Ontrak Founder Faces Trial Over Alleged $20M Insider Trading Scheme
America ı By Rochdi Rais
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The May 2021 disclosures contained information Ontrak's compliance officers believed was necessary to include, that key clients might cut back on enrollment levels. They also mentioned it'd be appropriate to modify its guidance to revenue of $80-85 million, reflecting current expectations "with our existing health plan customers regarding outreach pool," "budget considerations" and "timing of expansions," jurors heard.
Cigna isn't mentioned in name in those earnings reports, as Ontrak had a policy not to name clients in such disclosures as some clients have complained about that in the past, Willingham added.
Then, Peizer implemented his Rule 10b5-1 trading plan on Aug. 13, 2021, but again, only after the company submitted its earnings reports, which reiterated the same information found in the May 2021 reports, and warned of the risk of Ontrak losing any one of its biggest clients, jurors heard.
Cigna met with Ontrak on Aug. 18, 2021, five days after Peizer's trading plan was already in place. Peizer believed the meeting would discuss Ontrak's proposals and Cigna's renegotiation of the contract and thought Ontrak was in good shape. However, it was at that meeting that Cigna announced its plan to terminate its deal by the end of 2021, jurors heard.
Peizer didn't dump stocks to avoid losses, and if anything, sought to gradually sell his stock warrants over time, Willingham said. He also set up his trading plans after seeking advice from two law firms and receiving approval from Ontrak's executives to do so, Willingham added.
Testimony will begin Thursday.
The government is represented by Matthew Reilly and Della Sentilles of the U.S. Department of Justice's Fraud Section and Ali Moghaddas of the U.S. Attorney's Office for the Central District of California.
Peizer is represented by David K. Willingham, Yelena Kotlarsky and Jamie A. Lang of King & Spalding LLP and Stephen A. Best, Angela M. Papalaskaris and Stephen Cook of Brown Rudnick LLP.
The case is U.S. v. Terren Peizer, case number 2:23-cr-00089, in the U.S. District Court for the Central District of California.
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