Stewart May Be Subpoenaed in ImClone Probe
A lawmaker said Thursday that a House panel may need to subpoena Martha Stewart in the ImClone Systems Inc. investigation, and a former Securities and Exchange Commission official suggested that her legal prospects appear unfavorable.
“The line on her in Las Vegas obviously isn’t too good right now,” said Irving Einhorn, a former regional administrator for the SEC, now an attorney in private practice. “You’ve got to know that she’s in serious trouble.”
Prosecutors probably are not seeking Stewart’s help in making their cases against others in the ImClone stock scandal and may want to go after her with the full force of the law to show that “even the high and mighty can be brought down,” Einhorn said.
Rep. Bart Stupak (D-Mich.) said Stewart, Chief Executive of Martha Stewart Living Omnimedia Inc., should be subpoenaed to answer questions about her December sale of ImClone shares if she does not provide information by Aug. 20.
An indictment Wednesday brought new charges against Stewart’s friend, former ImClone CEO Samuel D. Waksal, who was accused of obstruction of justice in addition to previous securities fraud and perjury charges.
Members of the House Energy and Commerce Committee, which is investigating ImClone stock sales, are discussing the possibility of issuing a subpoena to Stewart to compel her testimony, committee spokesman Ken Johnson said.
Waksal was arrested in June on charges that he secretly advised family members to sell their ImClone stock on Dec. 27 after learning that his biotech company’s highly touted cancer drug had been rejected by the Food and Drug Administration. The stock subsequently plunged.
Stupak, a member of the House panel probing ImClone stock sales, said of Stewart: “Bring her in, and if she wants to take the 5th, that’s her right.”
A Stewart spokeswoman in New York declined to comment.
The House committee requested some of Stewart’s e-mails and records from her business manager.
Committee investigators are trying to resolve discrepancies between her account of the sale of nearly 4,000 shares of ImClone a day before the stock plunged and those of her Merrill Lynch & Co. broker and his assistant.
Stewart has declined to meet with investigators, saying it would be premature.
Shares of Stewart’s company have been battered since June 6, when they were trading around $19. Omnimedia shares dropped 72 cents, or 9.6%, on Thursday to close at $6.78, a record low.
Stewart says she had a standing order to dump her ImClone stock if it went below $60, and that the order was triggered on Dec. 27.
Johnson has said that a June 12 letter from Stewart’s lawyer said she had no inside knowledge about any action the FDA was taking regarding ImClone. The letter did not address whether Stewart knew that Waksal was trying to sell shares, Johnson said.
