[Marxism] Greed is the real dementia
lnp3 at panix.com
Sun Dec 16 10:34:48 MST 2012
NY Times December 15, 2012
Quiet Doctor, Lavish Insider: A Parallel Life
By NATHANIEL POPPER and BILL VLASIC
Speaking in front of a packed convention hall in Chicago, a top
Alzheimer’s researcher, Sidney Gilman, presented the results of a drug
trial that had the potential to change the fate of elderly patients
But as he worked through the slides, it became clear to the audience on
that day in July 2008 that the drug was not delivering and that its
makers, Elan and Wyeth, could lose out on blockbuster profits. Along
with other Wall Street analysts in the front rows, David Moskowitz
zapped messages to clients to dump shares of the companies. “I can
remember gasping” at the results, Mr. Moskowitz said.
Little did anyone in the room know that 12 days earlier, Dr. Gilman had
e-mailed a draft of the presentation to a trader at an affiliate of one
of the nation’s most prominent hedge funds, according to prosecutors,
allowing the fund, SAC Capital, and its affiliate to sell over $700
million of Elan and Wyeth stock before Dr. Gilman’s public talk.
Last month, the trader was arrested on insider trading charges after Dr.
Gilman agreed to cooperate with prosecutors to avoid charges.
While he appeared a grandfatherly academic, Dr. Gilman, 80, was living a
parallel life, one in which he regularly advised a wide network of Wall
Street traders through a professional matchmaking system. Those
relationships afforded him payments of $100,000 or more a year — on top
of his $258,000 pay from the University of Michigan — and travels with
limousines, luxury hotels and private jets.
The riddle for Dr. Gilman’s longtime friends and colleagues is why a
nationally respected neurologist was pulled into the high-rolling life
of a consultant to financiers and how he, by his own admission, crossed
the line into criminal behavior.
“My first reaction was, ‘That can’t possibly be right,’ ” said Dawn
Kleindorfer, a former student of Dr. Gilman’s at Michigan.
What is clear is that Dr. Gilman made a sharp shift in his late 60s,
from a life dedicated to academic research to one in which he
accumulated a growing list of financial firms willing to pay him $1,000
an hour for his medical expertise, while he was overseeing drug trials
for various pharmaceutical makers. Among the firms he was advising was
another hedge fund that was also buying and selling Wyeth and Elan
stock, though the authorities have given no sign they have questioned
His conversion to Wall Street consultant was not readily apparent in his
lifestyle in Michigan and was a well-kept secret from colleagues. Public
records show no second home, and no indication of financial distress.
Nevertheless, he was willing to share a glimpse of his lifestyle with a
17-year-old student whom he sat next to on a flight from New York to
Michigan a few months ago, telling her how his Alzheimer’s research
allowed him to enjoy fine hotels in New York and limousine rides to the
“I wouldn’t say he was egotistical because he didn’t come across as
obnoxious, but he definitely mentioned the kind of lifestyle that he
had,” said the student, Anya Parampil, who had been upgraded to first class.
Dr. Gilman’s role in the case involving SAC Capital has largely been
overshadowed by the possibility that investigators may be narrowing in
on the firm’s billionaire founder, Steven A. Cohen. Mr. Cohen and his
firm have not been accused of wrongdoing in acting on the insider
Colleagues now say Dr. Gilman’s story is a reminder of the corrupting
influence of money. The University of Michigan, where he was a professor
for decades, has erased any trace of him on its Web sites, and is now
reviewing its consulting policy for employees, a spokesman said.
The case also turns the spotlight back onto the finance world’s expert
networks, which match sources in academia and at publicly traded
companies — like Dr. Gilman — with traders at hedge funds and financial
The networks have been a central target of prosecutors in the sprawling
insider trading investigations that have resulted in dozens of
convictions in recent years.
Some networks have closed, and many are shifting their focus outside the
financial world, hoping to make up revenue by consulting for corporate
Days after the charges were filed, Dr. Gilman retired and has gone into
seclusion at his home on a wooded lot overlooking the Huron River on the
outskirts of Ann Arbor, which is listed in public records as worth
$400,000. He declined to open the door to a reporter last week,
directing questions to his lawyer. “I can’t discuss it,” he said. “I’m
In a one-paragraph statement, his lawyer, Marc Mukasey, said: “Dr.
Gilman’s accomplishments in medicine, research and education speak for
themselves. He moved the ball way down the field in helping to find a
cure for those who suffer from Alzheimer’s disease.”
The University of Michigan has severed its ties to Dr. Gilman and a
spokesman, Pete Barkey, said the case was “caused by a faculty member’s
unethical and illegal behavior during the conduct of external activities.”
Dr. Gilman graduated with top honors from the University of California,
Los Angeles, trained at Harvard Medical School and moved into a life of
teaching. He married Carol Barbour, a psychoanalyst, in 1984. People who
know him almost invariably mention his fatherly demeanor, and his gift
Brett Kissela, a resident under Dr. Gilman in the late 1990s, remembered
him as “a little bit formal” but warm and generous. When faculty members
had to sign up for an undesirable task, Dr. Gilman would start by
signing up himself, Dr. Kissela remembered.
