NEW YORK — A recent Binghamton University graduate was indicted last week in connection with a Wall Street insider-trading scam that seems made for TV — one that included a stripper, a retired Croatian seamstress and an exclusive Russian sauna.

In the biggest such plot to hit Wall Street in more than a decade, Stanislav Shpigelman, a 2004 School of Management graduate and a resident of Brooklyn’s Sheepshead Bay, allegedly fed two co-conspirators inside information he obtained while working as an analyst in the mergers and acquisitions unit of financial management firm Merrill Lynch. That information, the feds say, was used to make nearly $7 million in profitable transactions, the benefits of which were split among a number of co-conspirators.

“It’s stunning, shocking — use whatever word you want. We’re in disbelief,” said Upinder Dhillon, the dean of the School of Management. “When you know somebody well, and you don’t have any idea of something like that happening, it’s a whole range of emotions.”

What confuses many is that Shpigelman was one of SOM’s most promising graduates in 2004, Dhillon said — one of around 20 SOM students with “sterling” grade-point averages chosen during their sophomore year to be groomed for extra attention in an effort to help them land jobs at Wall Street’s top finance firms.

“Where he was, you’re at the pinnacle of success,” Dhillon said. “This is the peak of achievement as far as individuals are concerned, as far as success goes. It is ironic that you can go from there and then you fall so low.”

Part of what got him there was an independent study with assistant professor of finance Srinivasan Krishnamurthy. Through the semester, Krishnamurthy said, Shpigelman would read up on state-of-the-art thinking in the finance industry, report back on it and then apply it to actual cases in the world of mergers and acquisitions.

Student and teacher would sit down once a week, or sometimes more as needed. Although their interaction was limited to the classroom, through it Krishnamurthy came to know Shpigelman as one of the best he’d ever taught.

“He was one of our brightest students, very hard working, very academic. He was a very diligent, very bright kid,” he said. “He always got the stuff done on time. He was not required to do this independent study — he was really interested in that stuff.”

‘IT CANNOT BE HIM’

So, the assistant professor said, when he heard the accusations against Shpigelman — on TV and in the newspapers — he was incredulous.

“‘It cannot be him,’ that’s the first thing I thought,” Krishnamurthy said. “I did not think it could be him.”

That sense of disbelief was one shared by many people who knew Shpigelman during his time at Binghamton. Members of his fraternity, Alpha Phi Delta, weren’t convinced that the charges against Shpigelman were founded.

“Obviously, nobody’s happy with what they’re reading, but as far as we know, Stan has never wronged anybody,” said Jesse Segall, Shpigelman’s “little brother” — the pledge assigned to Shpigelman in the spring of 2004 — a junior psychology major, and the fraternity’s current president. “I’m sure that most of what’s in the paper isn’t true anyway.”

Segall emphasized Shpigelman’s intelligence, calling the former Delaware Hall resident a genius (“Sometimes we made fun of him because he was so smart,” Segall said) and a man who was very attentive to detail.

“He always seemed to do the right thing, which is why this surprises everyone,” Segall said. “If you were to make a model family, the way the son would do it, would be him — he did everything so well, so by-the-book, never cheating, never against the rules. When we read the article, we asked, ‘Is this really happening to Stan?’ There was just so much going for him, I don’t see any reason he’d make a mistake like this.”

Segall said that Shpigelman, who later moved to Murray Street, was also a model member of the fraternity — by Binghamton standards, a relatively small one, with fewer than 20 brothers.

“Stan, when he was here, he was very active. He did everything like any normal brother would do,” Segall said.

The tight-knit brothers intend to stand behind their man.

“When it comes down to a trial, we’re going to try go get people down to support him,” Segall said. “He’s one of the nicest kids ever. He deserves our support.”

Nor was Dhillon ready to issue judgment on Shpigelman before the alum has had his day in court.

“The justice system has yet to take its due course,” Dhillon said. “We have to give Stan his due course.”

BEARCAT v. BEARCAT?

Shpigelman’s indictment was announced April 11, and he was released the next day on $3 million bail (not the following week, as indicated in an earlier Pipe Dream online story). But how could a Binghamton graduate — granted, he likely made six figures at Merrill Lynch — come up with the $3 million for his freedom?

