Special Reportfull coverage Spitzer brings fraud suit against H&R Block HealthSouth settles suit for $445M Former General Re, AIG execs plead not guilty

Read the official charges • The criminal complaint against Fuks and Ben-Yehuda • The SEC charges against Fuks and Ben-Yehuda

NEW YORK (CNN) - The stock trading scandal that led to Martha Stewart's criminal conviction expanded Wednesday as regulators filed charges against two friends of former ImClone Systems CEO Sam Waksal.

Zvi Fuks, Chairman of the Radiation Oncology Department at Memorial Sloan-Kettering Cancer Center in New York, and Sabina Ben-Yehuda were arrested on insider trading charges.

The Justice Department and the Securities and Exchange Commission said Fuks and Ben-Yehuda sold ImClone (Research) stock after Sam Waksal illegally told them in December, 2001 that the Food and Drug Administration was about to deny review of the company's Erbitux cancer drug.

Prosecutors charge Fuks sold ImClone stock worth $5.3 million and Ben-Yehuda sold shares worth about $73,000 after receiving the tip from Waksal.

The Justice Department is charging the two with securities fraud and conspiracy to commit securities fraud, counts that carry a potential maximum sentence of 15 years. The SEC charges Fuks and Ben-Yehuda with insider trading.

Martha Stewart still faces an SEC insider trading suit that has been on hold pending resolution of her criminal appeal. Her attorney Robert Morvillo has told CNN he expects to reach a settlement once the criminal case is resolved. Stewart was convicted of lying about her sale of ImClone stock, served 5 months in prison and this week is beginning 5 months of home detention.

Sam Waksal is currently serving a sentence of 87 months in prison after pleading guilty to insider trading charges.

Fuks at the time of the sale was a member of the ImClone Scientific Advisory Board. The criminal complaint says Waksal and Ben-Yehuda had a "very close personal relationship" and that they were introduced by Fuks.

Ben Yehuda worked at Scientia, an investment firm Waksal established to invest in bio-technology start-ups, according to the SEC.

Stephen Fishbein, attorney for Ben-Yehuda, told CNN, "We believe these charges are entirely without merit and we intend to defend against them vigorously. We look forward to our day in court."

Attorneys for Fuks have yet to return CNN's calls.

SEC Attorney Helene Glotzer told CNN the case is "another example of those people with access to insiders benefiting at the expense of other shareholder victims."