October 17, 2006

DOW JONES REPRINTS

MORE   • Read the criminal "information"2 in U.S. v. Crawford, by arrangement with Findlaw (www.findlaw.com3)   * * * • Ex-FDA Head Held Shares in Regulated Firms4 10/26/05

Former FDA Head Is Charged
Over Stock Holdings

The former head of the Food and Drug Administration will plead guilty to two misdemeanors for failing to properly disclose stock ownership and violating conflict-of-interest rules while he was at the agency.

Lester Crawford, who resigned in September 2005, two months after the Senate confirmed him as commissioner, was charged by the Justice Department with failing to fully reveal in government disclosure forms holdings in companies regulated by the FDA. The U.S. attorney for the District of Columbia filed the charges yesterday.

While Dr. Crawford no longer works in government, the situation may spark broader questions about procedures for vetting stock options and shares held by high-ranking officials. The matter also arises at a time when the FDA faces heightened scrutiny from Congress.

The companies named in the charges -- shares of which were owned by Dr. Crawford and/or his wife during years when he served at a high level in the FDA -- include soft-drink and snacks company PepsiCo Inc.; Kimberly-Clark Corp., which sells some medical devices; Wal-Mart Stores Inc. and food distributor Sysco Corp. Dr. Crawford also held stock options in Embrex Inc., an agricultural biotechnology company on whose board he once served. He exercised some of the options while at the FDA, the Justice Department said.

The Justice Department also charged Dr. Crawford with conflict of interest, because he chaired an FDA working group on obesity issues while he owned shares in PepsiCo and Sysco, companies which had business that could be affected by the panel's findings.

While Dr. Crawford served on the working group, he and his wife owned 1,400 shares of PepsiCo, with a value of at least $62,000, and 2,500 shares of Sysco, with a value of at least $78,000, according to the Justice Department. The panel's work included recommending that manufacturers change food labels to more accurately reflect actual serving sizes.

Barbara Van Gelder, Dr. Crawford's attorney, said he plans to plead guilty to two misdemeanors. One stems from the omissions in his financial-disclosure forms, the other from the conflict-of-interest charge.

The penalty will be decided by a judge, but Ms. Van Gelder said fines and probation are typical in such situations. The issues stemmed from confusion and mistakes and weren't deliberate, she said. "At certain times of his career at the FDA, there were omissions that were inadvertent," she said. "He will take responsibility for the omissions." She said Dr. Crawford cooperated with the Justice Department.

A spokeswoman for the inspector general of the Department of Health and Human Services, which is also investigating the circumstances of Dr. Crawford's resignation, declined to comment on its status. Spokeswomen for the FDA and HHS also declined to comment. Dr. Crawford didn't return a call.

Lawmakers will debate the FDA's handling of drug safety and other issues next year, when agency-funding legislation goes before Congress. Democrats may use the Crawford incident to gain political traction for arguments that Republicans have been too sympathetic to the industry. New York Democratic Rep. Maurice Hinchey said the Crawford matter underscores that the FDA is "in need of a serious overhaul." The agency has said it is reviewing a recent report that criticized its handling of drug safety and has already made some changes.

Write to Anna Wilde Mathews at anna.mathews@wsj.com1