S.E.C. charges four for insider trading of Medicare reimbursement info from CMS employee

The Securities and Exchange Commission (SEC) has charged four men for alleged involvement in an insider trading scheme that used confidential government information regarding Medicare reimbursements From the Centers for Medicare and Medicaid Services (CMS). Christopher Worrall, an employee at (CMS), allegedly gave confidential information to David Blaszczak, a former co-worker who later worked as a political intelligence analyst.

Worrall allegedly told Blaszczak three different times about pending CMS reimbursement decisions that could affect stock prices. Prosecutors allege that Blaszczak passed that information on to two hedge fund analysts who paid him as a consultant, Theodore Huber and Jordan Foge, who made $3.9 million from the insider trades.Mr. Blaszczak, a former employee at the agency and founder of Precipio Health Strategies, was accused of pumping a friend at the agency for market-moving information that he passed to his clients at Deerfield, an unsealed indictment said.In his interactions with the hedge fund partners, Mr. Blaszczak bragged about his access to the inside information. In an email message, he said his analysis differed from that of one of his competitors because that competitor “doesn’t know anyone at cms. His guesses are just wild random guesses,” according to a separate complaint filed by the SEC.Mr. Blaszczak passed the information to his hedge fund clients, sometimes within minutes of the communications, prosecutors said.

The information involved tips about potential changes in government policy and regulations for things such as radiation therapy and kidney dialysis and how these policies would affect publicly traded companies.

In email exchanges made public by federal prosecutors, Mr. Blaszczak and Mr. Worrall would exchange banter with clients about how much money they could make by collaborating. In one email exchange in 2014, Mr. Blaszczak told Mr. Worrall that they would “kill it working together.” Mr. Worrall responded: “You’re like a drunk whore to me. Hard to resist. Lol. Let’s talk.”

Mr. Blaszczak was paid $193,000 for his information over a year and a half, according to the S.E.C. Federal prosecutors said Mr. Blaszczak was paid $263,000 in consulting fees between 2012 and 2014. His name came up in the trial of Stefan Lumiere, a former Visium Capital Management employee, in a securities fraud trial. Christopher Plaford, a witness at the trial, testified that Mr. Blaszczak had provided him with confidential information that he used to make trades in two stocks.

Jeffrey Newman represents whistleblowers.