Tuesday, May 21, 2024

Sponsors

Government Witness in Martha Stewart Trial Spared Jail Time

The stockbroker assistant who was the government’s star witness in the case against Westport’s Martha Stewart today was spared jail time and probation and was fined $2,000 for his part in the case.

Douglas Faneuil, 28, who testified that his boss ordered him to tip Stewart about a stock trade, previously pleaded guilty to a misdemeanor charge and cooperated with government lawyers.

U.S. District Judge Miriam Goldman Cedarbaum handed out a lesser sentence than recommended by guidelines. She cited Faneuil’s “substantial assistance” during the trial.

The federal sentencing guidelines recommended a prison sentence of up to six months that could have been followed by probation.

“I want to apologize for my mistakes,” Faneuil told Cedarbaum before sentencing. “Thankfully I’ve learned my lesson.”

“I believe it would have taken an exceptionally brave 26-year-old to prevent all this from happening,” he said.

“Nonetheless, I deeply regret not being that brave. This ordeal has been a disappointment for too many people, myself included.

“If I were given the opportunity to prevent it from happening again, I would choose to do so every single time.”

Stewart was sentenced last week to five months in prison and five months of house arrest for lying about the stock sale.

Her former stockbroker, Peter Bacanovic, drew the same term for conspiring with her. They are both free pending appeal.

Faneuil told the judge that although he testified truthfully about tipping the celebrity homemaker, he had little confidence that he would be believed.

“Facing an aggressive legal assault on my character, I didn’t believe that the truth would carry enough weight to be heard clearly, particularly against rich and powerful people. I was wrong and for that I am immensely grateful.”

Federal prosecutors, in a letter to the judge, sought leniency on behalf of their star witness and praised Faneuil’s cooperation as “truly extraordinary.”

“He knew he would be admitting to serious crimes, that he would be sacrificing his career in the securities industry, and that we would be placing his word against that of two powerful and respected people,” they said.

Faneuil testified in February that he was ordered by Bacanovic, his boss at Merrill Lynch & Co., to secretly tip Stewart that Sam Waksal, founder of ImClone Systems Inc,was dumping his shares in his biotech company.

After being tipped, Stewart sold almost 4,000 shares of ImClone on Dec. 27, 2001, a day before ImClone’s shares fell on news that regulators had rejected an application for its cancer drug.

Faneuil had initially lied to investigators for months about the stock trade, but had testified that he did so because he was physically afraid of his boss, Bacanovic, and worried he would be fired.

The defense tried to discredit Faneuil as an admitted drug user and a liar. Lawyers used e-mails to show jurors he had a spiteful fixation on Stewart while he worked at Merrill Lynch & Co.

After handling a call from Stewart, Faneuil told a friend in an e-mail: “I have never, ever been treated more rudely by a stranger in my life.”

Three days later, he wrote to another friend: “Martha yelled at me again today, but I snapped in her face and she actually backed down! Baby put Ms. Martha in her place!!!”

Leave a Reply

Your email address will not be published. Required fields are marked *