A Canadian citizen who fraudulently sold Gucci stock options to an unwitting investor was sentenced to more than four years in prison in federal court in Manhattan on Thursday.
Timothy Khan pleaded guilty in March to one count of securities fraud and one count of wire fraud. Judge Miriam Goldman Cedarbaum of the U.S. District Court for the Southern District of New York ordered Khan to serve 51 months in federal prison, serve an additional two years’ supervised release and pay more than $8.6 million in restitution.
According to the original indictment, filed in April 2007, Khan masqueraded as a Gucci Group advisory board member in the mid-Nineties. Using the ruse, he convinced an unnamed American investor that he had the opportunity to purchase and sell discounted options as part of the company’s 1995 initial public offering. Over the next 11 years, the victim wired millions of dollars to Khan with the purpose of purchasing the options. According to the indictment, Khan routinely lied over the same period as to why he could not exercise the options, sell the stock and deliver the proceeds, as the victim repeatedly requested.
When Khan entered his guilty plea, the sentencing guidelines advised a 51- to 63-month sentence. His attorney, Donald Yannella, had asked for a 24-month term.
“We were a little disappointed in the sentence, but not entirely surprised,” Yannella said. He said his client was remorseful and hoped to pay the restitution entirely. Khan has been in custody since his April 2007 arrest.
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