Feds scoop up a band of biotech insiders who allegedly bagged a windfall, and now criminal charges

Early last year, investors in Celator picked up a 72% premium when Jazz swooped in to buy the company and its lead drug for acute myeloid leukemia for $1.5 billion in cash. And according to federal investigators, a CPA at Celator conspired with friends to bag a quick windfall in the buyout and for the positive clinical trial data for Vyxeos that inspired the deal and quadrupled the biotech’s share price.

According to the feds, these are the particulars behind the charge.

Evan Kita

Last year, Evan Kita, then an accountant at Celator, used an encrypted smartphone app to share the insider info with Daniel Perez and Richard Yu, who bought the stock. Yu also allegedly told his father, Chiang Yu, who also got into the act.

That was uncovered in an investigation, and on Thursday the SEC filed insider trading charges with the four while the US attorney’s office for the district of New Jersey charged Perez with fraud and collected guilty pleas from the other three on securities fraud.

According to the prosecutors, Kita admitted his role in the scheme, picking up somewhere between $250,000 and $550,000 in ill-gotten loot. Chiang Yu admitted bagging at least $95,000, but not more than $150,000 while Richard Yu admitted gains totaling a very exact $200,070.29.

This is the latest in a long lineup of insider charges that federal investigators have brought in over the last few years, drawn to a field where tidbits of information can be translated into overnight windfalls — and the risk of criminal charges and heavy fines. The Financial Fraud Enforcement Task Force took credit for the busts and clearly signaled it was after more.

The not so subtle message: the next time you hear insider info in your biotech company, don’t arrange a side deal to cash in. The feds may be listening.

The best place to read Endpoints News? In your inbox.

Comprehensive daily news report for those who discover, develop, and market drugs. Join 48,200+ biopharma pros who read Endpoints News by email every day.

Free Subscription

Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

Visit Endpoints Careers ->