Two from New York, two from Massachusetts, including police chief, charged in insider trading scheme

Two from New York and two from Massachusetts, including Dighton’s police chief, have been accused of insider trading.

According to the Southern District of New York Department of Justice, in 2020, Joseph Kaplan, Shawn Cronin, Slava Kaplan, a/k/a “Stanley Kaplan,” and Paul Feldman engaged in an insider trading scheme surrounding the announcement of one pharmaceutical company’s acquisition of another. Cronin, Kaplan, and Feldman collectively made more than $2.2 million dollars in illegal profits by trading in stocks and options based on MNPI that Dupont misappropriated from his employer.

Dupont was a vice president at Alexion Pharmaceuticals, Inc. (“Alexion”) and, on January 31, 2020, was informed of Alexion’s upcoming acquisition of Portola Pharmaceuticals, Inc. (“Portola”). Before that acquisition was publicly announced, in April 2020, Dupont provided MNPI about the acquisition to his childhood friend, Cronin. Not only were Cronin and Dupont childhood friends, but also Cronin — who, at the time, was a sergeant in the police department of Dighton, Massachusetts, and later served as the chief of police — supervised Dupont in Dupont’s capacity as a reserve officer in that police department. Based on the MNPI that Dupont provided Cronin, Cronin purchased shares of Portola stock as well as out-of-the-money call options for Portola stock.

In turn, Cronin shared MNPI about Portola’s pending acquisition with Jarett Mendoza, another childhood friend of both Cronin’s and Dupont’s. Cronin also assisted Mendoza in purchasing Portola stock in the days before the acquisition was publicly announced.

Cronin shared MNPI about Portola’s pending acquisition not only with Mendoza, but also with Kaplan, a friend of Cronin’s, who was also known to Dupont. Cronin shared the MNPI with Kaplan both so that Kaplan could trade in advance of the acquisition and so that Kaplan would assist Cronin in formulating trading strategies to maximize Cronin’s own insider trading profits. Based on the MNPI that Cronin gave to Kaplan, Kaplan bought Portola shares and options.

Kaplan, in turn, shared MNPI about the upcoming acquisition with, among others, Feldman, a friend and colleague of Kaplan’s. Based on the MNPI that Kaplan gave Feldman, Feldman aggressively bought Portola call options.

Feldman, for his part, shared MNPI about the Portola acquisition with others, including a work colleague.

Alexion’s acquisition of Portola was publicly announced on the morning of May 5, 2020. Portola’s stock increased significantly in value. Cronin, Kaplan, Feldman, and their tippees sold their shares of Portola and call options for Portola stock, reaping millions of dollars of illegally obtained trading profits.

Dupont, 44, of Rehoboth, Massachusetts, who surrendered to authorities today, has been charged with one count of Title 15 securities fraud and one count of tender offer fraud, each of which carries a maximum sentence of 20 years in prison, and one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison.

Cronin, 43, of Dighton, Massachusetts, who surrendered to authorities today, has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison;.

Kaplan, 45, of Hopewell Junction, New York, who was arrested today, has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison.

Feldman, 48, of Poughquag, New York, who was arrested today, has been charged with six counts of securities fraud under Title 15 and six counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison.

Also unsealed today were charges against Jarett Mendoza, who has pled guilty pursuant to a cooperation agreement.

Dighton Town Administrator Michael Mullen, Jr. and Board of Selectmen Chairman Peter D. Caron report that the Dighton Board of Selectmen met in emergency session on Thursday.

During the meeting, the Board of Selectmen voted unanimously to place Cronin on administrative leave.

The board then voted unanimously to name Administrative Sergeant George Nichols to the position of Acting Chief of Police.

Immediately upon being named Acting Chief of Police, Acting Chief Nichols suspended Reserve Officer Dupont.