Dutchess County pulmonologist Stanley Kaplan has agreed to relinquish ill-gotten gains to the U.S. Securities and Exchange Commission for his role in a $4 million insider trading scheme.
Dr. Kaplan, 45, of Hopewell Junction, and Joseph M. Dupont, a Massachusetts pharmaceutical executive who instigated the scheme, consented to civil sanctions that were approved on Nov. 27 by U.S. District Judge Victor Marrero.
“The court shall determine the amounts of the disgorgement and civil penalty,” the court order states.
On Sept. 19, Kaplan pled guilty to securities fraud, in a parallel criminal case brought by U.S. Attorney Damian Williams, and agreed to forfeit $472,054.
Kaplan, who practiced at Vassar Brothers Medical Center in Poughkeepsie, got caught up in a friend-of-a-friend daisy chain, as depicted in the civil and criminal cases filed simultaneously in Manhattan federal courts this past June.
Dupont knew that his employer, Alexion Pharmaceuticals Inc., Boston, planned to buy Portola Pharmaceuticals Inc., of San Francisco, according to court records.
In 2020, he shared sensitive, non-public information with a childhood friend, according to court records, and they bought Portola shares and call options before the deal was publicly disclosed.
Dupont’s childhood friend tipped off Kaplan. Kaplan tipped off a relative and Dr. Paul Feldman, a nephrologist at Vassar Brothers Medical Center, according to court records. Feldman tipped off relatives and two doctors and a nurse at the hospital.
After the Portola deal was announced, share prices increased by 131% and participants sold their investments.
Collectively, Cronin, Kaplan and Feldman spent $364,400 and netted nearly $2.3 million, according to court records, and all of the participants made about $4 million.
Feldman has pled not guilty to the criminal charges and his civil case is pending.
In the civil case, judge Marrero also ordered Kaplan not to violate any securities laws or serve as an officer or director of a public company.
In the criminal case, U.S. District Judge Gregory H. Woods has granted Kaplan permission to travel outside the jurisdiction for job interviews and work assignments; travel to 13 states when necessary to attend disciplinary hearings on his medical license; and to visit family in Rhode Island.
Sentencing is scheduled for Jan. 5.
