On Dec. 5, 2001, ImClone Systems, a biotech company that was seeking Food and Drug Administration approval for a promising anti-cancer drug called Erbitux, saw its stock peak at a price of $74 a share and begin an earthward trajectory.
On the evening of Dec. 6, ImClone’s chief executive, Sam Waksal, 54, threw his annual Christmas party at the 5,000-square-foot Thompson Street loft that he calls home. Daily News owner Mort Zuckerman was in attendance, as well as former New York Times executive editor Abe Rosenthal and art dealer Larry Gagosian. Film producer Keith Barish put in a brief appearance, as did CNN correspondent Serena Altschul. Publicists Peggy Siegal and Bobby Zarem came, as did former Spy magazine investor Jean Pigozzi, who brought Mick Jagger with him.
Midway through the soiree, one guest came across home mogul Martha Stewart. Ms. Stewart, who is a longtime friend of Mr. Waksal’s-her daughter Alexis had dated him briefly, and at one point she had even been romantically linked to the Ph.D.-was sitting on the floor, her back against a radiator and looking rather wan. For a woman who was “always at the center of everything,” the sight of Ms. Stewart on her can seemed rather odd.
Within a few weeks, Mr. Waksal would be on his ass, too. On Dec. 28, the Food and Drug Administration refused ImClone’s application to market Erbitux because of questions regarding the drug’s testing. In a little more than a month, the company’s stock price would plummet nearly 80 percent, costing investors an estimated $4 billion. Mr. Waksal’s alleged 11th-hour trades in his own stock would provoke a Congressional probe and more than a dozen lawsuits. The Securities and Exchange Commission and the Justice Department would also launch investigations into ImClone.
Mr. Waksal has fallen hard, but he hasn’t fallen as far as someone else in his precarious position. And observers of the doe-eyed scientist chalk up a good deal of Mr. Waksal’s buoyancy to his ability to charm and cultivate a remarkable cross-section of the city’s power structure. Though Mr. Waksal resembles a balding Ichabod Crane in a baseball hat, his friends and acquaintances inevitably talk about how charming and intelligent he is, as well as his penchant for dating high-profile women. According to friends of Mr. Waksal, they have included active Democrat Patricia Duff, writer Lally Weymouth and Cheryl Gordon, the widow of the late real-estate mogul Edward Gordon.
In his Zelig-like way, Mr. Waksal has woven together so many different relationships-business, personal, romantic and occasionally all of the above-that it has functioned as a kind of social safety net in his time of crisis. “I’m sure there are people who think he’s a complete rogue,” said one friend of Mr. Waksal’s. “But I know a lot of people whose opinion I respect who think he got the shaft.”
Friends of Sam
Who does Mr. Waksal know? One acquaintance categorized the spectrum this way: “Bimbos, intellects, art people and investors.” Among those who are said to be closest to Mr. Waksal are the art dealer Mr. Gagosian, concert promoter Ron Delsener and entertainment attorney Allen Grubman-three men who are known for their combination of charm, bluntness and inscrutability.
In fact, after Mr. Grubman’s daughter, publicist Lizzie Grubman, had her Mercedes mishap at Conscience Point last July, Mr. Waksal told the New York Post that Ms. Grubman seemed like “a very nice, grounded individual.”
But that’s just scratching the surface. Those who know Mr. Waksal say his friendships include socialite Dixon Boardman, Sopranos actress Lorraine Bracco, adman Jay Chiat, real-estate scion Andrew Farkas, songwriter Denise Rich, scientific writer Stephen Jay Gould, Hamptons builder to the stars Ben Krupinski, and investment banker and Daily News owner Mr. Zuckerman, who, through a spokesman, called Mr. Waksal a “casual friend.”
Mr. Waksal also has his share of political connections. He is a supporter of Israel, and last year hosted an intimate dinner party for former Israeli Prime Minister Ehud Barak. “Sam aspires to be a big Jew,” said one person familiar with Mr. Waksal.
In 2000, Mr. Waksal finagled an invitation to a dinner at the White House with Indian Prime Minister Atal Bihari Vajpayee and Ms. Rich, the songwriter.
