Former ImClone Exec InDicted

Former ImClone Systems founder and chief executive Samuel Waksal was indicted Wednesday for securities fraud in an alleged insider trading scam that has tarnished Martha Stewart and made Waksal a symbol for stock shenanigans in corporate America.

The indictment, unsealed Wednesday in federal court in Manhattan, brings new charges of obstruction of justice and bank fraud against Waksal, in addition to previous securities fraud and perjury charges.

The bank fraud count, which carries a maximum sentence of 30 years in prison, alleges Waksal defrauded Bank of America between April 1999 and January by securing $44 million in loans with ImClone stock he no longer owned.

Waksal, 54, of New York, had been trying to reach a plea deal with federal prosecutors for weeks in an effort to avoid the grand jury indictment. He had been arrested in June on a complaint filed by federal prosecutors.

Authorities allege he tried to sell his stock and tipped off family members before a public announcement that the U.S. Food and Drug Administration had rejected ImClone's application for a new cancer drug called Erbitux. News of the FDA's rejection wrecked havoc on the company's stock.

Waksal has been accused of receiving a tip on Dec. 26 from his brother Harlan, then the company's chief operating officer and now its chief executive, about the FDA rejection. Waksal — then allegedly tried to sell 79,797 shares and alerted his father, Jack, and daughter, Aliza.

In June, Waksal — a friend of Stewart's — was arrested on insider trading charges for allegedly tipping off members of his family to sell ImClone shares. Waksal's lawyers and prosecutors had been trying to negotiate a plea deal before a deadline to indict him.

Also under federal investigation is homemaking guru Martha Stewart, a friend of Waksal, who sold nearly 4,000 shares of ImClone the day before the FDA news was made public. She has repeatedly said her sale was lawful and based on public information. Although no criminal charges have been filed against her, she has been sued privately by shareholders in her company, Martha Stewart Living Omnimedia.

Stewart has maintained that she simply had an order to sell her stock when it went below $60. But doubt has been cast on that assertion 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.

On Tuesday, the U.S. House Energy and Commerce Committee, which is investigating the ImClone trading scandal, said it requesting additional documents from Stewart including e-mails and records from her business manager.

In a letter to Stewart's lawyer, the committee chairman, Rep. Billy Tauzin, R-La., and Rep. James D. Greenwood, R-Pa., chairman of the subcommittee on oversight and investigations, requested an interview with Stewart to clear up discrepancies between her account of the sale and that of her broker and his assistant.

Stewart is a regular contributor to the CBS' The Early Show but has not made appearances recently since the scandal broke.