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Waksal sentenced Turning aside defense attorney Mark Pomerantz’s pleas for a downward departure under the Federal Sentencing Guidelines, Judge William Pauley of the Southern District of New York on June 10 sentenced ImClone Systems Inc. founder Samuel D. Waksal to seven years and three months in prison, the maximum under the guideline range. The judge said Waksal demonstrated a “pattern of lawlessness and arrogance” in covering up his attempt to unload millions in company stock on the eve of bad news from regulatory authorities on the application for the cancer-fighting drug Erbitux. The hearing concluded eight months of jockeying between Assistant U.S. Attorney Michael S. Schachter and Pomerantz over the appropriate sentence for Waksal, who entered a guilty plea on Oct. 15 to securities fraud, perjury, obstruction of justice, bank fraud and conspiracy charges. He later pleaded guilty on March 3 to wire fraud and conspiracy to commit wire fraud by avoiding New York state sales tax by routing the purchase of valuable artworks through New Jersey. record settlement urged Attorneys for WorldCom Inc. and the Securities and Exchange Commission (SEC) told a federal judge on June 11 that objections to a $500 million settlement of the SEC’s fraud suit against the telecommunications company are meritless. Urging Southern District of New York Judge Jed Rakoff to approve the largest settlement in the SEC’s history, Peter Bresnan, the commission’s deputy litigation counsel, said that the realities of the Bankruptcy Code and the company’s current assets made the pursuit of a stiffer penalty impractical. “Even if we got a claim for $10 billion, we would have to take that judgment to the bankruptcy court, establish we have a claim and [establish] that that claim would be allowed and be given priority,” Bresnan said. “We, of necessity, must have a claim satisfied in bankruptcy or it would be dischargeable.” And under the Bankruptcy Code, he said, the mass of WorldCom shareholders and bondholders now in civil litigation over the collapse of the company before Southern District Judge Denise Cote will receive virtually nothing. program is upheld A federal program giving preferential treatment to Native Americans seeking defense contracts is constitutional, the U.S. Circuit Court for the District of Columbia held on June 6 in American Federation of Gov’t Employees v. U.S., No. 02-5142. The Defense Appropriations Act for fiscal year 2000 contained a provision granting outsourcing preferences to firms with at least 51% Native American ownership. The American Federation of Government Employees and two civilian Air Force employees sued, arguing that the preference violated the equal protection component of the Fifth Amendment’s due process clause. Applying a rational-basis standard of review, a district court granted summary judgment to the government, and the union and workers appealed. The D.C. Circuit affirmed.

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