A former biotech king has been officially dethroned. David Blech, a pioneer in the industry, was once worth more than $300 million. Now, he is set to begin a four-year prison sentence with about $11 million in debt.
Blech was one of the first financial backers of the industry giant Celgene, rare disease specialist Alexion Pharmaceuticals, and cancer drug developer Ariad Pharmaceuticals, to name a few.
But the former Biotech king is far from that now. The New York Times reports that he will soon begin a four-year-prison term on a conviction of manipulating stock prices.
Blech’s $300 million fortune was lost to reckless borrowing and stock trading in the hopes of getting more money. As a result, his Wall Street firm, D. Blech & Company, collapsed in 1994.
The collapsed dragged biotech shares down with it on a day some now call Blech Thursday. Bloomberg notes that it is the second time the dethroned biotech pioneer has been convicted of fraud.
But last time David Blech got off with probation. This time, US District Judge Colleen McMahon wasn’t so lenient. As she rejected his plea for leniency, McMahon stated, “I’m afraid that you had all the mercy that you’re going to gt. Now is the time for punishment, which you didn’t get last time.”
The four-year prison sentence comes after Blech pleaded guilty in 2012 to two separate schemes, which took place in 2007 and 2008. He will also serve three years of supervised release and pay $1.3 million in fines. He will serve his time in federal prison in Fort Dix, New Jersey, beginning September 18.
Blech’s first problems started when he and his brother had a falling out over the direction of their company in 1990. He started his Wall Street firm, which underwrote stock offerings. He attempted to prop biotech stocks up when they began weakening by buying up shares with borrowed money.
When creditors began calling, Blech attempted to stall by making several sham trades. It didn’t work. D. Blech & Company collapsed, he checked into a psych ward for a bit, and his wife filed for divorce. He went to court, but Judge Kevin T. Duffy was lenient because of his cooperation and his bipolar disorder.
However, Blech broke his promise to Duffy, who said during his 199 sentencing, “God forbid you should ever come back to this courtroom.”The former biotech king who fell from grace hopes to appeal his sentence, claiming it to be excessive.
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