In business with criminals
Part 6: Carl Icahn tends to win
This is Part 6 in an ongoing series
PART 1: Apollo Global, deep pockets with ties to the NBA, Jeffrey Epstein, and Buzzy
PART 2: The earliest days of Sears Roebuck, the CIA, and United Fruit
PART 3: 1950s and 60s: Buzzy at Princeton, the CIA messes with mind control, Leon Black’s dad
PART 4: Beverly Hills in the 1960s, 70s, and 80s
PART 5: Buzzy the banker.
PART 6: In business with criminals
PART 7: Everyone in this story owns planes
PART 8: “The biggest crime in American history”
PART 9: “A stealth invasion of the U.S. banking industry”
PART 10: Jeffrey Epstein’s tutor
PART 11: Richard Nixon and Adnan Khashoggi
PART 12: The Dechert Report
BY HENRY ABBOTT
Not everyone in this story is brilliant. But Carl Icahn is—according to interview sources, books, and his blatant knack for gaining leverage. What’s leverage, exactly? In the Mark Stevens’ biography King Icahn a colleague says “Carl’s dream in life is to have the only fire truck in town. Then when your house is in flames, he can hold you up for every penny you have.”
Leverage isn’t nice.
A few years ago, Patrick Radden Keefe wrote a powerful profile of Icahn—a former Drexel investor—for the New Yorker. Radden Keefe writes:
Marty Lipton, a corporate lawyer whose firm has often been hired by companies that were looking to thwart an Icahn takeover, wrote a memo four years ago in which he described raiders like Icahn as engaging in “a form of extortion.”
And it’s worth noting that Icahn has ties to all kinds of people who have gotten in trouble, potentially including—read on—Jeffrey Epstein. “[Sam] Waksal, [Michael] Milken, Ivan Boesky,” a former Icahn employee told the New Yorker, “Carl has never got into trouble. But he’s played with everyone who did.”
It included a line that’s also true of Buzzy Krongard and Leon Black, “he emerges as a winner and everyone else seems to lose.”
Sam Waksal is out of prison now. But people who knew him, even in the five years starting in 1977 when he worked at Tufts Cancer Center, always found him to send off risky signals. Brilliant, but different. Alex Prud’homme ended up writing a book about Waksal, and this Vanity Fair article.
Odd people, they say, would call Waksal’s extension at all hours—they included bill collectors, Waksal’s irate ex-wife, Cindy, and “slimy characters”—until co-workers disconnected his line. He surrounded himself with a coterie of attractive lab technicians—“The profile was tall, legs-legs-legs, dark hair,” says a former colleague—known around the Center as the Disco Techs. His lab appeared dark and unused much of the time, and people who were clearly not scientists dropped by late at night. “It was kind of scary,” says a source. A rumor sprang up that Waksal was somehow involved with cocaine, although no one ever saw him with the drug. “The joke was that the only piece of equipment used in his lab was the balance,” says a person who worked nearby.
The joke suddenly gained credence on February 14, 1981. At nine o’clock that evening two undercover sheriff’s deputies noticed Harlan Waksal, then a 27-year-old Tufts medical student, in the Delta ticket area of Fort Lauderdale International Airport. Harlan—who today is 49, looks like a more robust version of Sam, and lives in a genteel New Jersey suburb with his wife and two children—appeared nervous. He had used cash to purchase a one-way ticket to Boston and did not check any luggage. The police felt that he fit a “drug-courier profile,” took him to a storage room, and searched him. Stashed in Harlan’s underwear, bag, and coat pocket was a kilo of cocaine.
When I asked Sam about this incident his face turned red and he replied, “This is a very difficult subject, one that I prefer not talking about. It’s a matter of public record. Harlan was never finally convicted of anything. He had an unfortunate incident when he was very, very young.”
Large quantities of cocaine and young women. (Note: Important names are left out of this story. Whose cocaine was that?)
And a brilliant mind. His career progressed, eventually Waksal was at the controls of a very promising career as a medical executive. His mentor, according to several reports, was Carl Icahn. (Icahn, who went to Princeton with Buzzy Krongard and did business with Leon Black, who are both now at Apollo.)
