Ex-FDA Chief Charged With Stock Conflict
Former Food and Drug Administration Commissioner Lester M. Crawford was charged Monday with criminal violations stemming from his failure to tell government ethics officers that he owned stock in companies regulated by the FDA.
His lawyer said Crawford intended to plead guilty to two misdemeanor charges during a federal court hearing this afternoon. “He accepts responsibility,” said attorney Barbara Van Gelder. “It really was an oversight. This was a very complicated set of financial transactions and it wasn’t always reported correctly.”
Federal prosecutors charged Crawford on Monday with making false statements and conflict of interest, violations that each carry a possible sentence of a year in prison.
But as part of a plea agreement, Crawford is expected to pay up to $50,000 in fines, his lawyer said.
Crawford, 68, had served two months as FDA commissioner before abruptly resigning. At the time, he gave no explanation other than his age, but his departure was evidently related to questions about his financial interests. He was the agency’s deputy commissioner from February 2002 to March 2004, when he was named acting commissioner; in July 2005, the Senate confirmed him to the top job.
Separately, the FDA has been criticized by consumer groups and others for tolerating financial conflicts. For example, more than a quarter of outside scientific advisors -- who guide agency decisions on drugs and other products -- had such conflicts, according to a study published earlier this year in the Journal of the American Medical Assn.
Some critics saw the charges against Crawford as part of larger problems at the agency. “The entire culture at the FDA needs to change,” Rep. Maurice D. Hinchey (D-N.Y.), who serves on the House committee that oversees FDA funding, said in a statement. “The days of letting the FDA treat the pharmaceutical industry as a client rather than a regulated entity must come to an end.”
As a senior FDA official, Crawford was prohibited from holding stocks or stock options of companies regulated by the agency. The charges against him involve failure to disclose such conflicts on government forms and saying that he had divested himself of certain stocks when he had not. The case does not involve any allegations that Crawford took specific official actions to benefit any company.
As Crawford was about to assume the post of FDA deputy commissioner early in 2002, government ethics officials told him that he and his wife would have to sell stock in more than a dozen companies in the pharmaceutical and food industries.
But according to an 11-page charging document filed in U.S. District Court by federal prosecutors Howard R. Sklamberg and Timothy G. Lynch, Crawford kept holdings in three: PepsiCo Inc., which manufactures snacks and soft drinks; Sysco Corp., a food distribution firm; and Kimberly-Clark Corp., makers of Kleenex and other products.
But Crawford told ethics officials in a 2004 e-mail that “Sysco and Kimberly-Clark have in fact been sold,” the document said.
The filing also noted: “In truth and in fact, as Crawford then knew, Crawford and/or his wife held certain shares in both Sysco and Kimberly-Clark throughout 2003 and 2004.”
As he continued to hold stock in Sysco and Pepsico, Crawford chaired an FDA working group on obesity that urged clearer labeling of the calories in increasingly popular 20-ounce soft drinks. His involvement in the obesity project violated federal laws against official conflicts of interest, the document said.
Crawford also failed to disclose stock options he held in Embrex Corp., a biotechnology firm that serves the poultry industry. In 2003 and 2004, he earned nearly $29,000 from exercising some of those options.
Before leaving the FDA, Crawford filed corrected information with ethics officials, his lawyer said.
A veterinarian and pharmacologist by training, Crawford spent most of his professional life alternating between government service and academia. His nomination by President Bush to head the FDA was considered the capstone of his career.