Two individuals working for the Deerfield Management hedge fund along with two others were convicted on charges involving insider trading as a result of information being leaked from a federal healthcare agency.
The Deerfield management partners have been identified as Ted Huber and Rob Olan. The two men were found guilty of securities fraud, wire fraud, as well as the conversion of government property. David Blaszczak, the founder of the Precipio Health Strategies, was also convicted on the charges.
A worker for the United States Centers for Medicare and Medicaid, Christopher Worral, also suffered a conviction for conversion of government property and wire fraud. Worral also faced securities fraud but was acquitted on that charge.
The jury’s verdict came after deliberating for almost four days. The trial itself took four weeks to complete.
Lawyers for the four men, as well as officials with Deerfield Management all declined to make themselves available for comment following the verdict.
The four men were initially charged with the crimes in May of 2017 and prosecutors allege that Worrall provided Blaszczak with advanced notice of actions to be taken by CMS, specifically in regards to the amount that government insurance programs would be required to provide in reimbursement to companies providing healthcare. The indictment then reads that Blaszczak then transferred this information to Olan and Huber, who executed trades based on the inside knowledge.
Blaszczak was a former employee of CMS and kept in touch with Worrall after leaving for other opportunities prosecutors allege in the indictment.
Worrall illegal information included tips regarding the lowering of reimbursement rates to be paid for dialysis and radiation treatments. Deerfield Management would then turn a profit by selling off companies that would be affected by the new policies.
Prosecutors said that the four men benefitted from the scheme for approximately a five-year period that ran from 2009 until 2014.
Deerfield Management entered into an agreement with the Securities and Exchange Committee to pay $4.6 million in settlements related to the case. The management firm did not speak to any questions of its guilt or innocence of wrongdoing in the situation.