By Dena Aubin
NEW YORK (Reuters) - Bail was set at $3 million on Wednesday for a French doctor facing criminal charges in an insider-trading case involving hedge fund FrontPoint.
Dr Yves Benhamou can be released from custody once he posts the bail, which is also to be secured by $1 million in property, ruled U.S. Magistrate Judge Frank Maas in Manhattan.
Benhamou was arrested earlier this month on charges of passing illegal tips about an experimental drug trial to FrontPoint. The infectious diseases expert could face as much as 25 years in prison if convicted.
The criminal and civil complaints did not mention FrontPoint by name or the hedge fund manager whom Benhamou is accused of tipping. The fund has said it is cooperating with authorities and has put one of its money managers on leave.
The bail conditions also require Benhamou to rent an apartment in New York and be confined there with electronic monitoring while the charges against him are pending.
"We're gratified that the court set conditions on bail that we hope will permit Dr. Benhamou to resume communications with his patients and contribute to their health and well-being," his lawyer, David Zornow, told reporters after the bail hearing.
LACK OF EXTRADITION CITED
Zornow had told the judge that Benhamou should be released so he could attend to his patients in France by phone and email.
"This is a man who treats literally hundreds of patients who are seriously, seriously ill," Zornow said.
Prosecutors said there were no conditions that could reasonably assure Benhamou's appearance at trial, since he had the means to flee and France would not extradite him if he returned home.
"Having people co-sign on a bond doesn't assure his appearance" because Benhamou has substantial assets and could reimburse his co-signers, said assistant U.S. attorney Pablo Quinones.
Quinones cited the case of film director Roman Polanski, who was not extradited from France even though he had admitted to drugging and having sex with a 13-year old girl in 1977. The filmmaker skipped bail and fled the United States for France in 1978.
Quinones also disputed Zornow's claim that Benhamou was indispensable.
"The world of hepatology is not going to crumble because he's not present," Quinones said.
Hedge fund FrontPoint, which investment bank Morgan Stanley acquired in 2006 and is now spinning off, oversees about $7 billion in assets in various funds.
Authorities said Benhamou tipped the hedge fund about negative results from a clinical trial that Human Genome Sciences Inc was conducting for an experimental treatment for hepatitis C. The fund sold all of its shares in Human Genome just before the news became public on January 23, 2008, according to prosecutors. Human Genome's shares fell 44 percent that day.