Insider Trading Scam Allegedly Centered Around Long Valley Man

John Lazorchak and five others accused of netting $1.4 million in illicit profits and kickbacks.

A Long Valley resident and executive for a pharmaceutical company has been charged, along with five others, in a $1.4 million insider trading operation that lasted nearly five years, U.S. Attorney Paul J. Fishman announced Monday.

John Lazorchak, 42, the director of Financial Reporting at Celgene, was part of a group of men who netted $1,483,749 in illicit profits and cash kickbacks, Fishman said.

Lazorchak, along with Mark Cupo, 51, of Morris Plains; Lawrence Grum, 48, of Livingtston; Michael Castelli, 48, of Morris Plains; Mark Foldy, 42, of Morris Plains; and Michael Pendolino, 43, of Nashua, N.H., were involved in the years-long operation, buying and selling stock prior to major announcements made by the company, Fishman said.

Lazorchak, Foldy and Pendolino have each been charged with one count of conspiracy to commit securities fraud. Cupo, Grum and Castelli have each been charged with two counts of conspiracy to commit securities fraud.

All are also charged with multiple counts of securities fraud. Lazorchak is charged on 26 counts; Cupo, 23; Grum, 12; Castelli, 11; Foldy, 2 and Pendolino, 2.

The group of men surrendered to FBI agents and were scheduled to appear in court Monday afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark Federal Court.

According to the complaint filed against the men, Lazorchak was at the center of the insider trading network and regularly disclosed non-public information about Celgene’s anticipated corporate acquisitions, quarterly earnings and regulatory news to Cupo between September 2007 and June 2012.

As an executive with Sanofi-Aventis, Cupo then funnelled the information to two “friends”—Grum and Castelli—who then shared any profitable trades with Cup and Lazorchak, the complaint alleges. Grum and Castelli also passed certain information to friends and family members, Fishman said.

Lazorchak also gave information to high school friends, Foldy and Pendolino, along with two, uncharged co-conspirators, Fishman said.

Celgene’s acquisition of Pharmion and Abraxis, along with its announcement of a cancer-fighting drug being expanded into Europe, were among the deals made that Lazorchak and the others traded earlier than the information was made to the public, Fishman said.

Each conspiracy count carries a maximum potential penalty of five years in prison, a $250,000 fine, or twice the aggregate loss to victims or gain to defendants. Each count of securities fraud carries a maximum potential penalty of 20 years in prison and a $5 million fine.

Chuck Ruff November 20, 2012 at 02:54 PM
People who drive drunk, beat their wives, get caught with drugs, etc... also usually have kids, and their stories are always published. White collar criminals should not get any special treatment.
Jersey November 20, 2012 at 06:02 PM
I feel terrible for the families involved. I also feel terrible for the families of people who commit violent crimes. Leave the accused to the criminal justice system, but treat the family of the accused (particularly any children) with respect and concern. It's not a child's fault when their parent commits a horrible crime - while collar or otherwise.
Liberty November 24, 2012 at 05:18 PM
You think close family and friends weren't there with their hands out, grinning? They sure weren't going to turn him in. The "accused" should have been thinking of their children before they got greedy and did something illegal---had to be very stupid to think they wouldn't get caught. And Squatch is right, they were probably being paid well to begin with.


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