OnTrak Inc. - OTRK

can this be Terren Peizer's final curtain?

As a refresher, Terren Peizer was the founder, CEO, and Chairman of former idea OnTrak (OTRK).  I first spieled on it way back in August 2020, and followed up on it a couple of times, with the title of one of my follow-ups asking: “when did they know it?”  That, of course, referred to the company being dumped by Aetna and then by Cigna, which the numbers clearly spelled out, and precipitated some insider sales.  Turns out the SEC has the same thought, though a couple years later.

https://www.justice.gov/criminal-vns/case/united-states-v-terren-s-peizer

Some online are pondering if this could be the end of Terren Peizer’s charmed investment career, and though the SEC can certainly try to make amends for the past and go full-throttle on their prosecution, I’m betting that he gets off fairly easily and that they settle with him.  Terren Peizer was always something of a “true believer” in this particular vision of his where drug addicts can magically get cured either through ordinary off-the-shelf ingredients or through tele-therapy sessions, and OTRK wasn’t the first iteration of this vision.  When the whole tele-health thing exploded at the start of the COVID craziness and the stock went up to $100, he could have reduced his huge 60% stake in the company and started up the 10b-5 plan he’s now accused of doing over a year later but only after discovering the loss of major customers, but he didn’t.  He could have done a secondary stock offering and sell some of his own personal stock along with it, but he chose to do a non-dilutive preferred offering instead.  Him relinquishing his CEO role essentially was an admittance that this vision, like his others, had failed.

Anytime I’m looking at an idea and find insiders behaving in this manner (the true believers), it gives me pause.  In this case, because of who it was and his long history of crappy bankrupt companies, it turned out to be a non-brainer.