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Waksal begins 7-year prison term

Sam Waksal Wednesday moved into a new home for the next seven years. The former Imclone CEO reported to the minimum security Schuylkill Federal Correctional Institute in Pennsylvania, and CNBC’s Mike Huckman took a look at where he’ll be staying.
/ Source: CNBC

Sam Waksal Wednesday moved into a new home for the next seven years. The former Imclone CEO reported to the minimum security Schuylkill Federal Correctional Institution in Pennsylvania. Waksal was found guilty of insider trading earlier this year, sentenced to 7 years and 3 months, and ordered to pay $4.3 million dollars in fines for insider trading. Here’s a look at where he’ll be staying.

FOR YEARS, Sam Waksal has called an expensive loft in New York’s trendy SoHo neighborhood home. But for the next seven years the closest he’ll come to loft-living is the top bunk of his new prison space — which is smaller than a Manhattan studio apartment.

His cell has cinder-block walls, but no bars. And there’s no barbed wire surrounding the minimum security federal facility in the Pennsylvania countryside.

“But make no mistake about it; this is certainly a prison,” said David Novak, who did 10-and-a-half months at a federal prison in Florida for mail fraud in 1997.

Today, the 41-year-old Novak runs a consulting company that helps lawyers get lenient sentences for their white-collar clients and counsels defendants and their families about dealing with incarceration. (Novak won’t say if he worked for Waksal.)

“You are no longer a defendant at this point in time,” he said. “You’re an inmate. and it’s time to own the experience and accept full responsibility for the fact that your choices put you in this position. And it’s your attitude that will make or break it for you.”

Monday through Friday, Waksal’s wake up call in prison will come at 6 a.m. He’ll have to report for work at 7:30 a.m. Quitting time is 3:30 p.m. By 8:30 p.m., Waksal has to be back in his cubicle. And then it’s lights out at 11:30 p.m.

“It’s a scary thing to wake up in your bed one morning and go to sleep that night in a prison,” said Novak. “I, quite frankly, am at a loss with respect to the language to describe the emotional impact that can have on an individual.”

In Waksal’s case, the impact will be emotional and financial. At one time, as head of ImClone, he made a base salary that worked out to about $721 an hour. In prison, he’ll get minimum wage of 12 cents an hour — and may top out at 40 cents an hour — for menial jobs like kitchen patrol, janitorial work, groundskeeping, plumbing and painting.

Novak was a prison baker.

“But it was something to occupy time, which unfortunately any inmate has much too much of,” he said. “Time tends to move fairly slow so most inmates welcome any diversion. And work is one of the largest ones.”

For Waksal, prison work may be a diversion. He’ll be one of about 300 inmates incarcerated at Schuylkill.

But Novak does not think that, for other white-collar criminals, Waksal’s experience will be a deterrent.

“I point to the statistics and facts with three decades of the war on drugs,” he said. “It’s been an abject failure. We’ve handed out harsher and harsher sentences and it’s really had zero impact.”

The 55-year-old Waksal admitted last fall to tipping his daughter to dump ImClone stock in December 2001 because he had received word the government was about to issue a negative report on the ImClone cancer drug Erbitux. Waksal pleaded guilty last year to charges including securities fraud and perjury. He later admitted to dodging more than $1 million in sales tax on nine paintings he bought from a Manhattan art gallery.

Waksal asked to be sent to a prison at Eglin Air Force Base, Fla. — a white-collar facility Forbes magazine once called the best place to be incarcerated in America.

The Associated Press contributed to this report.