Martoma loses fight to stay out of prison
NEW YORK — Former SAC Capital portfolio manager Mathew Martoma has lost his bid to remain free on bail pending appeal of his conviction in what prosecutors termed the most profitable insider-trading case in U.S. history.
In an order filed Tuesday, U.S. District Judge Paul Gardephe ruled that defense lawyers failed to show the appeal by the onetime financial lieutenant to billionaire hedge fund founder Steven Cohen "is likely to raise a substantial question of law or fact."
The judge denied the bail request, as well as a defense motion to postpone Martoma's scheduled Nov. 10 surrender date to begin serving a nine-year federal prison term.
"None of Martoma's arguments regarding the sufficiency of the evidence or legal error at trial are persuasive," Gardephe wrote in the four-page ruling. "Nor has Martoma articulated any basis for finding that his sentence was procedurally or substantively unreasonable."
Federal jurors in February convicted Martoma, 40, of conspiracy and two counts of securities fraud at the conclusion of a month-long trial during which he declined to testify. The case focused on charges that he illegally obtained disappointing results of clinical tests on an experimental Alzheimer's disease drug in 2008 by cultivating relationships with two doctors who knew details of the testing outcome.
Martoma then set in motion a $700 million sell-off of SAC Capital holdings in shares of Elan and Wyeth, the pharmaceutical firms that developed the drug. The transactions generated approximately $276 million in profits and avoided losses, along with a nearly $9.4 million 2008 bonus for Martoma.
Defense lawyers have signaled they may seek bail from a federal appeals panel as part of a broader appeal of Martoma's conviction. They contended the appeal would raise several "close questions," including whether evidence was improperly excluded from Martoma's trial and whether the sentence was unreasonable.
The sentence imposed by Gardephe in September also ordered the father of three to forfeit $9.4 million, more than his current net worth. Martoma's wife, Rosemary, is contesting the forfeiture order, arguing that she has a legal ownership claim to keep the couple's Florida home and funds held in several accounts.