- The Washington Times - Sunday, February 22, 2004

NEW YORK (AP) — A judge said she would hear arguments next week on whether charges should be thrown out in the stock fraud trial of homemaking mogul Martha Stewart.

Lawyers for Mrs. Stewart and her stockbroker, Peter Bacanovic, planned to spend the weekend drawing up papers urging U.S. District Judge Miriam Goldman Cedarbaum to dismiss all nine counts against each defendant.

Judge Cedarbaum indicated she would hear arguments on the matter tomorrow morning but strongly suggested she was unlikely to even come close to tossing out the entire case.

“We all understand that there are substantial portions of this indictment that will not be dismissed — at this point, in any event,” she said.

The government rested its case Friday. Prosecutors had called 21 witnesses over 14 days of testimony, as they tried to prove Mrs. Stewart lied about why she sold 3,928 shares of ImClone Systems stock in December 2001.

The government contends Mr. Bacanovic sent word to Mrs. Stewart on Dec. 27, 2001, that ImClone CEO Sam Waksal was trying to dump his shares in the company. Mrs. Stewart sold hers that day, netting about $225,000.

Mrs. Stewart and Mr. Bacanovic say they had a standing agreement that her ImClone shares would be sold when the stock fell to $60 per share.

Before the prosecution rested, Mariana Pasternak, a close friend of Mrs. Stewart, wavered slightly in her testimony.

Miss Pasternak had testified Thursday that Mrs. Stewart told her shortly after selling ImClone stock that she had been aware Waksal was trying to dump his shares.

In a separate conversation, Miss Pasternak testified that Mrs. Stewart told her, “Isn’t it nice to have brokers who tell you those things?”

But under cross-examination Friday, Miss Pasternak said it was possible that remark was simply a thought that crossed her mind — not something Mrs. Stewart said.

Mrs. Pasternak never wavered in the central element of her testimony — that Mrs. Stewart was aware when she sold her ImClone shares that Waksal had been trying to sell as well.

Mrs. Stewart told investigators in April 2002 that she had no memory of being told about Waksal just before she sold.

Also Friday, prosecutors sought to bolster the testimony of Douglas Faneuil, a former Merrill Lynch assistant and the government’s star witness. Mr. Faneuil testified earlier that he passed the tip about Waksal from Mr. Bacanovic, his boss, to Mrs. Stewart.

Mr. Faneuil had initially supported the $60-sell story, but later agreed to testify against Mrs. Stewart and Mr. Bacanovic — an indication, the defense says, that he is a liar.

Two friends of Mr. Faneuil testified Friday that he was distraught in January 2002, long before he changed his account, and that he confided in them that he was being pressured by his boss to lie.

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