Judge's stern message to Wall Street crooks

Sam Waksal, the founder of drugs company ImClone Systems, was yesterday sentenced to more than seven years in prison and fined $4.3m (£2.6m), making him the first US chief executive to be jailed for the scandals that bloodied the reputation of Wall Street last year.

The sentence of 87 months was the maximum under federal guidelines and was clearly intended to send a message to corporate America and investors that crooked executives will be punished.

He will serve the entire seven years and three months with no possibility of early release.

Mr Waksal pleaded guilty in October to six of 13 charges stemming from his attempt to offload shares in ImClone ahead of an announcement of a setback in a potentially blockbusting cancer drug, Erbitux. He also admitted to tipping off his daughter, Aliza.

Judge William Pauley said that Mr Waksal had "undermined the public's confidence" with his actions. "The harm you caused is truly incalculable," the judge added.

He rejected a plea for leniency based on ImClone's cancer research. Mr Waksal's lawyer also argued against using his client as an example. The insider trading "took place literally on the spur of the moment. This was not a sophisticated, highly planned course of conduct."

Mr Waksal, 55, who arrived at a New York court dressed in a sombre suit, was again apologetic. Several family members attended, with some crying, according to reporters in the courthouse.

Repeatedly clearing his throat, Mr Waksal said: "I want to apologise for my wrongdoing. I am deeply disturbed and so very sorry for my actions." He directed a particular apology to his parents, who are Holocaust survivors. "They survived so much, they didn't need me to inflict pain at this point in their lives."

He had pleaded guilty to charges including securities fraud, bank fraud, conspiracy to obstruct justice and perjury. Erbitux has since done well in trials on patients suffering from colon cancer and ImClone's shares have gone up.

In March, Mr Waksal pleaded guilty to separate charges that he had evaded taxes on $15m worth of art. The penalties included $3m in fines plus $1.2m in restitution to the state of New York.

Washington and Wall Street are eager to restore confidence after last year's wave of alleged frauds, cases of insider dealing and massive bankruptcies. Federal prosecutors have charged a handful of people, but Mr Waksal is the first top executive to be sentenced.

Prosecutors last week also filed charges against celebrity businesswoman Martha Stewart in connection with the ImClone scandal. Ms Stewart, a friend of Mr Waksal who uses the same broker, also sold shares in ImClone ahead of the announcement that the food and drug administration would not review Erbitux.

Criminal charges including obstruction of justice have been brought against her as well as civil insider dealing charges. She has pleaded not guilty.

Ms Stewart arrived at FBI offices yesterday for a low key mug shot and finger printing session.