ImClone’s chief has also courted powers in both political parties. Both former President Clinton and Al Gore were invited to Mr. Waksal’s Christmas party last year. They didn’t show. The ImClone C.E.O. also has a relationship with Democratic Party bigwig and Miramax co-chairman Harvey Weinstein. He’s even closer to State Comptroller Carl McCall. “It would be accurate to call them close personal friends,” a spokesman for Mr. McCall said. Indeed, he said that Mr. McCall refers to Mr. Waksal as “Brother Sam.” Another source said that Mr. Waksal helped Mr. McCall raise money for his most recent campaign.
That’s nothing unusual for Mr. Waksal. Over the last 10 years, he and his family have donated more than $160,000 to Democratic races, from Walt Minnick’s campaign for Congress in Idaho to Hillary Clinton’s campaign for the Senate in New York.
But Mr. Waksal hasn’t turned his back on the Republican Party, either. On April 16, the Post reported that ImClone had paid Governor George Pataki’s wife, Libby Pataki, $10,000 as a consultant, but that Ms. Pataki returned the money after “questions” were raised.
Tennis With Carl
Occasionally, Mr. Waksal’s personal and business relationships converge. Perhaps there’s no better illustration than his friendship with corporate raider Carl Icahn. Mr. Icahn and Mr. Waksal have long been tennis buddies. Indeed, back in May 2001, Mr. Icahn engaged in a little on-camera towel-snapping with Mr. Waksal, telling CNBC’s Business Center , “You know, I play a little tennis pretty badly …. But I could beat Sam Waksal. That’s about the only guy.”
It was a small price to pay. In February, Mr. Icahn, who had invested in ImClone prior to the stock’s fall, sent the faltering stock soaring when he announced that he might acquire a controlling interest in the company for $500 million.
Mr. Waksal has maintained close relationships with other ImClone investors: Leon Black of the hedge fund Apollo Management; Nelson Peltz of the food giant Triarc; Larry Feinberg of the hedge fund Oracle Partners; Dr. John Mendelsohn of, among others, Enron; and Mr. Barish.
Mr. Waksal’s romantic liaisons, however brief, have also not been without their benefits. Ms. Duff confirmed that she has “bought and sold” ImClone stock, although she declined to divulge whether she still owns any. And a source close to Mr. Waksal said that it was through his relationship with Ms. Weymouth that the ImClone C.E.O. became friendly with Blackstone Group chairman (and former Secretary of Commerce under Richard Nixon) Pete Peterson, who briefly joined ImClone’s board of directors. Mr. Peterson resigned in January.
Lots o’ Lawsuits
Though Mr. Waksal has done an impressive job of networking this city’s boldfaced names, he hasn’t been so fortunate with some lesser-known folk. He’s been sued by the C.E.O. of a now-defunct online cosmetics company he helped finance, iBeauty.com, for failing to pay her. The case has since been privately settled.
Mr. Waksal has also invested in a number of non-scientific ventures. In 1993, he put up the money to produce a feature-length documentary about the 1992 Democratic National Convention called The Last Party . Robert Downey Jr. and Donovan Leitch starred, and that tells you all you need to know about the project. Mr. Waksal invested in a long-since-closed restaurant called Sam’s with actress Mariel Hemingway, and a fashion magazine called Nylon that’s primarily known for having model Helena Christensen on its masthead.
Most recently, Mr. Waksal was sued for fraud by James Neal Jr., the former chief financial officer of a small biotechnology company Mr. Waksal started called Scientia Health Group.
According to the complaint Mr. Neal filed in Manhattan Supreme Court in March, Scientia was “a holding company that was to invest in and develop various other companies in the health-care field. In theory, these ‘portfolio’ companies were to benefit from Scientia’s scientific, managerial, financial and operational resources. That would increase the value of the portfolio companies and, in turn, Scientia.”
The court documents also allege that “Waksal indicated … he had commitments from associates and investors in ImClone to invest $60 million in Scientia.” Scientia is based in Bermuda, but it operates out of ImClone’s office on Varick Street.
Through his attorney, Mr. Icahn confirmed putting up some of Scientia’s money, though he said, “there were other people who probably invested more than I did.” Mr. Peltz and Mr. Black were said to have invested. Mr. Gagosian also invested, thought not much. In a statement to The Observer , the art dealer wrote, “Last year, I, along with dozens of Sam Waksal’s social acquaintances, was solicited to invest in a start-up company called Scientia. Aside from the fact that Scientia is in the biotech field, I know very little about the company, let alone any litigation. My total investment in Scientia is six dollars.”
