A Blackstone Group (BX) executive has been arrested and charged with fraud in an insider trading scheme involving shares of Albertson's Inc. that allegedly netted more than $3.5 million in illicit profits, according to court documents made public Wednesday.

Ramesh Chakrapani has been charged criminally with conspiracy and securities fraud, according to a criminal complaint made public Wednesday. He was arrested Monday, according to the court's electronic docket.

Chakrapani appeared before a federal magistrate judge on Tuesday and bail was set at $300,000. His travel was restricted to New York City and California.

A lawyer appointed to represent Chakrapani at the hearing didn't immediately return a call seeking comment Wednesday. It was unclear Wednesday if Chakrapani had retained other counsel.

Chakrapani was still in custody at the Metropolitan Correctional Center in Manhattan late Wednesday, according to the U.S. Bureau of Prisons Web site.

The U.S. Securities and Exchange Commission sued Chakrapani in a separate civil insider trading lawsuit on Tuesday.

Prosecutors have alleged Chakrapani tipped a co-conspirator with material nonpublic information concerning the acquisition of Albertson's Inc. prior to the public announcement of the deal in January 2006.

Chakrapani was privy to nonpublic information about the deal because he worked as a member of the team assigned to advise Albertson's on the transaction, the government said.

Prosecutors said the co-conspirator then traded shares in his personal account and caused trades of Albertsons's shares in his firm's proprietary trading accounts and an account held by the co-conspirator's parents.

In its lawsuit, the SEC has alleged Chakrapani tipped a friend, who works as a financial analyst.

Albertson's was sold in 2006 to a consortium of investors that included Supervalu Inc. (SVU), CVS Caremark Corp. (CVS) and an investor group led by Cerberus Capital Management LP.

Chakrapani, 33 years old, works as a managing director in Blackstone's corporate and mergers-and-acquisitions advisory group in London. He worked in Blackstone's New York office from 2001 until his transfer to London last year.

On Tuesday, a Blackstone spokesman said the company was "shocked by this alleged breach of the law and violation of our own compliance policies and ethical standards," adding the company was fully cooperating with the investigation.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com

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