|
|
Friday, June 30, 2023
VCJC News & Notes 6/30/23
NYC PUBLIC ADVOCATE'S RESPONSE TO THE SUPREME COURT RULING AGAINST AFFIRMATIVE ACTION IN COLLEGE ADMISSIONS
"With this ruling, the Supreme Court has chosen to ignore our nation’s history and jeopardize our youth’s future. The decision was entirely expected from this conservative court, but still extremely hard to hear, and to reckon with its implications on the fight for racial equity, diversity, and justice. The march forward on these issues has been painfully slow, but largely forward– now the court is pulling us back, creating the conditions for young people of more color today to have less opportunities than the generation before them. Students with a legacy of systemic privilege or power may see its benefits, students confronting a legacy of systemic racism and discrimination will see only barriers.
"In her dissent, Justice Sotomayor wrote that ‘Ignoring race will not equalize a society that is racially unequal… Equality requires acknowledgment of inequality.’ It’s clear that conservatives want to ignore race when it is convenient to do so, and ignore reality when it is inconvenient to their philosophy and policy goals. While Republican lawmakers attempt to remove our history of racial injustice from the classroom, conservative justices are trying to remove racial equity from classrooms altogether."
MAYOR ADAMS’ STATEMENT ON AFFIRMATIVE ACTION SUPREME COURT DECISION
New York City Mayor Eric Adams today released the following statement after the U.S. Supreme Court today issued a decision in the case Students for Fair Admissions, Inc. v. President and Fellows of Harvard College:
“Once again, a highly partisan Supreme Court is overturning decades of precedent in order to advance a purely political agenda. This decision will not only hurt historically disadvantaged communities, it will make many of our educational institutions less diverse, and perpetuate social, racial, and economic inequity. This is a loss for all New Yorkers, and all Americans, but as this country’s largest and most diverse city, New York will not be deterred. We will continue to celebrate and advance our city’s rich diversity and abide by the words of New York’s own Justice Sonia Sotomayor: ‘Society’s progress toward equality cannot be permanently halted…The pursuit of racial diversity will go on.’”
Attorney General Merrick B. Garland Statement on Supreme Court’s Ruling in Students for Fair Admissions Inc. (SFFA) v. President and Fellows of Harvard College and SFFA v. University of North Carolina
The Justice Department issued the following statement from Attorney General Merrick B. Garland in response to the Supreme Court’s decision in two cases — Students for Fair Admissions Inc. (SFFA) v. President and Fellows of Harvard College and SFFA v. University of North Carolina:
“The Supreme Court’s decision undercuts efforts by universities across the country to create a diverse group of graduates prepared to lead in an increasingly diverse nation. It will significantly set back efforts to advance educational opportunity for all Americans. And it upends nearly 50 years of precedent.
“The Department of Justice remains committed to promoting student diversity in higher education using all available legal tools. In the coming weeks, we will work with the Department of Education to provide resources to college and universities on what admissions practices and programs remain lawful following the Court’s decision.”
Thursday, June 29, 2023
BRONX MAN SENTENCED TO 6 YEARS IN PRISON FOR FIRST-DEGREE BURGLARY FOR BREAKING INTO BUILDING AFTER BLOODY FIGHT
Defendant Was Convicted After Jury Trial
Bronx District Attorney Darcel D. Clark today announced that defendant Pedro Hernandez has been sentenced to six years in prison after a jury found him guilty of first-degree Burglary and third-degree Criminal Mischief for breaking open a Bronx building door as he and his friends chased two men they had been fighting with in 2019.
District Attorney Clark said, “The defendant, Pedro Hernandez, has been sentenced to six years in prison for breaking into a building after he and his friends chased two men after a fight. He then tried to break into an apartment in which the victims had sought refuge. The 911 calls from people in the building that were presented in the trial showed the fear and desperation of the victims and building occupants. The terrorizing of innocent Bronx people will not be tolerated.”
