Broward cardiologist and GOP fundraiser Zachariah cleared of insider stock trading charges

By Dan Christensen,

Dr. Zachariah P. Zachariah

In a stinging rebuke to the government, a federal judge Monday cleared Fort Lauderdale heart doctor and top Republican fundraiser Dr. Zachariah P. Zachariah of civil insider stock trading charges.

In her 60-page ruling, U.S. Magistrate Linnea R. Johnson said the U.S. Securities and Exchange Commission “failed entirely” to prove its assertion that Zachariah used inside information to collect nearly $1 million in illegal profits trading a pair of Florida stocks in 2005.

“The evidence simply is not sufficient to show that Dr. Zachariah, a prominent cardiologist who has given millions of dollars to charity, who has been appointed to and considered for prominent public service positions, and who has been a devoted father to his sons, would be willing to jeopardize his reputation and his career and put his family in harm’s way all for the opportunity to make what was an insignificant profit to him in light of his means at that time,” Johnson said.

“I’ve always had great faith in our justice system and I knew I’d be fully vindicated in the end,” said Zachariah, the director of the Fort Lauderdale Heart Institute at Holy Cross Hospital and a past chairman of the Florida Board of Medicine. “The government has put me through a long ordeal and I’m happy to be able to devote 100 percent of my attention to my medical practice and my public service.”

SEC Assistant Regional Director Glenn Gordon said it was too soon to say whether his office would appeal. “We got the decision late yesterday and we are reviewing it,” he said.  

Zachariah, a past member of the state university’s Board of Governors and a current trustee at Nova Southeastern University, has been a top Republican money man for more than two decades. He is close to the Bush family, and was an elite fundraiser for both Presidents Bush and former Gov. Jeb Bush.

According to court records and trial testimony, President George W. Bush planned to nominate Zachariah – or “Zee-Zee,” as the former president called him – as U.S. Surgeon General in 2006. The SEC investigation changed those plans.

The SEC accused Zachariah in 2008 of using nonpublic information to profit three years earlier trading the stock of generic drug maker IVAX and jail operator Correctional Services Corp., whose shares rose sharply during takeovers.

The non-jury trial ran 12 non-consecutive days over a seven week period that ended Oct. 8. It included testimony from a pair of corporate chieftains involved in those takeovers – Teva Pharmaceuticals Chairman Phil Frost and George Zoley, CEO of Boca Raton prison contractor, The Geo Group.

Throughout the trial, defense counsel Curtis Miner sought to portray Zachariah as “a model public citizen” who served selflessly on public boards and gave generously to charity.

“He has the trappings of wealth, a nice house, a boat. Does that make him a greedy person? No. It just means he’s successful,” Miner said. Zachariah was also represented by former federal judge and U.S. Attorney Tom Scott.

Zachariah, who lives in a home on the Intracoastal Waterway in Sea Ranch Lakes, took the witness stand to deny wrongdoing. In his testimony, however, he portrayed himself as a physician consumed with playing the stock market between patient visits – likening his strategy of placing “hundreds and hundreds” of trades a year to “gambling.”

Huge stock losses

He said he lost upwards of $20 million over the years.

“I made millions of dollars in the market, and I lost millions of dollars in the market,” he told SEC trial attorney Christopher Martin. “One time I took a portfolio from $40 million up to $60 million in two months. You’d think I was a mini-Warren Buffet. Now, you think I’m a fool.”

The government relied heavily on written records to document Zachariah’s trades, phone calls and inside corporate connections. But the few witnesses the SEC called to testify ended up helping Zachariah, according to the judge.

In her order, Johnson accused the SEC of employing flawed logic and low blows to try and make its case stick.

“The lengths to which the SEC went to attempt to attack the credibility of non-party witnesses, including its own witnesses, highlights the weakness of its claims,” Johnson wrote. “For example, the SEC referred to (Zachariah’s son) Reggie Zachariah as a ‘drinker’ in its closing argument and slides – a bizarre allegation that was entirely unsupported by the record evidence.”