According to the federal court, $25,000 collateral on his family’s home in Sheepshead Bay and the word of five “financially responsible” people — as well as an early-evening curfew — were enough to convince officials that Shpigelman wouldn’t skip town, or that they’d be paid if he did miss his day in court.

But that day in court comes with its own twists. The U.S. attorney for the Southern District of New York who will likely prosecute the case is Michael Garcia — himself a 1983 graduate of Binghamton’s Harpur College.

Garcia is another BU success story, albeit a more long-term one. He graduated when the University was still called SUNY-Binghamton, in the same class as actor Billy Baldwin; he went on to get a Master’s degree from the College of William and Mary and his Juris Doctorate from Albany Law School, Union University.

He has successfully prosecuted some of the nation’s most high-profile criminal cases, including the first World Trade Center attack in 1993 and the bombing of American embassies in Kenya and Tanzania in 1998. In 2002, he was named acting commissioner of the U.S. Immigration and Naturalization Service, and in 2003, he was appointed Assistant Homeland Security Secretary for Immigration and Customs Enforcement by President George W. Bush. He currently serves as the U.S. Attorney for New York’s Southern District.

A STRIPPER, A SAUNA, A SEAMSTRESS AND SPIES

A criminal complaint from Garcia’s office and a civil suit from the Securities and Exchange Commission maintain that Shpigelman would tip off Eugene Plotkin, 26, and David Pajcin, 29 — an employee and former employee of wealth-management company Goldman Sachs, respectively — when major mergers were soon to take place, including the $5 billion acquisition of Reebok by Adidas in August 2005.

He allegedly did so at least six times in all. And officials say that a 23-year-old New York City exotic dancer, as well as Pajcin’s aunt, a retired Croatian underwear-factory worker, were among at least seven others who got in on the profits by allowing their bank accounts to be used to buy and sell shares of the companies in question.

Pajcin, Shpigelman and Plotkin — a Yale graduate himself — would allegedly meet at Spa 88, a posh Lower-Manhattan Russian-style spa, and plan their next steps with Shpigelman’s information.

The scheme went further, though. Plotkin and Pajcin allegedly hired two moles to work in the printing plant of Wall-Street newspaper Business Week. The spies would sneak a look at “Inside Wall Street,” a column that traders often use for advice on when to buy and sell, and phone that information back to Plotkin and Pajcin. Shpigelman was not said to be involved.

They made hundreds of thousands of dollars based on that advance knowledge, officials said.

“This fraud is one of the most widespread, varied and premeditated insider trading rings we have ever prosecuted,” said Mark K. Schonfeld, director of the Securities and Exchange Commission’s Northeast Regional Office.

Attorneys for the accused did not speak to the press, and Garcia’s office declined comment, citing the fact that the investigation is still ongoing.

PAUSE FOR THOUGHT

Ethics is an integral part of the School of Management’s general curriculum, Dhillon said; it’s touched on at least superficially in every class in the school. But SOM’s ethics education can go beyond the classroom. In 2004, the year of Shpigelman’s graduation, New York Attorney General Eliot Spitzer spoke on ethics as part of the Abraham J. Briloff Lecture Series on Accountability and Society.

Now, for their part, the School of Management professors intend to use Shpigelman’s predicament as a teaching tool. Krishnamurthy has already discussed the event in class this past week.

“We are always trying to see what can we learn from this, and what can we tell our students,” Krishnamurthy said. “These are things students are going to face when they’re on the job. They’re always going to face some opportunities when bad things may happen. As a student you always have to be alert and make sure these things don’t entrap you.”

Krishnamurthy said that the ethics lessons currently taught in SOM may strike students as out-of-touch, but that a fresh Binghamton grad at the center of a multimillion-dollar scandal would probably be a pretty good wakeup call.

“There have been so many people who’ve been caught, but students always think it’s been people far away from [themselves],” he said. “So here students realize these problems do arise and they always have to be careful, on alert.”

And, Dhillon said, the case could prove a useful instructional tool for some time.

“I think the faculty will discuss it in their classes. It’s a teaching moment, a learning moment,” Dhillon said. “People will refer to this for a period of years, but time always makes things fade … after it goes out of context, I think people will choose something else.”

But the lesson could reverberate beyond the students, through the SOM faculty in Academic Building A.

“We’ve got a lot to be proud of, but moments like this give us pause for thought,” Dhillon said.