Did Big-Hearted Martha Pay Bills for SEC Prosecution Witness?

24 March 2003

Martha Stewart, multimillionaire media magnate, TV style queen, homemaking guru and former embodiment of unimpeachable all-American womanhood, certainly knows how to treat a girlfriend.

Stewart, as the solar system knows, is a fallen angel due to suspicions of insider trading in the ImClone affair. But this trauma has not eroded her generosity, in particular that toward one Maria Pasternak, a chum who travelled with Stewart on a private jet the same day her alleged illegal trading in ImClone biotech shares took place.

Pasternak would have been party to telephone conversations held that day between Stewart and Merrill Lynch stockbroker’s assistant Douglas Faneuil, who allegedly called on the instructions of his boss to advise Stewart that her close friend Samuel Waksal, ImClone chairman and confessed inside trader, was offloading his shares in the company ahead of an adverse FDA ruling on its new cancer drug.

Not surprisingly, the US Department of Justice and the Securities and Exchange Commission were eager to explore this matter with Ms Pasternak who, a few days before she first chewed the fat with the Feds, invited Stewart to give her $150,000 (€142,248; £95,785) to help with legal bills and mortgage payments on her home. Stewart declined the latter but footed the former – said to run into tens of thousands of dollars.

Mrs America, currently being probed for alleged insider trading and obstructing the investigation, has consistently denied wrongdoing. Her lawyers, like those representing Pasternak, refused to comment on the alleged comradely payments.

Stewart’s attorneys will meet with officials in Washington this week and the affair, which could result both in civil and criminal charges, may be resolved within a month, say those close to the matter.

Meantime, the scandal has sent shares in the media maven’s commercial exploitation vehicle, Martha Stewart Living Omnimedia, into freefall. At close of business Friday they stood at $7.91 compared with their 52-week high of $19.95 on 23-May-02.

Data sourced from: Financial Times; additional content by WARC staff