The SEC argued that Reggie, who worked on the Correctional Services acquisition while employed in GEO’s merger department, was one of several possible sources of inside information that his father could have traded on when he bought about 80,000 Correctional Services shares for less than $3a share between May and July 13, 2005. Dr. Zachariah sold those shares for a large profit shortly after GEO announced on July 14 that it would pay $6 per share.

Alternatively, the SEC suggested Zachariah could have learned of the merger from his friendship with Zoley or his political work as a paid GEO consultant.

SEC’s ‘multiple choice theory’

Judge Johnson derided the SEC’s assertions as a “multiple choice theory.” Instead, she said she believed the “credible” testimony of Zachariah, his son and Zoley who denied discussing the merger in advance.

Likewise, the judge discounted the SEC’s allegations about Zachariah’s IVAX trades.

Zachariah was on IVAX’s board in July 2005 when he allegedly got a call from Frost informing him that IVAX had agreed to be acquired by Teva for $26 a share. The SEC said that phone records showed that within minutes Zachariah bought 35,000 IVAX shares for less than $21 a share.

IVAX’s directors were at the time forbidden by law from trading the company’s stock.

Johnson, however, ruled that the phone records were contradictory and unreliable. She also held that Zachariah’s violation of IVAX’s insider trading policy was not intentional. The company had sent the policy to Zachariah after he joined the board that spring, but he testified that he never received or reviewed it.

The judge’s findings were also a vindication of sorts for two other Holy Cross physicians charged along with Zachariah – his brother and fellow cardiologist Dr. Mammen Zachariah and endocrinologist Dr. Sheldon Nassberg.

The SEC had alleged that Zach Zachariah used the inside he information he’d obtained to tip both men. Mammen Zachariah, also a former chairman of the Florida Board of Medicine, and Nassberg paid large sums one year ago to settle their cases.

But the judge’s order suggests they should not have done so. Johnson wrote that she believed the testimony of both men who denied getting any inside information.

Print Friendly, PDF & Email

Latest comments

  • More dirtbag Democrats on the warpath. Lost again, jerks.

  • It is cause for pride in America whenever justice succeeds! U.S. Magistrate Linnea R. Johnson was discerning, fair, and honest in rendering her well-founded, sound ruling. May Dr. Zachariah’s continuing faith, life-saving work in Cardiology, philanthropy, and leadership be blessed.

  • Zeke, here got lucky. Let me guess went before a Federal Judge appointed by George Bush. Zeke here was caught on the phone getting inside info on a certain stock,hangs up and immediately buys a ton of the stock to make a huge profit. And dabbleing on the stock exchange in between patients? Sounds like a greedy man trying to keep up w/ the Jones? Never mind fine should have went to jail. You got lucky Gandi….

  • A “guess” does not always equal a factual truth. First: Magistrate judges are not appointed by the President – they are appointed by a majority vote of the federal district judges of a particular district. Secondly: Dr. Zachariah was not “caught on the phone getting inside info”. That was just another example of an incorrect “guess” & assumption made by the S.E.C.. U.S. Magistrate Linnea R. Johnson based her decision on facts, not “guesses, and the facts cleared Dr. Zachariah of all charges. We can all learn the danger of jumping to conclusions based on “guesses”. And thirdly: would a “greedy man” become a cardiologist, save innumerable lives, successfully achieve “the American dream”, and then share his good fortune with generous contributions to the American Heart Association, the worldwide City of Hope, the Museum of Science and Discovery, Nova University, the Broward PACE Center for girls, and numerous other charities, organizations, and civic endeavors? In 2000, he donated $2 million to help build the new Heart and Vascular Center at Holy Cross Hospital in Fort Lauderdale. He was also awarded the Ellis Island Medal of Honor for his philanthropic and leadership activities. The facts show that Dr. Zachariah is anything but “greedy” – in fact he is very generous and has given much of his money and of himself to the betterment of our community and others.

