- The Washington Times - Monday, February 23, 2004

NEW YORK (AP) — Weeks before Martha Stewart sold her ImClone Systems stock, her stockbroker mentioned a desire to get rid of the shares before they fell to $60, a defense witness testified yesterday.

The testimony by Heidi DeLuca, a business manager for Mrs. Stewart, undercuts the government’s charge that Mrs. Stewart and the broker came up with a $60 sale price later as a cover story.

Miss DeLuca said stockbroker Peter Bacanovic told her on Nov. 8, 2001, that he could “set a floor price of $60 or $61” for Mrs. Stewart’s ImClone shares.

“He said he would speak to Martha about it personally,” Miss DeLuca said. The conversation would have been long before Mrs. Stewart dumped her shares on Dec. 27, 2001.

Earlier, a former lawyer for Douglas Faneuil, the government’s star witness at Mrs. Stewart’s and Mr. Bacanovic’s trial, took the stand and bolstered key elements of Mr. Faneuil’s testimony.

The testimony came as Mrs. Stewart received some moral support from comedian Bill Cosby, who wore sunglasses as he sat directly behind her in the courtroom. Asked by reporters why he showed up, Mr. Cosby said: “I’m here for a friend.”

On Feb. 2, Rosie O’Donnell appeared at the trial, sitting in the front row and jokingly offering a prosecutor a bag of peanut M&Ms; as a bribe to drop the case.

In yesterday’s testimony, Jeremiah Gutman, who was retained by Mr. Faneuil in early 2002, was called as a witness by lawyers for Mr. Bacanovic. But he appeared to boost some of the main assertions Mr. Faneuil gave for the prosecution.

Mr. Faneuil has testified that he passed a tip from Mr. Bacanovic to Mrs. Stewart on Dec. 27, 2001, that ImClone Systems CEO Sam Waksal was unloading his ImClone shares. Mrs. Stewart promptly sold hers.

The story given by Mr. Faneuil, a former assistant at Merrill Lynch & Co., is central to the government’s case that Mrs. Stewart and Mr. Bacanovic lied when they claimed they had a pre-existing deal to sell ImClone at $60.

Mr. Faneuil first supported Mr. Bacanovic and Mrs. Stewart, then changed his story in June 2002 in a cooperation deal with the government.

Earlier in the trial, Mr. Faneuil testified that Mr. Gutman had told him he knew about a deal between Merrill Lynch and the government to ignore any wrongdoing by Mrs. Stewart and hand over Mr. Waksal “on a silver platter.”

The defense has tried to discredit that story. But Mr. Gutman testified yesterday that, while he did not use those words, he told Mr. Faneuil “something like that.”

Mr. Gutman said a Merrill official “had told me that he was working on making a deal and that deal would involve getting all Merrill Lynch people off the hook, and let the chips fall where they may.”

Also yesterday, U.S. District Judge Miriam Goldman Cedarbaum declined to rule immediately on whether she should throw out any charges in the case. Lawyers for Mr. Bacanovic and Mrs. Stewart over the weekend gave the judge papers urging her to dismiss parts of the indictment.

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