On June 23, 2025, the founder and former CEO of the behavioral healthcare company Ontrak Inc. will get sentenced for insider trading in connection with two Rule 10b5-1 trading plans. The potential twenty years in prison he faces should terrify every healthcare executive in America and highlights the Biden administration’s war against healthcare entrepreneurs. Essentially, any healthcare entrepreneur who made “too much” money while Biden was in office faced the risk of criminal prosecution and a jury trial involving thinly disguised class warfare—regardless of the executive’s reliance on legal counsel. One can only hope that the Department of Justice under President Trump bases its criminal prosecutions on criminal intent, not the wealth (or political affiliation) of the target defendant.
In 2023, the Biden Department of Justice indicted its founder and CEO, Terren Peizer, for insider trading based on a publicly filed 10b5-1 plan. 10b5-1 plans exist for the explicit purpose of allowing company founders and other insiders to sell some of their hard-earned stock by publicly disclosing their intended sales in advance. In 2021, Mr. Peizer wanted to exercise and sell warrants in Ontrak that would otherwise expire that same year. Ontrak’s Board of Directors and compliance officer both approved Mr. Peizer’s 10b5-1 plan and he publicly filed it, before selling small amounts of stock every day for a period of many months.
That would be the end of the story with respect to any other 10b5-1 Plan filed in the last twenty years. But as part of the Biden crusade against conservative healthcare entrepreneurs, Kenneth Polite, Biden’s Assistant Attorney General for the Criminal Division (who is no longer with the DOJ under President Trump), claimed the DOJ needed to pursue criminal charges to “hold accountable medical professionals, corporate executives, and others.” In practice, that meant the Biden DOJ prosecuted healthcare executives for actions they reasonably believed were appropriate in reliance on their legal counsel and other advisors.
For instance, during its four years in office, the Biden administration overreached in prosecuting many healthcare executives and entrepreneurs including, but not limited to, Mr. Peizer, Kenia Valle Boza, Sam Halper, Aaron Durall, Jeffrey Madison, Susan Hertzberg, Christopher Grottenthaler, and Ron Elfenbein. In each case, the Biden DOJ told juries that it was representing the United States of America against individuals who “got rich” by defrauding Medicare. It is nearly impossible to convince an average jury of any individual’s innocence when the “United States of America” says they “line[d] their own pockets at the expense of shareholders,” as Biden’s United States Attorney for the Central District of California, Martin Estrade, said about Mr. Peizer. Particularly when the individuals in question are multi-millionaires.
In another instance, the Biden DOJ indicted Jeffery Madison, a conversative Texas Republican school board member and rural hospital CEO, for conspiring to fraudulently induce Medicare referrals to his hospital. Mr. Madison won a civil case over the same issue when the “United States of America” was not the opposing party, disregarding the higher burden of proof necessary to secure a criminal conviction, the Biden DOJ insisted on proceeding to a criminal trial. There, it convinced a jury to convict Mr. Madison despite undisputed evidence that Mr. Madison’s hospital lost money on each and every Medicare patient it saw. In other words, Mr. Madison and his hospital had no motivation to induce Medicare referrals; even so, Biden’s DOJ secured a conviction by focusing on issues with no relevance to the charges, such as money Mr. Madison’s hospital made from privately insured patients and Mr. Madison’s individual wealth and use of private planes. More importantly, like Mr. Peizer, Mr. Madison relied on advice from his lawyers, who approved the hospital program in question.
Likewise, Christopher Grottenthaler relied on legal advice from two major international law firms (Sidley Austin and DLA Piper) in running his laboratory, True Health Diagnostics, but the Biden DOJ forced him to plead guilty after he saw Mr. Madison and Mr. Peizer convicted despite their own reliance on counsel.
Occasionally, juries were able to see through the Biden DOJ’s bias and, in separate and unrelated cases, juries acquitted Kenia Valle Boza, Sam Halper, and Aaron Durall. And, while it is unusual given our judicial systems’ deference to jury findings, judges sometimes correct jury errors. For instance, while a jury convicted Susan Hertzberg, the trial judge disregarded the Biden DOJ’s request for a long prison term and sentenced her to probation.
Similarly, a federal judge appointed by President Obama, Judge James Bredar, recognized the inequity of the Biden prosecution of Ron Elfenbein, the owner of an urgent care clinic, who was prosecuted for allegedly submitting false bills to Medicare. In contrast to the Hertzberg case, he was not lenient in his sentencing, but threw out the jury verdict in full, ruling that no reasonable and unbiased jury could have convicted Mr. Elfenbein based on the actual evidence submitted by the government.
The Biden DOJ’s targeting of Mr. Peizer may have been its most high profile attack and the Biden DOJ attorneys responsible parlayed it into lucrative private section jobs, each likely paying over a million dollars a year. For instance, Mr. Polite, Biden’s criminal chief at the DOJ, stepped down less than a month after Mr. Peizer’s conviction to become a partner at Sidley Austin. Likewise, Mr. Polite’s deputy, Nicole M. Argentieri, who was quoted in a DOJ press release touting Mr. Peizer’s conviction, left the DOJ once President Trump was elected to become a partner at the New York law firm, Cravath Swain & Moore. Finally, Mr. Estrada, Biden’s U.S. Attorney for Central California, resigned the Friday before President Trump’s inauguration to join the California law firm of Munger Tolles & Olson.
In the words of Mr. Peizer’s lawyer, Dave Willingham of King & Spalding: “Mr. Peizer did far more than your average prudent Chairman and board member. There was more than just reasonable doubt here, as the evidence showed that Mr. Peizer is an innocent man. His conviction is a miscarriage of justice. Ontrak’s CFO approved Mr. Peizer’s trading plan after discussions with Ontrak’s Chief Legal Officer. If there was ever a case where someone should be able to rely on that advice and approval, it is this one.” On the eve of Mr. Peizer’s sentencing, one can only hope that President Trump’s administration is fully reviewing each and every healthcare conviction obtained by Biden’s DOJ while recognizing that one should not go to prison for relying on the advice of counsel and other professionals – even if the administration in power at the time disagrees with that advice.
Ryan Downton, the managing partner of The Texas Trial Group (TheTexasTrialGroup.com), regularly defends executives accused of breaching their fiduciary duties and committing health care fraud and has recovered (and protected) over a billion dollars for healthcare providers underpaid by insurance companies.
