The closely watched trial of Martha Stewart, the American businesswoman, was set to reach a pivotal point on Tuesday afternoon with the testimony of the government’s key witness.
Douglas Faneuil, an assistant to Stewart’s former Merrill Lynch broker, Peter Bacanovic, was smuggled into court in the morning out of sight of the extensive media presence.
His testimony for the government in the obstruction of justice case has been heavily trailed. Faneuil claims that he was ordered to tip off Stewart in December 2001 that Sam Waksal, the founder of the drug company ImClone Systems, was dumping shares. Stewart sold nearly 4 000 shares in the company shortly before damaging news that regulators had turned down a review of a potentially blockbusting drug in development.
Bacanovic and Stewart maintain that they had an existing agreement to sell the shares at $60.
The cross-examination will be more lively as the defence tries to destroy Faneuil’s credibility. The defence lawyers want to maul the 28-year-old, questioning him on his use of drugs and presenting e-mails sent to his boyfriend, a magazine editor, complaining about how Stewart treated him.
According to the New York Post, Faneuil wrote in one e-mail, describing himself as ”baby”, that Stewart had treated him badly but ”baby” got back at her.
It was clear from the opening arguments that Faneuil would be the crucial witness. Lawyers for Stewart and Bacanovic, who is a co-defendant in the case, both fixed on the assistant broker.
Bacanovic’s defence described him as an ”admitted liar” who had done a deal with the government to escape prosecution. Faneuil, who had originally supported the version of events put forward by Bacanovic and Stewart, has accepted a misdemeanour conviction in return for providing evidence.
The defence added that the assistant was star-struck and had originally lied about his dealing with Stewart ”to impress someone” and ”to be the big man”. Stewart’s defence also spent time trying to discredit Faneuil, describing him as a novice broker ”overwhelmed by what was going on around him”.
Faneuil’s testimony was delayed last week when the government handed the defence notes from an interview given by the assistant’s former lawyer to the FBI. The lawyer said he could not recall whether it was Bacanovic or Waksal who had told Faneuil to contact Stewart.
The government has used the intervening time to prepare the groundwork for Faneuil’s testimony.
On Monday, an administrative officer at Merrill Lynch, Julie Monaghan, said Bacanovic had offered in March 2002 to pay Faneuil a $5 600 cash bonus and to increase his share of monthly commissions from 1,25% to 1,75%. That appeared to support Faneuil’s claim to investigators that Bacanovic had tried to buy his silence.
Stewart’s lawyer, Robert Morvillo, wants to cross-examine Faneuil about his admission to the FBI that he used the drug Ecstasy and smoked marijuana before and after he began cooperating with the government. Prosecutors have filed papers requesting that the questioning remain off limits.
Other witnesses on Monday included Waksal’s former assistant who took a phone call from Stewart on the day that she sold her shares.
The assistant, Emily Perret, said: ”I remember speaking with Martha. I answered the phone, she said ‘Where is Sam, get Sam’.”
Asked to describe her tone in the conversation, Perret said Stewart had seemed ”very hurried and harsh and direct”. — Guardian Unlimited Â