Ex-FDA chief faces stock sales charges

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Ex-FDA chief faces stock sales charges

By Diedtra Henderson, Globe Staff | October 17, 2006

 

WASHINGTON -- Former Food and Drug Administration Commissioner Lester M.

Crawford is expected to plead guilty today to failing to report stock

ownership in companies that the agency regulated and for underreporting

earnings from stock transactions.

 

Crawford, who resigned abruptly in September 2005, submitted financial

disclosure forms while at the FDA that he pledged were ``true, complete, and

correct. " But an 11-page information document filed by federal attorneys

indicates that Crawford misled ethics officials about whether he sold stock

when instructed and failed to report thousands of dollars in dividends he

earned.

 

His lawyer, Barbara Van Gelder , said the government has ``appropriately "

charged Crawford with two misdemeanor s, rather than felony charges that

would have signaled ``knowing intent. "

 

``Absolutely, he did something wrong, " Van Gelder said. ``No matter how

complex these transaction forms are, at the end of the day it's his

signature. There were mistakes, " she said. ``He will accept responsibility. "

 

Crawford, who had been deputy and acting commissioner before President Bush

nominated him to become commissioner, filed six financial disclosure forms

from 2002 to 2006 , the US attorney's fraud and public corruption section

found.

 

As a former member of the board of directors of Embrex Inc. , an

agricultural biotechnology company, Crawford received stock options. He let

some deadlines to purchase options expire without buying stock. In 2003 and

in 2004 , however, he exercised options to purchase Embrex stock.

 

Crawford reported the nearly $29,000 he earned in Embrex transactions on his

2003 and 2004 tax returns, but he did not list those earnings on disclosure

forms. As a senior-level FDA employee, he was required to file the financial

disclosure forms and list all earned income exceeding $200 .

 

And, as early as 2002 , a government ethics official flagged questionable

stock ownership, among them shares in Abbott Laboratories , Boston

Scientific Corp. , Johnson & Johnson , Medtronic Inc. , Merck & Co. and

Pfizer Inc. -- major drug and device manufacturers regulated by the FDA.

 

Told to sell the long list of stock, Crawford sold most. Throughout his

tenure at the FDA, however, Crawford and his wife held shares of

Kimberly-Clark Corp. , PepsiCo Inc. , Sysco Corp., and Wal-Mart Stores Inc.

, businesses ``significantly " regulated by the FDA, according to the report.

 

In late December 2004 , Crawford told ethics officials that his shares in

``Sysco and Kimberly Clark have in fact been sold. " But the Crawfords had

only sold their PepsiCo stock.

 

``In truth and in fact, as Crawford then knew, Crawford and/or his wife held

shares in both Sysco and Kimberly-Clark throughout 2003 and 2004, " wrote

Jeffrey A. Taylor , a US attorney for the District of Columbia .

 

The couple did not sell Wal-Mart stock valued at $31,000 to $71,000 , until

Jan. 4, 2005 . And, months after filing financial disclosures for the Senate

required for his confirmation vote, Crawford and his wife still held stock

in Sysco and Kimberly-Clark .

 

The couple sold their remaining Sysco and Kimberly-Clark stock on Aug. 18,

2005 .

 

 

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