District Attorney Clark said Pedro Hernandez, 23, of East 168th Street, Bronx, was sentenced today by Bronx Supreme Court Justice Beth Beller to six years in prison and five years’ post-release supervision for his first-degree Burglary conviction, and one to three years for third degree Criminal Mischief, to run concurrently. He was found guilty of the charges by a jury on April 21, 2023, after an eight-week trial.
According to the investigation, on April 7, 2019 at 7:30 a.m., the defendant and his friends got into a melee with two youths in front of 2177 Quimby Avenue. The defendant and his friends chased the victims into a building. The defendant is seen on video kicking the front door of the building while his friends are also kicking it and hitting it with the bat. When they broke the door in, the defendant and his friends ran upstairs and attempted unsuccessfully to break down the door to an apartment where the victims were seeking safety.
District Attorney Clark thanked NYPD Police Officer Naeem Shahid and Sergeant Luis Cardenas of the 43rd Precinct, and NYC Department of Correction Investigator Walter Holmes for their work in the investigation.
NYC PUBLIC ADVOCATE'S RESPONSE TO THE BUDGET HANDSHAKE AGREEMENT
"The budget agreement announced today thankfully prevents many of the highest-profile cuts to city services that New Yorkers rely on. I thank the Council and community for their advocacy. and the mayor for agreeing to this funding. Unfortunately, a necessary focus on restoring cuts meant that many new and necessary investments were not able to be made. Maintaining public school funding and supporting libraries should be a given, but so should strengthening and expanding services to meet the moment and the needs of the most vulnerable New Yorkers.
"I am glad to see investment in areas such as gun violence prevention through the Crisis Management System, yet we need new programming that builds on its successes. Increased funding for Fair Fares is in this budget, but not approaching what is needed. Securing funding for affordable housing is a significant victory, but it comes against a backdrop of a vetoing legislation to help get New Yorkers into that housing. Investments in a mental health continuum, in support services through Community Schools, are important ways to support the health, safety, and well-being of New Yorkers. Cutting funding from restorative programming on Rikers or homeless service providers will do the opposite.
"As I have said many times – investment, not austerity, is the most effective means of meeting the compounding crises our city faces, and we just cannot point to our challenges as a reason to prevent investment. While it is abundantly clear that federal funding is needed to help support those seeking asylum in our city, our newest New Yorkers are not a sanction or a scapegoat for not investing in services that will uplift all people and communities across the five boroughs. This is made even more frustrating by the administration’s opposition to common sense revenue raising measures from the wealthiest New Yorkers, not the working class, which could help fund these services.
"Preventing cuts, while critical, only maintains a status quo that does not adequately address the challenges facing so many New Yorkers, rather than moving forward. Beyond these negotiations, beyond the budget adoption, we have to continue to push for progressive investments that are smart, sustainable, and best serve our city."
MAYOR ADAMS AND SPEAKER ADAMS REACH HANDSHAKE AGREEMENT FOR RESPONSIBLE AND ON-TIME FISCAL YEAR 2024 BUDGET
Approximately $107 Billion Budget is Balanced and Makes Needed Investments in Future of New York City for Students, Seniors, and Working-Class New Yorkers
Adopted Budget Maintains Near-Record $8 Billion in Total Reserves
Mayor Adams and City Council Worked Collaboratively to Restore Funding to Libraries and Continue to Fund Cultural Institutions
Each Public School to Retain Initial FY23 Funding Levels Even if Enrollment Declined
New York City Mayor Eric Adams, New York City Council Speaker Adrienne Adams, Council Finance Chair Justin Brannan, and members of the City Council today announced an agreement for an on-time, balanced, and fiscally-responsible approximately $107 billion Adopted Budget for Fiscal Year 2024 (FY24). Despite facing strong headwinds, the budget makes upstream investments in working people and keeps New York safe and clean while contributing to the city’s robust savings program.
