CORRECTED-US judge gives onetime 'King of Biotech' 4 yrs in prison

Thu May 2, 2013 5:57pm EDT

(Corrects paragraph 3 to Thursday instead of Wednesday)

* Blech pleaded guilty in May 2012 to stock manipulation

* Also pleaded guilty in 1998 to similar charges

* Judge: "No mercy. This time, punishment."

By Nate Raymond

NEW YORK, May 2 (Reuters) - A once prominent biotechnology investor was handed four years in prison on Thursday after pleading guilty to stock manipulation, the second time he has run afoul of U.S. securities laws.

David Blech, 57, pleaded guilty in May 2012 to securities fraud charges stemming from improper trades in biopharmaceutical companies Pluristem Therapeutics Inc and Intellect Neurosciences Inc.

Blech pleaded guilty in 1998 to similar charges of illegal trading, getting five years of probation rather than jail time. On Thursday, U.S. District Judge Colleen McMahon in Manhattan expressed anger at his repeat offense and rejected his lawyer's request for leniency.

"No, not this time," McMahon said. "No mercy. This time, punishment."

Blech was once dubbed the "King of Biotech" as a founder of companies and a major investor in the biotechnology sector.

The latest case stemmed from his sale of 50 million shares of Pluristem over several months in 2007. Rather than just selling the stock, he used several accounts held in other people's names to buy another 100 million shares and sell 150 million shares, the government said in court papers.

The result was that Blech was able to sell the 50 million shares for $1.2 million while propping up the price of Pluristem, which is lightly traded on the Over the Counter Bulletin Board, prosecutors said.

Blech committed a similar fraud in 2008, prosecutors said, when he sold shares in Intellect Neurosciences, a company he co-founded.

He had faced a maximum 40 years in prison. Prosecutors had sought 41 to 51 months in prison.

McMahon also ordered Blech to forfeit almost $1.34 million and sentenced him to a maximum three years of supervision after his jail term.

"I am ashamed to again be before a court pleading for its mercy," Blech said.

Blech still faces a separate civil lawsuit by the U.S. Securities and Exchange Commission related to the case.

The case is USA v David Blech, U.S. District Court, Southern District of New York, No. 12-cr-00372. (Editing by Matthew Lewis)

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