ImClone Systems founder Samuel Waksal has been sentenced to more than seven years in prison, the first chief executive to go to jail in the spate of scandals that have rocked corporate America.
US District Judge William Pauley ordered Waksal to serve the maximum 87 months in prison, pay the top fine of $3 million and pay $1.26 million in restitution. The insider trading scheme led to last week's indictment of Waksal's good friend, style-setter Ms Martha Stewart.
Pauley harshly criticised ImClone's former chief executive for the harm he caused to his family, co-workers, the investing public and cancer patients who are still awaiting the development of the company's cancer-fighting drug, Ebitrux.
Waksal was indicted for trying to sell ImClone shares ahead of an announcement that the US Food and Drug Administration would reject the company's highly touted cancer drug. Erbitux has recently shown signs of success.
He pleaded guilty in October to six of the 13 charges in that indictment. He fashioned his plea to omit conspiracy charges that alleged his father, an 81-year-old Holocaust survivor and his daughter knew they had received inside information before selling their ImClone shares.
At that time, Waksal said he insisted that his daughter sell her shares. But he maintained he never told her the reason. In addition to two securities fraud charges relating to insider trading, Waksal pleaded guilty to obstruction of justice, perjury and bank fraud charges.
In March, he also pleaded guilty to new charges that he evaded sales tax on $15 million worth of art work.
Ms Stewart, who recently resigned as chief executive of Martha Stewart Living Omnimedia, came under investigation for selling nearly 4,000 ImClone shares one day before the FDA rejection became public. She has pleaded not guilty to charges in last week's indictment.