Former Chairman of the Board of Publicly Traded Company Pleads Guilty to Insider Trading Scheme
TRENTON, NJ—The former chairman of the board of Home Diagnostics Inc ., a health products company that previously traded on the NASDAQ stock exchange, admitted today to insider trading, United States Attorney Paul J Fishman announced. George Holley, 72, of Norwalk, Connecticut, pleaded guilty mid-trial to two counts of an indictment charging him with securities fraud. The government rested its case yesterday, and the defendant entered his plea this morning before United States District Judge Joel A Pisano in Trenton federal court. According to documents filed in this case and statements made in court: Holley was the founder of Home Diagnostics Inc ., a Florida-based company that sold diabetes management products, such as blood glucose monitoring systems.
In February 2010, Home Diagnostics was purchased by Nipro Corp. a Japanese Company, for a purchase price of $11.50 a share, approximately 90 percent more than Home Diagnostics’ then-share price. Holley, who at the time served as Home Diagnostics’ chairman of the board, admitted that in the weeks before the public announcement of the sale to Nipro, he disclosed inside information concerning the sale to his cousin and friend and told them to buy Home Diagnostics stock just three weeks before the merger was publically announced. News of the merger caused Home Diagnostics stock to nearly double in price.
Holley, who was released on bond, faces a maximum prison term of 20 years and a maximum fine of $5,000,000 on each count. Sentencing before Judge Pisano is scheduled for December 4, 2012. United States Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B Ward in Newark; and the United States Securities and Exchange Commission’s Division of Enforcement, Washington, DC ., Headquarters, under the direction of Robert S Khuzami, for the investigation leading to today’s plea. The government is represented by Assistant United States Attorneys Judith H Germano, Chief of the Economic Crimes Unit, and Christopher J Kelly of the United States Attorney’s Office Economic Crimes Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
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