A former executive at the Gaithersburg biotechnology firm MedImmune Inc. is scheduled to plead guilty today to criminal charges related to his allegedly improper stock trades, according to court papers.
Federal prosecutors last month charged Eric I. Tsao with securities fraud, citing his purchase and sale of stock in a company with which MedImmune was secretly considering a merger.
They also charged that Tsao lied to regulators at the Securities and Exchange Commission who were investigating the stock sales when he told them under oath in 2002 that he was not responsible for the transactions. He said his wife engineered the trades.
"Your wife must have come to your office, sat down at your desk, got onto your computer, and placed this order?" an SEC lawyer asked Tsao in October 2002, according to the court document. "Correct," Tsao responded, according to the document.
The SEC last year brought related civil insider trading charges against Tsao, who made profits of more than $150,000 on a series of allegedly improper sales of stock in three companies with which MedImmune did business. Federal prosecutors said in court papers that Tsao used at least some of the money to cover "household expenses."
Court records indicate that Tsao is scheduled to appear before U.S. District Judge Henry H. Kennedy Jr. this morning for arraignment.
Channing Phillips, an assistant U.S. attorney in the District, declined to comment, as did Paul R. Berger, an SEC enforcement division lawyer handling the case.
Richard A. Rossman, Tsao's lawyer, did not return calls yesterday.
Tsao, who started work as a senior scientist at MedImmune in 1992, most recently was a vice president of process and manufacturing sciences, last year's SEC complaint said. He left MedImmune only recently, according to a spokeswoman for the company.
As part of a proposed merger, MedImmune officials asked Tsao to help evaluate a Dutch facility controlled by U.S. Bioscience Inc. in September 1999. Soon after he learned of the trip, Tsao used an online brokerage account to buy 6,000 shares of U.S. Bioscience. He sold the stock after the deal was announced, locking in $18,000 in profit.
Tsao had a "duty to safeguard" the confidential information and had signed documents promising not to disclose or trade stock based on information he obtained as part of his job, according to criminal filings by prosecutors.
Legal experts said the Tsao charges are the latest in a series of criminal cases brought against defendants who allegedly tried to impede ongoing regulatory investigations. In 2002, the accounting firm Arthur Andersen LLP was convicted of obstructing an SEC probe related to client Enron Corp. Earlier this year, a jury convicted Martha Stewart of obstructing justice and lying to investigators about a personal stock sale.