“The agreement we reached today comes in the midst of a budget cycle dominated by great challenges and unexpected crises, but I am proud to say that we have successfully navigated through these many crosscurrents to arrive at a strong and fiscally responsible budget,” said Mayor Adams. “Our mission is not to simply save money — it is to set priorities, which include fair labor contracts for our unions, funding for education, the arts, and our libraries, and support for New Yorkers in the greatest need. I thank Speaker Adams, Council Finance Chair Brannan, and the entire Council for their partnership through this process.”
“The Council’s focus in this budget has been to protect the essential services that the people of this city rely on to be healthy, safe, and successful,” said City Council Speaker Adams. “We took seriously our task to negotiate the best possible outcomes and deliver results for the people of our city. Through difficult negotiations, the Council worked to bridge the distance between us and the administration, fighting to restore investments in essential services and funding many programs that we know our families, communities, and city need. Though we have come to a budget agreement today, the Council knows we must continue to push forward in our year-long budgetary, legislative, and oversight efforts to secure the investments that New Yorkers deserve.”
The agreement on the $107 billion budget includes increased funding for youth jobs and apprenticeships and innovative educational programming for public school students. As part of the budget agreement, the city is expanding access to Fair Fares discounted MetroCards, providing more meals for seniors and low-income New Yorkers, and extending the hours for many vacant early childhood education seats, so working families can more easily enroll their children. Additionally, the budget takes advantage of higher-than-anticipated revenues to restore and provide additional funding for libraries and cultural institutions, which will both be funded at a higher level in FY24 than they were a year ago in the FY23 Adopted Budget, even before including City Council discretionary additions. Further, no New York City Department of Education (DOE) public school will have an initial budget lower than their initial budget last year, even if their student population has declined.
The Adopted Budget was crafted in the midst of an ongoing asylum seeker crisis that is currently projected to cost the city $4.35 billion over Fiscal Years 2023 and 2024 –– with $2.9 billion in estimated spending over FY24 alone. Though New York City continues the longstanding tradition of helping immigrants, the city has –– virtually on its own –– cared for more than 81,000 migrants since last spring, and has, thus far, received inadequate federal and state assistance. For this reason, at adoption, the city must add $465 million in FY24 to make up for less-than-expected federal asylum seeker aid.
The administration was able to balance the budget in adoption despite substantial challenges by controlling new agency spending and through a higher-than-anticipated increase in the city’s revenue of $2.1 billion in FY23, driven by continued strength in the local economy –– though tax revenue growth is still expected to slow in coming years. These additional resources were used to pay for agency needs, meet increased asylum seeker costs, and fund City Council discretionary spending and shared Adams administration/Council priorities.
Throughout this budget cycle, the administration has made tough choices that reflect an ongoing commitment to strong fiscal management, including by making government more efficient through budget savings and by maintaining robust reserves.
Since last June, the Adams administration has achieved gap-closing savings of more than $4.7 billion over Fiscal Years 2023 and 2024, which include less-than-anticipated agency spending of $72 million in FY23 and debt service saving of $137 million in FY23 and FY24 recognized in this plan. These savings were achieved without reducing funding to programs or services, laying off a single employee, or cutting school or classrooms budgets.
The FY24 Adopted Budget maintains a near-record $8.0 billion in reserves, which includes $1.2 billion in the General Reserve, $2.0 billion in the Rainy Day Fund, $4.58 billion in the Retiree Health Benefits Trust, and $250 million in the Capital Stabilization Reserve.
Investment Highlights of the FY24 Adopted Budget Include:
Keeping New York City Safe and Clean:
- Funding to expand Supervised Release services and pilot an “Intensive Case Management” model to provide stronger support for recidivists ($36.8 million).
- Continuing the increased frequency of litter basket pickups citywide ($22 million).
- Funding the New York City Department of Sanitation’s highway cleaning program, which includes a focus on cleaning highways, medians, and road shoulders citywide ($9.6 million).
- Increasing funding for the CleaNYC program, which cleans streets and sidewalks in targeted corridors ($3 million).
- Expanding neighborhood-based community navigators in Gun Violence Prevention Task Force districts ($1.9 million).
