NEW YORK – A federal jury will decide whether Mathew Martoma, the former hedge fund manager, cheated when he worked at SAC Capital Advisors, but there’s no denying he cheated when he falsified his grades at Harvard Law School.
In 1999, Martoma was expelled from Harvard for creating a false transcript when he applied for a clerkship with a federal judge, court papers unsealed Thursday showed. Martoma used a computer program to change several grades, and then sent the forged transcript to 23 judges as part of the application process.
Then, during a Harvard disciplinary hearing to determine whether he should be expelled, Martoma tried to cover his tracks by creating a fake paper trail that included fabricated emails and a counterfeit report from a computer forensics firm that Martoma had created to help conceal his activities.
After Harvard expelled him, Martoma, who at the time was known as Ajay Mathew Thomas, legally changed his name to Mathew Martoma.
Nearly a decade after he was kicked out of Harvard, federal prosecutors contend, Martoma carried out one of the largest insider trading schemes while working at Steven A. Cohen’s hedge fund. He is charged with using inside information to help SAC avoid losses and generate profits totaling $276 million by recommending the firm sell all of its holdings in two drug companies, Elan and Wyeth, in July 2008.
The disclosure of Martoma’s expulsion from Harvard came as a jury of seven women and five men was seated for his trial. Lawyers for the prosecution and defense are expected to deliver opening statements Friday in a Manhattan federal courtroom.
It is not clear whether the bizarre twist in the case will ever be introduced into evidence. Lou Colasuonno, a spokesman for Martoma, said: “This event of 15 years ago is entirely unrelated to, and has no bearing on, this case.” He added that the prosecution, in raising the issue, was trying to “unduly influence the ongoing court proceedings.”
The prosecution argues that Martoma’s deception is relevant to show that he has the technical knowledge to alter computer files. That could be relevant if Martoma’s lawyers seek to argue he never received a copy of a confidential report that discussed a drug being developed by Elan and Wyeth. Prosecutors said Martoma’s pattern of deception at Harvard is “evidence of the defendant’s capacity to destroy or fabricate electronic forensic evidence.”