A Harvard-trained physician was sentenced Friday to five years in prison for evading $30 million in investment losses by obtaining inside information from a fellow doctor.
Joseph "Chip" Skowron III apologized to his wife and friends in a packed Manhattan courtroom before U.S. District Judge Denise Cote announced the sentence.
Turning around to look at his wife in the first row of spectators, Skowron said she was the most harmed by his insider trading venture, which helped him avoid millions of dollars in losses.
"I am not what she expected when she married a young doctor 15 years ago," he said.
The 42-year-old Greenwich, Conn., resident pleaded guilty in August to conspiring to commit securities fraud and obstructing justice.
He called the last year "devastating" and "incredible" with glimpses of the best parts of humanity emerging from the most unexpected of circumstances.
"I was not aware of the changes that were happening in me that blurred the line between right and wrong," he said. "I allowed myself to slip into the world of relativism where the ends justified the means."
Skowron admitted gaining an advantage in his work as a hedge fund analyst in 2007 and 2008 by using tips gained through meetings and conversations with a French doctor who knew inside information about clinical drug trials.
Skowron was charged after the French doctor, Yves Benhamou, pleaded guilty to conspiracy to commit securities fraud and other charges in a cooperation deal with prosecutors. Benhamou was widely known in Europe and the United States as an expert in the treatment of hepatitis C.
"Chip Skowron's medical training and expertise, along with his knowledge of the health care industry, undoubtedly gave him a legitimate trading edge," U.S. Attorney Preet Bharara said. "But that wasn't enough. He still took a corrupt path to protect his hedge fund and himself from sustaining a multimillion-dollar loss, and then corruptly tried to obstruct the government's investigation."
As part of his plea deal, Skowron has agreed to forfeit $5 million to the United States. The judge also ordered him to pay restitution of $5.96 million.
The probe began after the Securities and Exchange Commission spotted trading irregularities in the stock of a liver disease drugmaker.
It then learned of the relationship between Skowron and Benhamou, who worked as a consultant to Human Genome Science Inc., a biopharmaceutical company, on clinical drug trials evaluating the safety of the drug Albuferon for the treatment of chronic hepatitis C. Albuferon is the commercial name for a drug the company developed and planned to market with Novartis AG, a Switzerland-based pharmaceutical company.
After meeting in April 2006 at a Vienna conference staged by the European Association for the Study of the Liver, the pair met face-to-face again in Boston, Barcelona, Manhattan and Milan.
Authorities said Skowron in 2006 and 2007 gave Benhamou an envelope with 5,000 Euros in his Barcelona hotel suite, paid the $4,600 hotel bill when Benhamou and his wife visited Manhattan, offered Benhamou future employment with a biotechnology hedge fund he planned to start and gave Benhamou free investment advice.
In December 2007, Benhamou began tipping Skowron about serious adverse effects that occurred with two patients involved in the Albuferon clinical trial, authorities said. One of the patients later died.
The FBI has said Skowron was tipped again a month later that part of the clinical trial was going to be discontinued. According to court papers, Skowron was able to sell all his hedge fund's shares before the stock of Human Genome Science dropped 44 percent following the public announcement.
The FBI also said Skowron gave Benhamou $10,000 in cash in April 2008 in a hotel bar in Milan, Italy, and told him to continue to tell securities regulators who were investigating suspicious trades that the two had only discussed publicly available information.
Benhamou, who pleaded guilty in April, is scheduled to be sentenced Dec. 8.
Skowron studied at Vanderbilt University before he obtained his medical degree in 1998 from Yale University. He also earned a doctorate in cell biology from Yale before beginning his residency at Harvard University.
He was on the board of directors of the disaster relief agency AmeriCares Foundation, where his volunteer work took him to Kosovo, Cuba, India and Baton Rouge, La., after Hurricane Katrina.