A pair of private eyes hired to work on behalf of a controversial drug company have been shadowing Wall Street analysts who have been critical of the company.
The investigators – who were working for lawyers representing Biovail Corp. Chief Executive Eugene Melnyk, according to their attorney – repeatedly took the trash of former Banc of America Securities analyst Jerry Treppel last December.
A source said the pair were videotaped removing trash from Treppel’s Edison, N.J. home in December.
A source close to the case said the pair also repeatedly followed the wife of Banc of America drug analyst David Maris when she left her suburban New Jersey home.
The letter from the private investigators’ lawyer, Mitchell R. Schrage, said they were “retained by counsel for Eugene Melnyk in anticipation of and preparation for the pending litigation.”
He described the trash taken from Treppel by his PI clients as “attorney work product.”
Treppel’s lawyer has subpoenaed the pair, seeking return of what was taken from his garbage can.
Schrage’s letterhead says he works at Mitchell Schrage & Associates. His answering machine identifies him as an attorney at Kasowitz, Benson, Torres & Friedman LLP, a law firm that Biovail has retained on several matters.
Treppel has a history of conflict with Biovail and its management. Treppel left BofA – where he was a vocal critic of Biovail’s accounting practices – in 2002, after Biovail obtained and publicized his ownership of a rival drug company’s stock, claiming it skewed his opinion. He has since sued Biovail for defamation.
Maris, who is still with BofA, has been under surveillance repeatedly and as recently as two weeks ago, according to a source familiar with the situation.
Maris even complained to police about the repeated surveillance by a pair of men who had been parked in a car outside his home, the source said.
According to the source, after initially insisting to police they were “insurance fraud investigators,” the two men admitted they were employed by Biovail to observe Maris.
Maris declined comment, as did a BofA spokesman.
“Neither Eugene Melnyk, nor Biovail, nor any of its officers retained any investigators,” Biovail spokesman Michael Sitrick said, adding that any investigators used in legal proceedings were hired by attorneys representing Biovail.
“The investigators retained by attorneys for Biovail and/or its officers were only instructed to investigate whether Mr. Treppel was improperly disposing of evidence,” said Sitrick.
He said investigators went to Maris’ house only to confirm his address.
Maris and Treppel are not the only ones alleging that private investigators have been hounding them.
Four employees of Scottsdale, Ariz.-based Gradient Analytics, which was sued Feb. 21 by Biovail for allegedly colluding to drive down its stock price, told The Post that they have been repeatedly called and accosted by private investigators working for James Holohan, a managing director of a company called KBTF Consulting.
KBTF Consulting is located within the 1633 Broadway headquarters of Kasowitz, Benson and is the private investigation arm of the law firm.
Holohan and his investigators made clear that Gradient’s analysts faced “professional disaster” given their firm’s highly critical work of Biovail’s accounting, the analysts said.
A statement by Gradient provided to The Post argued that the pattern of contact by KBTF Consulting investigators amounted to a violation of Securities and Exchange Commission rules.
Biovail spokesman Sitrick said that KBTF’s Holohan had only one conversation with a Gradient employee and that “the conversation was a pleasant one.”
Hedge fund powerhouse SAC Capital also was named in the Biovail suit, which is very similar in scope to a suit filed by Overstock.com against Gradient and short-selling hedge fund Rocker Partners.
It refers to the collaboration of Maris, Gradient and hedge funds like SAC as “The Enterprise.” The suit seeks at least $4.6 billion in damages.
The controversy around Overstock.com and the short sellers who have criticized it resulted in a subpoenas sent to two Dow Jones & Co. journalists last week by the SEC, although the agency later backed off.
Bio-trail
A lawyer retained by investigators, who were allegedly tracking stock analysts locked in a legal battle with Biovail Corp., says Biovail’s chief hired the pair.
Quote
‘My clients were retained by counsel for [Biovail chairman] Eugene Melnyk in anticipation of and preparation for the pending litigation.’
– lawyer Mitchell R. Schrage
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