NEW YORK – A judge scolded Sam Waksal (search) for "lawlessness and arrogance" as he ordered the ImClone Systems (search) founder to serve more than seven years in prison in the stock-trading scandal that has ensnared his friend Martha Stewart (search).
At the sentencing hearing in Manhattan federal court Tuesday, U.S. District Judge William Pauley said Waksal had hurt his company, his family and investors nationwide.
"The harm that you wrought is truly incalculable," the judge said.
Pauley also ordered Waksal to pay nearly $4.3 million in fines and back taxes. Waksal is to begin serving his sentence in three weeks.
The sentence of seven years and three months was at the high end of the range suggested by federal guidelines for Waksal's crimes. The payments include a $3 million fine and more than $1.2 million Waksal owes for evading sales tax on nine paintings.
Waksal admitted last fall to tipping his daughter, Aliza, to dump ImClone stock in December 2001 because he had received word the government was about to issue a negative report on the ImClone cancer drug Erbitux (search).
He has also admitted he tried to transfer some of his own ImClone shares into his daughter's account so they could be sold. Brokerage Merrill Lynch blocked the transfer.
Stewart, a longtime friend of Waksal, is accused by federal prosecutors of unloading her ImClone stock when she heard the Waksals were selling. The home-decorating maven has pleaded innocent to the charges in a five-count indictment.
James Comey, the top federal prosecutor in Manhattan, said the verdict "shows that corporate crooks will serve real jail time."
In a letter to the judge pleading for leniency, Waksal admitted encouraging his daughter to lie to investigators and said his crimes "tore my family apart."
"That punishment is with me every moment of the day," he said. "I dream about it. I can barely look at Aliza without questioning who I am. When she cried to me and asked me why she was involved in this situation, I died inside."
Aliza Waksal has not been charged with a crime, and some analysts speculated Sam Waksal's guilty plea was partly designed to save his daughter from prosecution.
Michael Kulstad, a spokesman for Comey, declined to comment Tuesday on whether the investigation into the Waksal family was closed.
Waksal also addressed the judge in court, apologizing to his family and shareholders. He also apologized to cancer patients in case the government's evaluation of Erbitux was delayed by the uproar over the insider-trading scandal.
Last week, a new study conducted in Europe found Erbitux appears to be effective, helping some of the sickest colon cancer patients live longer.
Waksal's lawyers provided the judge with a binder of about 120 letters of support, including one from actress Lorraine Bracco of The Sopranos, who praised him for helping her during a personal struggle with depression.
But Assistant U.S. Attorney Michael Schachter, the lead prosecutor on the case, said Waksal had repeatedly lied to investigators and obstructed their work.
"Dr. Waksal was not merely an employee," he said. "He was not merely somebody who heard some news on the street. Dr. Waksal was the chief executive officer of a publicly traded corporation."
The judge said that until Waksal reports to prison July 2, he must remain in his New York apartment — except for appointments with his lawyers — and submit to electronic monitoring.
Granting a request by Waksal's defense, the judge said he would recommend Waksal serve his time at the federal prison at Eglin Air Force Base in Florida.
Waksal once rubbed shoulders with stars like Mick Jagger and cut a flamboyant figure in the pharmaceutical industry. He appeared frequently on the society pages with Stewart.
According to prosecutors, he learned in advance that the Food and Drug Administration (search) had decided not to review ImClone's application for Erbitux.
The judge said Aliza Waksal saved more than $630,000 when she sold with her father's encouragement. He said Waksal tried to save more than $1 million himself by transferring his own stock to Aliza's account.