Ex-Medtronic consultant convicted of insider trading; Twin Cities insurance agent acquitted

A federal jury last week convicted a former Medtronic consultant and acquitted a Twin Cities insurance agent who were both accused of participating in an insider trading scheme linked to the acquisition of an Israeli medical device company in 2018.

Doron “Ron” Tavlin, 68, of Minneapolis, was convicted of one count of conspiracy to commit insider trading and 10 counts of securities fraud and aiding and abetting securities fraud after a 10-day trial in St. Paul.

That same jury found David Jay Gantman, 58, of Mendota Heights, not guilty of all charges against him. A third defendant — Afshin “Alex” Farahan, 57, of Los Angeles — pleaded guilty in 2022.

According to the evidence presented at trial, Tavlin learned about a secret, pending acquisition by Medtronic of his Mazor Robotics, where he worked as vice president of business development, in 2018.

Mazor Robotics specialized in robotics for spinal procedures, and it was valued at $1.6 billion when it was acquired by the Ireland-based Medtronic, which also has a headquarters in Fridley.

Tavlin then illegally tipped off Farahan, his friend, about news of the imminent acquisition and told him to keep the news secret. Farahan knew the deal would likely result in a boost to Mazor’s stock price and quickly bought more than $1 million of the company’s stock throughout August and September 2018.

Farahan was accused of relaying the same inside information to Gantman, another friend, who then made multiple purchases of Mazor securities ahead of its September 2018 acquisition. Prosecutors said Farahan netted more than $245,000, and Gantman made $255,000 in profit by selling the securities quickly after the deal was publicized.

Prosecutors said Farahan paid Tavlin for the secret information about the pending deal — including a $25,000 kickback about a year later.

Tavlin was meanwhile interviewed by investigators from the Financial Industry Regulatory Authority examining certain trades of Mazor securities before its acquisition because of his knowledge of the secret negotiations. Tavlin falsely denied recognizing any names on a list of those who bought Mazor securities, which included Farahan.

Medtronic announced plans to acquire Mazor in September 2018. The $1.7 billion deal closed in December 2018.

The criminal case was the product of an FBI investigation. The federal Securities and Exchange Commission in 2022 also sued the three men and asked the court to compel them to “disgorge all funds received from their illegal conduct” with interest and be subject to civil penalties.

Senior U.S. District Judge Donovan Frank has not yet set a sentencing date for Tavlin and Farahan. Frank, who is also overseeing the civil proceedings, paused the lawsuit’s proceedings pending the resolution of the criminal case.

In a statement Wednesday, Matthew Forsgren, an attorney for Tavlin, said that “all inferences, no matter how outlandish, had been drawn against” his client at the outset of the case.

“Unfortunately, this remained the case during a hard-fought trial,” Forsgren said. “In a case riddled with false testimony by the government’s main witness, we are pleased with the acquittal of Mr. Gantman, and we believe that Mr. Tavlin similarly should have been acquitted. For his part, Mr. Tavlin will continue to pursue his rights with the class and dignity that he has demonstrated during this nightmarish process.”

Gantman on Wednesday described the Justice Department’s contention that both he and Farahan received $500,000 in illegal profits as “terribly misleading” because the $255,000 he received was legally obtained, he said.

Gantman said he was “incredibly grateful” to the jurors for their service and to his attorney, William Mauzy.

“This has been a painful, stressful and frightfully expensive ordeal,” Gantman said. “With my name now cleared, now is the time to rebuild my life and look for new opportunities.”

Mauzy said, at trial, he stressed Gantman “was a sophisticated trader who did his own research and made his own independent decisions” to buy Mazor securities. Gantman was aware of a distribution agreement between Medtronic and Mazor and knew they were combining technologies into a new product planned to be rolled out at a conference around the same time Medtronic’s buyout of Mazor ended up happening.

“But he did not act on inside information, didn’t receive inside information and did his own research,” Mauzy said.

Mauzy said he hopes the SEC will back away from proceedings against Gantman in light of the acquittal.

“We hope to convince them not to go forward with that, and if they do, we’ll be prepared to try it again if we have to,” Mauzy said.

Star Tribune staff writer Burl Gilyard contributed to this report.