US prosecutors and a man known as “King of Political Intelligence” for allegedly passing secret government information to traders arrived at an agreement under which securities fraud charges against him will be dropped.
(Bloomberg) — US prosecutors and a man known as “King of Political Intelligence” for allegedly passing secret government information to traders arrived at an agreement under which securities fraud charges against him will be dropped.
As long as David Blaszczak, a Washington consultant and former Medicare official, complies with the deferred prosecution agreement for three months, the US intends to dismiss two remaining charges it could have retried him on after appeals courts threw out earlier convictions, prosecutors told US District Judge Lewis A. Kaplan in a letter filed late Monday.
The decision caps a defeat for US prosecutors who had hoped to extend laws barring people from profiting on secret corporate information to government decision-making. It’s also a victory for the defendants, who maintained their innocence.
Blaszczak was sentenced to a year in prison after being convicted in 2018 of giving two hedge funds advance word on changes to government reimbursement rates. A federal jury found that he provided the clients with tips he picked up from ex-colleagues who were still in government. Blaszczak was found guilty of 10 of the 18 counts against him.
But in early 2021, the US Supreme ordered a new look at the convictions of four men, including Blaszczak, in the insider-trading case. The high court set aside a federal appeals court ruling that had lowered the bar for bringing insider-trading cases.
As a result the government dropped all but two of the counts of convictions.
The Blaszczak trial provided a look into the political intelligence business in the nation’s capital, showcasing how former government officials can leverage relationships with ex-colleagues to give investor clients insights into potentially market-moving regulatory actions.
The case is US v. Blaszczak, 17-cr-357, US District Court, Southern District of New York (Manhattan).
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