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Press Release

Four Defendants Sentenced Following Convictions At Trial For Stealing Confidential Government Information And Using It To Engage In Illegal Trading

For Immediate Release
U.S. Attorney's Office, Southern District of New York

Robert Khuzami, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced today that DAVID BLASZCZAK, a political intelligence consultant, was sentenced to 12 months and one day in prison; CHRISTOPHER WORRALL, a government employee at the Centers for Medicare and Medicaid Services (“CMS”), was sentenced to 20 months in prison; and THEODORE HUBER and ROBERT OLAN, two partners and analysts at Deerfield Management Company, L.P., a healthcare-focused hedge fund in New York, New York (“Deerfield”), were each sentenced to 36 months in prison, respectively, in connection with their convictions following a four-week jury trial. 

BLASZCZAK, WORRALL, HUBER, and OLAN each participated in a scheme to obtain confidential information from CMS, which was then used execute profitable trades at Deerfield.  Specifically, as part of the scheme, BLASZCZAK obtained confidential and nonpublic information from CMS employees, including his friend, CHRISTOPHER WORRALL, who worked at CMS, and who breached his duties as a CMS employee by providing confidential information to BLASZCZAK.  BLASZCZAK then provided this material nonpublic information in advance of market-moving CMS announcements to employees at Deefield, including HUBER, OLAN, and Jordan Fogel, who recommended trades on the basis of the information.  Fogel, a former partner and analyst at Deerfield, previously pled guilty and is cooperating with the Government.  As a result of these trades, Deerfield reaped more than $7 million in profits.

In a separate scheme, BLASZCZAK also obtained confidential and nonpublic CMS information about cuts in CMS’s reimbursement rates for home health providers, and provided that information to Christopher Plaford, a portfolio manager at Visium Asset Management, L.P., another healthcare-focused hedge fund in New York, New York (“Visium”).  Plaford then used BLASZCZAK’s information to execute trades, resulting in approximately $330,000 in profits.  Plaford has previously pled guilty to this conduct and is also cooperating with the Government. 

Deputy U.S. Attorney Robert Khuzami said:  “Blaszczak, Worrall, Huber, and Olan conspired to steal highly sensitive and confidential government information and profit from that theft.  This scheme was carried out through Blaszczak’s purported ‘political intelligence’ firm, but nothing about this scheme was intelligent.  When you steal confidential information from the Government and use it to make illicit millions in the stock market, you will get caught.”           

According to the allegations in the charging documents, the evidence and testimony at trial, and statements made in court proceedings:


CMS, a component of the United States Department of Health and Human Services (“HHS”), administers Medicare and Medicaid, among other things.  CMS is also responsible for setting Medicare reimbursement rates for healthcare providers.  CMS spends more than $1 trillion annually and pays approximately one-third of the country’s health expenditures.  Accordingly, CMS rulemaking decisions, including decisions that affect how much the federal government will pay to reimburse medical providers for services rendered, have a substantial, market-moving impact on publicly traded companies that depend on government healthcare spending. 

WORRALL began working at CMS in or about 1999.  Beginning in January 2012, WORRALL worked in the Director’s Office for the Center for Medicare (“CM”), which gave WORRALL broad access to CMS’s confidential deliberations about upcoming reimbursement decisions.  WORRALL also served as a project manager for a confidential CMS database that contained CMS’s most up-to-date claims data that CMS used to inform its decision-making. 

David Blaszczak

At all relevant times, BLASZCZAK served as a consultant at a number of Washington, D.C.-based firms that, in exchange for a fee, provided so-called “political intelligence,” which included analysis about how changes in Government reimbursement rates would impact publicly traded healthcare-related companies.  Before becoming a political intelligence consultant, BLASZCZAK worked at CMS, eventually serving as a special assistant to the CMS Administrator.  BLASZCZAK met WORRALL while the two worked at CMS. 

As a former CMS employee, BLASZCZAK was well aware of CMS’s rules governing the dissemination of nonpublic information. 

Deerfield Management Company, L.P. 

