Testifying in SAC Case, Doctor Admits Sharing Data

When Mathew Martoma, a hedge fund manager at SAC Capital Advisors, met Joel S. Ross, a prominent physician specializing in Alzheimer’s research, for the first time at a Midtown Manhattan restaurant, Mr. Martoma shocked Dr. Ross with a prescient question.

He wanted to know if any of the patients in Dr. Ross’s trial at the time had experienced brain swelling.

Dr. Ross, whose patient was admitted to a hospital months earlier for this exact reason, was taken aback because the information was not publicly known.

At the time, in early 2007, Dr. Ross was a principal investigator in a clinical trial of an Alzheimer’s drug for two drug companies, Elan and Wyeth, and had signed several confidentiality agreements pledging not to disclose any details about his clinical trial.

On Tuesday, a jury seated in the federal courthouse in Lower Manhattan heard the testimony of Dr. Ross, one of two doctors that prosecutors say Mr. Martoma corrupted to engineer what the government has called the most lucrative insider trading scheme in American history.

“Mr. Martoma, arguably to me, was one of the most well-informed outside individuals I ever met,” Dr. Ross said.

“He stood apart,” Dr. Ross told the jury of five men and seven women at Mr. Martoma’s criminal trial, adding that after that first meeting he shared confidential information with Mr. Martoma on more than one occasion. He was not asked specifically why he decided to work with Mr. Martoma.The government contends that Mr. Martoma cultivated relationships with Dr. Ross and a second doctor, Sidney Gilman, an 81-year-old retired University of Michigan professor who also was conducting clinical trials of the Alzheimer’s drug, to extract confidential information from them. The government argues that Mr. Martoma traded on that information, helping SAC to avoid losses and make profits of $276 million.

The jury on Tuesday was shown emails revealing that more than a year after their initial meeting, Dr. Ross and Mr. Martoma arranged to meet in Chicago the same night the final results of Elan’s second phase of clinical trials were revealed to a panel of investigators â€" a full day before the company announced the unexpectedly disappointing results.

“Also, just confirming we are on for Monday evening at 7:30pm,” Mr. Martoma wrote to Dr. Ross on July 22, 2008. Dr. Ross wrote back, “8PM better. Lobby of Hyatt McCormick confirmed.”

Dr. Ross, who runs the Memory Enhancement Center in Eatontown, N.J., and has been an investigator for almost every medical trial for Alzheimer’s disease medication over the last two decades, has signed a nonprosecution agreement with the government that gives him immunity.

Eugene Ingoglia, assistant United States attorney, presented the jury with evidence of email correspondence and telephone calls between the two men, as well as deposit slips showing payments that Dr. Ross received from Mr. Martoma for their meetings. One bank slip from March 2008 showed a $4,500 deposit with the handwritten note referring to the consulting firm HCRC, which arranged meetings between the two men, “HCRC-Consult Matt.”

Dr. Ross described his relationship with Mr. Martoma as “professional” and said that from March to November 2007, he had about six or seven meetings with Mr. Martoma.

But the jury was also shown correspondence between the two men revealing they met outside of the meetings that the consulting firm HCRC set up. In one email, Dr. Ross invited Mr. Martoma to the grand opening of his research center, and then later asked Mr. Martoma to help connect him with biotechnology companies that might be interested in conducting their trials at his new center.

“Need a favor,” Dr. Ross wrote to Mr. Martoma in an email on May 5, 2008. “I appreciate your help and will be happy to return the courtesy in other ways.”

When Mr. Ingoglia asked him to elaborate on what this meant, Dr. Ross replied that he was referring to more details about the trial he was conducting.

Mr. Martoma, dressed in a maroon tie and a brown suit, sat staring ahead for much of the day. But when Mr. Ingoglia showed the email correspondence between him and Dr. Ross, he watched Mr. Ingoglia and the jury carefully.

The jurors, who include a New York University professor and a bus driver, also watched closely as lawyers for both sides and Judge Paul G. Gardephe huddled together several times in the afternoon session to discuss objections raised by the defense.

Earlier in the day, before the jurors entered the courtroom, the defense raised concerns about the potential conflict of interest of one of the jurors, an employee at PricewaterhouseCoopers. Her employer is the auditor for SAC. Judge Gardephe said he was reluctant to raise the issue with this juror because it appeared that she had no prior knowledge of the fact.