Samuel Waksal, former CEO of New York-based ImClone Systems Inc., could face up to 65 years in prison and millions of dollars in fines on bank fraud and insider trading charges.
The actual sentence, however, likely will be far less even though Waksal did not agree to a plea-bargaining deal with prosecutors.
After months of negotiation with prosecutors in New York, Waksal, 55, pleaded guilty Tuesday to six counts that include bank fraud, securities fraud, conspiracy to obstruct justice and perjury. Waksal will remain free on bail until he is sentenced in January.
It is believed that Waksal tipped off family members and his friend, Martha Stewart, the home-decorating expert, about the FDA's refusal to accept ImClone's application for the cancer drug, Erbitux, in advance of the news becoming public. Also, Waksal has been accused of forging the signature of ImClone's general counsel on a document certifying that he owned stock warrants that he no longer had.
While Waksal faces years behind bars, the company he and his brother, Harlan Waksal, founded, continues to operate with the goal of selling Erbitux as a breakthrough cancer drug.
But ImClone's culture, as well as the events leading up to and immediately following the FDA's December letter rejecting Erbitux, continue to intrigue the House Energy and Commerce Subcommittee on Oversight and Investigations.
Just last week, committee members scolded ImClone's management team for failing to immediately fire Samuel Waksal on learning that he had forged the attorney's signature.
Most officials associated with ImClone defended Waksal before members of Congress. In his opening statement, Robert Goldhammer, chairman of ImClone's board of directors and a member since 1984, said, "Despite the misconduct that has come to light, Sam Waksal was indispensable to this company and an integral part of its success over the years. Sam Waksal was the one who recognized the potential of Erbitux, and it was he who was instrumental in building ImClone and in creating significant value for its shareholders and patients over the long term. As soon as allegations of wrongdoing by Sam Waksal began to surface in early 2002, the company's board acted quickly to address these issues." (See BioWorld Today, Oct. 11, 2002.)
He said ImClone commissioned outside legal counsel to investigate the allegations and chose to act after a thorough investigation had taken place.
Waksal resigned in May, at which time Harlan Waksal became CEO.
But committee Chairman Billy Tauzin (R-La.) released a statement saying it appears that ImClone management had been concerned about Samuel Waksal's honesty long before this year's news broke.
"We have now learned that for years ImClone did not trust Sam Waksal with the company's corporate credit card. It actually installed special procedures to ensure he did not charge the company for his personal expenses," Tauzin's statement said.