ImClone Founder Gets 87 Months in Prison
[ Health and Medicine Board ] [ Home ]
Posted by Reuters on June 10, 2003 at 15:10:33:
Tuesday June 10, 5:46 pm ET
By Gail Appleson and Paul Thomasch NEW YORK (Reuters) - ImClone Systems Inc.(NasdaqNM:IMCLE - News)founder Samuel Waksal was sentenced on Tuesday to more than seven years in prison, the first chief executive to go to jail in the spate of scandals that have rocked corporate America. U.S. District Judge William Pauley ordered Waksal to serve the maximum 87 months in prison, pay the top fine of $3 million and pay $1.26 million in restitution. The insider trading scheme led to last week's indictment of Waksal's good friend, style-setter Martha Stewart (News). Pauley harshly criticized ImClone's former chief executive for the harm he caused to his family, co-workers, the investing public and cancer patients who are still awaiting the development of the company's cancer-fighting drug, Ebitrux. "You abused your position of trust as the chief executive officer of a major corporation and undermined the public's confidence in the integrity of the capital markets," Pauley said. "Then you tried to lie your way out of it." Pauley said the harm Waksal wrought was incalculable: "You even jeopardized the well being of your family." The judge ordered Waksal, 55, to surrender on July 2, and said he must wear an electronic monitoring bracelet and remain house arrest until he goes to prison. Waksal was indicted for trying to sell ImClone shares ahead of an announcement that the U.S. Food and Drug Administration (News - Websites) would reject the company's highly touted cancer drug. Erbitux has recently shown signs of success. He pleaded guilty in October to six of the 13 charges in that indictment. He fashioned his plea to omit conspiracy charges that alleged his father, an 81-year-old Holocaust survivor and his daughter knew they had received inside information before selling their ImClone shares. At that time, Waksal said he insisted that his daughter sell her shares. But he maintained he never told her the reason. In addition to two securities fraud charges relating to insider trading, Waksal pleaded guilty to obstruction of justice, perjury and bank fraud charges. In March, he also pleaded guilty to new charges that he evaded sales tax on $15 million worth of art work. In his sentencing, Pauley rejected defense arguments that Waksal's crimes were "spur of the moment" weaknesses and that he should not be compared with defendants in major accounting fraud cases involving former executives at WorldCom and Enron. Pauley said the ImClone founder's crimes "are not simply a 24-hour window of catastrophic poor judgment or a crime of impulse. Rather these crimes are emblematic of a pattern of lawlessness and arrogance from your own self description of a short-term cash flow needs." The judge gave Waksal the maximum term suggested by federal sentencing guidelines. He denied all arguments that the defense presented for a reduction in the possible 70-87 month range, including Waksal's philanthropy and good works. Pauley said although he had received more than 120 letters supporting Waksal, his contributions were not extraordinary for a "captain of industry." The government opposed a reduction in the sentencing range and alleged numerous examples of lying by Waksal. Included in the government's court papers was a letter retrieved from his computer written on behalf of Martha Stewart's daughter Alexis, with whom prosecutors said Waksal was romantically involved. In the letter, Waksal, who has a doctorate in immunology, appeared to be impersonating a medical doctor asking that Alexis be excused from jury duty. Prior to his sentencing, Waksal addressed the court and apologized to family, ImClone employees, shareholders and cancer patients. Members of his family attending the hearing at a federal courthouse in lower Manhattan were emotional, and some cried. "I am deeply disturbed and so very sorry for my actions," said Waksal, who kept clearing his throat and tried to gain composure in front of a packed courtroom. "Please know how much I tried to do for the cancer community," he said. "I consider myself one of the luckiest people in the world. Erbitux is moving forward to help ease the pain and suffering of cancer patients." Stewart, who recently resigned as chief executive of Martha Stewart Living Omnimedia Inc. (NYSE:MSO - News), came under investigation for selling nearly 4,000 ImClone shares one day before the FDA rejection became public. She has pleaded not guilty to charges in last week's indictment.
|