NEW YORK: ImClone Systems Inc founder Samuel Waksal has been sentenced to more than seven years in prison, the first chief executive to go to jail in the spate of scandals that has rocked corporate America.
US District Judge William Pauley ordered Waksal to serve the maximum 87 months in prison, pay the top fine of US$3mil and fork out US$1.26mil in restitution in connection with an insider trading case that also led to the indictment last week of Waksal’s good friend, style-setter Martha Stewart, on securities fraud charges.
Stewart, the domestic design guru, is fighting fraud charges in relation to her trading in ImClone stock.
The judge harshly criticised ImClone’s former chief executive for the harm he caused to his family, co-workers, the investing public and cancer patients who are still awaiting the development of the company’s cancer-fighting drug Erbitux.
“You abused your position of trust as the chief executive officer of a major corporation and undermined the public’s confidence in the integrity of the capital markets,” Pauley told Waksal. “Then you tried to lie your way out of it.”
The judge ordered Waksal, 55, to surrender on July 2, and said he must wear an electronic monitoring bracelet and remain under house arrest until he goes to prison.
Waksal was indicted for trying to sell ImClone shares ahead of an announcement that the US Food and Drug Administration would reject the company’s highly touted cancer drug. Erbitux has recently shown signs of success.
He pleaded guilty last October to six of the 13 charges in that indictment, fashioning his plea to omit conspiracy charges that alleged his father, an 81-year-old Holocaust survivor, and his daughter knew they had received inside information before selling their ImClone shares.
In addition to two securities fraud charges relating to insider trading, Waksal pleaded guilty to obstruction of justice, perjury and bank fraud charges. In March he also pleaded guilty to new charges that he evaded sales tax on US$15mil worth of art work.
The judge gave Waksal the maximum term suggested by federal sentencing guidelines.
He denied all arguments the defence presented for a reduction in the possible 70–87-month range, including Waksal’s philanthropy and good work. Pauley said Waksal's contributions were not extraordinary for a “captain of industry”. – Reuters