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Hoping to head off further prosecution, former ImClone Systems Inc. CEO Samuel Waksal took a huge risk Tuesday by admitting to insider trading and other crimes without the protection of a plea deal with the government. By pleading guilty to only six of 13 counts in a case that a prosecutor described as far from over, Waksal is gambling he can wrap up his involvement in the scandal by Jan. 24, when he is scheduled to be sentenced by Southern District of New York Judge William J. Pauley. Waksal on Tuesday admitted to Judge Pauley that he persuaded his daughter, Aliza, to dump $2.4 million in ImClone stock on Dec. 27, hours after he learned that the Food and Drug Administration was about to reject the company’s application for the cancer-fighting drug Erbitux. Waksal, 55, pleaded guilty to two counts of insider trading and single counts of conspiracy to obstruct justice and commit perjury, obstruction of justice, perjury and bank fraud. But he declined to enter guilty pleas to the remaining charges: two counts of conspiracy to commit securities fraud/insider trading, and five counts of insider trading. His lawyer, Mark F. Pomerantz, expressed hope that Waksal’s guilty plea would prompt the government not to proceed on the remaining charges. But Assistant U.S. Attorney Michael S. Schachter said Tuesday it was not clear that Waksal was accepting responsibility for his actions. Schachter said the investigation is ongoing and that Waksal may face even more charges. “The government wishes to make sure that Dr. Waksal is held accountable for all of the criminal conduct that he engaged in, not just that conduct to which he has pled guilty to today,” Schachter said. Schachter said the government was investigating the sale of $30 million in ImClone shares by another “tippee,” as well as the sale of $600,000 in stock by a “close friend” of Waksal’s. There was no mention Tuesday of the related probe of insider trading by Martha Stewart, who sold almost 4,000 shares of ImClone stock on Dec. 27, the day after Waksal heard the bad news from a person with connections at the Food and Drug Administration (FDA). Waksal took pains during his guilty plea to protect his daughter, Aliza, who is also a target of the investigation, and is identified in the indictment as “Tippee No. 2.” Waksal said that during a series of phone conversations with his daughter, he strongly urged her to sell her ImClone stock, but never told her the reason why “in an effort not to implicate her in any unlawful or improper conduct.” Of the two counts of conspiracy to commit securities fraud for which Waksal declined to plead guilty, one involved Aliza Waksal. Regarding Waksal’s decision not to enter a plea of guilty to five counts of insider trading, four of the counts involved his father, Jack, who is referred to as “Tippee No. 1″ in the indictment. Jack Waksal allegedly sold 135,000 shares for $8.1 million on Dec. 27 and Dec. 28, 2001, shortly after speaking with his son. But Samuel Waksal did admit that he told his daughter to mislead the Securities and Exchange Commission (SEC) about their communications around the time of the trades, which was the basis for the charge of conspiracy to obstruct justice and commit perjury. ‘HUMAN SHIELDS’ Schachter said the evidence at trial would have showed that Waksal “used his family members as human shields — including his daughter and father — to lie for him under oath.” Waksal also admitted trying to transfer almost 80,000 shares of his own stock into his daughter’s account for sale, only to be blocked by Merrill Lynch from selling the shares because of restrictions on trading leading up to the FDA’s ruling. Waksal said further that he instructed employees at ImClone to withhold documents from the Securities and Exchange Commission. But Schachter said in court that Mr. Waksal had employees destroy documents and delete computer files, including records for off-shore accounts Waksal maintained. Finally, Waksal admitted to defrauding the Bank of America by pledging already pledged ImClone stock to secure $44 million in loans from the bank. Although he refused to accept the facts as portrayed by Schachter, Waksal admitted forging the signature of ImClone’s general counsel on a document purporting to show he still owned the securities. Pomerantz said Waksal “did what he allocuted to doing, but there are other respects — this being one — in which the government’s statements go far beyond what the defendant did.” But Schachter said Waksal’s guilty plea on the bank fraud, while “legally sufficient,” did not amount to “a full acceptance of responsibility for the heart of the crime of bank fraud that he committed.”

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