Insider Trading Scam Allegedly Involved Morris Plains Men
Six accused of netting $1.4 million in illicit profits and kickbacks.
Three Morris Plains men have been charged, along with three others, in a $1.4 million insider trading operation that lasted nearly five years, U.S. Attorney Paul J. Fishman announced Monday.
Mark Cupo, 51, Michael Castelli, 48, and Mark Foldy, 42, were part of a group of men who netted $1,483,749 in illicit profits and cash kickbacks from insider trading on Celgene, a biopharmaceutical company, Fishman said.
Also charged were Long Valley resident John Lazorchak, 42, the director of Financial Reporting for Celgene; Lawrence Grum, 48, of Livingtston; and Michael Pendolino, 43, of Nashua, N.H. The U.S. Attorney said the men were involved in a years-long operation, buying and selling stock prior to major announcements made by the company.
Lazorchak, Foldy and Pendolino have each been charged with one count of conspiracy to commit securities fraud. Cupo, Grum and Castelli have each been charged with two counts of conspiracy to commit securities fraud.
All are also charged with multiple counts of securities fraud. Lazorchak is charged on 26 counts; Cupo, 23; Grum, 12; Castelli, 11; Foldy, 2 and Pendolino, 2.
The group of men surrendered to FBI agents and were scheduled to appear in court Monday afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark Federal Court.
According to the complaint filed against the men, Lazorchak was at the center of the insider trading network and regularly disclosed non-public information about Celgene’s anticipated corporate acquisitions, quarterly earnings and regulatory news to Cupo between September 2007 and June 2012.
As an executive with Sanofi-Aventis, Cupo then funnelled the information to two “friends”—Grum and Castelli—who then shared any profitable trades with Cupo and Lazorchak, the complaint alleges. Grum and Castelli also passed certain information to friends and family members, Fishman said.
Lazorchak also gave information to high school friends, Foldy and Pendolino, along with two, uncharged co-conspirators, Fishman said.
Celgene’s acquisition of Pharmion and Abraxis, along with its announcement of a cancer-fighting drug being expanded into Europe, were among the deals made that Lazorchak and the others traded earlier than the information was made to the public, Fishman said.
Each conspiracy count carries a maximum potential penalty of five years in prison, a $250,000 fine, or twice the aggregate loss to victims or gain to defendants. Each count of securities fraud carries a maximum potential penalty of 20 years in prison and a $5 million fine.