Medical Device Daily Associate
Lester Crawford will plead guilty for failing to disclose a financial interest in companies that the FDA regulated while he was head of the agency, his lawyer said Monday. The Justice Department accused Crawford with falsely reporting that he had sold stock in companies, as required, but continued to hold shares in the firms governed by FDA rules.
Crawford “is going to plead guilty to two misdemeanors ... and he is going to admit his financial disclosures had errors and omissions, mostly with his wife’s continued ownership of stocks,” Crawford’s lawyer, Barbara Van Gelder, told the Associated Press.
“At the end of the day, he owned these stocks and he will admit he owned them while he was at the FDA and he will take responsibility for that,” said Van Gelder.
Accused of false writing and conflict of interest, Crawford was scheduled to appear before a federal magistrate Tuesday afternoon. Each count carries a maximum penalty of one year in prison, though Van Gelder said she expects him to be fined and placed on probation under a plea agreement.
“It’s his responsibility,” she said, “and he accepts it.”
Senior employees of the FDA are prohibited from owning shares in companies the agency regulates, and when Crawford became a deputy commissioner in 2002, the government’s charge says, ethics officials at the Department of Health and Human Services told him that he and his wife would have to sell stock in a dozen regulated companies. Those companies included several large pharma and medical device concerns, among them Johnson & Johnson (New Brunswick, New Jersey), Merck (Whitehouse Station, New Jersey), Pfizer (New York), Medtronic (Minneapolis) and Boston Scientific (Natick, Massachusetts).
Crawford and his wife, Catherine, sold their holdings in nine companies, the government says, but they retained shares in three others.
They failed to divest shares in Kimberly-Clark (Dallas), a maker of consumer healthcare and other products.
Crawford chaired FDA’s Obesity Working Group at a time when he and his wife owned stock in soft drink and snack food manufacturer Pepsico (Purchase, New York), and food product manufacturerSysco (Houston).
Crawford also failed to disclose his income from exercising stock options in Embrex (Research Triangle Park, North Carolina), an agriculture biotech company. Crawford had been a member of Embrex’s board, according to federal filings.
Crawford, a veterinarian and pharmacologist, abruptly resigned from the FDA job in September 2005 (Medical Device Daily, Sept. 27, 2005). The only reason he gave for stepping down was his advanced age, but he had accepted the position only two months earlier. He had served as acting head of the agency for more than a year.
When Crawford became acting commissioner of the agency in 2004, reviewers at the HHS raised questions about his ownership of Sysco and Kimberly-Clark shares. Responding to that query, he wrote in an e-mail message to an ethics official at the department that “Sysco and Kimberly-Clark have in fact been sold.”
The charging document said, however, “In truth and in fact, as Crawford then knew, Crawford and/or his wife held shares” in both Sysco and Kimberly-Clark “throughout 2003 and 2004.”
Even though financial reporting requirements for federal officials say all income must be disclosed, Crawford also reportedly failed to reveal $8,000 in income from the exercise of Embrex stock options in 2003, and he failed to report $20,000 from the sale of Embrex stock options in 2004.
In October 2005, the HHS inspector general began an investigation of Crawford’s sudden departure, called for by a group of Senators (MDD, Oct. 28, 2005).
In a Forbes.com interview that Crawford gave shortly after his resignation in September 2005, he denied that his resignation had anything to do with financial conflicts of interest, though records obtained through the Freedom of Information Act by the New York Times revealed that the HHS’ ethics office had questioned Crawford’s broker in August 2005, the month before he quit.
In the interview, he said his decision was the result, in part, of the controversy over his ruling that he did not have authority to make the morning-after pill more accessible, and the prospect of another battle over the abortion pill, RU-486.
Crawford was sharply criticized after he announced in late August 2005 that the agency could not rule on the morning-after contraceptive, although FDA scientists and outside experts agreed that it could be safely sold without a prescription. The abortion pill RU-486 was approved by the FDA in 2000, but some social and religious conservatives have petitioned the agency to have it removed from the market.
Crawford was also involved in a Government Accountability Office investigation into why the agency initially turned down the morning-after pill application in May 2004.
Crawford is now a senior staff member at the Washington lobbying and communications firm Policy Directions.