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In
a 2-1 decision, the 2nd U.S. Circuit Court of Appeals in
Manhattan dismissed fraud and theft charges against former
Deerfield Management Co partners Theodore Huber and Robert Olan,
former U.S. Centers for Medicare and Medicaid Services (CMS)
employee Christopher Worrall, and David Blaszczak, the founder
of political consulting firm Precipio Health Strategies.
The court agreed with prosecutors that the May 2018 convictions
could not stand after a 2020 Supreme Court ruling that clarified
when alleged misuse of property triggered federal fraud laws.
It also set aside conspiracy convictions against Blaszczak,
Huber and Olan and ordered further proceedings, saying it was
unclear whether jurors convicted them for conduct that the
government no longer considered criminal. The case against
Worrall was dismissed entirely.
A spokesman for U.S. Attorney Damian Williams in Manhattan
declined to comment.
Prosecutors said that in a scheme that ran from 2012 to 2014,
Worrall tipped Blaszczak about upcoming CMS decisions, including
plans to lower reimbursements for radiation cancer treatment and
kidney dialysis.
They said Blaszczak passed the information to Huber and Olan,
who used it to make $7 million by trading healthcare stocks.
The appeals court upheld the defendants' convictions in 2019,
but the Supreme Court ordered a reconsideration after ruling in
the so-called "Bridgegate" case.
In that case, the Supreme Court overturned two defendants' wire
fraud convictions for closing access lanes to the George
Washington Bridge in Fort Lee, New Jersey, to punish that city's
Democratic mayor for refusing to support Republican Governor
Chris Christie's reelection.
The court said the alleged scheme did not aim to obtain
"property" within the meaning of the underlying fraud statute.
Citing that ruling, the 2nd Circuit said the leaked CMS
information was not that agency's "property" or a "thing of
value" to support the fraud and theft claims.
Olan's lawyer Eugene Ingoglia said he looked forward to his
client's "full exoneration" at a new trial, and Worrall's lawyer
Daniel Sullivan said "we are gratified that the cloud of
conviction has been lifted." Lawyers for Blaszczak and Huber did
not immediately respond to requests for comment.
The case is U.S. v. Blaszczak et al, 2nd U.S. Circuit Court of
Appeals, Nos. 18-2811, 18-2825, 18-2867 and 18-2878.
(Reporting by Jody Godoy and Jonathan Stempel in New York,
Editing by Rosalba O'Brien)
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