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ImClone Systems Inc. founder and former chief executive Samuel Waksal pleaded not guilty Monday to charges that he tipped off family members that the company’s anti-cancer drug had been rejected, and that he subsequently tried to obstruct a government probe into his actions. Appearing in U.S. District Court in Manhattan before Judge William H. Pauley, Waksal simply responded “not guilty” when the court asked him how he pled to the charges. Outside the courtroom after his arraignment, in his first public statement since his arrest on June 12, Waksal defended ImClone and its cancer drug, Erbitux. “I believe that the drug, Erbitux, which I have worked to bring to the public for over 10 years, has the potential to help millions of cancer patients,” he said. “I know this breakthrough therapy will one day make a real difference in the lives of many people.” Waksal said ImClone is still a “strong, solid company.” He did not comment directly on the criminal charges brought against him, except to say he looked forward to addressing them in court and “set[ting] the record straight.” He said the past few months had been “extremely challenging and emotionally draining for me, my family and my friends.” Waksal, 54, is accused of alerting his father and daughter that the Food and Drug Administration was going to issue a negative decision on Erbitux days before the public announcement, provoking $11 million in family stock sales and nearly $5 million in attempted sales. ImClone’s stock has plummeted nearly 85 percent since the FDA’s Dec. 28 announcement. The scandal has spread to Martha Stewart, chief executive of Martha Stewart Living Omnimedia Inc., who is also the target of an inquiry into her sale of nearly 4,000 ImClone shares just one day before the news on Erbitux was released. Stewart has denied any wrongdoing and refused to answer questions before a congressional committee last week. The U.S. Attorney’s Office for the Southern District of New York, in conjunction with the New York office of the Federal Bureau of Investigation, formally indicted Waksal last week on charges of insider trading, obstruction of justice, perjury and bank fraud. The indictment charges that Waksal conspired with the two “tippees” to lie to regulators at the Securities and Exchange Commission, which was investigating the stock trades. Waksal, who the government claims was in “dire financial circumstances,” also allegedly destroyed documents pertaining to offshore accounts he held under the name of Protec Advisory Group, in an effort to hide assets. Waksal is also charged with defrauding the Bank of America by pledging ImClone stock he no longer held to secure approximately $44 million in loans he received in 1999 and 2000. To further his scheme, the government alleges, Waksal forged the signature of the company’s general counsel on documents that falsely stated that Waksal still owned the stock. EARLY TRIAL DATE Assistant U.S. District Attorney Michael S. Schacter pressed the judge for an early trial date, describing the matter as “at bottom, a very simple case.” He estimated the trial would take three to four weeks. Defense attorney Mark Pomerantz, a partner at Paul, Weiss, Rifkind, Wharton & Garrison, contested Schacter’s characterization, saying the case was “a bit more complicated.” He said he had just received 70 boxes of documents supporting the government’s case that morning, which defense had yet to review. Pomerantz also said that he anticipated motion practice relating to the charges in the indictment. Also defending Waksal is Lewis J. Liman of Wilmer, Cutler & Pickering. Judge Pauley said the trial would commence either Dec. 9 or Feb. 10. He set a date of Oct. 25 for argument on any motions that are brought. Waksal is out on bail on a $10 million bond secured by $5 million in cash. The sides had been working on a possible plea deal since his arrest, delaying the indictment. If convicted, Waksal faces a possible 30-year sentence on the bank fraud charge. The securities fraud charges carry possible 10-year prison terms, and the three conspiracy charges, the perjury charge and the obstruction-of-justice charge carry maximum sentences of five years each.

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