Ex-Sanofi Executive Gets 16 Months for Insider TradingDavid Voreacos
A former Sanofi executive who cooperated with prosecutors was sentenced to 16 months in prison by a judge who called him a leader of an insider-trading ring that made $1.4 million in profit off pharmaceutical and medical-technology company tips.
Mark Cupo, 53, was sentenced yesterday in federal court in Newark, New Jersey, to a longer term than the two men he helped convict. Cupo pleaded guilty Oct. 7 after making secret recordings for authorities of the two primary traders in the ring, Lawrence Grum, 50, who was sentenced April 9 to a year and a day in prison, and Michael Castelli, 50, who got nine months.
Cupo, who faced from 46 to 57 months in prison, asked for probation, citing his help to authorities in unraveling a five-year scheme that relied on tips from executives at Celgene Corp., Sanofi and Stryker Corp. The judge said Cupo and a former Celgene executive who pleaded guilty, John Lazorchak, were the primary architects of the scheme. Lazorchak will be sentenced April 22.
“To have deterrence in a situation like this, I believe a prison sentence is required,” U.S. District Judge Katharine Hayden said at the sentencing. “Mr. Cupo and Mr. Lazorchak are the most culpable because they dreamed up the scheme. Both were involved in the decision to include outside people.”
Lazorchak, a former Celgene director of financial reporting, passed inside information from his company to Cupo, who gave it to Grum and Castelli, prosecutors said.
Lazorchak also got tips from Mark Foldy, 44, a former Stryker executive who was sentenced yesterday to six months’ home confinement. Foldy, who also cooperated, faced 30 to 37 months in prison.
The ring, which operated from 2007 to 2012, involved two sets of high school friends and Cupo making secret recordings for the Federal Bureau of Investigation, authorities said.
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.
The tips also involved six quarterly earnings reports by Celgene and the company’s announcement in June that it was withdrawing an application in Europe for expanded use of its blood cancer drug Revlimid, according to the government.
Cupo made more than $50,000 in cash through the scheme, Assistant U.S. Attorney Shirley Emehelu said.
“I take full responsibility for all my actions,” Cupo told the judge. “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.”
Cupo is likely to lose his certified public accountant’s license and will be barred by the SEC from working at a public company, according to his attorney, Joseph J. Bell. Cupo also will settle the SEC’s claims against him, according to Bell.
Foldy, a high school classmate of Lazorchak, was involved in two insider trades. He told Lazorchak of Stryker’s plans to buy Orthovita, and Lazorchak told him about Celgene’s planned acquisition of Pharmion, authorities said. Foldy, a graduate of the U.S. Naval Academy, passed inside information to a family member and a friend.
The judge said that while his conduct was “immensely stupid and painful in its consequences,” it was also “relatively isolated.”
She imposed a two-year probationary term, including the home confinement with electronic monitoring.
“Probably not an hour goes by that I don’t regret what I did,” Foldy told the judge. “Stryker didn’t deserve it. My family didn’t deserve it. It was wrong and I know it.”
The cases are U.S. v. Grum, 13-cr-00737, U.S. v. Castelli, U.S. v. Lazorchak, 13-cr-00656, U.S. v. Pendolino, 13-cr-00657, U.S. v. Cupo, 13-cr-00658, and U.S. v. Foldy, 13-cr-00659, U.S. District Court, District of New Jersey (Newark).