2 Dutchess Men Among 10 Accused Of Insider Trading

DUTCHESS COUNTY, NY — The federal government accused four men, including two Dutchess County residents, of engaging in an insider trading scheme that involved the acquisition of a pharmaceutical company.

The four were charged as part of four separate insider trading cases against 10 people and were announced Thursday by Damian Williams, the United States attorney for the Southern District of New York.

The cases involved trading based on confidential information misappropriated from a variety of industries.

Williams said his office is working to investigate and prosecute anyone who corrupts the financial markets.

“Insider trading is not a quick buck. It’s not easy money. It’s not a sure thing,” he said. “It’s cheating. It’s a bad bet. It’s a ticket to prison.

“Because my office, the Southern District of New York, is watching,” Williams said.

Prosecutors said, in 2020, Joseph Dupont, Shawn Cronin, Slava Kaplan, aka “Stanley Kaplan” and Paul Feldman engaged in an insider trading scheme surrounding the announcement of one pharmaceutical company’s acquisition of another.

Cronin, 43, of Dighton, Massachusetts; Kaplan, 45, of Hopewell Junction, and Feldman, 48, of Poughquag, collectively made more than $2.2 million in illegal profits by trading stocks and options based on material, non-public information that Dupont, 44, of Rehoboth, Massachusetts, misappropriated from his employer.

Dupont was a vice president at Alexion Pharmaceuticals Inc., and on Jan. 31, 2002, was informed of the company’s upcoming acquisition of Portola Pharmaceuticals Inc.

Before that acquisition was publicly announced, in April 2020, Dupont provided information about the acquisition to his childhood friend Cronin.

Not only were Cronin and Dupont friends, but Cronin — who, at the time, was a sergeant in the Dighton, Massachusetts, police department and later served as police chief — supervised Dupont in his capacity as a reserve officer in that police department.

Based on the information that Dupont gave Cronin, Cronin bought shares of Portola stock as well as out-of-the-money call options for Portola stock.

In turn, Cronini shared the information about the pending acquisition with Jarett Mendoza, another childhood friend of both Cronin’s and Dupont’s. Cronin assisted Mendoza in purchasing Portola stock in the days before the acquisition was publicly announced.

Not only did Cronin share information about Portola’s acquisition with Mendoza, but also with his friend Kaplan, who was also known to Dupont. The objective was to share the information with Kaplan so he could not only trade in advance of the acquisition but also assist Cronin in formulating trading strategies, prosecutors said.

Kaplan, in turn, shared information with, among others, Feldman, who was a friend and colleague. Prosecutors said Feldman aggressively bought Portola call options.

Feldman also shared information about the acquisition with others, including a work colleague, according to law enforcement.

The acquisition was publicly announced May 5, 2020, and Portola’s stock increased significantly in value. Cronin, Kaplan, Feldman and the others they tipped off sold their shares of Portola and call options for Portola stock, reaping millions of dollars of illegally obtained trading profits.

Kaplan and Feldman were arrested Thursday. Dupont and Cronin surrendered to authorities Thursday.

Kaplan was charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years.

Feldman was charged with six counts of securities fraud under Title 15 and six counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years.

Dupont was charged with one count of Title 15 securities fraud and one count of tender offer fraud and one count of securities fraud under Title 18.

Cronin was charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, one count of securities fraud under Title 18 and one count of conspiracy to commit securities fraud and tender offer fraud.

Also unsealed Thursday were charges against Mendoza, who pleaded guilty pursuant to a cooperation agreement.

For information about the other cases and charges, go here.