Charges: Expedia worker snooped execs to make insider trades Prosecutors say IT worker stole information from CFO, head of investor relations

An Expedia IT worker alleged to have broken into executives’ computers to steal closely held information is now accused of insider trading. An Expedia IT worker alleged to have broken into executives’ computers to steal closely held information is now accused of insider trading. Photo: Joe Raedle/Getty Images Photo: Joe Raedle/Getty Images Image 1 of / 1 Caption Close Charges: Expedia worker snooped execs to make insider trades 1 / 1 Back to Gallery

UPDATE: Former Expedia employee Jonathan Ly pleaded guilty Monday to securities fraud charges. Ly accessed computers and email accounts belonging to executives at the Seattle company, and then used stolen information to conduct insider stock trades. He is scheduled to be sentenced Feb. 28. at U.S. District Court in Seattle.

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An Expedia IT worker alleged to have broken into executives’ computers to steal closely held information is now accused of insider trading.

Federal prosecutors in Seattle claim Jonathan Ly made $331,000 trading on information he gleaned combing hard drives and email accounts belonging to Expedia (NASDAQ: EXPE) brass. Ly pleaded guilty Monday to securities fraud.

U.S. Attorney for Western Washington Annette Hayes described Ly's actions as a "get-rich-quick scheme."

"I commend Expedia for quickly contacting law enforcement when they identified the computer intrusion," Hayes said in a statement Monday. "Their willingness to do the right thing made it possible to effectively investigate and prosecute the matter – protecting our financial markets from unfair manipulation."

Ly had been stealing information from the Seattle-based online travel giant since at least 2013, according to investigators’ statements. The fraud is alleged to have continued through late 2015.

"Detection was achieved via enhanced monitoring practices we had in place," Expedia spokesperson Tarran Street said in a statement Monday. "Expedia worked closely with law enforcement authorities to identify, track, pursue, and put a halt to these activities."

Ly is alleged to have bought and sold stock in the publicly-traded company, which operates Hotwire.com as well as Expedia.com. Ly worked as an information technology technician at the Hotwire subsidiary, which is based in San Francisco, before leaving the company in April 2015.

According to charging papers, Ly accessed Expedia executives’ computers and email accounts to obtain “non-public and proprietary information belonging to Expedia.”

“Ly fraudulently obtained the information in order to execute a series of well-times and lucrative securities trades in Expedia options,” Assistant U.S. Attorney Katheryn Frierson said in court papers.

As an IT worker, Ly had administrative privileges that allowed him to remotely access employees’ computers. He used that, Frierson said, to peep into files saved on his coworkers’ hard drives without their knowledge.

In 2014, Ly gained even greater access to the systems and continued accessing information using other employees’ login information, the federal prosecutor continued.

Among those Ly snooped on were Expedia’s chief financial officer and head of investor relations, Frierson continued.

Frierson said Ly continued to steal Expedia information even after leaving by using a company laptop he failed to return before departing.

Court records indicate Ly had insider information about Expedia earnings reports as well as several significant events impacting the business.

Frierson noted that Ly traded Expedia stock near the company’s September 2015 announcement that the Department of Justice would approve its purchase of competitor Orbitz. He is also alleged to have conducted stock transactions around in the summer of 2013, when Expedia and Travelocity inked a marketing agreement.

Ly appears to have made his last trade in October 2015.

Ly was charged by information on Friday in U.S. District Court for Western Washington. He has not yet appeared in court there.

Seattlepi.com reporter Levi Pulkkinen can be reached at 206-448-8348 or levipulkkinen@seattlepi.com. Follow Levi on Twitter at twitter.com/levipulk.