Patent agent and sibling plead guilty to securities fraud - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Patent agent and sibling plead guilty to securities fraud

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SAN DIEGO (CNS) - A former Sequenom patent agent and his brother pleaded guilty Tuesday in San Diego to conspiring to use inside information to trade stock options in the publicly traded biotechnology company.

Ex-employee Aaron Scalia, of San Diego, and his sibling, Stephen Scalia of Baltimore, entered their guilty pleas to conspiring to commit securities fraud before U.S. Magistrate Judge Ruben Brooks.

Their pleas are subject to final acceptance by U.S. District Judge Barry Ted Moskowitz.

According to court documents and admissions during the defendants' guilty pleas, Sequenom employed Aaron Scalia as a patent agent in its legal department, where he had regular contact with scientists working on Sequenom's confidential and proprietary intellectual property.

In that capacity, the defendant also had special access to the scientists' work products and facilities, prosecutors said.

As a Sequenom employee, he had a duty to refrain from disclosing any confidential information he learned during the course of his employment, and had been warned against using company information to engage in insider trading, according to the U.S. Attorney's Office.

Court documents show that from October 2008 through 2009, Aaron Scalia disclosed material nonpublic information about Sequenom to his brother on two occasions, knowing that the inside information would be used to purchase stocks or stock options.

In both instances, Stephen Scalia passed the inside information to his college friend, Brett Cohen, who then tipped off his uncle, David Myers, who actually purchased securities using the inside information for a gross profit of more than $600,000, prosecutors said.

In December, Cohen and Myers pleaded guilty to conspiracy to commit securities fraud. They have yet to be sentenced.

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