ImClone figure's plea bargain falls through

Associated Press

NEW YORK -- Samuel Waksal, founder and former chief executive of ImClone Systems Inc., has been indicted on expanded charges in an insider trading scandal that has tarnished Martha Stewart and her home fashion empire.

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

Attempts to cut a deal with prosecutors before a Friday deadline apparently broke down. A deal likely would have required him to reveal, in exchange for leniency, whether he provided insider trading tips to family and friends, including Stewart.

Waksal, 54, 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 his biotech company's highly touted cancer drug, Erbitux, had been rejected by the Food and Drug Administration.


"This is a painful chapter in Dr. Waksal's life, but he continues to believe in ImClone and Erbitux as holding out real hope for millions of cancer patients," Waksal attorney Mark Pomerantz said in a statement. "Like all Americans, he is presumed to be innocent, and he will respond to these charges as required."

Investigators also targeted Stewart, CEO of Martha Stewart Living Omnimedia Inc., after learning that she disposed of nearly 4,000 shares on Dec. 27. Stewart has denied any wrongdoing.

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

The obstruction count accuses him of ordering the destruction of ImClone computer files containing phone messages and records of his accounts at banks in Switzerland and the Netherlands. Prosecutors say the files and records could have revealed the identities of his insider trading partners and where he might have hidden illicit gains.

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