Former FDA Chief Illegally Held Stocks

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By Marc Kaufman
Washington Post Staff Writer
Tuesday, October 17, 2006

Lester M. Crawford, who resigned mysteriously last fall just two months after being confirmed as commissioner of the Food and Drug Administration, will plead guilty today to charges that he hid his ownership of stock in food and drug companies that his agency regulated, his lawyer said.

The Justice Department charged Crawford yesterday with two misdemeanors for withholding the financial information, which included his ownership of shares in food and drink manufacturers Pepsico Inc. and Sysco Corp. and the drug company Embrex Inc.

The complaint, called a criminal "information," accused Crawford, who held numerous senior FDA and Agriculture Department jobs in his many years in government, of conflict of interest and filing false financial disclosure reports.

Barbara Van Gelder, Crawford's lawyer, said he "is going to plead guilty to two misdemeanors tomorrow afternoon, and he is going to admit his financial disclosures had errors and omissions, mostly with his wife's continued ownership of stocks," the Associated Press reported. "At the end of the day, he owned these stocks, and he will admit he owned them while he was at the FDA, and he will take responsibility for that."

Crawford failed to disclose $28,000 he gained from stock options in Embrex, an agriculture biotechnology company, the complaint said. Crawford was a member of Embrex's board of directors from 1992 to 2002.

The Justice Department document said a government ethics official told Crawford in 2002 that he had to sell shares the couple owned in 12 companies considered to be "significantly regulated organizations" -- companies that regularly had business before the FDA.

The prosecutors wrote that the Crawfords sold many of their shares but kept ownership in three companies. When asked in 2004 about two of them, Crawford replied in a December e-mail that "Sysco and Kimberly-Clark have in fact been sold." Actually, the court papers state, Crawford knew that he or his wife still held shares in both companies.

Crawford chaired the FDA's Obesity Working Group, which made recommendations affecting food and soft drink makers, at a time when he and his wife owned stock in Pepsico and Sysco, the court papers said.

The complaint said Crawford made some of his false statements on yearly financial disclosure forms and others on his financial disclosure statement to the Senate Health, Education, Labor and Pensions Committee -- which was considering his nomination to become permanent FDA commissioner.

Crawford's short tenure as commissioner was best known for his August 2005 decision to postpone action on the "morning after" contraceptive Plan B. He had earlier told the Senate that the agency would act on the application, and Sens. Hillary Rodham Clinton (D-N.Y.) and Patty Murray (D-Wash.) allowed a vote on his nomination as a result.

Rep. Maurice D. Hinchey (D-N.Y.), who helped initiate an investigation into Crawford's departure by the inspector general of the Department of Health and Human Services, said that further digging into Crawford's finances should and will continue.

"By blatantly ignoring the law on financial holdings and conflicts of interest, Lester Crawford used his position as the head of the FDA to send all the wrong signals to other FDA employees and the American public," Hinchey said in a statement.

Crawford, trained as a veterinarian and pharmacologist, had previously served as deputy FDA commissioner and acting commissioner. The agency, which regulates almost one-quarter of the U.S. economy, has had a confirmed commissioner for less than two years since the Bush administration came into office.


© 2006 The Washington Post Company

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