US prosecutors agreed to drop charges against the former “King of Political Intelligence” and two others for allegedly trading on secret government information, six years after they were first charged.
(Bloomberg) — US prosecutors agreed to drop charges against the former “King of Political Intelligence” and two others for allegedly trading on secret government information, six years after they were first charged.
David Blaszczak, a Washington consultant and former Medicare official, his former government colleague Christopher Worrall, and Robert Olan and Theodore Huber, who were partners at Deerfield Management, were convicted of some of the charges after a trial in 2018.
After a series of appeals, the government was forced to drop all the charges against Worrall. Blaszczak, Olan and Huber continued to face a possible new trial on conspiracy charges. But those will be dropped in three months, assuming the defendants stay out of trouble until then, prosecutors told US District Judge Lewis A. Kaplan in court papers filed late Monday.
The decision caps a defeat for prosecutors who had hoped to extend laws barring people from profiting on secret corporate information to government decision-making. It’s a victory for the defendants, who maintained their innocence.
David Esseks, a lawyer for Olan, said in a statement that the result is a “long-overdue exoneration” of his client and that the charges should never have been filed. Barry Berke and Dani James, who represent Huber, called the prosecution a “misguided insider-trading case,” and said their client did nothing wrong.
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 the four defendants. The government dropped most of the charges, agreeing that the convictions couldn’t be left in place.
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).
(Adds details of case in second paragraph.)
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