NEW YORK (AP) — An Ivy League-educated ex-portfolio manager convicted of enabling his firm to earn more than a quarter-billion dollars through insider trading on a promising Alzheimer's drug trial was sentenced Monday to nine years in prison by a judge who said the "staggering" fraud deserved lengthy incarceration.
Mathew Martoma, his face drawn, left Manhattan federal court holding his wife's hand after Judge Paul Gardephe ordered him to report to prison in November following his February conviction for conspiracy and securities fraud.
A jury found Martoma, of Boca Raton, Florida, had flattered and enriched two medical doctors to elicit the secret results of an Alzheimer's drug trial so he could trade ahead of public announcements, enabling his Stamford, Connecticut-based employer, SAC Capital Advisors, to earn more than $275 million illegally. His firm, headed by billionaire Steven A. Cohen, then rewarded him with more than $9 million in bonuses.
The judge ordered Martoma, 40, to forfeit $9.3 million, including his home and banks accounts holding millions of dollars.
As the judge said "the sums here are staggering in size," a standing Martoma looked forward, expressionless. His wife dabbed at her eyes with a tissue.
The judge said the illegal trading edge Martoma obtained was "deeply corrosive to our markets," breeding cynicism.
"The gain here is hundreds of millions of dollars more than has ever been seen in an insider trading prosecution," Gardephe said.
He rejected requests by defense attorney Richard Strassberg to be lenient so Martoma could resume his charitable work and care for his wife and children, ages 9, 7 and 5.
The judge described a "darker side to his character" that emerged years before SAC Capital as Martoma studied at Duke University, Stanford University Graduate School of Business and Harvard Law School, where he was expelled in 1999 after using a forged transcript he claimed he created to impress his parents to apply for federal appeals court clerkships.
The judge said Martoma repeatedly revealed his "unwillingness to accept anything but the top grade, the best school, the highest bonus and a willingness to do anything to get that result."
U.S. Attorney Preet Bharara said in a statement that the "long and short of Mathew Martoma's trading is that he traded his liberty, his name and his time with his family for what in the end is nothing."
In a statement, Martoma's lawyers promised to appeal, saying Martoma and his family were "devastated by the outcome."
At trial, Strassberg had insisted Martoma acted sensibly to sell the bloated stocks of the drug trial's sponsors, drugmakers Elan Corp. and Wyeth.
Jurors heard Sidney Gilman, an ex-University of Michigan Medical School professor, testify he gave Martoma secret results of the drug trial nearly two weeks before they were publicly announced in summer 2008.
Gilman, once one of the world's top Alzheimer's experts, said he was charmed by Martoma, who seemed more knowledgeable about his work than hundreds of other financial professionals who paid Gilman more than $1 million over several years for consultations.
SAC Capital pleaded guilty in November to fraud charges and agreed to pay $1.8 billion to settle charges that it allowed, if not encouraged, insider trading for over a decade. But Cohen has disputed the allegations involving his company.