Not Guilty Plea For ImClone's Waksal

Former ImClone Systems Inc. Chief Executive Samuel Waksal make statement to the media following his arraingment on banking and securities fraud charges at Federal Court in Manhattan, August 12, 2002. One of Waksal's attorneys Lewis Liman looks on (R). REUTERS

The founder and former chief executive of ImClone Systems Inc. pleaded not guilty on Monday to banking and securities fraud charges in an insider trading probe that threatens to catch homemaking guru Martha Stewart in its net.

Samuel Waksal, 54, defended the company and its cancer drug outside court.

"Whatever happens to me, I know that this breakthrough therapy will one day make a real difference in the lives of many gravely ill people," Waksal said outside U.S. District Court in Manhattan, where he made his first public comments on the charges.

Waksal, who was previously charged with insider trading, was named in a 13-count indictment last Wednesday accusing him of obstruction of justice, bank fraud and expanded securities wrongdoings. If convicted on the bank fraud count alone, he could face up to 30 years in prison.

The investigation stems from allegations that Waksal tried to sell ImClone shares ahead of a public announcement that the U.S. Food and Drug Administration would reject ImClone's application to market its highly touted new cancer drug, Erbitux. He is also accused of allegedly tipping off two family members.

Stewart, a friend of Waksal, is also under investigation for selling nearly $228,000 in ImClone stock the day before the FDA news was made public. She has repeatedly said her sale was lawful and based on public information.

On Sunday, the head of a House panel investigating ImClone stock sales said Stewart probably would be subpoenaed to appear before his committee.

"We can't sweep something like this under the rug because Martha Stewart is a celebrity, and so I think that we're probably going to have to subpoena her," said Rep. James D. Greenwood, chairman of the House Energy and Commerce oversight and investigations subcommittee.

Waksal was arrested in June on charges he secretly advised family members — widely reported to be his daughter, Aliza, and father, Jack — to sell their ImClone stock on Dec. 27 after learning that Erbitux had been rejected by the Food and Drug Administration.

Investigators also targeted Stewart, chief executive of Martha Stewart Living Omnimedia Inc., after learning that she disposed of nearly 4,000 shares on Dec. 27.

Asked to appear voluntarily before the House panel, Stewart responded with a letter from her lawyers stating that her stock sell-off was "prompted solely" by a pre-existing arrangement with her broker to sell ImClone's stock if it fell below $60 a share.

Time magazine reports that based on that letter, Stewart's lawyers also requested that committee chairman Rep. Billy Tauzin issue a statement exonerating her.

"We were stunned," said Tauzin spokesman Ken Johnson. "We couldn't believe what they were asking us to do." Tauzin, R-La., refused.

But doubt has been cast on Stewart's assertion about the stop-loss order because she and her Merrill Lynch broker, Peter Bacanovic, differ on when the order was placed.

Bacanovic's assistant, Douglas Faneuil, originally said there was such an order but has since changed his story.

The House committee requested some of Stewart's e-mails, records from her business manager and phone records for its investigation.

Her lawyers said they would do everything they can to comply with the committee's request for additional documents.
  • Dan Collins

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