- Investing in technology to conduct a community sentiment analysis that will reach residents in an equitable and inclusive manner in order to evaluate the effectiveness of gun violence prevention interventions and deliver inclusive community-informed solutions to gun violence ($850,000).
Supporting Libraries and Cultural Institutions:
- Providing funding for Cultural Institutions Group and Cultural Development Fund recipients ($40 million).
- Adding funding for the public library systems ($36 million).
Lifting Youth and Working Families:
- Providing workforce enhancement to support wage increases for contracted human services providers ($40 million, growing to $90 million in FY25).
- Increasing annual funding for the Right to Counsel program ($36.6 million in FY24 and $30.6 million annually thereafter).
- Adding 5,000 slots to “Work, Learn & Grow” to provide Summer Youth Employment Program (SYEP) participants with school year employment ($22.5 million).
- Increasing baseline funding for Fair Fares to expand eligibility ($20 million, bringing baselined funding to $95 million).
- Funding 600 PromiseNYC child care slots for undocumented children and their families ($16 million).
- Converting almost 1,900 vacant, standard early childhood education seats into extended day seats, so they can be more effectively utilized by working families ($15 million).
- Helping City University of New York (CUNY) students overcome barriers and complete their degrees by adding funding for the Accelerate, Complete, Engage and Accelerated Study in Associate Programs ($14.1 million).
- Continuing support for Community Schools, a vital resource that supports the whole child in and out of the classroom, including providing school-based health services, and the child’s family with adult education classes and access to social services ($14 million).
- Providing free MetroCards for SYEP participants this summer ($11 million).
- Adding 400 slots to New York City Department of Youth and Community Development’s year-round youth workforce programs for out of school, out of work youth — bringing total capacity to 1,739 slots ($6.6 million).
- Continuing funding for DOE’s Immigrant Family Engagement program, which helps parents, who either do not speak English or are outside the nine standard translated languages, communicate with schools about their children’s education ($4 million).
- Providing New Yorkers experiencing food insecurity with access to an online marketplace for local grocery stores through the “Groceries to Go” program ($5.6 million).
- Increasing the reimbursement rate for home-delivered meals for seniors ($4.5 million).
- Funding for existing CUNY programs, like “College Now,” “CUNY Explorers,” and “Career Launch” ($5 million).
- Providing funding for K-12 arts education ($4 million).
- Helping to connect New Yorkers to apprenticeships, improve the city’s workforce development system, and establish a new community hiring program as authorized by recently passed state legislation ($2.7 million).
- Increasing funding for housing navigators to connect runaway and homeless youth to safe housing ($1.6 million).
Improving Health and Safety:
- Supporting swimming education in neighborhoods without access to public pools by funding 70 full- and part-time aquatic specialists, five recreation supervisors, 30 lifeguards, equipment, pool rentals, and access to DOE pools ($5.3 million).
- Continuing the investment in the Mental Health Continuum as part of the Adams administration’s Mental Health Agenda ($5 million).
- Investing in trauma recovery centers to support the recovery of underserved crime victims and stop cycles of violence ($2.4 million).
U.S. Attorney Announces Charges In Four Separate Insider Trading Cases Against 10 Individuals, Including Drug Company Employees, Investment Firm Executive Director, And SPAC Investors
Pfizer Employee and Associate Charged with Insider Trading Based on Non-Public Drug Trial Results for COVID-19 Treatment
Investment Firm Executive Director Charged with Insider Trading Based on Information Stolen from a Major Investment Bank
SPAC Investors Charged with Insider Trading by Exploiting Their Privileged Access to Information to Engage in Illegal Open Market Trades
Network of Individuals, Including Police Chief, Charged with Insider Trading Based on Inside Information About an Impending Merger
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced charges in four separate insider trading cases, collectively charging 10 defendants with securities fraud and other related charges. These cases involve trading based on confidential information misappropriated from entities and individuals in a variety of industries and reflect the U.S. Attorney’s Office for the Southern District of New York’s broad investigative reach and continued resolve to root out corruption in our financial markets. The defendants in these cases collectively generated more than $30 million dollars from illegal securities trading based on material, non-public information (“MNPI”) that was stolen from numerous sources.
