Terren Scott Peizer, Securities Fraud and Insider Trading, California 2023

LOS ANGELES – A former CEO and chairman of the board of directors of Ontrak Inc., a Henderson, Nevada-based publicly traded health care company, was found guilty by a jury today of engaging in an insider trading scheme to avoid losses of more than $12.5 million.

Terren Scott Peizer, 64, a resident of Puerto Rico and Santa Monica, was found guilty of one count of securities fraud and two counts of insider trading.

“Corporate executives and other insiders hold major power in our economy, but with that power comes responsibility,” said United States Attorney Martin Estrada. “It is important that executives, such as this defendant, be held accountable when they line their own pockets at the expense of shareholders. That is why I created our office’s Corporate and Securities Fraud Strike Force. Today’s verdict sends a clear message that everyone, including corporate executives, must abide by the law.”

When Peizer learned significant negative news about Ontrak, he set up Rule 10b5-1 trading plans to sell shares before the news became public and to conceal that he was trading on inside information, said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division.

According to evidence presented at a 10-day trial, Peizer avoided losses of approximately $12.5 million by entering into two Rule 10b5-1 trading plans while in possession of material, non-public information concerning the serious risk that Ontrak’s then-largest customer would terminate its contract.

In May 2021, Peizer entered into his first 10b5-1 trading plan shortly after learning that the relationship between Ontrak and the customer was deteriorating and that the customer had expressed serious reservations about continuing its contract with Ontrak. Peizer later learned that the customer informed Ontrak of its intent to terminate the contract. Then, in August 2021, Peizer entered into his second 10b5-1 trading plan approximately one hour after Ontrak’s chief negotiator for the contract confirmed to Peizer that the contract likely would be terminated.

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