Move Over Rajat, Make Room for Mathew



At 1:51 p.m. Thursday, 12 jurors filed into a courtroom in lower Manhattan to deliver the latest insider trading verdict against an Indian American. In what has become something of a déjà-vu, the defendant was found guilty on all counts. It was another shameful moment for Indian Americans, complete with two shocked sets of parents, a crying wife, and three young children waiting offsite with a babysitter—reminders of the human carnage that accompanies most criminal cases. But after four weeks of trial, the testimony of two Alzheimer’s doctors and that of drug company executives, traders, compliance officers and academics, two days of jury deliberations, and now a unanimous verdict, a huge unanswered question lingers: Why didn’t Mathew Martoma turn State’s evidence, and roll-over on his former employer, Billionaire Hedge Fund Manager, Stephen A. Cohen?

Martoma was charged in November 2012 with insider trading in two pharmaceutical stocks, Elan (PRGO) and Wyeth (PFE), in what the government described as the largest insider trading case in history, with $275 million in profits and avoided losses. Some of the trades at the heart of the case involved Martoma’s former boss, SAC founder Steven Cohen, who, the government alleged, sold off SAC’s position after Martoma advised him based on information obtained from an insider with access to the preliminary results of clinical drug trials. Cohen himself has not been charged criminally.

SAC Capital pled guilty to securities fraud in November. The U.S. Securities and Exchange Commission filed a civil charge against Cohen for failing to supervise his employees that has yet to be resolved. But that is the extent of legal action taken against the company and its owner to date.

When law enforcement showed up at his Boca Raton Home in 2011 to question him, Mathew Martoma fainted, apparently due to the jolt of being investigated.  But if the shock was compounded by his being arrested, the following year, experts following the case, including those working for the New York Times and Bloomberg were perhaps as equally surprised by the fact the case actually went to trial. Fired by SAC Capital Advisers in 2010, Martoma seemed like the ideal disgruntled employee – a potential whistle-blower – especially when most assumed that the Government’s real target was billionaire CEO of SAC, Stephen Cohen.

In fact, Martoma seemed optimally positioned to cut a favourable deal for himself in an environment where getting a company insider to roll-over on his boss is a standard tactic in such prosecutions. Add to that: the case against Martoma was entirely circumstantial. Martoma allegedly had a 20 minute conversation over phone with Stephen A. Cohen after which Mr. Cohen reversed his trading position on two pharmaceutical companies, Elan and Wyeth – a decision that netted him $275 Million.  What did these two men talk about? This ought to have been the burning question for prosecutor Preet Bharara and his team, especially, if ostensibly their target was Cohen – the big fish in all of this.

However, what is not known is whether a deal was even offered to Martoma by Bharara, who has made his career convicting high profile brown-skinned Americans.  Some say that Martoma’s conduct at Harvard University Law school, falsifying transcripts for which he was expelled, would have impugned his credibility had Bharara offered him a deal in exchange for testimony. But this evidence was ruled as inadmissible in trial as a prior bad act, precisely because of its prejudicial nature. And, corroborating witnesses in such criminal cases are hardly boy scouts – Sammy (The Bull) Gravano is a case in point: this mass murderer was found to be credible in the conviction of his boss, Mafia Don John Gotti in perhaps the highest profile racketeering trial in American history.

If Martoma’s credibility was an issue, this did not seem to be the case for Dr. Sidney Gillman, the prosecution’s star witness, who testified that he passed on a power point presentation to Martoma containing advance results of an Alzheimer’s drug trial ahead of its release.  The thing is: there was absolutely no evidence presented at trial that Martoma actually received this presentation, much less used it in his decision-making. No wire tap recordings or other hard evidence. His lawyer, Richard Strassburg argued that the trading activity was based on rational analysis and not inside information. So, proving the case hinged upon the credibility of Gillman vs. that of Martoma.

And, Gillman, despite admitting that he originally lied to the FBI on the matter due to his “embarrassment” and claiming to be confused and “divorced from reality”, suffered from bouts of memory loss followed by selective memory recall. In fact, he was on record saying the process of his recollection was in “evolution.”, hardly the rock solid testimony that prosecutors desire to present before a jury. He admitted in court that it wasn’t until two weeks ago that he remembered in detail a July 19, 2008, meeting in his Ann Arbor, Michigan, office with Martoma, who had flown to Detroit, and allegedly took a cab 25 miles to meet the doctor during which Gillman alleges that Martoma and he went over the final results of the drug trials of pharmaceutical companies Elan and Wyeth. As if that wasn’t a stretch, Gillman claims to have been “unconciously” mesmerized by Martoma because the dark skinned Malayalee-Indian origin trader had reminded Gillman of his white skinned son, who had previously committed suicide. Apparently, like Martoma Gillman’s son was also smart and “into science”, hence the inscrutable similarity.  The inevitable result, according to Gilman was his being powerless to hypnotic influence of the Indian American trader, more than forty years his junior.

