(Adds comment from defense attorney, 10th paragraph)
By Jonathan Stempel
April 9 Two New Jersey men who were the main
traders in an insider trading ring that focused on
pharmaceutical and medical technology stocks and generated $1.48
million of illegal profit were sentenced to prison on Wednesday,
U.S. Attorney Paul Fishman in New Jersey said.
Lawrence Grum, 50, was sentenced to one year and one day in
prison, while his high school classmate Michael Castelli, also
50, received nine months.
Both men were sentenced by U.S. District Judge Katharine
Hayden in Newark, New Jersey. Prosecutors had sought prison
terms of roughly three to four years, as recommended under
federal guidelines, for the defendants.
Grum, of Livingston, New Jersey, had pleaded guilty to four
counts of securities fraud and two counts of conspiracy.
Castelli, of Morris Plains, New Jersey, had pleaded guilty to
five counts of securities fraud and two counts of conspiracy.
All six people charged in the scheme have pleaded guilty.
Investigators said the scheme ran from 2007 to 2012 and
involved trades ahead of quarterly earnings results,
acquisitions and other news from companies including Celgene
Corp, Sanofi SA and Stryker Corp.
According to prosecutors, Grum and Castelli made numerous
profitable trades based on tips from insiders or middlemen, and
tried to conceal their tracks by compiling binders of market
research to suggest an independent basis for their trades.
The men were accused of trading on tips from Mark Cupo, then
a Sanofi executive, who in turn obtained some tips from John
Lazorchak, then Celgene's director of financial reporting.
Lazorchak, meanwhile, also got tips from Mark Foldy, then a
Stryker executive, prosecutors said.
"We were gratified that our client got a substantial
reduction from the recommended guideline sentence," Scott
Resnik, a partner at Katten Muchin Rosenman who represents Grum,
said in an interview. "It reflects his exceptional steps to take
responsibility, his lifetime of good work and charitable deeds,
and his agreement to disgorge his trading profits."
Daniel Stein, a partner at Richards Kibbe & Orbe who
represents Castelli, did not immediately respond to requests for
Cupo, 53, of Morris Plains; Foldy, 44, also of Morris
Plains; Lazorchak, 43, of Long Valley, New Jersey; and Michael
Pendolino, 44, a chiropractor from Nashua, New Hampshire,
pleaded guilty to involvement in the scheme in October. They
The cases are in the U.S. District Court, District of New
Jersey. They are U.S. v. Grum, No. 13-00737; and U.S. v.
Castelli, No. 13-00738.
(Reporting by Jonathan Stempel in New York; Editing by Jonathan