Former Vassar Brothers Medical Center physician Slava “Stanley” Kaplan has been sentenced to five months in prison for his role in a $4 million insider trading scheme.
U.S. District Court Judge Gregory H. Woods also sentenced Kaplan to three years of supervision after prison and ordered him to forfeit the $472,054 he gained from the scheme, Jan. 5. in Manhattan federal court.
Kaplan “profited handsomely, provided the information to others so that they could profit, and expressed an intention to engage in further unlawful insider trading,” assistant prosecutor Samuel P. Rothschild told the judge in a sentencing letter.
Kaplan, 45, of Hopewell Junction, was a pulmonologist at Vassar Brothers in Poughkeepsie. He was arrested on securities fraud charges this past July and pled guilty in September.
The scheme centered on Alexion Pharmaceuticals Inc., of Boston. Joseph M. Dupont, an Alexion executive, knew that the company was planning to buy Portola Pharmaceuticals, of San Francisco, and shared details with a childhood friend before the buyout was publicly disclosed.
Dupont’s friend tipped off Kaplan, enabling him to buy Alexion shares and stock options when they were cheap and then sell for a profit when prices rose after the buyout announcement.
Kaplan tipped off a relative and Dr. Paul Feldman, a nephrologist at Vassar Brothers, according to court records. Feldman tipped off relatives and several colleagues.
In all, the insider information netted $4,040,596 for 10 people.
Judge Woods sentenced Dupont, who did not trade on the information, to probation for three years and fined him $75,000. Feldman, who allegedly pocketed $1.7 million, has pled not guilty and is scheduled for a jury trial beginning May 21.
The U.S. Probation Office recommended that Kaplan be imprisoned for at least 18 months. Rothschild concurred.
Kaplan’s attorneys, Rachel Maimin and Logan Vickery, recommended probation and no imprisonment.
“Stanley committed this crime during a once-in-a-lifetime period of stress, fear, exhaustion and extraordinarily bad judgment,” his attorneys argued in a sentencing memorandum.
Kaplan was working 80 hours a week at three hospitals during the peak of the Covid-19 pandemic, while quarantined from his family for weeks at a time, working amidst corpses that couldn’t be placed in overcrowded morgues, and worrying that he would become infected and die.
Despite having an autoimmune disorder that made him vulnerable, he declined an option to work with less infectious patients and chose to work with the sickest.
He has already suffered great shame, “caused by the press coverage in this case,” his attorneys said. And having fled Belarus when he was 15 and being granted asylum in the United States, he is “particularly ashamed of breaking the laws of the country that saved his life.”
Vassar Brothers fired him, and he is fighting to protect his medical licenses in several states and to support his wife and children.
“Imprisonment is not only contrary to Stanley’s interests,” his lawyers said, “but also to justice and to society, which, on balance, need Stanley more as a doctor and a father than a prisoner.”
Rothschild countered that Kaplan’s crime was particularly serious because he not only acted on the insider information for himself, he passed it on to others.
The crime did not consist of a single act or momentary lapse of judgement during the worst moments of the pandemic, Rothschild said, but was a matter of repeated choices that spanned months.
“Neither retribution, nor respect for law, nor general deterrence would be vindicated by imposing no term of imprisonment,” the sentencing letter states, “on an individual who illegally traded on inside information, reaping illicit profits of nearly a half a million dollars, and then passed that information along to others so that they too could earn ill-gotten gains.”
Judge Woods ordered Kaplan to surrender to the Bureau of Prisons on Feb. 5.