Former ImClone head pleads innocent

Aug. 12, 2002 at 12:31 PM
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NEW YORK, Aug. 12 (UPI) -- Former ImClone Systems Inc. head Samuel Waksal pleaded innocent Monday to banking and securities fraud stemming from an insider-trading investigation that has also expanded to include lifestyle entrepreneur Martha Stewart.

Last week, the 54-year-old former chief executive officer was named in a 13-count indictment after months of investigations kicked off by his selling of a large volume of ImClone stock the day before a Dec. 12, 2001, announcement that the company's key cancer drug Erbitux had failed to gain U.S. Food and Drug Administration approval.

Additionally, investigators are looking into why members of the Waksal family, and friend Stewart, all sold stock just prior to the FDA's rejection of Erbitux, which led to a sharp decline in the price of ImClone's stock.

After Waksal's court appearance Monday, he vowed the company he founded and headed would "grow and prosper and continue its very important work."

Waksal's brother, Harlan, currently heads the company.

Under the indictment, Waksal is alleged to have defrauded Bank of America Corp. by using ImClone securities he no longer owned in order to secure loans. The indictment states Waksal allegedly forged the signature of ImClone's general counsel on pledging documents to convince the bank of his ownership of stock used as collateral for $44 million in loans.

The bank fraud charge carries with it a 30-year prison term.

At the time, Waksal was, prosecutors said, "in dire straits" financially, with his company more than $75 million in debt.

Also, the former CEO was indicted for obstruction of justice in the Securities and Exchange Commission's investigation into alleged insider trading by him, his family and his friends.

"My attorneys and I look forward to addressing these claims in court," said Waksal Monday after his plea.

In the case of Stewart, authorities are looking into her sale of nearly 4,000 ImClone shares, which she says was not based on any insider information. Stewart says the sales were lawful.

Her statements have been contradicted by recent testimony from a Merrill Lynch trading assistant who is cooperating with authorities on the insider-trading investigation.

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