Federal Agencies Expand ICN, Panic Investigations

Federal investigators have turned up the heat on ICN Pharmaceuticals Inc. and its chairman, Milan Panic.

The U.S. attorney’s office in Los Angeles has subpoenaed several current and past employees of the Costa Mesa drug maker to testify in a 2-year-old grand jury investigation into matters such as possible insider trading by Panic in November 1994.

In a Securities and Exchange Commission filing last week, the company also disclosed that the grand jury has widened its probe to include possible violations of the U.S. economic embargo on Yugoslavia through alleged stock sales by Panic and the company to employees.

Company officials declined to say exactly how many past and present employees have been subpoenaed, or name them.

The grand jury also is scrutinizing Panic’s sales of assets associated with Yugoslavia and possible omissions or misstatements in federal tax filings.

The company stated in the SEC filing that the outcome of the grand jury probe and a parallel investigation by the SEC “cannot be predicted and could have a material adverse effect” on the Costa Mesa drug maker.

Arnold Burns, a lawyer for Panic and the company, reiterated the company’s position that it did nothing wrong.

Noting the length and breadth of the grand jury’s inquiry, Burns said, “This smacks of an investigation of not specific allegations of crime but a continuing ongoing, endless investigation of an individual. I believe that when it all shakes out, we will find there is no wrongful conduct here that will be worthy of an indictment.”

Separately, the company is trying to avert a possible enforcement action by the SEC in connection with Panic’s 1994 stock sale. Panic sold 55,000 shares of stock--worth $1.24 million--months before the company publicly disclosed that the government wouldn’t approve its drug ribavirin as a stand-alone treatment for the liver ailment hepatitis C. When the government’s decision was disclosed the following February, the company’s stock dropped 41% in six days of trading.

Earlier this year, the agency’s Philadelphia staff informed the company that it would urge the commission to fine Panic up to $1 million and ban him as a company officer and director.