Former Mylan executive gets prison time in $8 million insider trading scheme

A former Mylan executive who pleaded guilty to insider trading in the drug company’s stock will serve two years in federal prison.

Dayakar Mallu, 54, of Orlando, Fla., is expected to report to a federal correctional facility to begin his sentence by Nov. 19 for his role in what the government said was an $8 million scheme.

He must also forfeit $4.2 million and pay $7 million in restitution to the IRS for unpaid taxes.

Mallu, formerly of McDonald, was sentenced Tuesday by U.S. District Judge W. Scott Hardy after pleading guilty to one count of conspiracy to commit securities fraud and one count of filing of a false tax return on September 17, 2021.

Mallu worked for Mylan – which has since merged with Pfizer’s generic business, Upjohn, to become Viatris – from May 2011 to March 2017, spending the last three years as vice president of global operations and technology. ‘information.

After Mallu left, a company executive still at Mylan gave him insider, nonpublic information about the company’s future business dealings, prosecutors said.

Mallu used this information, the government said, to inform its stock purchases between September 2017 and July 2019.

Charges dismissed

The federal government initially identified the corporate executive as Ramkumar Rayapureddy of Upper St. Clair and charged him in November 2022 with one count of conspiracy to commit securities fraud and three counts of securities fraud movable.

But the charges against Rayapureddy were dismissed without prejudice in January, two weeks before the scheduled trial date, based on a government request.

In its motion, the government only wrote that a dismissal was “in the interests of justice”.

Rayapureddy’s defense lawyer, however, said the case was dismissed because the charges against him were false.

Many documents relating to the case remain under seal and it is unclear whether they could provide additional insight into the government’s decision not to prosecute Rayapureddy.

In a joint filing regarding the continued sealing of the documents, Rayapureddy’s lawyers wrote that they wanted the records made public.

“Among other things, Mr. Rayapuredy is no longer a defendant and the government has wrongfully accused him of a serious crime,” one of his lawyers wrote.

“Although the government has biasedly dismissed the case, it has refused Mr. Rayapuredy’s request to issue a press release announcing the dismissal of the charges, and has yet to remove from the (Ministry of Defense) website Justice), nor even updated, the press release announcing the charges – now dismissed – in this case.

The law firm representing Rayapuredy said in a press release at the time that it was prepared to prove at trial that the evidence against him was fabricated and that their client had not provided any inside information to Mallu.

“With the trial fast approaching and knowing that the jury would soon hear the defense, the government had no choice but to dismiss the case,” they said.

The charges against Rayapureddy were filed more than a year after Mallu pleaded guilty to insider trading.

Rayapureddy is listed online as Viatris’ chief information officer. A message left with the company Tuesday was not immediately returned.

“Ubiquitous and unrepentant”

Assistant U.S. Attorney Matthew Reilly of the U.S. Justice Department’s Fraud Section said Mallu made at least five transactions based on the information he received.

For example, in September 2017, the same day Mallu learned that Mylan’s generic option for Copaxone, a multiple sclerosis treatment, was close to being approved by the Food and Drug Administration, he purchased nearly $800,000 worth of Mylan stock.

Four days later, when the approval was announced, the value of Mallu’s shares increased by almost $700,000.

Reilly urged Hardy to sentence Mallu to the upper end of the range of 46 to 57 months, calling Mallu’s crimes “pervasive and unrepentant.”

Mallu, the prosecutor said, “preyed on the company he worked for and took advantage of it.

“This is, overall, deliberate criminal conduct.”

Mallu’s repeated non-payment of taxes also demonstrates blatant disregard for the law, the prosecutor said.

The charges against Mallu alleged he made a net gain of $4.2 million, which he shared with his co-conspirator.

But on Tuesday, Mallu’s lawyer argued that his client actually lost $6 million on trades he made.

Defense attorney Aitan Goelman asked Hardy for a sentence well below the guidelines — just one day of incarceration — arguing that the proposed punishment was artificially inflated based on the amount of money involved in the insider trading.

“Mr. Mallu lost money, overall, in this trade,” Goelman said.

But the government told Hardy that just because Mallu was bad at insider trading doesn’t mean he should be given a break.

“His goal was to make as much money as possible,” Reilly said. “He just wasn’t good at it.”

Judgment clouded

Goelman also told the court that over the past eight years, defendants sentenced for white-collar fraud have received penalties below the guideline range — depending on their personal circumstances or other factors.

Mallu was also entitled to one, Goelman said.

Several letters submitted on Mallu’s behalf — all of which appear to be under seal in the court filing — described him as a loving son, husband and father, the judge said.

He served as a mentor to others and volunteered at charitable organizations, the court continued.

Since Mallu was charged, his lawyer said, his health has deteriorated, he has lost all his money and is now left with an “impossible to repay” debt.

“He has already paid a heavy price for his crimes,” Goelman said, “an elderly man in disgrace, unemployable, poor and facing retirement.”

Mallu apologized for his actions and thanked the court for allowing him to travel to India while he was on bail to see his ailing father before his death.

The accused expressed regret and shame, saying that before his crimes he felt he had always served as a role model for others.

“My actions went against everything I believe in,” Mallu said. “I still struggle to understand how I allowed myself to fall into such selfish and careless behavior.

“I let my greed cloud my judgment.”

Mallu said he regrets the impact his crimes had on his family.

“They shouldn’t be punished because of my mistakes,” he said. “I will never stop feeling guilty for putting so many burdens on my children.”