US doctor pleads guilty in securities case
By LARRY NEUMEISTER
Associated Press
An Ivy League-trained doctor turned health care hedge fund manager pleaded guilty Monday to a conspiracy charge for illegally evading $30 million in losses by obtaining inside information from a fellow doctor.
Joseph "Chip" Skowron III, 42, of Greenwich, Connecticut, entered the plea to conspiring to commit securities fraud and obstructing justice, agreeing to serve a five-year prison sentence.
Skowron oversaw six health care-related hedge funds when he worked at FrontPoint Partners LLC. Authorities say he evaded millions of dollars in losses in 2007 and 2008 by paying a prominent French doctor for secrets on the progress of a liver disease drug.
Sentencing will be Nov. 18 for Skowron, who has remained free on $6 million bail after posting his multi-million-dollar home as collateral.
An investigation into Skowron's trading activities began after the Securities and Exchange Commission spotted trading irregularities in the stock of a liver disease drug maker.
The probe led to a guilty plea in a securities fraud case by a French doctor, Yves Benhamou, who cooperated with prosecutors and is awaiting sentencing. Authorities said the obstruction of justice allegation came after Skowron urged Benhamou to lie to the SEC.
Benhamou, widely known in Europe and the United States as an expert in the treatment of hepatitis C, worked as a consultant to Human Genome Science Inc., a biopharmaceutical company, on clinical drug trials evaluating the safety of the drug Albuferon for the treatment of chronic hepatitis C. Albuferon is the commercial name for a drug the company developed and planned to market with Novartis AG, a Switzerland-based pharmaceutical company.
Authorities said Skowron gave Benhamou cash, including $10,000 on one occasion, paid some of his expenses and offered him future employment with a biotechnology hedge fund in exchange for tips about the drug trials.
In December 2007, Benhamou tipped Skowron about serious adverse effects that occurred with two patients involved in the Albuferon clinical trial. One of the patients later died.
A month later, another tip enabled Skowron to sell all of his fund's shares before the stock of Human Genome Science dropped 44 percent following an adverse public announcement.
In a statement, FrontPoint said Skowron violated the company's principles, compliance policies and its code of conduct.
Skowron studied at Vanderbilt University before he obtained his medical degree in 1998 from Yale University. He also earned a doctorate in cell biology from Yale before beginning his residency at Harvard University.
He was on the board of directors of the disaster relief agency AmeriCares Foundation, where his volunteer work took him to Kosovo, Cuba, India and Baton Rouge (Louisiana), after Hurricane Katrina.
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