John Lazorchak, a former director of financial reporting at Celgene Corp. (CELG:US), pleaded guilty for his role in a health-care stock insider-trading ring that prosecutors said generated $1.48 million in illicit profit.
Lazorchak entered his plea yesterday in federal court in Newark, New Jersey, where he admitted that from September 2007 to July 2012 he passed inside tips about Celgene’s planned acquisitions, quarterly earnings and drug approval developments, according to court records.
He admitted giving the information to a former supervisor at Sanofi-Aventis, now known as Sanofi, where he previously worked, and to several high school friends. One friend, Michael Pendolino, a chiropractor from Nashua, New Hampshire, also pleaded guilty yesterday in Newark, court records show.
The health-care industry has been hard-hit by insider trading. Executives at Celgene, Sanofi (SAN) and Stryker Corp. (SYK:US) were among six charged Nov. 20. Before their arrest, at least 75 people had been sued by regulators or charged by prosecutors since 2008 for passing or getting insider-trading tips about pharmaceutical, biotechnology and other health-care stocks.
Lazorchak, who lives in Long Valley, New Jersey, pleaded guilty to conspiracy to commit securities fraud and insider trading and five counts of securities fraud. He faces as long as 20 years in prison on the securities fraud counts.
His attorney, Lawrence Lustberg, didn’t immediately return a call seeking comment on the case. Julissa Viana, a spokeswoman for Celgene, said Lazorchak no longer works for the company. Celgene, based in Summit, New Jersey, makes the Revlimid cancer drug.
Lazorchak admitted that the tips he passed included news on the outcome of Celgene’s application for European regulatory approval of expanded use of Revlimid, according to court records.
The tips also involved Celgene’s announcement in November 2007 that it was buying Pharmion Corp. for $2.9 billion and Celgene’s news in June 2010 that it was buying Abraxis BioScience Inc., also for $2.9 billion, the records show.
Pendolino, who pleaded guilty to conspiracy to commit securities fraud, admitted that he traded on the Pharmion tip and another conspirator’s tip ahead of Stryker’s announcement in May 2011 of plans to buy Orthovita Inc. for $316 million, according to court records.
He faces as long as five years in prison.
U.S. District Judge Katharine Hayden set sentencing for both men for Jan. 20. Pendolino’s attorney, James Friedman, declined to comment on the case.
The cases are U.S. v. Lazorchak, 2:13-cr-00656, and U.S. v. Pendolino, 2:13-cr-00657, U.S. District Court, District of New Jersey (Newark).
To contact the reporter on this story: David Voreacos in federal court in Newark, New Jersey, at email@example.com.
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org.