Chicago, IL: Federal Prosecutors have charged a certified public accountant and former director of corporate audits for Chicago based Allscripts Healthcare Solutions with insider trading.

Steven M. Dobrowski has been charged with 16 counts of securities fraud in the indictment, each of which carries a maximum penalty of 20 years in prison and a fine of $5 million.

According to the indictment, Dombrowski who is 49, used non-publically disclosed about Allscripts performance in the first quarter of 2012 for personal benefit. Using knowledge he had learned auditing and testing the processes and procedures Allscripts uses to compute and report it financial performance, Dombrowski accumulated trade profits of $286,000. In order to discuss his efforts at using insider information, Dobrowski purchased options through a trading account which he set up, and controlled, in his wife’s maiden name.

Because of his intimate knowledge of the company’s internal financial reporting, Dombrowski decided to sell short 1,000 shares of Allscripts stock in the weeks leading up to the earnings release, as well as buy more than 510 options that would be profitable if the company’s share price declined, the SEC said.

After the earnings release, Dombrowski liquidated and closed his positions and took in more than $286,000 in illegal profit. On April 26, 2012, Allscripts announced first quarter financial results that were much worse than the market had expected. Allscripts also announced that its Chief Financial Officer would soon leave the company for another job, and that the Chairman of the Board and several other members of the Board had resigned. Immediately after the announcement Dombrowski purchased Allscripts stock to close his short position, and the next day, on April 27, Dombrowski sold all of his options positions as Allscripts’ common stock fell $5.72, or approximately 35.7% from the previous day’s close.

“As alleged in our complaint, Dombrowski attempted to profit off his company’s poor financial results and hide his breach of duty to his employer by conducting his illegal trading through his wife’s account,” said Timothy L. Warren, associate director of the SEC’s Chicago office.

The Securities and Exhange Commission (SEC) in a parallel actions, is seeking a judgment that permanently enjoins Dombrowski from future violations of these provisions of the federal securities laws, orders him to disgorge all of his ill-gotten gains, plus prejudgment interest, and orders him to pay an appropriate civil penalty. The SEC also seeks an order requiring Dombrowski’s wife, relief defendant Lisa Fox, to pay disgorgement, plus prejudgment interest, as Dombrowski’s illegal trades were in her account.