- The Washington Times - Wednesday, September 11, 2002

The House Energy and Commerce Committee asked the Justice Department yesterday to investigate whether Martha Stewart, a homemaking guru and top Democratic donor, lied to Congress about her sale of ImClone stock.
Rep. Billy Tauzin, Louisiana Republican and chairman of the committee, said Ms. Stewart's statements through her lawyers were inconsistent with facts the panel turned up concerning phone conversations she had with her broker's assistant and ImClone Chief Executive Officer Sam Waksal about the stock.
Evidence uncovered by the committee suggests the conversations might have involved the exchange of inside information that enabled Ms. Stewart to sell nearly 4,000 ImClone shares for a $230,000 profit a day before adverse news sent the stock plummeting, he said.
"This evidence raises a serious question as to whether Ms. Stewart's accounts were false, misleading and designed to conceal material facts," in violation of the federal False Statements Act, he said.
The Justice Department already is investigating whether Ms. Stewart knew about the government's pending rejection of ImClone's cancer drug application when she sold the stock on Dec. 27, in violation of inside-trading law. Both crimes are punishable with fines and prison terms.
Ms. Stewart has maintained that she did not know about the adverse government action that drove down the stock, but merely had instructed her broker to sell shares when they fell below $60.
Mr. Tauzin said the committee's decision to refer the matter to the department for what he expects to be "vigorous" enforcement frees the panel to pursue weightier questions involving the Food and Drug Administration's handling of such sensitive announcements.
"This is somewhat of a sideshow" for the committee, which led Congress' investigation of Enron Corp. and WorldCom Inc. earlier this year, he said.
Democrats have criticized the Republican-led committee for spending so much time investigating such "a small player" amid the bumper crop of big-time corporate criminals this year.
The issue that both Democrats and Republicans on the committee were most concerned about, he said, was the possibility that Mrs. Stewart had not been completely honest in her account to committee investigators.
Ms. Stewart, a billionaire who has given more than a half-million dollars to Democratic causes in recent years, also is no ordinary investor, he noted.
"She is a former stock broker. She is the CEO of a very large corporation. And she sits on the board of directors of the New York Stock Exchange. And that is quite different than your average little investor sitting at home in her kitchen."
Ms. Stewart's attorneys said she has voluntarily provided more than 1,500 pages of documents in response to the committee's requests and spent "innumerable hours" trying to answer questions.
They seized on the chairman's admission that the committee investigation was merely a "sideshow" and said they agreed with Mr. Tauzin that it is a matter for the Justice Department, not Congress, to decide.
"I'm glad that the political aspects of this matter will now terminate and am confident that the investigation will lead to Ms. Stewart's exoneration," said Robert Morvillo of Morvillo, Abramowitz, Grand, Lason & Silberberg P.C.

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