Posted on 06/27/2002 3:43:50 AM PDT by kattracks
artha Stewart now has a target on her back.
Federal investigators are focusing their criminal probe on whether the homemaking diva gave the FBI a bogus story to cover up insider trading, two sources familiar with the case said yesterday.
The feds are armed with new evidence that contradicts Stewart's version of events in the ImClone scandal, according to these sources.
Now they're trying to determine whether there's enough to charge her with lying to an FBI agent — a felony — the sources said.
The stunning revelation of the widening probe sent stock in Martha Stewart Living Omnimedia plummeting yesterday by 23.5%.
That resulted in another $100 million hit for the homemaking icon, meaning her portfolio is down $273 million since the ImClone scandal broke.
And there was more bad news for Stewart.
The Daily News has learned prosecutors are pressuring her close friend Sam Waksal, former CEO of ImClone Systems, to plead guilty to criminal charges and cooperate in their probe.
In the last few days, prosecutors turned up the heat on Waksal by informing him they were preparing to indict his daughter Aliza, said a source close to the investigation.
Tense TV Appearance
The new developments came a day after the usually unflappable Stewart appeared on TV angrily chopping cabbage while declaring she'd be "exonerated from this ridiculousness."
Last week, the FBI apparently was satisfied with Stewart's version of events. She'd been interviewed in April and told the feds her version of why she sold off her ImClone stock the day before it tanked.
A source told The News then that Stewart was not a target of a criminal probe.
That changed Friday, after Merrill Lynch handed prosecutors evidence that contradicted her version of events.
The key was the testimony of Douglas Faneuil, an assistant to Stewart's broker, Peter Bacanovic, which reportedly differed dramatically from the accounts given by Bacanovic and Stewart.
With the Merrill evidence in hand, prosecutors are reexamining Stewart's April statements to the FBI, as well as a deposition by Bacanovic to the Securities & Exchange Commission, two sources familiar with the investigation said.
In Washington, Kenneth Johnson, spokesman for a House subcommittee investigating ImClone stock trading, said the reports of contradictions in Stewart's story are not surprising.
Pols Set to Jump In
"This whole sorry saga has had a hollow ring to it from the beginning," Johnson said, noting that the committee is still trying to question Bacanovic and Faneuil.
"They'll either appear voluntarily or we'll go knocking on their doors," he said.
In their statements, Stewart and Bacanovic said they had an oral stop-loss agreement to sell her ImClone stock if it dropped below $60 per share, sources said.
But there was no written record to back this up.
Faneuil, a sales assistant to Bacanovic, gave Merrill investigators a different version of events, the source said.
The Wall Street Journal — which first reported yesterday that Stewart was the focus of a criminal probe — said Faneuil initially backed up the stock loss order story under pressure from Bacanovic.
But later he changed his story to Merrill investigators.
He told them there was no stop-loss order from Stewart, who sold her 3,900 ImClone shares a day before the stock went into a tailspin.
One source said there was no evidence that Bacanovic pressured Faneuil to change his story.
But prosecutors are checking to see whether Faneuil's version of events clashes with what Stewart told the FBI and Bacanovic told the SEC.
If it does, Stewart and Bacanovic could face charges of lying to the feds, two sources said.
Boss Pressed
At the same time, Stewart and Bacanovic face the fact that Waksal — the man at the center of the scandal — is under increasing pressure to cooperate with the government.
In the last few days, sources said, prosecutors have made it clear to Waksal's lawyers they have enough evidence to indict his daughter Aliza, 28.
Waksal phoned her repeatedly the morning of Dec. 27, shortly before she sold nearly 40,000 ImClone shares for $2.4 million. The next day, the Food and Drug Administration rejected ImClone's application for a cancer drug, and its stock collapsed.
Lawyers for Stewart, Waksal and Faneuil did not return calls seeking comment. Bacanovic's lawyer, Richard Strassberg, and Aliza Waksal's lawyer, Stephen Kaufman, declined to comment.
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