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U.S. Seeks to Seize Family's Proceeds

October 22, 2002|Christopher Mumma | Bloomberg News

NEW YORK — U.S. authorities Monday filed a civil lawsuit seeking forfeiture of almost $10 million in proceeds from alleged insider trading by the family of former ImClone Systems Inc. Chief Executive Samuel D. Waksal.

Federal prosecutors asked a judge to authorize the seizure of $9.7 million in trading profits in four separate accounts controlled by Waksal's parents, Jack and Sabina, and his daughter, Aliza, according to court papers filed in U.S. District Court in Manhattan.

The suit contends that there is probable cause to believe that the money is "derived from proceeds traceable to an offense."

Waksal, 55, pleaded guilty last week to insider trading charges, admitting that he had confidential information that the Food and Drug Administration would reject ImClone's application for Erbitux, a highly touted cancer drug, on Dec. 28.

The FDA's decision sent the company's shares plummeting from prices that had topped $75 a share.

Waksal told U.S. District Judge William Pauley that he called his daughter in Idaho on the morning of Dec. 27 and instructed her to sell $2.47 million in ImClone shares immediately. Waksal said he didn't tell her the true reason for his call "in an effort not to implicate her in any unlawful or improper conduct." Within minutes, she called to execute the sale, records show.

Jack Waksal, 80, also sold $8.27 million in shares Dec. 27 and Dec. 28, prosecutors said. Authorities said that phone records indicate several phone calls between Samuel Waksal and his father on the evening of Dec. 26. Neither Jack nor Aliza Waksal have been charged.

In all, Waksal's family sold $10.65 million worth of ImClone shares in December, the civil forfeiture papers say. Waksal's family members have not been indicted.

Last week, prosecutors warned that Waksal's plea would not protect Waksal or family members from possible charges.

An attorney for Jack Waksal, Charles Stillman, declined to comment on the forfeiture suit. Aliza Waksal's attorney, Abbe Lowell, also declined to comment, saying he had not seen the suit.

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