Rookie broker Douglas Faneuil broke down in tears after claiming to his lawyer that he made false statements to the feds about Martha Stewart’s ImClone sale, saying that his Merrill Lynch bosses were “merciless and immoral,” the attorney testified at the domestic diva’s trial yesterday.
Jeremiah Gutman, who represented Faneuil days after he handled Stewart’s contentious sale in December 2001, was called as a defense witness yesterday, but his testimony ended up bolstering the government’s case against stockbroker Peter Bacanovic.
Gutman, 80, backed up Faneuil’s damaging evidence that he felt pressured to cover up from the feds that Stewart was tipped off that ImClone founder Sam Waksal was trying to dump his family’s shares.
Faneuil, the government’s star witness, testified that when he confided to Gutman that he’d made false statements to the SEC, the lawyer at first advised him to go back and tell the truth but later said he should “lay low” rather than change his story.
Gutman said he had never told Faneuil to lie, but suggested that if he went back to the feds and altered his statements, he’d be “sticking his neck out.”
He said Faneuil, then 26, told him he was “afraid” of his bosses at Merrill Lynch and started to cry, saying, “They were merciless and immoral people.” Gutman offered a slightly different version of Faneuil’s recollection that a Merrill Lynch lawyer said the firm had a deal with the government to ignore the Stewart trade but to deliver Waksal “on a silver platter.”
Gutman said he had been told by Merrill Lynch lawyer David Marcus that the Wall Street brokerage was working on a deal “which involved getting all the Merrill Lynch people off the hook and letting the chips fall where they may.”
The Bacanovic team, who called Gutman as a witness, hoped the veteran civil-rights lawyer would put a hole in Faneuil’s credibility.
But Gutman refused to speak to the defense before taking the stand, leaving Bacanovic’s lawyers uncertain as to what he would tell the jury.
While the Gutman testimony backfired, Stewart financial assistant Heidi DeLuca bolstered her boss’ central defense – that she had an agreement with Bacanovic to sell her 3,928 ImClone shares if the price dropped to $60.
As comedian Bill Cosby joined Stewart’s team of supporters in the public gallery, DeLuca said Bacanovic told her on Nov. 8, 2001 – seven weeks before Stewart’s trade – that the ImClone stock was “a dog” and he would tell her to “set a floor price of $60 or $61.”
“He said he would speak to Martha about it personally,” DeLuca said.
CRYING SHAME: Jeremiah Gutman, who once represented government star witness Douglas Faneuil, said the rookie broker cried after allegedly making false statements to the feds about Martha Stewart’s ImClone trade and described his bosses at Merrill Lynch as “merciless and immoral people.”
FIRST AIDE: Stewart’s financial assistant Heidi DeLuca bolstered her boss’ claims she had a pre-existing agreement with stockbroker Peter Bacanovic to sell her ImClone shares if the price dropped to about $60.
WRITE STUFF: Albert Lyter III, a defense ink expert, said Bacanovic used at leastthree pens on a worksheet of Stewart’s portfolio on which the notation”@60″ appears next to a listing for her ImClone stock.
TOSS-UP: Stewart lawyer Robert Morvillo urged Judge Miriam Goldman Cedarbaum to throw out the five charges against Stewart. The judge is expected to rule today.