A federal jury yesterday reportedly convicted a Centers for Medicare & Medicaid Services worker and three others of using inside information as the “secret sauce” in a $7 million insider trading scheme with a well-known healthcare hedge fund.
Consultant David Blaszczak, founder of Precipio Health Strategies and the one-time colleague at CMS of Christopher Worrall, pleaded not guilty last June to charges that Worrall used his position in the CMS director’s office for access to advance notice of reimbursement rate changes. Traders at Deerfield Management, Ted Huber and Rob Olan, allegedly used the inside dope to make moves on healthcare stocks affected by the changes for radiation treatments and dialysis. Another Deerfield trader, Jordan Fogel, pleaded guilty in May 2017.
The trades allegedly involved radiosurgery companies Accuray (NSDQ:ARAY), Varian Medical (NYSE:VAR) and Elekta (STO:EKTA B) and dialysis providers DaVita Healthcare(NYSE:DVA) and Fresenius (NYSE:FMS), prosecutors alleged.
Deerfield agreed last year to pay $4.6 million to settle a related U.S. Securities & Exchange Commission case, without admitting any wrongdoing.
After a four-week trial and four days of deliberations, a jury in the U.S. District Court for Southern New York yesterday convicted all four defendants on counts including wire fraud, securities fraud and conversion of government property; Worrall was acquitted of the securities fraud charges, Reuters reported.