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Bonnie Hoxie, Disney Exec's Assistant, Charged In Trade Scheme

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NEW YORK — An assistant to a top executive at Walt Disney Co. was arrested Wednesday along with her boyfriend on charges that they offered to sell secrets about the company's financial picture to investment companies, authorities said.

Bonnie Hoxie, who had been a secretary to Disney's head of corporate communications, was accused of conspiracy and wire fraud along with Yonni Sebbag, also known as Jonathan Cyrus.

Hoxie, 33, and Sebbag, 29, appeared Wednesday in federal court in Los Angeles. Hoxie was released on $50,000 bond, but Sebbag was ordered held in prison pending transfer to New York where the case was filed.

U.S. District Judge Patrick J. Walsh said Sebbag was a potential flight risk. He ordered both defendants to appear in New York court on June 3 where they will seek representation by appointed counsel or public defenders. Both submitted statements that they cannot afford to hire lawyers.

The pair appeared wearing black t-shirts and handcuffs. Both spoke clearly, answering questions by the judge on whether they understood what they were charged with. They said they did.

Hoxie's temporary counsel said her father and brother who live in Michigan have agreed to post her bond.

No bail was set for Sebagg.

U.S. Attorney Preet Bharara said the case demonstrated that "the integrity of the securities exchanges can be compromised not only by top executives, but also by anyone entrusted with material, nonpublic information."

Disney said in a statement that it "has been fully cooperating with this investigation."

Prosecutors said Hoxie, who had been employed at Disney since Dec. 18, 2007, obtained information such as Disney's quarterly earnings before the results were publicly released and fed the information to Sebbag, who tried to sell the tips to at least 33 investment companies.

The government said the pair arranged for anonymous letters to be sent in early March to dozens of hedge funds and other investment companies, many of which were located in Manhattan, offering to sell secrets.

George Venizelos, the acting head of the New York office of the FBI, said the majority of the hedge funds and investment companies that received the offers notified the FBI.

FBI agents then posed as hedge fund traders and offered to buy the information from Sebbag and Hoxie, prosecutors said.

The government alleged that before Disney's May 11 earnings report, the couple sent FBI agents a copy of a 107-page document titled: "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points." Prosecutors also said the defendants notified agents two hours before the public earnings announcement that Disney's results would exceed stock analysts' expectations.

Three days later, Sebbag met two undercover FBI agents in New York and accepted $15,000 in cash for the information, the government said. Prosecutors said he agreed to provide similar confidential information in the future in return for a 30 percent share of any profits from early trades.

If convicted, Hoxie and Sebbag would each face up to 25 years in prison and fines of $250,000 or twice the amount that was gained or lost in the scheme.

According to the complaint, on March 15 one of the suspects volunteered information that Disney CEO Bob Iger was "in serious and advanced negotiations with two private equity firms to sell them the ABC network but no price has been determined yet."

An FBI agent responded that the information was "open source" and available on the Internet and inquired further about the earnings report.

Disney denied the sale rumors directly Wednesday.

"The reference in the complaint to conversations regarding the ABC Network were and are false," the company said.

Miller Tabak & Co. analyst David Joyce said speculation about the possible sale of ABC "had been percolating in the past couple months" and that the information in the complaint was "not too surprising" even if it were true.

Disney shares rose 75 cents, or 2.3 percent, to close Wednesday at $33.07, largely in line with gains in other media companies.

In a related complaint filed in federal court in Manhattan by the Securities and Exchange Commission, the SEC said Hoxie sent Sebbag an e-mail on the same day she divulged Disney's earnings per share, saying she expected to receive an expensive Stella McCartney designer handbag as a gift from Sebbag in return.

The SEC said that Sebbag, anticipating a large payoff, responded: "I may be able to (buy) u 2 of them, lol."

It said Hoxie answered: "In that case, i also love love these shoes" and attached a link to a photograph of expensive Stella McCartney shoes.

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AP Business Writer Ryan Nakashima and AP Special Correspondent Linda Deutsch in Los Angeles contributed to this report.

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