FBI Assistant Director in Charge Michael J. Driscoll said: “The charges announced today center on the defendants’ alleged participation in illegal securities trading based on material, non-public information. Insider trading schemes not only yield ill-gotten gains for those directly involved but also damage the public’s faith in the fairness of our financial markets. Today’s announcement serves as a reminder to anyone attempting to tilt the balance in their direction using insider trading, investigating this illegal behavior is a top priority of the FBI.”
According to the allegations contained in the Indictments filed in federal court and other publicly available information:[1]
United States v. Amit Dagar and Atul Bhiwapurkar
In or about November 2021, AMIT DAGAR and ATUL BHIWAPURKAR participated in an insider trading scheme to reap illicit profits from options trading based on inside information about the results of clinical trials of Paxlovid, a medicine used to treat COVID-19. DAGAR was an employee of Pfizer Inc. (“Pfizer”) and assisted in managing the data analysis in certain clinical drug trials.
On or about November 4, 2021, DAGAR learned that a Pfizer trial of the drug Paxlovid, a medicine designed to treat mild to severe COVID‑19 infection, had produced positive results. The results were confidential and meant to remain so until Pfizer publicized them on or about November 5, 2021.
Later that same day, and while those results remained confidential, DAGAR purchased short-dated, out-of-the-money call options in Pfizer stock. DAGAR also tipped his close friend, ATUL BHIWAPURKAR, about the coming drug results and BHIWAPURKAR also purchased short-dated, out-of-the-money Pfizer call options that expired approximately two weeks later. BHIWAPURKAR also tipped another friend (“Individual-1”), who similarly purchased short-dated, out-of-the-money Pfizer call options that expired approximately three weeks later.
The next day, on or about November 5, 2021, and before the market opened, Pfizer publicly released results of its Paxlovid study. That same day, following the publication of the positive results, Pfizer’s stock price increased substantially, opening — and eventually closing — more than 10% higher than the prior day’s closing price. In the coming weeks, DAGAR, BHIWAPURKAR, and Individual-1 sold their Pfizer call options at significant profits, totaling approximately more than $350,000.
DAGAR, 44, of Hillsborough, New Jersey, who was arrested this morning, has been charged with four counts of securities fraud, each of which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.
BHIWAPURKAR, 45, of Milpitas, California, who was arrested this morning, has been charged with two counts of securities fraud, each of which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.
United States v. Jordan Meadow
From at least in or about March 2021 through in or about May 2022, JORDAN MEADOW, a registered broker at a brokerage firm based in New York, New York, used inside information stolen from a major investment bank in New York City (“the Investment Bank”) to make millions of dollars in illegal profits trading stock on behalf of himself and his clients. In or about late 2020, MEADOW offered and agreed to provide items of value, such as Rolex watches, to a friend, Steven Teixeira, in exchange MNPI that Teixeira obtained by secretly accessing confidential work documents on a personal laptop computer (the “Laptop”) belonging to Teixeira’s then-girlfriend, an executive assistant at the Investment Bank. The documents on the Laptop contained MNPI about planned corporate acquisitions in which the Investment Bank served as an advisor.
In or around late July 2021, Teixeira secretly accessed confidential work information on the Laptop and learned that in less than a week, Penn National Gaming, Inc. (“Penn National”), was going to acquire Score Media and Gaming Inc. (“Score”), a Canadian digital media company, for approximately $2.2 billion. Teixeira shared this MNPI with a friend, who in turn shared it with MEADOW. MEADOW then purchased more than 769 call option contracts in Score between August 2, 2021, and August 3, 2021, based on the MNPI and also advised a colleague at the brokerage firm where he worked, their clients, and a friend to purchase Score securities. After Penn National’s acquisition of Score was announced publicly on August 5, 2021, MEADOW, his colleague, their clients at the brokerage firm, and MEADOW’s friend sold their holdings in Score for a combined profit exceeding $5 million.
