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ImClone's Ex-CEO Waksal Faces Sentencing

Posted on: Tuesday, 10 June 2003, 06:00 CDT

Sam Waksal, the ImClone Systems founder at the center of an insider-trading scandal, once rubbed shoulders with rock stars and collected art, cutting a flamboyant figure in the mostly staid pharmaceutical industry.

On Tuesday, Waksal faced the unglamorous possibility of as many as 75 years in prison and millions of dollars in fines at a sentencing hearing related to insider trading charges and his evasion of $1.2 million in sales taxes on fine art.

Federal guidelines call for a sentence of roughly six to seven years in prison for Waksal. His defense team plans to argue for a lighter sentence, and prosecutors plan to make the case for a stiffer one.

The insider trading scandal that snared Waksal also threatens Martha Stewart and her home decorating empire.

Waksal, 55, pleaded guilty in October to six counts, including securities fraud, bank fraud, conspiracy to obstruct justice and perjury.

He admitted to a scheme in which he tipped his daughter, Aliza, to dump ImClone stock just before it plunged in value on news that the Food and Drug Administration would not review his company's experimental cancer drug, Erbitux.

Waksal's plea was not made in exchange for a predetermined sentence agreement with prosecutors. Prosecutors also did not agree to dismiss other charges pending against Waksal.

"I've made some terrible mistakes and I deeply regret what has happened," Waksal said following his plea.

In pleading guilty to bank fraud, he said he forged a lawyer's signature on paperwork for a $44 million bank loan. On the obstruction count, Waksal admitted he ordered staff to keep certain financial records from leaving his office, knowing the Securities and Exchange Commission would be interested in those documents.

Prosecutors say Waksal also ordered the destruction of computer files, phone messages and other records, though he did not admit to those allegations. He pleaded guilty to conspiring with an art dealer to dodge $1.2 million in sales tax on nine paintings that cost him a total of $15 million.

In March, Waksal agreed to an $800,000 fine and a lifetime ban on leading a public company in a partial settlement of civil charges relating to the scandal filed by the Securities and Exchange Commission.

Stewart was indicted last week on five federal counts - including obstruction of justice, conspiracy and lying to investigators - tied to her December 2001 sale of nearly 4,000 shares of ImClone stock. She pleaded innocent to all charges.

Her former stockbroker, Peter Bacanovic, was also indicted and pleaded innocent. Prosecutors said Bacanovic illegally sent word to Stewart that Waksal's family was planning to unload shares of ImClone.

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On the Net:

Imclone: http://www.imclone.com

SEC: http://www.sec.gov

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