Litigation
Jun. 19, 2002
ImClone Stock Flimflam, the Nadir of Scandals, Rides Backs of Dying
Column by Garry Abrams - In this life, most of us expect to be cheated, lied to and flat out ripped off by a wide variety of scam artists, many of them operating under the guise of legitimate businesses.
In this life, most of us expect to be cheated, lied to and flat out ripped off by a wide variety of scam artists, many of them operating under the guise of legitimate businesses.
Truth be told, few of us are always perfectly honest. But we're too moral, or inhibited, to contemplate, let alone engage in, the brazen flimflams that have been making headlines in recent months.
A major aspect of the Enron scandal, for example, is the elaborate attempt by the Houston firm to make a mint by overcharging the entire state of California for electricity.
Indeed, much of the current wave of business scandals in this country involves something we can all understand - greedy people picking the pockets of gullible people and using the money to buy vacation houses in Aspen and generally have a really good time.
OK, so I'm outraged.
I hope some of these high-flying dudes get to spend lots of quality time bunking with Hells Angels meth addicts in high-security prisons where the guards are all hearing- and sight-impaired.
But most of us, I think, can -eventually - forgive and forget being overcharged for the electricity we used to watch television, run the garbage disposal and surf the 'Net. At least we got something in return for being robbed.
Then there's the ImClone scandal.
This one is in a class by itself.
It involves hyping an experimental cancer drug to drive up the price of the stock in the company developing the drug - and then dumping the stock for a hefty profit before word leaked out that the Food and Drug Administration won't approve the drug for general use.
Call it paving the way to the bank with the hopes of the dying.
Last week, the FBI arrested Samuel D. Waksal, the former chief executive of ImClone Systems, in his sprawling Manhattan loft on charges of insider stock trading. The federal criminal complaint accused Waksal of tipping off family members in December to the unfavorable FDA ruling.
Back then, the FDA decided that a key study to determine the effectiveness of ImClone's drug Erbitrux in the treatment of late-stage colon cancer was too shoddy to be a valid clinical evaluation.
Meanwhile, the Securities and Exchange Commission hit Waksal with a civil complaint seeking to have him cough up "the several million dollars in losses avoided by those family members he tipped," the commission said in a release.
The stock-dumping relatives - Waksal's daughter and father, according to the New York Times - sold more than $10 million in ImClone shares over two days, before the FDA announcement. Since the two turned their pretty profit, ImClone's stock has declined 90 percent from its all-time high of more than $75 in early December.
For instance, on the trading day after the FDA announcement became public Dec. 28, ImClone stock declined 16 percent.
Perhaps not surprisingly, though, Waksal was able to make his steep $10 million bail.
And thanks to making bail, Waksal was able to travel to Washington, D.C., the day after his arrest and cite his Fifth Amendment right against self-incrimination when he refused to testify before a congressional hearing.
"It appears that, instead of concentrating [its] focus on the need to carefully conduct clinical trials that the introduction of a breakthrough medicine demand, ImClone was more focused on the sales pitch," Rep. James Greenwood, R-Pa., said, according to news reports.
Of course, the sales pitch.
And talk about a captive audience.
I can imagine no one more susceptible to a sales pitch than a dying cancer patient eager for the thinnest sliver of hope. Remember laetrile?
Moreover, cancer patients often strive mightily to participate in clinical studies of new, promising but unproven drugs like Erbitrux because such drugs often represent the last chance for life of the terminally ill.
Most of us know someone, or several someones, who have battled cancer, sometimes successfully, more often unsuccessfully.
Profiting from the longings of the dying may not be murder.
But it's close.
Garry Abrams
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