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INDIANAPOLIS (AP) -- Three Indianapolis residents have been ordered to pay

a total of $1.75 million in penalties and fines after a federal judge found

they had engaged in an insider trading scheme.

U.S. District Judge Larry McKinney found that Michael Maio, Patricia Ladavac

and Darrin Duncan used inside, nonpublic information on the impending sale of

Xidex Corp. to Anacomp Inc., a Carmel-based computer services company, to buy

and sell stock.

According to the Securities and Exchange Commission's complaint, Anacomp

chairman Louis Ferrero tipped Maio off to the impending purchase of Palo Alto,

Calif.-based Xidex in June 1988 when both men were in Las Vegas.

Court documents indicate Maio made numerous phone calls to his stockbroker

while he was still in Las Vegas, asking him to purchase large quantities of

Xidex stock and sell off his shares in Anacomp.

Maio also called Ladavac, a friend and former business associate, and she,

too, began purchasing Xidex stock and selling off her shares in Anacomp.

Duncan, who was dating Maio's daughter in June 1988, also began buying and

selling stock.

Between Maio, Ladavac and Duncan, the three made more than $450,000 in

illegal profits from their purchase of Xidex stock, while avoiding losses of

more than $100,000 by selling their Anacomp stock before the deal was made


All three were ordered Monday to disgorge the profits they made in the

scheme, as well as pay more than $240,000 in interest accrued since July 1988,

when the deal was made public.

McKinney levied the maximum fine against Maio -- three times the total

profits gained and losses avoided -- and ordered him to pay $838,875.

Ladavac was fined $94,500, and Duncan $16,562.50. Ferrero reached an

out-of-court settlement with the SEC and agreed to pay a $277,750 fine.

"As far as I'm aware, it was the first time that a case that went to trial

had the maximum penalty imposed," Barry Goldsmith, the SEC's chief litigation

counsel, said Wednesday.

"We think that sends a strong message out to the community that if you

commit insider trading, you will have to pay the fiddler," said Daniel Shea, an

SEC attorney who prosecuted the case.

Maio's attorney, David Mernitz, refused to comment on the judgment. Ronald

Elberger, Ladavac's attorney, said he believed that both sides were given a

fair trial, but was disappointed with the settlement.

It is not known whether any of the three plan to appeal McKinney's judgment.