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Waksal Is Expected to Plead Guilty, Source Says

October 15, 2002|Devlin Barrett | Associated Press

NEW YORK — Samuel D. Waksal, the founder and former CEO of ImClone Systems Inc. and a friend of Martha Stewart, is expected to plead guilty today to multiple charges in the company's insider trading case, a law enforcement source told the Associated Press on Monday.

Waksal faces federal charges of securities fraud, perjury, bank fraud and obstruction of justice.

The source, who requested anonymity, would not say to which charges Waksal was to plead guilty.

Waksal spokesman Scott Tagliarino, reached at his Connecticut home Monday night, declined to comment, as did a spokesman for the U.S. attorney's office.

The former CEO was arrested June 12 on charges of trying to sell his ImClone shares and tipping off friends and family members after learning that the Food and Drug Administration would reject his company's experimental cancer drug, Erbitux.

He was indicted in August and has pleaded not guilty.

Stewart, an ImClone investor, sold almost 4,000 shares in the biotech company a day before the FDA's announcement in December that it would not approve the drug. That announcement caused ImClone's stock price to fall.

Stewart has maintained that she had a prearranged order with her stockbroker, Peter Bacanovic, who was also Waksal's broker, to sell her shares if the stock dropped below a certain price.

Stewart has denied any wrongdoing and has not been charged.

An assistant to Bacanovic at Merrill Lynch, Douglas Faneuil, pleaded guilty this month to a misdemeanor charge of taking a payoff to keep quiet about Stewart's sale of her shares.

As part of his plea, Faneuil agreed to testify against Stewart and others if they are charged in connection with the scandal.

Waksal could face up to 30 years in prison if convicted of the most serious charge, bank fraud.

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