The stock fraud trial of Westport’s Martha Stewart heard testimony today from her business manager that the sale of ImClone shares was small potatoes compared to other matters Stewart had on her plate.
Heidi DeLuca, who worked in the Westport office of Stewart’s media company, said she oversaw millions of dollars in Stewart’s personal and corporate accounts and played down the sale of almost 4,000 shares of ImClone and its much smaller value.
The intent by the defense was to show that because of the relatively smaller amount involved in ImClone, it was not unusual for Stewart not to be able to recall with clarity every detail about the sale.
Meanwhile, it was not clear as testimony in the trial resumed today whether Judge Miriam Cedarbaum would throw out the most serious charge against Stewart—securities fraud—which accuses her of deceiving investors in her media conglomerate.
The judge has called that charge “novel” and “the most problematic” of the five counts each against Stewart and her former stockbroker, Peter Bacanovic.
The government contends Stewart sold her ImClone stock after Bacanovic ordered his assistant to tip her that ImClone founder Sam Waksal was frantically trying to unload his holdings.
On Monday, DeLuca said Bacanovic had talked of selling off ImClone shares weeks before the stock dropped.
DeLuca’s testimony would seem to undercut prosecution claims that selling shares of ImClone at $60 was a cover story.
DeLuca said a conversation she had had with Bacanovic took place on Nov. 8, 2001, about a month and a half before Stewart sold her shares of ImClone.
During today’s testimony, DeLuca said she reminded Stewart in January 2002 that her broker wanted her to unload ImClone Systems stock at $60 or $61.
Heidi DeLuca placed the conversation with Stewart on Jan. 29, 2002. Stewart gave her first interview to investigators in the ImClone probe six days later.
Lawyers for Stewart and Bacanovic are trying to show Stewart was giving her best recollection when she told investigators she and Bacanovic had arranged to sell ImClone at $60.
The government claims Stewart actually sold on Dec. 27, 2001, because she was tipped that Waksal was selling, and that the $60 plan was a cover story, devised after investigators started looking into the sale.
DeLuca’s testimony supports the key element of the defense – that Stewart and her co-defendant, Bacanovic, had a pre-existing plan to sell her 3,928 ImClone shares.
On Monday, DeLuca testified that Bacanovic expressed a desire to get rid of the shares in a conversation on Nov. 8, 2001.
“He told me he felt ImClone was a dog,” she said. “He felt he could set a floor price of $60 or $61 just in case the stock continued to fall, as a safeguard.”
DeLuca said she was discussing the matter with Bacanovic because she was handling the transfer of Stewart’s ImClone shares from another bank to Merrill Lynch & Co., where Bacanovic worked.
Stewart and Bacanovic are accused of repeatedly lying to investigators about the circumstances of the ImClone sale. They are charged with conspiracy and obstruction of justice, among other counts.
The testimony Monday came as Stewart got support from Bill Cosby, who wore sunglasses as he sat next to her daughter in the courtroom. Asked by reporters why he showed up, Cosby said: “I’m here for a friend.”
Earlier Monday, a former lawyer for Douglas Faneuil, Bacanovic’s assistant and the government’s star witness at the trial, took the stand and bolstered key elements of Faneuil’s testimony.
With the trial winding down, it appeared more unlikely that either Stewart of Bacanovic would testify in their own defense.
A spokeswoman for Stewart told reporters today that it was “highly unlikely” she would testify.
