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Mon, 16 Oct 2006 21:23:51 EDT

WASHINGTON - Former FDA chief Lester Crawford will plead guilty for failing to disclose a financial interest in companies his agency regulated, his lawyer said Monday.

The Justice Department accused the former head of the Food and Drug Administration with falsely reporting that he had sold stock in companies when he continued holding shares in the firms governed by FDA rules.

Crawford "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," said Crawford’s lawyer, Barbara Van Gelder.

"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," said Van Gelder.

Accused of making a false writing and conflict of interest, Crawford was scheduled to appear before a federal magistrate Tuesday afternoon. Each carries a maximum penalty of one year in prison.

The papers say Crawford failed to disclose his income from exercising stock options in Embrex Inc. of Research Triangle Park, N.C., an agriculture biotechnology company. Crawford had been a member of Embrex’s board of directors, according to federal filings.

The court papers also say Crawford chaired FDA’s Obesity Working Group at a time when he and his wife owned stock in soft drink and snack food manufacturer Pepsico Inc., based in Purchase, N.Y., and food product manufacturer Sysco Corp., based in Houston.

The panel Crawford was chairing was making decisions affecting food and soft drink manufacturers.

Crawford, a veterinarian, abruptly resigned from the FDA job in September 2005 but gave no reason for his decision to step down. He had held the top position for just two months but had been acting head of the agency for more than a year.

According to the Justice Department’s court papers:

• A government ethics official inquired about Crawford’s ownership of stock in several companies FDA regulates and Crawford replied in a Dec. 28, 2004 e-mail that "Sysco and Kimberly-Clark have in fact been sold." Actually, the court papers state, Crawford knew that he or his wife held shares in both.
• Even though financial reporting requirements for federal officials say all income must be disclosed, Crawford failed to reveal $8,000 in income from the exercise of Embrex stock options in 2003, and failed to report $20,000 from the sale of Embrex stock options in 2004.
• At the time he was making decisions chairing the government obesity panel, Crawford and his wife owned more than $25,000 in Pepsico shares and over $25,000 in Sysco shares.

Crawford’s ownership of shares in Pepsico, Sysco, Embrex and the other companies was prohibited under federal regulations, since the companies are considered to be "significantly regulated" by the FDA.