Dr. Gilman helped turn Michigan into a national center for research in
dementia, and eventually the university’s neurology lecture series was
named after him.
He was well-known for shaping trials for Alzheimer’s drugs and served on
Food and Drug Administration drug advisory panels. J. Timothy
Greenamyre, who has known Dr. Gilman for about 30 years, remembered
turning to him for help with ethical issues after succeeding him at a
top industry journal, Neurobiology of Disease.
“He always gave me rock-solid advice and counseled me to maintain
transparency so as to avoid even the appearance of a conflict of
interest,” Dr. Greenamyre said.
For most of his career, almost the only work Dr. Gilman did outside
Michigan was in national advisory positions and academic journals that
provided almost no compensation, according to his 43-page résumé. But in
2000, as he scaled back his academic and editing duties, colleagues
said, Dr. Gilman’s desire for recognition remained and he began
consulting for two pharmaceutical companies.
He was soon contacted by one of the first expert network firms, Gerson
Lehrman, which began in 1998 by enlisting academics in health care and
connecting them with financial firms. Experts on drug development, and
especially those involved in drug trials, are sought by investors
because the fortunes of a pharmaceutical company can rise or fall with
the fate of a single treatment.
Dr. Gilman quickly became a popular consultant, working with more than
40 clients and participating in 50 to 100 meetings a year, people with
knowledge of his work said. Each meeting paid around $1,000.
In 2006, the SAC Capital trader, Mathew Martoma, asked Gerson Lehrman to
find an expert who knew about an Alzheimer’s drug under development,
bapineuzumab, according to the affidavit filed by the F.B.I. agent in
the case. Dr. Gilman was chairman of the board monitoring trials of the
drug. Gerson Lehrman connected the men, but told Dr. Gilman not to
discuss the drug, according to the criminal complaint in the case.
Within weeks, Dr. Gilman was speaking with Mr. Martoma shortly after
confidential meetings about the drug trials, the complaint said.
To avoid arousing suspicion at Gerson Lehrman, Dr. Gilman began asking
Mr. Martoma to falsely request meetings on other topics, the complaint
said. Ultimately the men had 42 meetings. Gerson Lehrman declined to
comment on the relationship.
At first, Mr. Martoma’s fund, CR Intrinsic, bought shares of the firms
developing the Alzheimer’s drug, Wyeth and Elan, and encouraged SAC’s
founder, Mr. Cohen, to do the same, prosecutors say. When Dr. Gilman
told Mr. Martoma that the trial results were not as good as expected,
the funds sold all their shares, netting gains and avoiding losses
totaling $276 million, the complaint said.
Kenneth Fischbeck, a neurologist who has known Dr. Gilman for years,
said that it might have been the same urge that led him to be such a
good teacher — a desire to share information — that also led him into
“It’s a cautionary lesson for all of us in academic medicine,” Dr.
Fischbeck said. “I think it could happen to anybody if they’re not
careful.” The complaint said that Dr. Gilman eventually came to view Mr.
Martoma “as a friend and a pupil.”
Besides contracting with expert networks, Dr. Gilman was hired to serve
on scientific advisory boards of financial firms including Pequot
Capital. His connection to Pequot has rarely been mentioned, but that
fund built up its own $25 million position in Wyeth stock and a stake of
around $20 million in Elan, according to Pequot’s public filings, at the
same time Dr. Gilman was overseeing drug trials for the two companies.
While the records don’t reveal the exact dates of trades, Pequot sold
its Wyeth position in the quarter before both drug companies’ shares
fell in 2007, and it sold its Elan position at some point during the
quarter when it dropped, the filings show. Pequot went out of business
in 2010 after admitting its own insider trading scandal involving
Neither Dr. Gilman’s lawyer, Mr. Mukasey, nor prosecutors would say
whether investigators are questioning Dr. Gilman about his other
relationships. In exchange for prosecutors’ not charging Dr. Gilman, he
has agreed to share information about “any matters” they want to ask him
about. Dr. Gilman stopped meeting with Mr. Martoma in 2008, the
complaint said, but continued to consult for Gerson Lehrman until this
year, people familiar with his work said.
Dr. Gilman’s life changed starkly on Nov. 20, when Mr. Martoma was
arrested. Dr. Gilman agreed to pay federal authorities $234,000 of the
money he had earned from Wyeth and Gerson Lehrman. He has been
ostracized by the university, and the consequences are broader still as
a debate over the propriety of professors’ receiving payments from
financial firms has been rekindled.
“What is the argument for sanctioning your full-time faculty, using your
brand name, to advise the financial sector?” said Dr. Garret A.
FitzGerald, a cardiovascular researcher at the University of
Pennsylvania, who has been outspoken about conflicts of interest.
“What’s the public good there?”
Stephanie Steinberg contributed reporting.
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