Stewart’s Secretary Brought to Tears
Martha Stewart’s personal secretary, testifying against her boss, burst into tears on the witness stand Monday, recalling a plum pudding that Stewart had sent her as a Christmas gift.
Ann E. Armstrong broke down and covered her face with her hands while describing how she had thanked Stewart for the gift in the same Dec. 27, 2001, phone call in which she had relayed a message that Stewart’s stockbroker thought shares of ImClone Systems Inc. were “going to start trading downward.”
Stewart continued looking forward but appeared shaken by Armstrong’s distress, clutching a tissue and drinking water from a cup at the defense table.
Amid sobs, Armstrong tried to continue, but federal Judge Miriam Goldman Cedarbaum finally called a recess for the day, about 15 minutes before the usual 5 p.m. ending time.
The government contends that Stewart’s sale that day of $228,000 worth of ImClone stock was based on an illegal insider tip. Stewart has not been criminally charged with insider trading, but she and her former broker, Peter E. Bacanovic, are charged with lying to investigators and trying to cover up the reason for the sale.
Armstrong was slated to take the stand again this morning. She was expected to confirm the government’s allegation that on Jan. 31, 2002, Stewart changed the original message on Armstrong’s computer phone log from “Peter Bacanovic thinks ImClone is going to start trading downward” to “Peter Bacanovic re ImClone.” A moment later, Stewart ordered Armstrong to restore the message to its original wording, according to Stewart’s indictment.
The secretary’s emotional outburst came at the end of a day when the defense finished its cross-examination of the government’s star witness without fundamentally shaking his story.
Douglas Faneuil, Bacanovic’s former aide at Merrill Lynch & Co., has testified that at Bacanovic’s insistence, he passed on to Stewart the tip that ImClone founder Samuel D. Waksal and his family were trying to unload their shares in the biotech firm on Dec. 27, 2001.
In questioning Faneuil on Monday, Robert G. Morvillo, Stewart’s lead defense lawyer, drew a sharp contrast between the aide’s hazy memory of other events of that busy December day and his near-verbatim recall of his conversation with Stewart.
The picture that Morvillo elicited from Faneuil was of a hectic day in which he handled scores of phone calls from Waksal family members and representatives as well as Merrill Lynch officials, Bacanovic and Stewart. In many cases, he was uncertain about whom he had spoken to or even whether a particular conversation was that day.
Faneuil said he suspected that the Waksals were trying to engage in insider trading but admitted that, contrary to the instructions in Merrill Lynch’s employee manual, he didn’t share his suspicions with Bacanovic or other brokerage officials.
Morvillo also asked about Faneuil’s earlier testimony that he had lied to the government about the Stewart trade because he was intimidated by Bacanovic.
Said Faneuil: “The thing that I have always been most scared of is actually this moment, being up here on the stand and having to tell the truth in a trial in which Peter is lying.”
Morvillo grilled Faneuil about his decision to approach federal authorities and recant his earlier statements. Faneuil testified earlier that he decided to tell the truth when he could no longer stand the pressure of living with the coverup.
But Morvillo pointed out that his change of heart seemed to come amid a flood of publicity that started June 6, when it was first reported that Stewart had sold her ImClone shares the day before an adverse regulatory ruling caused the stock to plunge.
After Faneuil’s incriminating testimony, it is probable that Bacanovic will have to take the stand in his own defense, criminal defense lawyer Laura Ariane Miller said Monday.
“He has to deal directly with Faneuil’s accusations,” said Miller, who is not involved in the case.
It is a different story for Stewart, Miller said. As much as the jury is curious to hear her side, she was not as directly implicated by Faneuil’s testimony, and her lawyers probably intend to keep her off the stand.
Before the trial, Morvillo said he would not decide whether to put Stewart on the stand until after the government had finished its case.
Faneuil’s testimony was the most eagerly anticipated of the trial to date, but it was Armstrong who made the biggest stir Monday.
Prosecutor Michael S. Schachter asked her to describe the Dec. 27 phone call.
“It was the first time I talked to her since Christmas, so we talked about the holidays,” Armstrong replied. “She had been up in Maine. I thanked her for the plum pudding that she had sent home. Now I’m going to cry,” Armstrong said, and covered her face and sobbed for a long moment.
“I thanked her for the plum pudding that she sent home,” Armstrong began, still in tears.
“Would you like to stop and take some water?” Cedarbaum asked.
“Martha made plum puddings and sent them home with a lot of us for Christmas, so I thanked her for that,” Armstrong said between sobs.
Morvillo then asked for a recess.
“I’m sorry,” Armstrong said.
