Samuel Waksal – ImClone Systems
He thought he was 'immune from consequences.' He put himself and Martha Stewart in prison.
Samuel Waksal took a break from his long and successful career as a biotech entrepreneur to serve several years in prison for insider stock trading.
The immunologist was admittedly arrogant enough to believe he could be immune from consequences. He put family members in legal peril and set off a chain of events that landed his most famous friend, Martha Stewart, in prison.
Waksal founded New York-based ImClone Systems in 1984. When he learned the Food and Drug Administration had rejected its cancer drug, Erbitux, he scrambled to dump stock and warn family and friends ahead of a public announcement.
He tried, but was unable, to unload about 80,000 shares. Family members sold more than $10 million worth of stock, though, catching regulators’ attention.
His stockbroker at Merrill Lynch, Peter Peter Bacanovic, gave Stewart a heads up to sell her shares, which ultimately resulted in five month prison sentences for both of them.
ImClone stock fell 16% once the company announced its FDA approval had been rejected.
Waksal pleaded guilty to securities fraud, bank fraud, obstruction of justice and perjury charges in late 2002. He was sentenced to more than seven years in prison and was released in 2009.
Waksal was no one-hit wonder when it came to malfeasance. News reports noted that long before Waksal’s insider trading debacle, he’d been dismissed from several academic and research positions for reckless behavior and ethical lapses. In 2003, he also pleaded guilty to two criminal charges for dodging $1.2 million in sales tax on $15 million worth of artwork.
Before heading to prison, he was candid and remorseful about his misdeeds in media interviews.
“I was arrogant enough at the time to believe that I could cut corners, not care about details that were going on and not think about consequences,” he told CBS News. “Did I know that I had committed an illegal act? Yeah, I knew. I tried to rationalize beyond rationality that I hadn’t.”
It was all for naught. The FDA finally approved Erbitux in 2004 and the drug was lauded for aiding thousands of cancer patients. In 2008, Erbitux generated $1.5 billion in sales and Eli Lilly bought out ImClone for $6.5 billion.
After prison, Waksal resumed his life as a biotech entrepreneur, founding Kadmon, which sold for $1.9 billion to Paris-based biotech company, Sanofi, in 2021. He is now CEO of another biotech company that he founded, Graviton Bioscience.
“The day I was arrested was a horrible day in my life,” he told CBS News. “It is very difficult for someone who thinks about himself as someone who does good things for society to be led away, in handcuffs, and thought about as a common criminal.”