A source close to the situation was not surprised at the size of Mr. Gagosian’s “investment.” “Sam cared more about having Larry on board than having his money,” the source said. For that same reason, the source said, Mr. Waksal gave stock in Scientia to friends like Martha Stewart. Spokespersons for both Ms. Stewart and Mr. Weinstein declined to confirm or discuss any alleged stock dealings involving their clients.
According to court papers, Mr. Neal-a longtime biotech executive who was not a member of Mr. Waksal’s inner circle-was offered a job as C.F.O. last April, after inquiring into top openings at ImClone. “During his employment,” the complaint states, Mr. Neal “became aware of certain illegal and unethical conduct engaged in by Waksal, both in connection with Scientia and his other business interests.” The complaint does not say what this conduct was, and neither Mr. Neal, nor his attorneys, would comment on the case.
But the complaint goes on: “In addition, [Mr. Neal] witnessed Waksal make outright misrepresentations to potential investors on numerous occasions.” When Mr. Neal “made clear to Waksal, and others, that he would not stand by silently while Waksal engaged in such misconduct,” the court papers said. “Waksal, in turn, concluded that he did not want to be hampered by an immediate subordinate who might expose his illegal, unethical and fraudulent behavior. Waksal thus wished to remove plaintiff from Scientia for his own personal benefit,” the complaint continued.
As time went by, several investors in Scientia raised objections to Mr. Neal’s hiring, according to the complaint; in November, 2001, he was fired for reasons that remain unclear. According to the complaint, his contract was voided on a technicality.
Mr. Waksal’s attorney, Paul Ginsberg, told the Transom: “We believe the allegations in Jim Neal’s complaint are without merit, but beyond that we’re not going to comment pending litigation.”
Old Shoe Factory
Like Scientia, ImClone began without a real specific idea of what it was supposed to do. The Waksal brothers started it in an old shoe factory downtown in 1984 with $4 million from biotechnology venture capitalists. They built it up slowly, often sputtering into debt and squeaking by mostly on Samuel Waksal’s charm. But things got better beginning in 1992, when the brothers met Dr. Mendelsohn, who claimed to have an incredible cancer treatment forged from human and mouse antibodies-a treatment dropped by Eli Lilly because of its apparent toxicity to humans. Eventually, the drug, later called Erbitux, generated so much hype that ImClone was able to bring in a reputable drug company-Bristol-Myers Squibb-as a 20 percent partner for $1 billion in 2001. Bristol’s job was to market Erbitux; ImClone would push it through the F.D.A.’s approval process.
As late as Sept. 19 last year, even big investors seemed confident about Erbitux’s prospects. At a conference call with shareholders that day-soon after ImClone signed a deal with Bristol-Myers Squibb-Mr. Waksal was asked how a current study of Erbitux was going. “We completed that trial,” he reportedly replied. “It went very well. We’ll be announcing that data at the next available conference that we can announce it at …. We believe we will be successful in gaining approval because of the data that we’ve generated thus far.”
But on Dec. 28, the F.D.A. sent a letter to ImClone that raised serious doubts about the test results for Erbitux. On this news, the price of ImClone stock-which had reached a high of $74 in early December-dropped to $14 by early February. The Waksal brothers were accused of dumping some $100 million worth of their own ImClone stock before the news came out, and of encouraging friends and family members to do the same. Sam Waksal’s daughter, Aliza, sold close to $2.5 million of her own shares. The investigations and lawsuits ensued.
As it stands, Mr. Waksal is still in charge of his company. With Mr. Icahn’s takeover offer looming, ImClone and Bristol have patched things up. Bristol has pledged an additional $700 million to help develop Erbitux, and ImClone’s stock is nearly 10 points above its February low. It’s a little early to think about the Christmas party, but Mr. Waksal’s friends are wondering.
There were red-wrapped condoms in the bathroom and, during cocktails, “Conquest Competition” flyers that asked: “Which is a real Kama Sutra position-Cat & Mice sharing a hole, Giraffe in willow or Silk Worm in Sky?” But the only heavy breathing in evidence at the annual New York City Opera Thrift Shop Benefit on April 8 was expended over clothes.
