A press conference was held at the Melbourne Police Department Thursday morning with multiple law enforcement agencies in attendance. A multi-agency drug task force that targeted drug traffickers in Brevard County named Operation Spring Cleaning resulted in 64 arrests, the seizure of more than $130,000 and large amounts of methamphetamine, cocaine, cannabis, and illegal prescription drugs. Operation Spring Cleaning
Los Angeles, California – In a case that redefines the boundaries of insider trading enforcement, former Ontrak CEO Terren Scott Peizer was sentenced Tuesday to 42 months in federal prison for orchestrating a stock-trading scheme that allowed him to dodge over $12.5 million in losses — all while using a legal mechanism meant to protect executives from exactly this kind of accusation.
Peizer, 65, who split his time between Puerto Rico and Santa Monica, becomes the first executive convicted in a federal insider trading prosecution based solely on the misuse of Rule 10b5-1 trading plans. These plans were designed to offer corporate insiders a lawful way to sell stock without running afoul of insider trading laws, provided they established those plans in good faith and without foreknowledge of nonpublic material information. But prosecutors say Peizer exploited the rule’s structure to offload his holdings just as trouble was looming for his company.
The scheme unfolded during the summer of 2021. At the time, Peizer knew that Ontrak’s most critical contract — a deal with its largest customer — was unraveling. Despite this knowledge, he initiated two 10b5-1 trading plans in May and August, timing them just before negative news about the contract became public. In both cases, Peizer began selling shares the very next trading day, bypassing industry-standard “cooling-off” periods meant to prevent precisely this kind of misuse. He did so despite warnings from two brokers, a senior company executive, and legal counsel.
On August 19, 2021, just six days after his final trading plan was adopted, Ontrak publicly confirmed the customer had canceled its contract. The company’s stock plummeted by more than 44 percent.
A federal jury found Peizer guilty in June 2024 on one count of securities fraud and two counts of insider trading after a 10-day trial. In addition to prison time, U.S. District Judge Dale S. Fischer ordered Peizer to pay a $5.25 million fine and forfeit more than $12.7 million in profits made from the scheme.
The case represents a milestone for securities enforcement. Until now, prosecutions involving 10b5-1 plans were rare and largely theoretical. But Peizer’s conviction signals a more aggressive federal posture toward executives who manipulate supposedly protective mechanisms to enrich themselves at the expense of investors.
