George Holley, former chief executive officer and chairman of Home Diagnostics Inc., pleaded guilty during his trial on insider-trading charges.
Holley, 72, pleaded guilty today to two counts of securities fraud in federal court in Trenton, New Jersey, where prosecutors rested their case yesterday. Holley hadn’t begun his defense case when he ended the trial in the eighth day.
Holley admitted he tipped his cousin and a friend that Osaka, Japan-based Nipro Corp., a maker of medical equipment, would buy his company. He “told them to buy Home Diagnostics stock just three weeks before the merger was publicly announced,” U.S. Attorney Paul Fishman said in a statement.
Nipro bought the company for $215 million in February 2010. Shares of Home Diagnostics, based in Fort Lauderdale, Florida, rose 89 percent after the announcement. The subsidiary, which makes blood glucose monitoring systems and disposable supplies for diabetics, is now known as Nipro Diagnostics.
“We felt that the plea agreement that was arrived at during trial was an appropriate, fair resolution of the case,” Kevin Marino, Holley’s defense attorney, said in a telephone interview.
U.S. District Judge Joel Pisano set sentencing for Dec. 4. Holley faces as many as 20 years in prison on each of the two counts.
Assistant U.S. attorneys Judith Germano and Christopher Kelly declined to comment on the plea.
One of the people that Holley admitted tipping was Phairot Iamnaita, 30, of Hangdong, Chiang Mai, Thailand. Holley, of Norwalk, Connecticut, was arrested in January 2011 and charged with Iamnaita. Prosecutors dismissed the charges against Iamnaita when they indicted Holley for a second time in May.
Iamnaita was a “close personal acquaintance” of Holley who “regularly socialized and vacationed” with him, according to the Federal Bureau of Investigation’s arrest complaint. The two invested in business ventures in Thailand, the FBI said.
From 1985 to March 2010, Holley was chairman of Home Diagnostics, according to the Securities and Exchange Commission. The SEC sued Holley, Iamnaita, and a third man. A judge administratively closed that lawsuit so that it wouldn’t interfere with the criminal case.
The case is U.S. v. Holley, 11-cr-66, U.S. District Court, and the SEC case is Securities and Exchange Commission v. Holley, 11-cv-205, U.S. District Court, District of New Jersey (Trenton).