Martha Stewart Employee Testifies for Her Boss

25 February 2004

Heidi DeLuca, administrative business manager at Martha Stewart Living Omnimedia, testified Monday on behalf of her boss.

Giving evidence at New York's sellout showtime trial starring TV homemaking queen Martha Stewart, DeLuca told jurors that the controversial sale of ImClone stock may have resulted from a plan made weeks in advance rather than in response to a tip from a corporate insider.

The question of what prompted this sale is the pivot on which the entire case against Stewart and her co-defendant, stockbroker Peter Bacanovic, will swing. The prosecution alleges the sale was triggered by insider information; the defense that it was a pre-arranged action primed by a predetermined minimum price.

Bacanovic and Stewart are not charged with insider trading, however, but with conspiring to hinder a federal investigation into the latter's sale of nearly 4,000 ImClone shares in December 2001.

Back on the stand, DeLuca described a conversation with Bacanovic in November 2001 regarding the sale of her boss's ImClone stock. According to DeLuca, the stockbroker "felt that he could set a floor price of 60 or 61, just in case the stock continued to fall, as like a safeguard."

In response to the next question from defense lawyer, David Apfel, DeLuca replied that Bacanovic "said that he would speak to Martha personally about it."

Apfel and other defense attorneys are expected to argue that this conversation shows Stewart did not sell the stock in response to an alleged tip from Bacanovic that ImClone chairman Sam Waksal and his family were about to unload their own shares.

The curtain was rung down on most of Monday's drama, out of sight and hearing of the jury, as defense lawyers tried to convince Judge Miriam Goldman Cedarbaum that the defendants should be acquitted as the prosecution had failed to make its case.

Judge Cedarbaum was apparently unmoved by this argument, although she made no ruling on the so-called Rule 29 motions for acquittal. Instead, she instructed the defense to begin its case.

STOP PRESS (Wednesday 07.30 GMT)
Stewart Will Not Take the Stand, Defense Decides

Stewart’s lead attorney, Robert Morvillo, announced Tuesday he had decided not to put his client on the stand. There was no need to do so, he claimed, as the prosecution had failed to prove its case.
    Despite Morvillo's bravado, Judge Cedarbaum made no ruling on the so-called Rule 29 motions for acquittal, instead indicating that the jury will begin deliberating the case next week.
    Peter Bacanovic, Stewart’s co-defendant and former broker at Merrill Lynch, has also decided not to testify.

Data sourced from: New York Times and Times Online (UK); additional content by WARC staff