven Fortuna, a hedge fund manager with a home in Westwood, pleaded guilty in Manhattan federal court to illegally trading shares of Akamai Technologies Inc. of Cambridge. Arthur Cutillo, a New York attorney for Boston law firm Ropes & Gray LLP, was arrested and charged with leaking inside information about a Bain Capital LLC plan to buy 3Com Corp. in Marlborough. Florida hedge fund investor Roomy Khan pleaded guilty to making illicit trades in several stocks, including Kronos Inc. of Chelmsford, netting her about $1.6 million in profits. She is cooperating with authorities.

The charges are related to the case against Galleon Group of New York, a now-defunct hedge fund. Galleon’s cofounder, billionaire Raj Rajaratnam, was one of six people arrested and charged last month in connection with making $25 million from illegal trades in stocks of several companies, including Akamai.

Altogether, the Justice Department yesterday arrested eight people, with a ninth suspect still at large. Fortuna, Khan, and three others pleaded guilty to securities law violations and are awaiting sentencing.

“These defendants thought the rules that apply to all investors did not apply to them, but the one rule they cannot avoid is the rule of law,’’ Robert Khuzami, director of the enforcement division of the US Securities and Exchange Commission, said in a statement.

The SEC, which regulates trading in securities, has filed civil charges in the cases.

It is illegal to buy and sell stocks based on information unavailable to the public. The law is intended to prevent professional investors and corporate insiders from gaining an unfair advantage over less knowledgeable investors.

Federal investigators cracked the case using wiretaps and confidential inform ants, uncovering a network of traders who dealt in confidential corporate information. At the center of the web was Zvi Goffer, a trader who worked at the New York brokerage Schottenfeld Group during 2007, when some of the transactions were made. He later worked at Galleon, leaving in August 2008 to found his own company, Incremental Capital.

According to the SEC complaint, Goffer was known to his alleged coconspirators as “the Octopussy,’’ because he had so many channels of illicit information. FBI agents tailed Goffer and witnessed transactions that the Justice Department asserted were deliveries of cash payoffs for inside information.

Goffer was exceedingly cautious, buying prepaid cellphones for his alleged coconspirators to make it more difficult for investigators to intercept their calls, the complaint said. After the announcement of the 3Com acquisition, the complaint said, Goffer bit into the memory card in his tipster’s disposable cellphone, broke the phone in two, and threw one half away. He then instructed the insider to get rid of the rest of the phone.

The complaint said that Cutillo, the Ropes & Gray lawyer, was a legal adviser to Bain Capital during its 2007 attempt to acquire 3Com, a maker of computer networking equipment. Cutillo allegedly shared inside information about the 3Com acquisition and deals involving other clients with another New York lawyer named Jason Goldfarb. Goldfarb was also arrested yesterday, charged with passing the inside information on to Goffer.

The Bain-3Com deal ultimately fell through. But according to the SEC complaint, Goffer and his alleged coconspirators made about $11 million by trading on Cutillo’s information.

Cutillo’s personal information has been removed from the Ropes & Gray website.

According to a copy stored on the Internet search site Google, Cutillo holds bachelor’s and master’s degrees in chemical engineering as well as a law degree from Villanova University. He joined Ropes & Gray as an intellectual property lawyer in 2005, after working at drug maker Merck & Co.

“We are deeply disappointed to learn about this situation, which suggests an extreme breach of this person’s duty of trust to our clients and to the firm,’’ Ropes & Gray said in an e-mailed statement. “We cannot comment in detail on an ongoing investigation, but we are moving quickly to protect our clients and are cooperating fully with authorities.’’

Both Bain and 3Com declined to comment on the matter.

Authorities connected hedge fund manager Fortuna of Westwood to the Akamai insider trading that helped bring down Galleon. Fortuna, cofounder of S2 Capital LLC in Boston, said that he received inside information on Akamai from Danielle Chiesi, a hedge fund investor who was arrested last month.

Investigators said S2 used the knowledge to make illicit trades of Akamai stock, which netted the fund a profit of about $2.4 million.

In describing his client’s guilty plea, Fortuna’s attorney Richard Schaeffer said, “He has accepted responsibility for his conduct.’’

Fortuna graduated from Boston University with a bachelor’s degree in electrical engineering and a master’s in computer engineering, and received an MBA from Columbia University, according to records stored on the Internet.

Before starting S2, he worked as a financial analyst at Stratix Asset Management, Prudential Equity Group, Merrill Lynch Inc., BT Alex. Brown Inc., and Paine Webber Inc.

In a separate complaint filed yesterday, authorities described a spate of illegal trading tied to the March 2007 acquisition of software firm Kronos by private investment firm Hellman & Friedman.

The complaint said Deep Shah, a former analyst at Moody’s Investors Service in New York, learned about the deal from an unnamed source. He shared the information with Roomy Khan, who made stock trades based on the information, shared the information with other traders, and paid kickbacks to Shah.

Elizabeth Nowicki, a professor at Boston University School of Law, expressed astonishment that so many affluent and successful people would break the law.

“Sometimes people are just idiots,’’ Nowicki said. “It can’t possibly be the money, because these guys didn’t need the money, and the risks are huge.’’

Hiawatha Bray can be reached at bray@globe.com.