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Feds weighing Martha Stewart case
Published report says key witnesses in her alleged insider trading case are re-interviewed.
January 7, 2003: 10:23 PM EST

NEW YORK (CNN/Money) - A published report Tuesday said federal investigators are again turning up the pressure on the possible insider trading case involving lifestyle diva Martha Stewart .

The New York Daily News reported two sources familiar with the probe as saying several key witnesses have been asked to re-answer questions in recent days by investigators in Manhattan U.S. Attorney James Comey's office.

That indicates Comey is preparing to make up his mind about whether he will file criminal charges against Stewart, the sources told the paper.

Prosecutors are trying to determine whether Stewart got an illegal insider trading tip in December 2001 when she dumped 4,000 shares of ImClone Systems (IMCL: down $0.55 to $10.76, Research, Estimates) stock a day before the FDA decided to reject the company's application for its proposed cancer drug, Erbitux. That decision sent ImClone stock plunging.

The newspaper said the probe has been on the back burner for weeks, possibly awaiting the outcome of a separate civil action by the Securities and Exchange Commission against Stewart.

The key witnesses include an assistant to Stewart's broker, Douglas Faneuil, who has pleaded guilty to participating in an insider trading scheme. In his plea, Faneuil spoke of an unnamed "tippee," whom sources identify as Stewart.

The Daily News reported investigators also are interested in several other witnesses who were with Stewart or in the offices of her company, Martha Stewart Living Omnimedia (MSO: unchanged at $10.32, Research, Estimates), the day she sold her stock, one source familiar with the investigation said.

The news came amid new developments in the case of ImClone founder Samuel Waksal, Stewart's longtime friend.

Waksal pleaded guilty in October to insider trading and other charges. During that plea, the government warned it had no deal with Waksal and likely would ask a judge to increase Waksal's jail time.

But the newspaper reported that Waksal's attorney, Mark Pomerantz, told the judge Monday in a hearing outside the earshot of reporters that "other issues" had arisen "that the court is not yet aware of that complicate" Waksal's sentence.

Pomerantz made reference to a sealed letter to the judge and asked that prosecutors be given more time to recommend a sentence while both sides continue "discussions" with prosecutors.

That indicates Waksal may be trying to offer his cooperation in the FBI's ongoing probe of Stewart, officials acknowledged.

Neither Pomerantz nor prosecutors would discuss the ongoing discussions Monday. Stewart repeatedly has denied wrongdoing and declined Monday through a spokeswoman to comment on the new activity by the U.S. attorney.

The judge in Waksal's case did delay his sentencing Monday for two months, from January to March. The judge blamed that delay primarily on defense attorneys who, he charged, were too slow in getting key financial information about Waksal to the courts.

Stewart and her company also are not commenting on Chrysler's decision to sever its relationship with the lifestyle queen.

The Chrysler unit of DaimlerChrysler says it made a mistake by teaming up with Martha Stewart Living Omnimedia for a year-long series of TV and magazine ads. The carmaker refused to renew its multi-million dollar deal with Stewart, saying the company was looking for a different kind of image.

Chrysler says that image now will be provided by singer Celine Dion in a new ad campaign.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.