Dighton Police Chief Shawn Cronin charged with insider trading: 'A ticket to prison'

DIGHTON — Dighton Police Chief Shawn Cronin has been charged with insider trading and surrendered himself to authorities early Thursday morning, according to the United States Attorney’s Office for the Southern District of New York.

In 2020, Rehoboth resident Joseph Dupont, Cronin and two men from New York state engaged in an insider trading scheme surrounding the announcement of a pharmaceutical company’s acquisition of another, the U.S Attorney’s Office said.

Cronin and the two men from New York collectively made more than $2.2 million in illegal profits by trading in stocks and options based on non-public information Dupont misappropriated from his employer, according to the U.S. Attorney’s Office.

What is the Dighton police chief charged with

Cronin, 43, has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison, according to a written statement from the U.S. Attorney’s Office.

Cronin, who has served on the Dighton Police Department since 2006, was a sergeant when the illegal trading allegedly took place in 2020. Cronin was promoted to lieutenant in September of 2021 and to chief in August of 2022.

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How the U.S. Attorney's Office says the insider trading happened

Dupont was a vice president at Alexion Pharmaceuticals, Inc. and, on Jan. 31, 2020, was informed of Alexion’s upcoming acquisition of Portola Pharmaceuticals, Inc., according to the U.S. Attorney’s Office. But before that acquisition was publicly announced, in April 2020, Dupont told his childhood friend, Cronin, about the acquisition.

Not only were Cronin and Dupont childhood friends, but Cronin supervised Dupont in Dupont’s capacity as a reserve officer, the statement said.

Based on the information Dupont gave Cronin, Cronin bought shares of Portola stock as well as out-of-the-money call options for Portola stock, the statement said.

In turn, Cronin shared the insider information with Jarett Mendoza, another childhood friend of both Cronin’s and Dupont’s, the U.S. Attorney’s Office said. And Cronin allegedly assisted Mendoza in purchasing Portola stock in the days before the acquisition was publicly announced.

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Cronin also allegedly shared the same information with Slava Kaplan, also known as Stanley Kaplan, of Hopewell Junction, New York, a friend of Cronin’s, who was also known to Dupont, the statement said.

Cronin shared the insider information with Kaplan both so that Kaplan could trade in advance of the acquisition and so that Kaplan would assist Cronin in formulating trading strategies to maximize Cronin’s own insider trading profits, the U.S. Attorney’s Office said.

Kaplan purchased Portola shares and options and, in turn, shared the insider information about the upcoming acquisition with, among others, Paul Feldman of Poughquag, New York, a friend and colleague of Kaplan’s, the statement said. Based on the insider information Feldman allegedly “aggressively bought Portola call options,” the statement said. Feldman, for his part, shared the insider information with others, including a work colleague, according to the U.S. Attorney’s Office.

Alexion’s acquisition of Portola was publicly announced on the morning of May 5, 2020. Portola’s stock increased significantly in value.

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Cronin, Kaplan, Feldman “and their tippees sold their shares of Portola and call options for Portola stock, reaping millions of dollars of illegally obtained trading profits,” the U.S. Attorney’s Office said.

“Insider trading is not a quick buck. It’s not easy money. It’s not a sure thing. It’s cheating. It’s a bad bet. It’s a ticket to prison,” U.S. Attorney Damian Williams said in the written statement.

Also, unsealed Thursday were charges against Mendoza, who has pled guilty pursuant to a cooperation agreement, the U.S. Attorney’s Office said.

According to a written statement from the Securities and Exchange Commission, the SEC also filed insider trading charges against the same five people.

How much did they make in 'illegally obtained trading profits'

According to the SEC’s complaint, filed in U.S. District Court for the Southern District of New York, the defendants’ approximate ill-gotten gains were as follows: Cronin - $72,000; Mendoza - $39,000, Kaplan - $472,000; and Feldman - $1.73 million.

The other traders who allegedly received nonpublic information from either Kaplan or Feldman saw profits of an additional $1.7 million, the SEC said.

After realizing their profits, Kaplan texted Feldman in Russian, “Let’s hope our golden goose will continue laying golden eggs!” the SEC said.

Where do the cases against Joseph Dupont, Stanley Kaplan and Paul Feldman stand

Dupont, 44, who also surrendered to authorities Thursday, has been charged with one count of Title 15 securities fraud and one count of tender offer fraud, each of which carries a maximum sentence of 20 years in prison, and one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison.

Kaplan, 45, who was arrested Thursday, has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison.

Feldman, 48, who was also arrested Thursday, has been charged with six counts of securities fraud under Title 15 and six counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison.

Where did Shawn Cronin turn himself and what's next

Cronin self-surrendered at the FBI’s office in Massachusetts Thursday morning, according to a spokesperson for the U.S Attorney's Office for the Southern District of New York. He had his initial appearance in the U.S. District Court for the District of Massachusetts Thursday afternoon. He was released on an unsecured bond in the amount of $250,000. His next appearance will be in the Southern District of New York before the assigned District Judge, Judge Gregory H. Woods, but there is no scheduled appearance date as of yet.

This article originally appeared on The Taunton Daily Gazette: Dighton Police Chief Shawn Cronin accused of insider trading by SEC