CNN BREAKING NEWS
Sam Waksal Gets Seven Years
Aired June 10, 2003 - 13:05 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: Let's go right now to New York City, where in a federal courtroom, Sam Waksal has been sentenced now. For details on all of this, we turn now to CNN's Chris Huntington who's been watching this for us in New York.
CHRIS HUNTINGTON, CNN CORRESPONDENT: Miles, good afternoon to you.
Well, Sam Waksal has just been sentenced to seven years and three months in federal prison. He'll have to pay a $3 million fine on top of that. And in addition, $1.26 million in restitution. This all stemming from insider trading. He pleaded guilty to six counts relating to the insider trading. Also bank fraud in there. And an additional two counts of avoiding taxes for some artwork.
All in all, this penalty and this jailtime comes in at the high end of the recommended sentencing guidelines for this crime of insider trading. It is far below the cumulative total of jail time and fines that Waksal could have faced. So if you add everything together, but that rarely if ever, happens. So the fact this is coming in just at the high end, Miles, is a signal that the prosecution, in a sense, prevailed with Judge William Pauley, in trying to make an example of Sam Waksal. One of the things prosecutors said in this hearing was they wanted to make it very clear you don't mess with the capital markets, and they want to show that anybody like Sam Waksal who gets off easy sends a message that the game is rigged.
So Sam Waksal, going to jail for more than seven years and pay about $4.25 million -- Miles.
O'BRIEN: All right, we're -- I assume Sam Waksal is still inside the courthouse, given the gaggle of reporters that is waiting out there.
O'BRIEN: We hope to hear from him soon. Do you think he'll say anything today? Have you got any guidance on that, Chris?
HUNTINGTON: It's pretty unlikely that he will say anything actually in court. You don't know. He made about a six-minute appeal to the judge in the hearing, apologizing to friends, families, employees of ImClone and cancer patients. Remember, this all stems from the fate of Erbitux, the cancer drug that ImClone is working on. And sort of in a bitter irony, that drug is actually showing up quite well in clinical trials, and now is going back to the FDA, the very application process that was kicked back that set off this whole insider trading mess.
So we are -- as the media is all staged out here, we're hopeful somebody will come and address us. Not clear if Waksal himself will. The
U.S. attorney's office tell us Waksal will be released this afternoon on his own recognizance to surrender at a latter date. He'll not be shackled, if you will, right now -- Miles.
O'BRIEN: Chris, probably worth pointing out, and probably should have done this at the beginning, why we're so interested in Sam Waksal and ImClone. It's no a story that would probably get nearly as much attention, were it not for Waksal's friends.
HUNTINGTON: We can sum it up in one word,and that's Martha. Sam Waksal's very close friend Martha Stewart, her whole case revolves around the fact that she sold her shares, according to the government, with knowledge that Waksal was selling, and that's the allegation at the heart of the government's charges against Martha Stewart, is that she was privy to nonpublic information in the form that the CEO of ImClone, her close friend Sam Waksal, was dumping out of her share. So that prompted her to sell, according to the government.
So yes, this has relations to Martha Stewart. It's also, Miles, seen as somewhat of a precedent-setting case. This sentence now will certainly be seen as a setting of the bar, if you will, for the undoubted future sentencings that will get a whole raft of corporate criminal cases that are due to come -- Enron, WorldCom, Adelphia Communications, those are much more serious corporate crimes.
So seven years here for Sam Waksal, that sends a serious message to anybody involved in the indictments with those other companies.
O'BRIEN: The bar's set very high. Chris Huntington, keep us posted as people trickle out of the courthouse in New York. Thank you very much.
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