United States v. Blaszczak

947 F.3d 19 (2019)

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United States v. Blaszczak

United States Court of Appeals for the Second Circuit
947 F.3d 19 (2019)

  • Written by Rose VanHofwegen, JD

Facts

David Blaszczak and Christopher Worrall (codefendants) worked together at the Centers for Medicare and Medicaid Services (CMS). They remained friends when Blaszczak left to become a hedge-fund consultant. Theodore Huber, Robert Olan, (codefendants) and Jordan Fogel were partners at Deerfield Management Company, L.P., a healthcare-focused hedge fund. On four occasions, Blaszczak gave the Deerfield partners nonpublic information about upcoming CMS rule changes that reduced reimbursement rates for certain medical treatments. Each time, Deerfield shorted stock in medical companies that declined when CMS publicly announced the new rules. All told, Deerfield profited over $7 million trading on confidential CMS information. The government (plaintiff) charged Blaszczak, Worrall, Huber, and Olan with conspiring to misappropriate and convert nonpublic information, wire fraud, and securities fraud under both Titles 15 and 18. (Fogel pleaded guilty and testified against the others.) The court instructed the jury that to convict for Title 15 securities fraud, Worral must have tipped in exchange for a personal benefit. The jury acquitted as to Title 15 securities fraud, but convicted all four on wire fraud and conversion, and all but Worrall on Title 18 securities fraud and conspiracy. All four appealed on multiple grounds, including that Title 18 wire and securities fraud require personal benefit.

Rule of Law

Issue

Holding and Reasoning (Sullivan, C.J.)

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