At all relevant times, Deerfield managed multiple hedge funds specializing in healthcare-related investments.  As of 2017, Deerfield had more than $7 billion in assets under management.  HUBER, OLAN, and Fogel were partners and analysts at Deerfield, where their job was to analyze investment decisions and recommend potentially profitable trades for Deerfield.  Deerfield’s compliance manual prohibited its employees from committing insider trading.  

The Scheme to Convert and Use Confidential CMS Information 

The Scheme

From at least in or about 2009 through in or about 2014, BLASZCZAK, WORRALL, HUBER, OLAN, Fogel, and others participated in a scheme to convert to their own use confidential and material nonpublic information from CMS concerning, among other things, CMS’s internal deliberations regarding coverage and reimbursement decisions.           

During this time period, Deerfield retained BLASZCZAK as a consultant who provided political intelligence related to, among other things, the content, likelihood, and timing of CMS reimbursement decisions.  As part of the scheme, HUBER, OLAN, and Fogel encouraged BLASZCZAK to obtain confidential and material nonpublic information from CMS insiders.  As HUBER, OLAN, and Fogel knew, these CMS insiders included BLASZCZAK’s former colleagues with whom he had close personal relationships, who were prohibited from disclosing such information to CMS outsiders.

BLASZCZAK obtained material nonpublic information from his close friend and former CMS colleague WORRALL.  BLASZCZAK and WORRALL were friends since their time working together at CMS.  BLASZCZAK also frequently offered to help WORRALL find lucrative private sector employment opportunities, in exchange for WORRALL giving BLASZCZAK confidential government information.  

BLASZCZAK conveyed the information obtained from WORRALL to HUBER, OLAN, and Fogel, who – knowing that BLASZCZAK had obtained the information improperly from a CMS insider – used the information to trade.  In exchange for being provided with this inside information, HUBER, OLAN, and Fogel caused Deerfield to pay BLASZCZAK more than $800,000 in consulting fees.

The Verdict 

The jury found BLASZCZAK guilty of 10 counts, HUBER and OLAN guilty of five counts each, and WORRALL guilty of two counts.  Specifically, with respect to Count One (conspiracy to convert government property, to commit securities fraud, and to defraud the United States relating to Deerfield) and Count Two (conspiracy to commit wire fraud and securities fraud relating to Deerfield), the jury found BLASZCZAK, HUBER, and OLAN guilty.  With respect to Count Three (conversion of government property) and Count Nine (wire fraud), the jury found all four defendants guilty.  With respect to Count Ten (securities fraud), the jury found BLASZCZAK, HUBER, and OLAN guilty. With respect to Count Thirteen (conversion of government property), Count Fifteen (wire fraud), Count Sixteen (securities fraud), Count Seventeen (conspiracy to convert government property and to defraud the United States relating to Visium), and Count Eighteen (conversion of government property), the jury found BLASZCZAK guilty on each count.

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In addition to his prison sentence, BLASZCZAK, 42, of Isle of Palms, South Carolina, was sentenced to two years of supervised release, including one year of home confinement, and ordered to forfeit $727,500 and pay restitution to CMS in the amount of $1,644.26.

WORRALL, 40, of Linthicum Heights, Maryland, was sentenced to one year of supervised release, and ordered to pay restitution to CMS in the amount of $1,644.26.

HUBER, 56, of Westport, Connecticut, was sentenced to two years of supervised release, and ordered to forfeit $87,078, pay restitution to CMS in the amount of $1,644.26, and pay a fine of $1.25 million.

OLAN, 47, of Rumson, New Jersey, was sentenced to two years of supervised release, and ordered to forfeit $98,244, pay restitution to CMS in the amount of $1,644.26, and pay a fine of $1.25 million.

Mr. Khuzami praised the work of the Federal Bureau of Investigation and U.S. Department of Health and Human Services, Office of the Inspector General, and thanked the Securities and Exchange Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Ian McGinley and Joshua A. Naftalis are in charge of the prosecution.  

Updated September 13, 2018

Securities, Commodities, & Investment Fraud
Press Release Number: 18-313