Defense Counters With Stewart’s Business Manager, Ink Analyst

Martha Stewart’s stockbroker considered ImClone Systems Inc. “a dog” of a stock and said he would try to persuade Stewart to sell her stake before it fell to $60 or $61 a share, Stewart’s business manager testified Monday.

Heidi DeLuca’s account of her Nov. 8, 2001, conversation with broker Peter E. Bacanovic supports the linchpin of Stewart’s defense: that she and Bacanovic had agreed to sell her ImClone stock if the price dropped to $60, as it did six weeks later when she sold her 3,928 shares.

Bacanovic told DeLuca that he “thought he could set a floor of $60 or $61” as a safeguard and added that he would speak to Stewart about it personally, DeLuca testified Monday afternoon.

The government contends that the $60 agreement was a phony story that Stewart, 62, and codefendant Bacanovic, 41, cooked up to hide the true circumstances of Stewart’s sale. The two face charges of conspiracy, lying to federal officials and obstruction of justice. Stewart also faces one count of securities fraud.

Authorities say Bacanovic had his assistant pass Stewart the tip that ImClone founder Samuel D. Waksal was trying to sell his own shares in the biotech company. A regulatory setback for ImClone’s key cancer drug, which sent the shares reeling, occurred a day after Stewart’s stock sale.

DeLuca’s testimony came on a day when defense lawyers, at the end of the government’s case, urged U.S. District Judge Miriam Goldman Cedarbaum to dismiss all charges, claiming in oral arguments that the prosecution had failed to prove them beyond a reasonable doubt.

Cedarbaum held back any ruling until at least today. She has previously said some portion of the case would survive the defense’s challenge. There are five felony counts against Stewart and four against Bacanovic.

Comedian Bill Cosby on Monday became the latest celebrity to visit the packed lower Manhattan courtroom in support of Stewart. Wearing dark sunglasses and a trademark sweater and carrying a University of Pennsylvania letterman’s jacket, Cosby sat for about an hour and a half in the first gallery row behind Stewart, next to her daughter, Alexis.

“I am here for a friend,” he told reporters.

Cosby, who said he has known Stewart for about nine years, brought her some Jell-O chocolate pudding during her lunch break. He is a longtime TV pitchman for Jell-O.

If the jury of eight women and four men recognized Cosby, they gave no obvious signs of it.

Earlier this month, comedian Rosie O’Donnell dropped in on the trial.

On Monday morning, Bacanovic’s defense team called its own ink analyst to counter the government’s expert witness, who appeared last week.

The ink experts tested a sheet of paper on which Bacanovic had printed out a list of Stewart’s stock holdings on Dec. 20, 2001, and then had jotted notations in pen.

Larry F. Stewart, lab director for the Secret Service and no relation to Martha, testified Friday that the notation “@ 60” next to the ImClone listing was in a different ink than the rest of the checkmarks, circles and other jottings on the page. That supported the government’s contention that Bacanovic added the “@ 60” only after Stewart’s trade came under suspicion.

Defense consultant Albert H. Lyter III, who once had been Larry Stewart’s superior in a federal lab, slightly dented the prosecution’s scenario, saying his tests showed that at least three pens had been used on the page.

That raised the image of Bacanovic grabbing whatever pen lay at hand as he made his notations over a period of time.

The defense camp has been putting out word that neither Stewart nor Bacanovic is likely to take the stand in their own defense, which could mean a more speedy than expected end to the trial, with closing arguments perhaps as early as this week.