Samuel Waksal, former chief executive of ImClone Systems, was yesterday sentenced to seven years and three months in prison for his part in an insider-trading scandal that has implicated his family and lifestyle diva Martha Stewart, writes Conor O'Clery, North America Editor.
Waksal (55) was also ordered to pay $4 million (€3.4 million) in fines and back taxes after pleading guilty to six fraud, conspiracy and perjury counts, and the evasion of sales tax on art work worth $15 million.
"I am deeply disturbed and so very sorry for my actions," the founder of the bio-tech firm stated, his voice breaking. "I want to apologise to all the people who may have had confidence in me and whose confidence I betrayed."
The punishment is one of the most severe meted out by a court since the current round of corporate scandals began with Enron in 2001, and bodes ill for other company executives embroiled in accountancy and trading scandals.
Waksal, who was once a leading figure in Manhattan high society and an avid art collector, pleaded guilty to trading on inside information he received in December 2001 that the US Food and Drug Administration would not approve the company's cancer drug, Erbitux, a blow that drove down ImClone's share value.
He admitted to warning his daughter, Aliza, to dump ImClone stock before the fate of the drug became public.
He tried to sell $5 million of ImClone stock through brokerage accounts at Merrill Lynch and Bank of America but the brokers refused as they were "restricted" and Waksal instead bought options on ImClone shares giving him the right to sell at a predetermined price at a future date.
Waksal, who at the height of his company's success was worth many millions, allegedly made $130,000 through his insider trading.
Lawyers for the former ImClone chief executive pleaded unsuccessfully with US District Judge William H. Pauley for a lighter sentence, citing his company's cancer research, his charitable work and media attention that meant the matter being taken "wildly out of context".
Judge Pauley said his charitable work amounted to less than half of 1 per cent of his income and was not worthy of consideration.
The ImClone founder had also admitted to forging a lawyer's signature on an application for a $44 million bank loan and ordering staff to keep documents away from the Securities and Exchange Commission.
Some weeks ago before the same judge Waksal pleaded guilty to charges of conspiring with a Manhattan art gallery owner to write fraudulent invoices for nine pieces of art to show they had been sent to ImClone's factory in New Jersey, thus avoiding New York purchase tax.