When we at the Global Calcuttan read about this in court transcripts, we thought it was nuts, and our legal expert told us that it smacked of reasonable doubt. For surely even the imperious Preet Bharara is required to actually prove his case in court?  But the jury bought Gillman’s testimony – as Bharara knew they would based on his experience convicting other Indian and South Asian Americans. White skinned juries in the US, it seems, have real trouble believing brown-skinned defendants, especially if testimony against them is from fellow white-skinned witnesses – and here’s the kicker – IT REALLY HELPS TO HAVE A BROWN-SKINNED PROSECUTOR, WHOSE PRESENCE GLOSSES OVER THE GLARING RACIAL BIAS!

By the way, Gillman while appearing to be a grandfatherly academic was living a parallel life, one in which he regularly advised a wide network of Wall Street traders through a professional matchmaking system. Those relationships afforded him payments of $100,000 or more a year — on top of his $258,000 pay from the University of Michigan — and travels with limousines, luxury hotels and private jets. Quite clearly, he had long been exposed to ‘mesmerizing’ wall street types for at least two decades prior to meeting Martoma.

Once a dedicated researcher, Gilman made a sharp shift in his 60s, from a life dedicated to academic research to one in which he accumulated a growing list of financial firms willing to pay him $1,000 an hour for his ‘medical expertise’, while he was overseeing drug trials for various pharmaceutical makers. Among the firms he was advising was another hedge fund that was also buying and selling Wyeth and Elan stock, though the authorities, Preet Bharara included have given no sign they have questioned those trades. Why would they? Asking too many questions about Gillman might have impugned the testimony of their star witness in the Martoma case!

Gillman retired shortly after charges were filed in the Martoma case. And, the University of Michigan abruptly and publicly severed its ties to him.

A spokesman for the university, Pete Barkey, said the parting of ways was “caused by the faculty member’s unethical and illegal behaviour during the conduct of external activities.”

In exchange for prosecutors’ not charging Dr. Gilman, he agreed to share information about “any matters” they want to ask him about.

Martoma, 39, husband and father of three, on the other hand, by all accounts wasn’t afforded the same treatment, and could face a prison term that far exceeds his entire life span.

For more on Dr. Gillman, read the New York Times Article, QUIET DOCTOR, LAVISH INSIDER: A PARALLEL LIFE Information on Stephen Cohen, please see a related article, which appeared in an issue of The Newyorker, last spring: Is Stephen A. Cohen Buying Off the US Government?

49 Comments on “Move Over Rajat, Make Room for Mathew

  1. I really find it despicable that people like Dr. Gillman who get paid big bucks for slipping inside information on drug trials to traders get off scot-free. It’s not that I don’t think Marthoma deserves to go to jail – but my brother-in-law is a lawyer, who works for a prominent NY law firm, and he says that the government didn’t prove its case. Meanwhile, Cohen is still a free man, and Gillman gets to keep his millions while a father of three is convicted on the basis of his prior bad acts. It’s a sad day for American Justice – and a sad day for our profession (the medical profession) when doctors become complicit in illegal financial transactions, and get away with it!

    • Thanks for your comment. It’s not that we think that the Guptas, Martoma’s et al definitely deserve to be held to account. Insider trading prevents the free and fair functioning of the marketplace, and is detrimental to the average retail investor, people whose retirement funds are invested in the market. We say – they should ALL go to hail; the problem is that Preet Bharara is only interested in guys named Gupta, Rajaratnam, Martoma, Kumar, etc. It’s the selective prosecution that we find disgusting!

  2. Yeah…there’s an article about Gillman in which a 17 year-old girl says the 81 year old scientist was chatting her up on a first class flight to which she was upgraded form economy in which he bragged about his lifestyle. Ew!!!!!

  3. Yes…I remember reading that, and was grossed out by it.

    • An editorial comment from The Global Calcuttan: In fairness to Dr. Gillman, we will post the link to the article about his alleged hitting on the 17 year old on a plane and bragging about his money. We would not have approved these posts had we not seen the article ourselves – but unlike other web-magazines or blogs, we feel a sense of responsibility to prevent slander or misrepresentation of the subject of any article or posting thread. Stay tuned.

  4. I’m now not sure the place you’re getting your information, however good topic. I must spend a while learning much more or working out more. Thanks for fantastic information I used to be in search of this information for my mission.

    • Hi, For this article, we got our info. from court transcripts, the New York Times, Bloomberg, the Wall Street Journal, and the brilliant legal experts at In a related article on Preet Bharara, our managing editor had spoken to former Wall Street Journal correspondent and author of The Billionaire’s Apprentice on the Gupta/Rajaratnam cases as well as Peter Godwin, Journalist, Author and President of PEN American Center in New York. Both added valuable input and context. We endeavour to bring you the most thorough and reflective take on topical articles of interest to us and our readership. Any feedback you have is most welcome, and if you do enjoy what we write, please like us on FB and tell your friends!

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