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Ex-ImClone Boss Admits Fraud

Oct 15, 2002 | BBC

The executive at the centre of the investigation into inside stock trading at biotech firm ImClone Systems has pleaded guilty to six of 13 charges against him.

Dr Samuel Waksal, the firm's former chief executive, has in court pleaded guilty to two counts of securities fraud, one count of bank fraud, one count of perjury, one count of obstruction of justice and one count of conspiracy.

He faces up to 65 years in prison and millions of dollars in fines.

Mr Waksal is scheduled to be sentenced in January and remains free on bail.

Speaking before a New York court, a federal prosecutor said the government's investigation continues and may result in additional charges against Mr Waksal and others.

The official said the US Attorney's office has been developing evidence that Mr Waksal may have tipped off others, without elaborating who the others might be.

Broadening scandal

In speaking to reporters after his court appearance, Mr Waksal said the period since his arrest in June has been "a difficult and sad time" for him and his family and friends.

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

"I was wrong."

The former boss at biotechnology firm ImClone Systems was indicted by a federal grand jury in August.

Mr Waksal stood accused of insider trading - tipping family members and others to sell ImClone shares the day before federal regulators refused to review its new cancer drug last December.

The scandal has broadened, with pressure growing on Martha Stewart, the US domestic products icon, and Mr Waksal's family members, who also sold shares ahead of a Food and Drug Administration (FDA) announcement late last year.

Stock sales

On 26 December, relatives sold $19m (£12.9m) of ImClone stock, two days before the FDA announced it would not review Erbitux, ImClone's cancer-fighting drug.

The Securities and Exchange Commission (SEC) and the Department of Justice have alleged the decision to sell was based on knowledge passed from Mr Waksal to his family and at least two others.

Based on that information, Mr Waksal tried to sell nearly 80,000 shares of the company's stock but was blocked from doing so by two brokerage firms.

Among those who sold shares were Mr Waksal's daughter, Aliza, and other family members, including another daughter and her husband.

In addition, Ms Stewart unloaded all her shares two days before the FDA action, although she has denied acting on non-public information.

Prosecutors are continuing their investigation into Ms Stewart's actions, after a former Merrill Lynch sales assistant, Douglas Faneuil, pleaded guilty to a misdemeanour charge and agreed to co-operate over her case.

Ms Stewart has not been charged.

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