Martha Pal Gets 7-Year Jail Term

ImClone Systems founder Samuel Waksal arrives at Manahattan Federal court to be sentenced for his role in the ImClone insider trading scheme, Tuesday, June 10, 2003, in New York.
ImClone founder Sam Waksal, whose sale of company stock in late 2001 is linked to the federal case against Martha Stewart, was sentenced Tuesday to seven years and three months in prison and ordered to pay $4 million in fines and back taxes.

U.S. District Judge William H. Pauley rejected Waksal's plea for a lighter sentence based on ImClone's cancer research, Waksal's humanitarian works and the intense media interest surrounding the case.

"The harm that you wrought is truly incalculable," the judge said.

Earlier, with his voice breaking, Waksal apologized in court 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."

The prison term represented a steep fall for Waksal, who once rubbed shoulders with rock stars and collected art, cutting a flamboyant figure in the mostly staid pharmaceutical industry. He pleaded guilty in October to six counts, including securities fraud, bank fraud, conspiracy to obstruct justice and perjury.

Assistant U.S. Attorney Michael Schachter asked for a tough sentence, saying the 55-year-old Waksal "told numerous, separate and distinct sets of lies" surrounding his family's sale of ImClone stock.

Stewart, a close friend of Waksal, was indicted last week on five federal counts — including obstruction of justice, conspiracy and lying to investigators — tied to her December 2001 sale of nearly 4,000 shares of ImClone stock. She pleaded innocent to all charges.

Her former stockbroker, Peter Bacanovic, also was indicted and pleaded innocent. Prosecutors said Bacanovic illegally sent word to Stewart that Waksal's family was planning to unload shares of ImClone.

Stewart, a contributor to CBS News' The Early Show until last summer, reported quietly to the FBI's New York headquarters Monday to be fingerprinted and photographed, nearly a week after she was indicted. She wore no makeup and a casual outfit for the early-morning processing, and was not noticed by the press or even federal security guards.

Sources said prosecutors wanted to counter Stewart's claims that she is being treated harshly.

Waksal did not implicate Stewart in his plea, and his plea was not part of an agreement to cooperate with prosecutors — a rare development in a criminal plea.

Because he did not implicate Stewart, CBS News legal analyst Andrew Cohen said Waksal was not likely "to get any special favors from prosecutors when they make their sentencing pitch or from the judge who has complained over the past few months that Waksal wasn't providing the court with the information it needed to evaluate the case."

Waksal admitted to a scheme in which he tipped his daughter, Aliza, to dump ImClone stock just before it plunged in value on news that the Food and Drug Administration would not review his company's experimental cancer drug, Erbitux.

A week ago, ImClone stock surged after European researchers reported that Erbitux does appear to be effective, helping some of the sickest colon cancer patients live longer.

"The past few weeks should have been a moment of glory for Sam Waksal. But there's no glory for Sam Waksal," Pomerantz told the judge.

Pomerantz portrayed Waksal as fiercely devoted to ImClone and said he covered up the insider trading because he did not want to have to leave the company.

The lawyer said the insider trading "took place literally on the spur of the moment."

"This was not a sophisticated, highly planned course of conduct that extends over time," he said.

Waksal, in a letter to the court, said: "I tore my family apart. That punishment is with me every moment of the day. I dream about it."

The charges against him were not all directly related to insider trading.

In pleading guilty to bank fraud, Waksal said he forged a lawyer's signature on paperwork for a $44 million bank loan. On the obstruction count, Waksal admitted he ordered staff to keep certain financial records from leaving his office, knowing the Securities and Exchange Commission would be interested in them.

Prosecutors say Waksal also ordered the destruction of computer files, phone messages and other records, though he did not admit to those allegations. He pleaded guilty to conspiring with an art dealer to dodge $1.2 million in sales tax on nine paintings that cost him a total of $15 million.

In March, Waksal agreed to an $800,000 fine and a lifetime ban on leading a public company in a partial settlement of civil charges relating to the scandal filed by the Securities and Exchange Commission.