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Archive for Thursday, July 24, 2003

ImClone founder begins 7-year prison sentence

July 24, 2003

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— ImClone Systems founder Sam Waksal reported to a minimum-security prison Wednesday to begin serving a seven-year prison term -- becoming the first chief executive to do time in the recent wave of corporate scandals.

"I deeply regret the mistakes I've made that have brought me here today, and I'm ready to pay for those mistakes," Waksal said after arriving at the Schuylkill Federal Correctional Institution in a Range Rover, dressed comfortably in blue jeans, white sneakers and a blazer.

The 55-year-old scientist admitted last fall to tipping his daughter to dump ImClone stock in December 2001 because he had received word the government was about to issue a negative report on the company's cancer drug, Erbitux.

He was sentenced June 10 to seven years and three months in prison and ordered to pay about $4.3 million. A federal judge scolded him at the time for "lawlessness and arrogance."

Waksal's friend Martha Stewart was indicted June 4 in the scandal. Prosecutors said she sold her own shares after she was tipped that the Waksals were moving to sell theirs, then lied about it to investigators.

Waksal will be one of about 300 federal inmates at the prison in Minersville, 75 miles from Philadelphia. He stopped his car on a prison access road Wednesday to speak briefly with reporters before continuing on to the jail.

"I only hope that right now I can go on and continue contributing after this in a positive way for society, in the kinds of ways that help bring Erbitux to people," said Waksal, who was accompanied by a driver and an unidentified woman.

Many prisoners work 7 1/2 hours each day, five days a week, scrubbing floors, and cutting grass for pay ranging from 16 cents to 40 cents per hour. The prison's dormitory-style houses are similar to a military barracks, said U.S. Bureau of Prisons spokesman Dan Dunne.

Waksal pleaded guilty last year to charges including securities fraud and perjury. He later admitted to dodging more than $1 million in sales tax on nine paintings he bought.

Stewart was indicted on charges of conspiracy, obstruction of justice, securities fraud making and false statements to federal officials.

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