The government’s star witness at the insider trading trial of Mathew Martoma told a defense lawyer seeking to discredit his testimony that his memory of a key 2008 meeting with the former SAC Capital Advisors LP fund manager improved over time.
Sidney Gilman a former University of Michigan neurologist, said he gave Martoma inside information about a clinical drug trial for at least 1 1/2 years. Gilman said he originally told prosecutors he had no memory of the July 19, 2008, meeting, which took place at his Ann Arbor, Michigan, office.
Gilman, 81, testified yesterday that he began to recall details of the event last year, during a time that he was meeting with prosecutors and federal agents as part of a non-prosecution agreement he reached with the government. Gilman told jurors this week that he remembered details of the meeting such as letting Martoma in the front door, walking with him down a hallway and asking if he wanted coffee or a soda.
“It was not as if everything occurred at once,” Gilman said of the recovered memory, responding to questions from Martoma’s lawyer, Richard Strassberg. “It developed slowly over time.” Gilman said he began recalling details of the meeting sometime in early 2013. The most recent details came “a couple weeks ago,” he told the jury.
Martoma, who faces as long as 20 years in prison if convicted of the most serious count against him, is charged with using confidential information he allegedly got from Gilman and Joel Ross, a New Jersey geriatrician, to make SAC $276 million in illegal profits and losses avoided.
Gilman ended his testimony yesterday after five days on the witness stand. He testified the day before that an agent of the Federal Bureau of Investigation told him he and Martoma were “a grain of sand” compared with the government’s real target, SAC founder Steven A. Cohen.
In November, Stamford, Connecticut-based SAC agreed to plead guilty to securities fraud and end its investment advisory business as part of a record $1.8 billion settlement of the government’s investigation of insider trading at the firm. The agreement must be approved by a judge before it can take effect. Cohen, who denies wrongdoing, hasn’t been charged.
Craig Mehrens, a criminal-defense lawyer who’s been watching the trial, said he thought Strassberg did an “incredibly competent” job cross-examining the government’s star witness.
“I think there’s a lot more ambiguity than I thought there was going to be” in the trial, he said. “It clearly is not an open-and-shut case.”
In his cross-examination, Strassberg tried to shake Gilman’s story that he passed Martoma confidential data about phase 2 tests of bapineuzumab, a drug that was being developed by Elan Corp. and Wyeth to treat Alzheimer’s disease. Strassberg yesterday questioned Gilman about changes in the story he told investigators, focusing on a series of meetings with the government as part of his agreement to cooperate in exchange for immunity from prosecution.
Gilman said at a meeting with federal agents on March 1 that he remembered finding Martoma in the street outside his office.
“Even then, you did not recall any other details of the meeting?” Strassberg asked.
“That’s right,” Gilman said.
Strassberg also tried to get Gilman to say that he shared with other investors some of the drug trial details he said he passed only to Martoma.
“To my knowledge, Mathew Martoma is the only person to whom I gave away information on a regular, systematic basis,” Gilman testified.
At the end of the day, under questioning by Assistant U.S. Attorney Arlo Devlin-Brown, Gilman testified that Martoma had reminded him of his son, who committed suicide. Gilman told jurors that he’s no longer welcome on the campus of the University of Michigan, where he worked for 35 years before he was forced to resign over his role in the Martoma case.
“I’d given a great deal to that university and I’m suddenly ending my career in disgrace,” Gilman said.
Lawyers for both sides told U.S. District Judge Paul Gardephe they expect the presentation of evidence in the case will be finished next week.
Outside the presence of the jury yesterday morning, Devlin-Brown called Gardephe’s attention to an error made in the live transcript of yesterday’s trial session. According to Devlin-Brown, the transcript quoted Gilman testifying about the requirements of his non-prosecution agreement with the government: “I must not tell the truth at all times.” Gilman’s actual testimony was, “I must tell the truth at all times.”
The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).