Later, in or around early March 2022, Teixeira secretly accessed confidential work information on his then-girlfriend’s laptop and learned about a planned corporate acquisition of VMWare, an enterprise software company, for approximately $65 billion. Teixeira shared this MNPI with his friend, who in turn shared it with MEADOW. MEADOW purchased over 5,000 shares of VMWare stock, as well as call options contracts in VMWare, between May 9, 2022, and May 18, 2022, and advised his colleague at the brokerage firm to purchase VMWare securities. After there was public reporting that Broadcom was in talks to acquire VMWare, the VMWare holdings of MEADOW and his colleague increased significantly, and they began to sell their VMWare holdings for a combined profit exceeding $100,000.
MEADOW, 34, of Warren, New Jersey, who was arrested this morning, has been charged with six counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.
Also unsealed today were charges against Steven Teixeira, who has pled guilty pursuant to a cooperation agreement.
United States v. Michael Shvartsman, Gerald Shvartsman, and Bruce Garelick
In October 2021, MICHAEL SHVARTSMAN, GERALD SHVARTSMAN, and BRUCE GARELICK together made more than $22 million dollars in illegal profits by trading in securities of Digital World Acquisition Corporation (“DWAC”) based on MNPI about DWAC’s planned but not yet public business combination with a media company founded by former President Donald J. Trump.
As sophisticated investors, MICHAEL SHVARTSMAN, GERALD SHVARTSMAN, and BRUCE GARELICK were invited to invest in DWAC and another special purpose acquisition company (“SPAC”), and after signing non-disclosure agreements, they were provided confidential information about the SPACs, including that a potential target of the SPACs was Trump Media & Technology Group (“Trump Media”). As a condition of receiving this information, the defendants were prohibited by the non-disclosure agreements from disclosing the confidential information they learned or using it to buy and sell securities on the open market. After making initial investments into DWAC through the initial public offering process, GARELICK was given a seat on DWAC’s board of directors, which gave him access to valuable MNPI about DWAC’s plans to merge with Trump Media. After learning MNPI through his role on DWAC’s board, GARELICK provided updates to his alleged co-conspirators — which he called “intelligence” — about the status of the merger negotiations and the timing of a public merger announcement.
In violation of the non-disclosure agreements that they had signed, and in contravention of GARELICK’s duties and responsibilities as a board member, the defendants bought millions of dollars of DWAC securities on the open market before the news of the Trump Media business combination was public. In addition to their own purchases, the defendants also passed DWAC’s confidential information to their friends on a trip to Las Vegas, to MICHAEL SHVARTSMAN’s neighbors, and to GERALD SHVARTSMAN’s employees at a furniture supply store. After DWAC’s merger with Trump Media was announced publicly, the stock and warrant holdings of MICHAEL SHVARTSMAN, GERALD SHVARTSMAN, and BRUCE GARELICK, and those they tipped, significantly increased in value. The defendants and the individuals they tipped then sold their DWAC securities for a significant profit.
MICHAEL SHVARTSMAN, 52, of Sunny Isles Beach, Florida, who was arrested this morning, has been charged with five counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.
GERALD SHVARTSMAN, 45, of Aventura, Florida, who was arrested this morning, has been charged with three counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.
BRUCE GARELICK, 53, of Fort Lauderdale, Florida, who was arrested this morning, has been charged with five counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.
United States v. Joseph Dupont, Shawn Cronin, Slava Kaplan, and Paul Feldman
In 2020, JOSEPH DUPONT, SHAWN CRONIN, SLAVA KAPLAN, a/k/a “Stanley Kaplan,” and PAUL FELDMAN engaged in an insider trading scheme surrounding the announcement of one pharmaceutical company’s acquisition of another. CRONIN, KAPLAN, and FELDMAN collectively made more than $2.2 million dollars in illegal profits by trading in stocks and options based on MNPI that DUPONT misappropriated from his employer.
