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ImClone's Former CEO May Plead Guilty To Insider-Trading Charges

Oct 15, 2002 | The Wall Street Journal

ImClone Systems Inc.'s former chief executive, Samuel Waksal, may plead guilty as early as Tuesday morning to insider-trading charges and throw himself on the mercy of the court, people familiar with the situation told The Wall Street Journal.

Dr. Waksal, the central figure in an insider trading scandal that has ensnared his close friend Martha Stewart, has been negotiating with prosecutors for some time trying to win leniency for himself and family members. Those talks stalled because he was reluctant to provide information about family members and to cooperate in the investigation, the people close to the situation said.

A spokesman for Dr. Waksal declined to comment, as did Dr. Waksal's lawyer, Lewis Liman.

A person familiar with the situation said Dr. Waksal doesn't appear to have reached an agreement with prosecutors to provide information about his family members or Ms. Stewart. Dr. Waksal's father, Jack, and daughter Aliza, along with Ms. Stewart, are under scrutiny for ImClone stock sales in the days before federal authorities turned away the company's cancer drug in late December.

Prosecutors are still weighing possible charges against Ms. Stewart and Dr. Waksal's father and daughter. His father and daughter sold about $10 million in ImClone shares in the days before the Food and Drug Administration rejected the company's drug application; Ms. Stewart sold nearly 4,000 shares for about $230, 000.

Dr. Waksal was indicted in August on charges of securities fraud, bank fraud and obstruction of justice for allegedly tipping off family members and trying to sell his own shares before the FDA refused to review his company's cancer drug in late December. He pleaded not guilty to the charges.

Dr. Waksal's family and Ms. Stewart have said they did nothing wrong. But prosecutors are moving forward in their investigation of Ms. Stewart, having secured a former Merrill Lynch sales assistant, Douglas Faneuil, as a key witness against her in the case.

People close to the situation say Dr. Waksal won't offer any testimony against Ms. Stewart. She hasn't been charged in the case.

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