Posted on 02/10/2004 12:03:45 PM PST by antivenom
NEW YORK (Reuters) - Martha Stewart (news - web sites) changed an incriminating telephone message after she discovered she was under investigation over an insider stock tip, but then immediately asked her assistant to restore the original, the aide testified on Tuesday.
Federal prosecutors called Ann Armstrong to testify against her long time boss in an effort to show that the trendsetter was aware she had committed a crime in trying to cover up the insider stock tip from her former stockbroker Peter Bacanovic.
Armstrong said Stewart altered a pivotal Dec. 27, 2001 telephone message that initially read, "Peter Bacanovic thinks ImClone is going to start trading downward" -- a reference to the stock sale at the center of the trial.
The assistant said that on Jan. 31, 2002, after Stewart learned her ImClone trade was under investigation, she asked Armstrong to call up her computerized phone messages log.
Armstrong said that when she scrolled to the fateful Bacanovic message, Stewart sat down at her aide's computer.
"She instantly took the mouse and put the cursor at the end of the sentence and highlighted back to the end of Peter's name and then she started typing over that."
The new version then read "Peter Bacanovic re: ImClone," Armstrong said.
Armstrong said Stewart then had a change of heart and, "Instantly stood up ... and she told me to put it back to the way it was."
Prosecutors say the message shows that Bacanovic wanted to tip Stewart to secret information that ImClone's founder was dumping his shares. Stewart sold her nearly 4,000 shares in the biotech company the day she got Bacanovic's call.
ImClone shares fell sharply the next day when it announced health regulators had given the thumbs down to Erbitux, a cancer drug that was to have been the company's main product.
Stewart's lawyer Robert Morvillo tried to show that his client did not want to conceal Bacanovic's original message.
"Did she ever ask you to lie or cover up this incident," Morvillo asked the assistant.
"No," Armstrong answered.
Armstrong, who broke down in tears on Monday apparently overwrought about testifying against her employer of six years, was more composed as she gave her second day on testimony, which went to the heart of the case against Stewart and Bacanovic, who are accused of conspiring to cover up insider trading.
They maintain there was a pre-existing order to sell ImClone Systems Inc. shares if they fell below $60.
When asked about the telephone message during an interview in February 2002 with investigators, Stewart said she did not know whether the phone message from Bacanovic had been recorded in the computerized log.
If I was paying someone to keep track of phone logs on a computer for me, I would certainly insist that they keep regular backups in case the computer fails.
Martha may have realized at the last minute that she was engaged in attempting to erase a message which might be interpreted as evidence of a crime, but possibly leaving backup copies which would prove that she had attempted to make the change. She may also have realized that a living witness to her modifying the phone log was every bit as potentially damaging as the original message.
Martha show every evidence of having arrogantly assumed that she didn't need expert legal advice. She could probably have copped a plea early on in exchange for implicating the broker. The circle in which she moves would not have tolerated such disloyalty. It is quite similar to the circle which protects the Klintons.
I think that she is being charged with lying about it during the investigation. She wouldn't have lied about it (assuming that she did, which is really up to a jury to determine) had she not known that what she did was illegal. Clinton did similar things and got impeached for it. He just had better friends in high places (so that he could avoid prosecution after leaving office) than Martha does.
Do you think she is "innocent"? Or that the jury won't care?
The many cases of cheating that you describe are probably cases that were not prosecuted. Once a person manages to find themselves in front of the jury, different judgements will apply.
Based on what I have read, Martha cheated some buyers of Imclone stock out of money they paid for the stock. It is little different than if Martha had burgled their homes while they were on vacation and stole their life savings.
I assume he was given immunity to testify against Martha, but I haven't paid that close of attention to know.
Peter is facing charges also. It was Peter's assistant who testified against Martha.
More heads will roll with the Enron case. The feds in Houston have so many people working on Enron they had to rent a building to house all the investigators.
Enron is very far from over. A lot of people will be losing their money and/or going to jail.
Probably pretty much everybody who's ever dealt with her, directly or indirectly.
The fact that her secretary broke down into tears says "I love Martha no matter what" and we both got caught with our fingers on the computer keys.
A friend of a former coworker is a floral designer who got stiffed to the point of having to obtain a judgement (around $5000 as I recall)...apparently Martha's attitude is that you should consider yourself privileged to be deemed good enough to do projects for her.
True, but Martha was a bigtime donor to the Clinton machine, back in the day. I've kind of been looking at that angle. Maybe she said she was done supporting them?
Either she was supporting the wrong candidates in a major way, or some people hope to obscure the fact that few Enron officials are behind bars, or she made a major enemy out of certain parties represented by the prissy Faneuil.
Her billion dollar company has now lost half its value, and K-Mart has suffered by her prosecution.
She's being major league railroaded. It's just not clear why.
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