Ex-CEO Waksal Pleads Not Guilty
ImClone Systems Inc. founder and former Chief Executive Samuel D. Waksal pleaded not guilty Monday to insider trading, bank fraud, perjury and obstruction-of-justice charges in connection with an alleged scheme to dump shares of the company days before regulators rejected its highly touted new cancer drug.
Monday’s indictment included last week’s allegations by a federal grand jury of destroying documents, lying to investigators and putting up the same collateral for two different bank loans.
After his arraignment, he spoke publicly for the first time since his arrest June 12, reading a statement to dozens of reporters outside the federal courthouse in lower Manhattan.
“My attorneys and I look forward to addressing these charges in the appropriate forum, the courts,” Waksal said.
“Whatever happens to me, I know that this breakthrough therapy will one day make a real difference in the lives of many gravely ill people.”
The 54-year-old Waksal is accused of tipping off relatives that the Food and Drug Administration turned down the company’s application for Erbitux, an experimental cancer drug, days before the news was made public. Waksal’s father and daughter alone sold millions of dollars’ worth of company stock in that time, authorities said, with family stock sales totaling $10 million before the Dec. 28 announcement sent the stock tumbling. The resulting scandal also has ensnared Waksal’s friend Martha Stewart.
Stewart, the chief executive of Martha Stewart Living Omnimedia Inc., is the target of an insider trading investigation for her sale of 3,928 ImClone shares Dec. 27, the day before the news about Erbitux was released. She has denied wrongdoing and refused last week to answer questions on the matter before a congressional committee.
Stewart has been given until Aug. 20 to provide the House Energy and Commerce Committee with additional documents, said Ken Johnson, a spokesman for the panel. “Anything that has not been turned over voluntarily will be subpoenaed,” he said.
Rep. Jim Greenwood, a Pennsylvania Republican on the committee, told CNN’s “Late Edition” that Stewart “has been less than candid with us and with others with whom she’s talked on the matter.”
Greenwood predicted that the panel probably would have to subpoena her. “We can’t sweep something like this under the rug just because Martha Stewart is a celebrity,” he said.
Since the FDA announcement, Martha Stewart Living shares have dropped almost 59%. The stock was up 30 cents at $6.99 in trading on the New York Stock Exchange. ImClone shares were up 68 cents to close at $8.02 on Nasdaq.
Prosecutors had sought unsuccessfully to arrange a plea deal that would have forced Waksal to reveal, in exchange for leniency, whether he provided insider trading tips to family and friends, including Stewart.
Appearing in court Monday, Waksal said only “not guilty.” He was silent as a prosecutor detailed the charges to U.S. District Judge William Pauley.
“This is an extremely simple and straightforward case,” said Assistant U.S. Atty. Michael Schachter. The judge said Waksal’s trial would begin Dec. 9 or Feb. 10, depending on how long lawyers take to prepare the case and on the judge’s schedule.
In his statement outside the court, Waksal didn’t address the charges directly. Instead, the former CEO of ImClone spoke about the company and what once was its most promising drug.
“I believe that the drug Erbitux, which I have worked to bring to the public for over 10 years, has the potential to help millions of cancer patients,” he said.
He also told reporters that the case had been “extremely challenging and emotionally draining for me, my family and my friends.”
“I founded ImClone in order to discover important new drugs to meet unmet medical needs of society,” he added. “ImClone itself is a strong, solid company whose scientists and other employees have devoted themselves to achieving a noble goal.”
Prosecutors offered a glimpse of their evidence against Waksal at Monday morning’s hearing. It includes 70 boxes of documents, many relating to ImClone’s application to the FDA for Erbitux approval. Schachter said the government hadn’t seized any property from Waksal and that the ex-CEO made no incriminating statements after his arrest.
Schachter asked for a quick trial, estimating the case would take three to four weeks.
He said he’d “rather not comment” when asked by Pauley whether the government would be filing charges against another person, or additional charges against Waksal.
Defense lawyer Mark Pomerantz disputed Schachter’s assertion that the case was straightforward, telling Pauley, “It seems a bit more complicated.” Pomerantz also said he might not remain Waksal’s lawyer.
Waksal is free on $10 million bond, secured by $5 million in cash. If convicted, he could face 30 years in prison on the bank fraud charge alone.
