{"id":56766,"date":"2024-06-21T15:21:22","date_gmt":"2024-06-21T22:21:22","guid":{"rendered":"https:\/\/cjnotebook.com\/?p=56766"},"modified":"2024-06-21T15:21:22","modified_gmt":"2024-06-21T22:21:22","slug":"former-chairman-of-nevada-health-care-company-guilty-of-multimillion-dollar-insider-trading-scheme","status":"publish","type":"post","link":"https:\/\/cjnotebook.com\/?p=56766","title":{"rendered":"Former Chairman of Nevada Health Care Company Guilty of Multimillion-Dollar Insider Trading Scheme"},"content":{"rendered":"

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0LOS ANGELES\u00a0<\/strong><\/span><\/p>\n

\"Inside<\/p>\n

A federal jury on Friday found the former CEO and chairman of the board of directors of Ontrak Inc., a Henderson, Nevada-based publicly traded healthcare company, guilty of engaging in an insider trading scheme.<\/span><\/p>\n

Terren Scott Peizer used Rule 10b5-1 plans to avoid losses of more than $12.5 million.<\/span><\/p>\n

Peizer, 64, a resident of Puerto Rico and Santa Monica, was found guilty of one count of securities fraud and two counts of insider trading.<\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a0\u00a0<\/span> \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u201cWhen Terren Peizer learned significant negative news about Ontrak, he set up Rule 10b5-1 trading plans to sell shares before the news became public and to conceal that he was trading on inside information,\u201d said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department\u2019s Criminal Division.\u00a0<\/span>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

\"U.S.According to evidence presented during a 10-day trial, Peizer avoided approximately $12.5 million in losses by initiating two Rule 10b5-1 trading plans while possessing material, non-public information about the significant risk that Ontrak\u2019s largest customer would terminate its contract.<\/span><\/p>\n

In May 2021, Peizer implemented his first 10b5-1 trading plan shortly after learning that Ontrak’s relationship with the customer was deteriorating. <\/span><\/p>\n

The customer expressed serious reservations about continuing the contract.<\/span><\/p>\n

\"\"Subsequently, Peizer learned that the customer had informed Ontrak of its intent to terminate the contract.<\/span><\/p>\n

Then, in August 2021, Peizer entered into his second 10b5-1 trading plan approximately one hour after Ontrak\u2019s chief negotiator for the contract confirmed to Peizer that the contract likely would be terminated.<\/span><\/p>\n

In establishing his 10b5-1 plans, Peizer refused to engage in any \u201ccooling-off\u201d period\u2014the time between entering into the plan and selling stock\u2014despite warnings from two brokers, a senior Ontrak executive, and attorneys.<\/span><\/p>\n

Instead, Peizer began selling shares of Ontrak on the next trading day after establishing each plan. <\/span><\/p>\n

\"TwoOn August 19, 2021, just six days after Peizer adopted his August 10b5-1 plan, Ontrak announced that the customer had terminated its contract and Ontrak\u2019s stock price declined by more than 44%.<\/span><\/p>\n

\u201cAs a CEO, Mr. Peizer abdicated his responsibilities by using his position to conceal trading on material non-public information in order to avoid the losses shareholders suffered,\u201d said Acting Assistant Director in Charge Krysti Hawkins of the FBI Los Angeles Field Office.\u00a0<\/span><\/p>\n

U.S. District Judge Dale S. Fischer scheduled an Oct. 21 sentencing hearing. <\/span><\/p>\n

Peizer faces up to 25 years in prison on the securities fraud count and up to 20 years in prison on each of the insider trading counts.<\/span><\/p>\n

The case is part of a data-driven initiative led by the Criminal Division\u2019s Fraud Section to identify executive abuses of 10b5-1 trading plans. <\/span><\/p>\n

\"Speedcurve<\/p>\n

Rule 10b5-1 trading plans can offer an executive a defense to insider trading charges. However, the defense is unavailable if the executive is in possession of material, non-public information at the time he or she enters into the 10b5-1 trading plan. <\/span><\/p>\n

Additionally, a plan does not protect an executive if the trading plan was not entered into in good faith or was entered into as part of an effort or scheme to evade the prohibitions of Rule 10b5-1.<\/span><\/p>\n

The Corporate and Securities Fraud Strike Force is designed to expand and prioritize complex corporate and securities fraud investigations, some of which involve corporate executives and other individuals implicaated in criminal conduct. <\/span><\/p>\n

Members of the Strike Force examine accounting fraud, insider trading, and other matters that directly impact the financial system and trading markets.<\/span><\/p>\n

The FBI investigated the case with substantial assistance from FINRA\u2019s Criminal Prosecution Assistance Group.<\/span><\/p>\n

Assistant U.S. Attorney Ali Moghaddas of the Corporate and Securities Fraud Strike Force and Trial Attorneys Matthew Reilly and Della Sentilles of the Justice Department\u2019s Criminal Division\u2019s Fraud Section are prosecuting this case.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0LOS ANGELES\u00a0 A federal jury on Friday found the former CEO and chairman of the board of directors of Ontrak Inc., a Henderson, Nevada-based publicly traded healthcare company, guilty of engaging in…<\/p>\n","protected":false},"author":1,"featured_media":56767,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-56766","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\nFormer Chairman of Nevada Health Care Company Guilty of Multimillion-Dollar Insider Trading Scheme<\/title>\n<meta name=\"description\" content=\"\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0LOS ANGELES\u00a0 A federal jury on Friday found the former CEO and chairman of the board of directors of Ontrak Inc., a Henderson, Nevada-based\" \/>\n<meta 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