An FBI investigation into an $8 million insider trading scheme at pharmaceutical giant Mylan came into sharper relief this week when a federal grand jury in Pittsburgh indicted the former chief information officer.
Ramkumar Rayapureddy, 54, of Upper St. Clair, was charged Wednesday under seal with conspiring with another former Mylan executive, Dayakur Mallu, to fraudulently trade Mylan securities based on nonpublic inside information Rayapureddy obtained in advance of corporate announcements.
The case was unsealed Thursday when Rayapureddy made a court appearance before a U.S. magistrate judge.
Mallu, an information technology executive formerly of McDonald but now living in Florida, pleaded guilty last year to his role in the scheme. His case is pending.
From 2017 through 2019, Rayapureddy tipped off Mallu multiple times with insider Mylan information concerning FDA drug approvals, financial earnings and a 2020 merger with a division of Pfizer, the grand jury said.
Mallu used the information to execute trades in Mylan securities, and in return Rayapureddy, or someone acted as his designee, received cash payments.
U.S. Magistrate Judge Maureen Kelly Thursday released Rayapureddy on a $500,000 bond.
Mallu, who joined Mylan in 2011 and left in 2017, is awaiting sentencing.
He had waived indictment by grand jury and pleaded to what prosecutors call a criminal information, which is typically an indication of cooperation against someone else.
His case mentioned the second conspirator as a former chief information officer at Mylan but did not name him.
Mallu reported directly to Rayapureddy, and the two texted regularly and attended community and family events together. Using the insider information, Mallu placed trades in Mylan stock and shared the profits with Rayapureddy through cash transactions in India, according to the FBI and the criminal investigation division of the IRS.
Mallu made more than $4 million in net profits and avoided losses as a result of the trading scheme.
He also admitted that he sent false information to his tax preparer related to a computer company he owned in Michigan.
Prosecutors had previously moved to forfeit $4.2 million seized from Mallu’s TD Ameritrade account as fraud proceeds.
He remains free on bond.
Torsten covers the courts for the Pittsburgh Post-Gazette, but he's currently on strike. Reach him at jtorsteno@gmail.com.
