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 Martoma, 39, built up contacts with doctors involved in a clinical
trial of an Alzheimer's drug, which paid off in a "dramatic way"
when one of them told him the final results, Assistant U.S. Attorney
Eugene Ingoglia said.
But Martoma's defense lawyer, Richard Strassberg, told jurors the
entire case came down to the unreliable testimony of a single doctor
who cooperated with the government in the hopes of avoiding prison.
Martoma, Strassberg added, was the victim of a "rush to judgment" by
investigators whose true target was Steven A. Cohen, the founder of
SAC Capital, who has not been criminally charged.
The competing arguments came at the close of a four-week trial over
what prosecutors call the most lucrative insider trading episode in
U.S. history.
The jury is expected to begin deliberating on Tuesday.
Martoma, who worked in SAC's CR Intrinsic Investors division, is
accused of using confidential information to trade the stocks of the
drug's developers, Elan Corp Plc and Wyeth, which is now owned by
Pfizer Inc.
Based on that information, SAC Capital made profit and avoided
losses of about $275 million, prosecutors say.
Ingoglia told a packed courtroom that Martoma had "corrupted" two
doctors involved in the trial, beginning in 2006.
After an earlier trial for an Alzheimer's drug developed by Elan had
been halted due to safety issues, "Martoma needed the equivalent of
a canary in the coal mine," Ingoglia said.
Martoma began speaking with Joel Ross, a clinical investigator on
the trial who oversaw patients at his clinic in Eatontown, New
Jersey.
Ross, 58, earned $1,500 an hour to speak with Martoma, Ingoglia
said. Ross also "very badly" wanted Martoma to help use his contacts
to bring business to his newest clinic, he said.
"He was going to return the favor or return the courtesy by giving
insider information to Mr. Martoma," Ingoglia said.
Ingoglia said Martoma received "an illegal sneak preview" in July
2008 of negative results of the drug trial from Sidney Gilman, then
a professor at the University of Michigan who chaired the drug
trial's safety monitoring committee.
SAC Capital then began selling off its $700 million position in Elan
and Wyeth before the data was made public later that month, Ingoglia
said.
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Most of the trading took place in accounts controlled by Cohen, who
was informed about the negative results by Martoma during a
20-minute telephone call, Ingoglia said.
Gilman, 81, testified under a nonprosecution agreement, as did Ross.
With Martoma's wife, Rosemary, nodding from her seat in the
courtroom's first row, Strassberg said Gilman's story was rife with
inconsistencies — a result of tailoring his story to the
government's case, rather than telling the jury what he actually
recalled.
"He's not telling you a story he remembers," Strassberg said of
Gilman, whose memory became an issue during the trial. "He's telling
you a story the prosecutors like, so he can get his deal."
Strassberg also referred to testimony by Gilman, who said an FBI
agent who approached him September 2011 called Martoma only a "grain
of sand" in a probe targeting Cohen.
Strassberg said prosecutors erred "in their haste to make a case
against someone who is not even in this courtroom: Mathew Martoma's
boss, Steven Cohen."
Cohen, 57, has not been charged and denies wrongdoing. The U.S.
Securities and Exchange Commission is seeking to bar him from the
financial services industry for failing to supervise Martoma and
another employee.
SAC Capital agreed last year to pay $1.8 billion in criminal and
civil settlements and plead guilty to fraud charges stemming from
insider trading by its employees.
The case is U.S. v. Martoma, U.S. District Court, Southern District
of New York, 12-cr-00973.
(Editing by Andre Grenon and Matthew
Lewis)
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