  • Model citizen? HARDLY! Z-Zach (Zachariah Zachariah, MD) as he is known in the hosptial has a reputation for hitting on anything and everybody with pitiful persistence. He is blind to the rejection and the behind his back laughter. It is thought that the cheap, ugly, DIY plugs have caused brain damage.

  • Surprisingly all those greedy crooks inside traders, ponzi schemers are so genrous in giving to charities,…Well to cearte good image.

  • Many, not all, dcs who come from SE Asia such as India, Pakistan or similar counytries are very greedy but smart, In their own country they earn very little and remain middle class. When they come to America some of them, cardiologist and other specialist make a lot of money and then study American culture of giving to charities and political parties to create connections. And then take advantage of those connections

  • Knowing Zach – NOT Zeke – personally and professionally, intimately and extensively, for several years (do not read into this anything more that what it says), to read posts from people who do not know the person behind the news story, yet feel compelled, even righteous, in commenting on him angers me.

    Zach came to America as a young man with a (very) few dollars in his pocket, intelligence, goals and aspirations. He applied his pocket change to his survival, while he capitalized on his intelligence and plans. He worked hard. He became educated – something many ‘commentators’ on this post would be well served to also do – and used that education to pioneer methodologies in treatment in his field, Cardiology. Countless people are alive today, or lived long and meaningful lives they otherwise would have been deprived, as a DIRECT result of Dr. Zachariah’s contributions.

    He is wholly devoted to his patients and to his field. So much so, he and family members invested personal finances into creating a state-of-the-art Cardiac Care facility at the hospital where he has served out the majority of his career. Yes, you read that accurately: he Invested in the institution that serves not only his patients but all cardiac-related patients (including those whose Cardiac physician is Not a Zachariah). The investments Dr. Zachariah made were not solely money-making, interest-earning nor ‘greed-based’.

    I will address “Nurses” slander of Dr. Zachariah. He did at times have a reputation in and out of the hospital, even in local media and which he happily played to, as a ‘playboy’. However, this was always lighthearted and irreverent, never a consequential characterization .Even the name of his boat is a double entendre “Kind of Hearts”.

    Truth: Zach was married to his son’s mother for all of his early adult life, becoming a single man (through a very amicable parting) at an age that most men are comfortably settled in their home life, routines, so forth. Dating can be unpleasant for many of us, but for a man who had been a married father or two for the majority of his adult life, well, it is foreign. Did Zach delight in the attentions of beautiful, intelligent, successful women? Of course he did. He would be crazy not to (or ‘brain damaged!’) He enjoyed women. So what? I wonder, however, how this alleged ‘reputation’ in the hospital for hitting on ‘anything’ and ‘everybody’ – which is a very broad spectrum, and as such, wholly inaccurate – has anything to do with his citizenship? How does his dating impact his status as a model citizen? If anything, your own description of him as persistent and unaffected by other’s opinions of him, undeterred by rejection actually serve to describe desirable traits in a citizen in a leadership role.

    I also ‘know’ many of Dr. Zachariah’s connections, and yes, they are quite impressive – a veritable who’s who in all walks of professional life – but trust me when I tell you, they benefit equally from their association with Zach.

    Dr. Zachariah Zachariah is a good man. A kind, caring, decent man – on every level. If you do not know this, then you do not know him. To comment here on on his character, his behavior, his though-processes, his motivations, or any thing would require a personal knowledge from which to speak with clarity, accuracy and truth. Otherwise, such posts are an embarrassment of your ignorance. And as such, worthless.

    I know that in Social Media, people love to find a topic about which they feel they have superior morals, values and ethics and espouse away. I assure you that in this particular case some of you are very, very wrong about that – which leads me to believe that is regularly the case. I recommend with all due consideration that you save your opinions for those situations about which you are indeed informed and about which your opinion matters. This is not that place.

    And while I realize that my comments in defense of Zach are not necessary, especially at this late date; are hardly needed by this man, I feel compelled to make them.

    Tina H.

  • CORRECTION: Name of Yacht is “King of Hearts” (typo: Kind)

leave a comment

%d bloggers like this:

Subscribe to our Newsletter


First Name

Last Name