Martoma, an ex- financial lieutenant to billionaire hedge fund executive Steven Cohen, deserves punishment less harsh than the 15.7-year to 19.6-year prison term proposed by probation officials, defense attorney Richard Strassberg argued in legal memo filed late Tuesday.
Calling such punishment "irrational," Strassberg argued the recommendation was wrongly based on total SAC Capital gains from the insider trading, rather than Martoma's personal profits.
The attorney urged U.S. District Court Judge Paul Gardephe to weigh Martoma's devotion to his family and history of helping others. He also argued against any financial fines, and filed more than 100 support letters from the former trader's relatives and friends.
"Mr. Martoma is not perfect, but he is a good man," wrote Strassberg. "To prevent a sentence disparity; to recognize his lower level of culpability relative to other insider trading cases; to credit his lifetime of volunteer and charitable work ... we respectfully request leniency in his sentence."
Martoma, 40, was convicted in February of conspiracy and two counts of securities fraud. Prosecution evidence showed he ingratiated himself with two doctors who gave him secret and disappointing information from tests on an experimental drug to treat Alzheimer's disease.
Martoma then called Cohen, setting in motion an SAC Capital sell-off that allegedly generated $276 million in profits gained and losses avoided, prosecutors charged.
The verdict, handed up by a seven-woman, five-man jury in Manhattan federal court, theoretically means the Florida father of three faces up to five years in prison term on the conspiracy count, and up to 20 years on each securities fraud charge. But the sentencing decision rests with Gardephe, who presided! over the nearly month-long trial.
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Federal prosecutors are scheduled to file their punishment recommendation before Martoma's scheduled June 10 sentencing.
Martoma was the eighth SAC Capital employee found guilty on insider-trading charges. The convictions played a central role in the hedge fund's guilty plea to similar charges in a record $1.8 billion November settlement that permanently bars it from handling investments for outsiders.
Martoma, who did not testify at trial, maintained he did nothing wrong. But prosecutors charged he obtained an illegal trading edge between 2006 and 2008 by getting secret evidence from drug trials on a drug being developed by pharmaceutical firms Elan and Wyeth.
Dr. Sidney Gilman, an Alzheimer's disease expert and the prosecution's star witness, told jurors he met regularly with Martoma through a company that linked matched financial professionals with expert researchers. Gilman, who chaired the safety monitoring committee for the Alzheimer's drug trial, admitted he gave inside information to Martoma because he came to regard the trader as a friend.
Dr. Joel Ross, a clinical investigator on the drug trial, similarly testified that he shared confidential information from the drug testing with Martoma.
Martoma's defense focused on challenging both doctors' credibility and accuracy. In particular, cross-examination questioning by Strassberg showed Gilman initially had no recollection of a key meeting in his University of Michigan office to discuss the drug trial results.
But federal prosecutors presented records of cell phone calls and other evidence that appeared to buttress the testimony of Gilman and Ross.
Cohen was not charged in the case — though Gilman testified that federal investigators once told him the SAC Capital founder was their ultimate target.
Cohen instead faces ! an admini! strative proceeding by the Securities and Exchange Commission for allegedly failing to provide proper supervision of Martoma and other employees who became involved in insider trading.
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