Thursday, April 17, 2014

New Jersey Corruption: Two N.J. men sentenced in insider-trading scheme

04/17/2014


A former pharmaceutical executive who cooperated with prosecutors was sentenced Thursday to 16 months in prison for his role in an insider-trading ring that made $1.48 million from tips about several health-care companies, including Stryker Corp., which has operations in Mahwah.

Mark Cupo, 53, of Morris Plains was sentenced in federal court in Newark. He pleaded guilty last October, after secretly recording the two primary traders in the ring. He is a former director of accounting and reporting at Sanofi in Bridgewater.

Another participant, Mark Foldy, a former Stryker executive who also lived in Morris Plains, was sentenced Thursday to six months of home confinement. He also pleaded guilty last October.

The two main traders were sentenced last week after pleading guilty. Lawrence Grum, 50, of Livingston was sentenced to a year and a day in prison, and Michael Castelli, 50, of Morris Plains, was sentenced to nine months in prison. The two were high school classmates.

According to authorities, Cupo passed information about Sanofi, Stryker and Celgene Corp. of Summit to Grum and Castelli. He got the information about Celgene from John Lazorchak of Long Valley, a former executive at Celgene, and the Stryker information from Foldy, through Lazorchak. Lazorchak is awaiting sentencing, after pleading guilty.

Authorities said that by trading on the information from 2007 to 2012, Grum made about $700,000 and Castelli, $640,000.

The tips involved Celgene's announcement in November 2007 that it was buying Pharmion Corp. for $2.9 billion; Sanofi's announcement in March 2010 that it was buying Chattem Inc. for $1.9 billion; Celgene's news in June 2010 that it was buying Abraxis BioScience Inc. for $2.9 billion and Stryker's announcement in May 2011 of plans to buy Orthovita Inc. for $316 million, according to the U.S. Securities and Exchange Commission, which sued the men.

In addition, authorities say Grum and Castelli traded on inside information about quarterly earnings announcements by Celgene and an announcement about its blood cancer drug, Revlimid.

"I take full responsibility for all my actions," Cupo said to U.S. District Judge Katharine Hayden Wednesday. "I made a series of bad judgments and poor choices. I've jeopardized my whole family's stability, which was poor judgment on my part."


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