(Bloomberg) -- A former Phlow Corp. executive and his cousin admitted to insider trading on confidential information about a pandemic-related government loan to Eastman Kodak Co. 

Andrew Stiles of Charleston, South Carolina, and his cousin, Gray Stiles, of Richmond, Virginia, pleaded guilty Wednesday to securities fraud before US District Judge Ronnie Abrams in New York. The two men, both 37, face as long as 20 years in prison at sentencing in July, although white-collar criminals rarely get the maximum penalty.

According to prosecutors and the US Securities and Exchange Commission, Andrew Stiles was an executive at Phlow, a generic drugmaker that was working with Kodak to produce drugmaking chemicals and helping with Kodak’s application for the government loan. 

Stiles bought more than 90,000 Kodak shares between June 2020, when he learned of the potential loan, and July 2020, prosecutors said. He tipped off his cousin, who bought more than 30,000 shares, according to the government. When the $765 million loan was announced on July 27 of that year, Kodak stock soared, handing Andrew Stiles a profit of more than $500,000 and Gray Stiles earnings of more than $700,000, prosecutors said.

The two men exchanged coded text messages while discussing the potential loan, according to the government. When Kodak applied for a loan of $655 million on July 9, 2020, Gray asked his cousin if there was “any update on the film we sent off a few weeks ago to get developed.”

“600+,” Andrew Stiles replied. “Maybe 2 weeks out.”

“I can live with that hahaha,” his cousin responded.

The loan was also the subject of an insider-trading probe by New York Attorney General Letitia James, who alleges that Kodak Chief Executive Officer James Continenza violated state securities law by buying shares before the loan was announced. Kodak has said that Continenza was pre-cleared to trade by the company’s general counsel. 

The loan was to help Kodak repurpose its manufacturing facilities to produce drug ingredients that had fallen into short supply in the pandemic’s early months, including those used in Covid-19 medications.

According to the SEC, which sued both men, Andrew Stiles also made more than $45,000 in May 2020 trading shares of Novavax Inc. after learning of its efforts to secure more than $300 million in funding to develop a coronavirus vaccine. At the time, he was working for BDO USA LLC, which had a consulting contract with Novavax, the SEC said. Stiles briefly worked for both BDO and Phlow at the same time.

Andrew Stiles’ LinkedIn profile indicates he was an executive vice president for government initiatives at the company during the time of the alleged activity.

The criminal case is US v. Stiles, 23-cr-98, US District Court, Southern District of New York (Manhattan).

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