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Thursday, January 29, 2004

Martha Stewart Trial Judge Postpones Star Witness Testimony

The judge in the stock fraud trial of Westport’s Martha Stewart today postponed the testimony of the government’s star witness against her after defense attorneys accused prosecutors of withholding vital information about his story.

The delay came on the second day of testimony of Stewart, 62, in a Manhattan courtroom.

The postponement was ordered after doubts were raised about what the former lawyer for star witness Douglas Faneuil recalled about the circumstances of the stock sale that triggered the case against Stewart.

Faneuil is the former brokerage assistant at Merrill Lynch & Co. who sold Stewart’s 3,928 shares of ImClone Systems stock in 2001 on orders from Stewart.

The government says Stewart sold the shares because her stockbroker and co-defendant, Peter Bacanovic, sent a tip through Faneuil that ImClone Systems founder Sam Waksal was trying to dump his family’s shares.

But Faneuil’s former lawyer, Jeremiah Gutman, told the FBI in 2002 that he could not recall whether Faneuil said it was Bacanovic who ordered the tip or Waksal himself.

Prosecutors turned over Gutman’s FBI statement late Wednesday night on orders from U.S. District Judge Miriam Goldman Cedarbaum. Lawyers for Stewart and Bacanovic said it should have been provided to them long ago.

Faneuil had been scheduled to testify later today. But Cedarbaum postponed the testimony until next week and asked prosecutors to come up with another witness who could testify this afternoon.

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Posted 01/29/04 at 06:20 PM  Permalink



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