DUPONT was a vice president at Alexion Pharmaceuticals, Inc. (“Alexion”) and, on January 31, 2020, was informed of Alexion’s upcoming acquisition of Portola Pharmaceuticals, Inc. (“Portola”). Before that acquisition was publicly announced, in April 2020, DUPONT provided MNPI about the acquisition to his childhood friend, CRONIN. Not only were CRONIN and DUPONT childhood friends, but also CRONIN — who, at the time, was a sergeant in the police department of Dighton, Massachusetts, and later served as the chief of police — supervised DUPONT in DUPONT’s capacity as a reserve officer in that police department. Based on the MNPI that DUPONT provided CRONIN, CRONIN purchased shares of Portola stock as well as out-of-the-money call options for Portola stock.
In turn, CRONIN shared MNPI about Portola’s pending acquisition with Jarett Mendoza, another childhood friend of both CRONIN’s and DUPONT’s. CRONIN also assisted Mendoza in purchasing Portola stock in the days before the acquisition was publicly announced.
CRONIN shared MNPI about Portola’s pending acquisition not only with Mendoza, but also with KAPLAN, a friend of CRONIN’s, who was also known to DUPONT. CRONIN shared the MNPI with KAPLAN both so that KAPLAN could trade in advance of the acquisition and so that KAPLAN would assist CRONIN in formulating trading strategies to maximize CRONIN’s own insider trading profits. Based on the MNPI that CRONIN gave to KAPLAN, KAPLAN bought Portola shares and options.
KAPLAN, in turn, shared MNPI about the upcoming acquisition with, among others, FELDMAN, a friend and colleague of KAPLAN’s. Based on the MNPI that KAPLAN gave FELDMAN, FELDMAN aggressively bought Portola call options.
FELDMAN, for his part, shared MNPI about the Portola acquisition with others, including a work colleague.
Alexion’s acquisition of Portola was publicly announced on the morning of May 5, 2020. Portola’s stock increased significantly in value. CRONIN, KAPLAN, FELDMAN, and their tippees sold their shares of Portola and call options for Portola stock, reaping millions of dollars of illegally obtained trading profits.
DUPONT, 44, of Rehoboth, Massachusetts, who surrendered to authorities today, has been charged with one count of Title 15 securities fraud and one count of tender offer fraud, each of which carries a maximum sentence of 20 years in prison, and one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison.
CRONIN, 43, of Dighton, Massachusetts, who surrendered to authorities today, has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison;.
KAPLAN, 45, of Hopewell Junction, New York, who was arrested today, has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison.
FELDMAN, 48, of Poughquag, New York, who was arrested today, has been charged with six counts of securities fraud under Title 15 and six counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison.
Also unsealed today were charges against Jarett Mendoza, who has pled guilty pursuant to a cooperation agreement.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI’s New York and Philadelphia Field Offices. He also thanked the Miami Field Office of the U.S. Department of Homeland Security, Homeland Security Investigations, for its assistance in the investigation in United States v. Michael Shvartsman, Gerald Shvartsman, and Bruce Garelick. He further thanked the Securities and Exchange Commission for its cooperation and assistance across these investigations.
These cases are being handled by the Office’s Securities and Commodities Fraud Task Force. United States v. Dagar and Bhiwapurkar is in the charge of Assistant U.S. Attorney Alex Rossmiller. United States v. Meadow is in the charge of Assistant U.S. Attorney Nicholas Folly. United States v. Michael Shvartsman, Gerald Shvartsman, and Bruce Garelick is in the charge of Assistant U.S. Attorneys Elizabeth Hanft, Nicolas Roos, and Matthew Shahabian. United States v. Dupont, Cronin, Kaplan, and Feldman is in the charge of Assistant U.S. Attorneys Samuel P. Rothschild, Sarah Mortazavi, and Margaret Graham.
The charges contained in the Indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictments and the description of the Indictments set forth below constitute only allegations, and every fact described should be treated as an allegation.