Faneuil Pleads Guilty in Stewart Case
Douglas Faneuil, the boyish assistant to Martha Stewart’s stockbroker, pleaded guilty to a misdemeanor charge Wednesday, admitting he was offered money, plane tickets and an extra week’s vacation to keep mum that Stewart had been tipped off to inside information regarding her ImClone System Inc.’s shares.
The plea by the Merrill Lynch broker assistant--signed with federal prosecutors in the office of Manhattan U.S. Atty. James Comey on Sept. 24--was part of a deal to testify in their investigation of Stewart and her dumping of $228,000 worth of ImClone shares in December.
The homemaking celebrity sold her 3,928 shares of ImClone stocks Dec. 27, just before the price nose-dived on news the Food and Drug Administration would not approve its anti-cancer drug, Erbitux.
Stewart has denied any wrongdoing in the sale of ImClone shares and has maintained that she had a standing order with Faneuil’s supervisor, Peter Bacanovic, to sell the stock if the price went below $60.
Her friend Samuel Waksal, ImClone’s former chief executive and founder, was indicted in August for allegedly telling family members to dump millions of dollars’ worth of ImClone stock before the bad news about Erbitux hit the market. He has pleaded not guilty.
Faneuil, 27, contradicted Stewart’s account Wednesday, telling U.S. Magistrate Judge Kevin Fox that Bacanovic had “directly or indirectly” told Stewart that Waksal family members had been selling their ImClone stock and that Waksal also had attempted to sell off his stock.
Neither Stewart nor Bacanovic was named in the indictment, but the misdemeanor case describes Faneuil’s superior as a “Financial Advisor” and Stewart as “the Tippee.”
Asked to identify “the Tippee,” one of Faneuil’s lawyers, Marvin Pickholz, said, “If you guys read this information and you can’t fill in the blanks, you’re in serious trouble.”
Stewart’s spokeswoman, Allyn Magrino, declined to comment Wednesday.
Merrill Lynch fired Faneuil and Bacanovic on Wednesday.
Merrill Lynch spokesman Bill Halldin indicated that Faneuil was terminated because of his guilty plea, and Bacanovic was terminated because “he has declined to cooperate with investigators.”
The former “client associate” described how he had accepted “a percentage of the financial advisor commission” and had been offered an extra week’s vacation and airline tickets. Faneuil also admitted to lying in a Jan. 3 interview with the Securities and Exchange Commission and a March 7 interview with an SEC lawyer and an FBI agent.
Faneuil faces up to a year in prison for the charge and a minimum fine of at least $100,000 when he is sentenced Jan. 7. But under the plea deal, Faneuil probably will get probation.
