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Partial Guilty Plea Seen For Ex-ImClone Chief

Oct 15, 2002 | Samuel D. Waksal, the former chief executive of ImClone Systems, is expected to plead guilty today to many of the charges against him, people close to the case said yesterday.

The plea, to be made in Federal District Court in Manhattan this morning, is not part of an agreement with the government, these people said. Rather, they said, by pleading guilty to many of the charges, Dr. Waksal hopes that the judge will be lenient in sentencing and that prosecutors will drop the remaining charges.

Dr. Waksal is expected to plead guilty to charges of insider trading, bank fraud, perjury and obstruction of justice, these people said.

He is not pleading guilty to tipping off his father, Jack Waksal, to sell ImClone shares in the two days before the company announced unfavorable news that caused its shares to drop sharply in price.

But Dr. Waksal is expected to plead guilty to causing his daughter, Aliza Waksal, to sell all of her ImClone shares in that same period. However, he will not plead guilty to conspiring with his daughter to trade on inside information. That could give Ms. Waksal a defense at any trial — that she was persuaded to sell by her father without knowing the reason.

Dr. Waksal, who resigned from ImClone in May, was arrested at his loft in the SoHo section of Manhattan in June and indicted in August. The main charges were that he tipped off his father and daughter to sell more than $10 million in ImClone stock in the two days before the company announced that the Food and Drug Administration would not review the company's application to sell its cancer drug, Erbitux.

He was also accused of trying to sell his own shares, of lying to the Securities and Exchange Commission and of obstructing the S.E.C.'s investigation by ordering records to be destroyed. He was also charged with forging a signature in order to defraud a bank into lending him millions of dollars.

Until now, he has pleaded not guilty to all the charges.

There have been talks in the past about a plea bargain, but it appears that Dr. Waksal could not negotiate an agreement to his liking. People close to the case have said in the past that he wanted to spare his father and daughter from prosecution and wanted a prison sentence considerably less than the 7 to 10 years that prosecutors were considering.

By pleading guilty to some of the charges, Dr. Waksal hopes to push the sentence down to five years or less and hopes the prosecutors will not pursue his family. But prosecutors might seek a longer sentence.

Dr. Waksal has in recent weeks also been asked by prosecutors whether he knows anything about the trading by his friend Martha Stewart, who is also under investigation for selling ImClone shares the day before the F.D.A. ruling was announced. But there is no agreement to cooperate, people close to the situation said.

Dr. Waksal's guilty plea would be the second in the case so far. Douglas Faneuil, an assistant to Ms. Stewart's stockbroker at Merrill Lynch, pleaded guilty earlier this month to a misdemeanor charge of taking a payoff to keep quiet about Ms. Stewart's sale of her shares. Mr. Faneuil is expected to testify against others.

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