April 8, 2024

Phlow executive and cousin plead guilty to insider trading in connection with Kodak trades

On April 3, 2024, the US Attorney’s Office for the Southern District of New York announced that James Andrew Stiles and his cousin Edward Gray Stiles each pleaded guilty to one count of securities fraud for their alleged involvement in an insider trading scheme.  As part of their plea agreements, the defendants consented to the entry of money judgments of approximately $531,000 for Andrew Stiles and approximately $724,000 for Gray Stiles.  Both defendants are scheduled to be sentenced on July 24, 2024.

According to the USAO, in or around 2020, Andrew Stiles obtained material nonpublic information (“MNPI”) about a potential government loan to be made to the Eastman Kodak Company in connection with the production of critical COVID-19-related pharmaceutical components.  Andrew Stiles allegedly obtained the MNPI while working as an executive for pharmaceutical company Phlow Corporation, which had been providing Kodak with advice and guidance in connection with the loan application process.  In June and July of 2020, while in possession of the MNPI, Andrew Stiles allegedly purchased approximately 90,000 shares of Kodak stock before a public announcement was made, on July 27, 2020, regarding the government’s “letter of interest” to provide Kodak with a $765 million loan.  According to federal prosecutors, Andrew Stiles also shared the MNPI with his cousin Gray Stiles who allegedly purchased 34,000 Kodak shares based on the tip.  Following the public announcement, Kodak stock increased by more than 2,500 percent enabling Andrew Stiles and Gray Stiles to realize alleged profits of more than $500,000 and $700,000, respectively, after the two sold the entirety of their shares.

In a parallel action filed in 2023, the Securities and Exchange Commission also charged Andrew Stiles and Gray Stiles with insider trading in connection with the Kodak securities trades and others.  The SEC’s case is stayed pending the outcome of the government’s criminal case against the defendants.

USAO SDNY Press Release | Indictment | J. Stiles – Consent Order of Forfeiture/Money Judgment | E. Stiles – Consent Order of Forfeiture/Money Laundering | SEC Press Release (2023) | Order to Stay SEC matter