ImClone’s Waksal Sentenced to Serve Jail Time
Martha Stewart’s friend Sam Waksal was sentenced to seven years and three months after pleading guilty to insider trading charges that have affected his family and threaten to end Stewart’s reign as America’s queen of domesticity.
Waksal, the founder of ImClone Systems, was also ordered to pay $4 million in fines and back taxes. He offered an emotional apology to his family and former employees.
"I am deeply disturbed and so very sorry for my actions," he said." I want to apologize to all the people who may have had confidence in me and whose confidence I betrayed."
Waksal asked for a lighter sentence, citing his company’s cancer research, his philanthropic work and the media circus that has surrounded the case. U.S. District Judge William H. Pauley rejected Waksal’s arguments and said, "The harm that you wrought is truly incalculable." He could have faced up to 75 years in prison.
Waksal will report to federal prison on July 2 and until then, he is under house arrest in his Manhattan apartment, with permission to leave only for appointments with his lawyer. He will be monitored electronically. He hugged his brother and 80-year-old father in the courtroom but did not offer a public statement after the sentencing.
A former high rolling jet setter, Waksal pled guilty in October to six counts, which include securities fraud, bank fraud, conspiracy to obstruct justice and perjury. The charges include insider trading and the effort to elude a $1.2 million tax bill for the sale of fine art.
Assistant U.S. Attorney Michael Schachter had asked for a stiffer sentence, claiming Waksal "told numerous, separate and distinct sets of lies" about his family's sale of ImClone stock.
Waksal admitted that he told his daughter, Aliza, to dump ImClone stock just before it plunged in value after it was learned that the Food and Drug Administration would not review the company’s cancer-fighting drug.
Last week, Waksal’s close friend Stewart was indicted on five federal charges that include obstruction of justice, conspiracy and lying to investigators – all related to her December 2001 sale of nearly 4,000 shares of ImClone stock. She pleaded innocent to all charges.
Waksal lawyer Mark Pomerantz attempted to separate this from the scandals that have shaken investor confidence in corporate America. "He has been worried that he's going to be held responsible for companies and situations that he had nothing to do with," Pomerantz said.
But Schachter said Waksal had violated "a sacred trust with his shareholders" and accused him of even more egregious violations since he was the company’s chief executive officer.
"It runs the risk of sending the message to investors that the game is rigged," he said of Waksal's actions.