Fast forward a few years, and Waksal had a swinging apartment on Thompson Street in SOHO, guests like Mick Jagger, a place in Jeffrey Epstein’s Little Black Book, and a medical startup with giant potential: ImClone. In the media Waksal became something of a curio. With the dollars, celebrities, crimes, and stunning women involved, he made great tabloid fodder. He’s pretty close in age to his friend Martha Stewart. For a few years, he dated her daughter Alexis.
Everyone who was anyone invested. When Waksal learned the company’s key drug had FDA trouble, he called some people who sold their stock in ImClone. All kinds of people, including Waksal and Martha Stewart went to prison for insider trading. Reportedly on Waksal’s last night in his swinging bachelor pad, actress Lorraine Bracco explained what she had heard about sex life behind bars. Waksal, Prud’homme writes, asked “girls” partying at his house that night to have phone sex with him.
In the tabloid version, it’s almost funny. But what was happening with money, behind the scenes, has never really been well understood—and involved all kinds of powerful figures. Prud’homme’s book, The Cell Game, describes Scientia Holdings, the company Waksal set up in late 2000. On paper it was based in Bermuda, but in reality it was run out of ImClone’s New York offices.
Scientia quickly raised $40 million from 48 backers, including Softbank, Icahn, Leon Black, Harvey Weinstein, and former Drexel investor Nelson Peltz. Movie producer Keith Barish, art dealer Larry Gagosian, Silicon Valley entrepreneur Russell Glass, Middle East policy advisor Charles Dunne, all kinds of movers and shakers are on the list of Scientia Investors that leaked with the Paradise Papers.
The idea was that the firm would invest in biotech and healthcare. But before long, the executive running Scientia, James W. Neal sued alleging “illegal, unethical, and fraudulent” conduct. When Waksal was deposed in 2002, he mostly pleaded the Fifth. He was so evasive he ended up being iffy on whether he even knew Scientia—of which he had been founder and CEO.
Whatever Scientia was really up to, it seemed incredibly important to Waksal and others to cover it up.
Mostly, it has been hard to know what happened. Until Apollo’s conflicts committee recently hired Dechert to investigate ties between Leon Black and Jeffrey Epstein. Now it appears Epstein was a Scientia investor all along—in partnership with senior executives from Apollo.
Dechert’s investigation has determined that Financial Trust Company, a company owned by Epstein … invested in two other entities, AP SHL Investors LLC and AP Technology Partners LLC, which are not Apollo funds and do not have any formal relationship with Apollo, but were formed by certain Apollo executives to explore investment opportunities that Apollo chose not to pursue.
Recapping: Top Apollo executives include several people key to the NBA, including 76ers billionaire Josh Harris. “Certain Apollo executives” formed a partnership with the criminal Jeffrey Epstein, to invest in an offshore enterprise founded by the criminal Waksal, and run by an executive who filed papers declaring the enterprise “illegal, unethical, and fraudulent.”
What the hell?
Maybe the least surprising thing in David Stern’s career is that when he retired from the NBA he landed a plum job from a powerful friend. The one he accepted and seemed to relish in his later years was in venture capital at Greycroft, working for legendary investor Alan Patricof.
On the leaked short list of investors in Scientia Holdings: Alan Patricof’s late wife, Susan.
The world of billionaires is small, and cozy with the NBA.
Whatever happened in the Waksal episode, it worked out well for Carl Icahn and potentially for Buzzy Krongard, too. Buzzy Krongard’s wife, Cheryl Gordon, was an Apollo executive starting in 2002. True to form: everything went to hell, and Icahn walked away with a ton of cash. Icahn mentored Waksal; Waksal ended up behind bars. As it played out over years, Icahn ended up purchasing at a discount and controlling Waksal’s company. Andrew Pollack of The New York Times reported in 2006:
Mr. Icahn said in an interview yesterday that in the mid-1990’s, when ImClone needed money, he bought two million shares at $2 a share and sold after the price rose to around $130, before a split. He said he got out of the stock before the deal with Bristol-Myers was announced, and therefore before the crash that occurred after the scandal erupted.
He said that after the stock price plummeted he began buying more. Most of what he owns now, he said, was acquired when ImClone shares were selling below $20.
“I hope I get lucky with it again,” he said.
In 2008, Eli Lilly acquired ImClone for $6.5 billion, or $70 a share.
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