“I bought a little red riding hood cape I’m really excited about,” artist Rachel Feinstein said after rummaging through the racks and racks of vintage clothes that had been wheeled to the wood-paneled third floor of Columbia University’s Casa Italiana.
“I got some wonderful linen, tablecloths and twin sheets for my daughter, a Zandra Rhodes dress, a white Mexican dress and a beautiful skirt that looks like it’s from the 40′s and needs a little work,” socialite Marina Rust said. “You have to keep a cool head about you while you’re shoving yourself in front of a small mirror and judging whether something will fit you.” On her left shoulder, she had flung an additional white crochet dress. “I’m thinking about it,” she said.
Vogue ‘s European editor-at-large Hamish Bowles, stalked the racks wearing a red suit, a red shirt and a black tie. He looked a bit devilish. “Loooovely ,” he said of Ms. Feinstein’s cape. “Does it work ? Do you like it?” he inquired of Ms. Rust about her finds. ” Daaaarling , thaaaaank you for coming,” he cooed to a third guest.
Mr. Bowles was the curator of the Metropolitan Museum of Art’s Costume Institute exhibit “Jacqueline Kennedy: The White House Years,” which is currently in Washington. He is also a self-described “vintage fashionista.” He owns a 1936 Schiaparelli jacket embroidered with cellophane that’s “pretty wonderful,” something from Mainbocher’s first collection and now, thanks to the benefit, a rhinestone beaded black satin dress from Galanos, from the late 1950s.
But just how much did Mr. Bowles love vintage? Shortly after the Kennedy show opened at the Met, the gossip grapevine was abuzz with speculation that Mr. Bowles had tried on some of Mrs. Kennedy’s clothes before assigning them to their display cases. Mr. Bowles vehemently denied this. “The concept of trying anything on is verboten ,” he said, looking appalled.
And what did fashion publicist Eleanor Lambert, who’s in her 90′s have to say about the vintage craze when she showed up at the event with her grandson. “There’s absolutely no one living today that makes you think you have to change the way you look,” the turbaned Ms. Lambert said.
Dive, Darby, Dive!
Oxygen Media Production President Geoffrey Darby sure seems to have drunk the company Kool-Aid.
Near the beginning of Oxygen’s second birthday celebration at Exit on April 4, a number of the multimedia concerns principals gathered on stage, including co-founder Geraldine Laybourne, backer Paul Allen, parenting correspondent Gayle King, Oxygen personality Isaac Mizrahi and Mr. Darby, to rally the crowd. According to one Oxygen employee who was present, after the group did its “‘Woo-hoo, Go Oxygen’ stuff,” Mr. Darby “spontaneously stage dives – in a suit – into a pit of his own employees.”
“He is definitely a dork,” reported our source, who, by the way, had a problem with the three-pasta buffet served at the soiree. “It’s a network about women’s issues – what’s with all the carbs?” the source said.
Mr. Darby responded that the experience taught him a crucial lesson. “Never stage-dive into a group of women. They’ll never catch you.” The executive said he suffered only a minor ankle injury, and that he had “do doubt” that the move made him look “dorky.”
The Transom Also Hears …
“If I’m moving my glasses up and down like this,” Walter Cronkite said, “it means I can’t hear you.” It was the night of April 8. Mr. Cronkite was eating pasta at a dinner for bandleader Skitch Henderson at the National Arts Club and talking to a reporter for The New York Times . At 85, he wears two hearing aids, walks kind of slowly, coughs habitually, and seems almost at home with his own mortality.
He told the Times reporter that he and his wife, Betsy, are big fans of the paper. “Nowadays, the first thing Betsy does every morning is turn to C-10 or 12 for the obituaries,” he said. “Of course, most days she reads it over and says, ‘Nobody good died today.’”
… The old nightlifers mingled with the new ones at the launch party for the alternative fashion magazine Cut on April 4. Mingling in the Canal Street loft of guitarist-turned-photographer Sprague Hollander (Iggy Pop, Lloyd Cole, Safety Last) were Melissa Burns of the up-and-coming electroclash band W.I.T.; the old Queen of the Roxy, Ruza Blue; photographer Adam Fuss, Warholite Benjamin Liu. Veteran designer Stephen Sprouse, who’s just finished a line for Target, came late, and Alexander McQueen, who was sporting a tan and a more svelte figure, arrived and left early.
Follow Ian Blecher via RSS.