Martha Trial: Credibility Showdown

After a week fending off questions from his former boss' lawyers, the prosecution's key witness against Martha Stewart now must face more barrages - this time from Stewart's camp.

Douglas Faneuil, the Merrill Lynch & Co. assistant who handled Stewart's well-timed sale of ImClone Systems stock in December 2001, returns Monday to the witness stand for his fourth day of testimony and the first in which Stewart's lawyers get to cross-examine him.

Faneuil, 28, testified last week that Stewart's broker, Peter Bacanovic, ordered him to tip her off that ImClone founder Sam Waksal was selling his shares.

He also claimed Bacanovic, desperately trying to protect a lucrative career at Merrill, pressured him into initially lying to investigators. He changed his story in June 2002 and struck a plea deal with the government.

Faneuil, in laying out his story last week before the courtroom in New York, also painted another picture: of Stewart as quick-tempered and hard-to-please, qualities which while not illegal, could conceivably dent the defense.

"The question isn't whether jurors will be willing to nominate Stewart for Miss Congeniality," says CBS News Legal Analyst Andrew Cohen. "The question is whether Faneuil's testimony about Stewart's mean streak will help convince jurors that she lied to the feds when they asked her about her role in the stock sale. Obviously, Faneuil's story doesn't help Stewart. But how much does it hurt?"

Stewart and Bacanovic are accused of repeatedly lying to the government about the circumstances of the sale. They claim they had a pre-existing deal to sell ImClone when it fell to $60.

ImClone stock dropped sharply four days after Stewart sold, when news emerged that its highly touted cancer drug had been rejected by the government. But Stewart is not criminally charged with insider trading.

On Thursday, Bacanovic's lawyers introduced e-mails in which Faneuil described Stewart as yelling and cursing at him. In one, he told a friend that he had defended himself and "Baby put Ms. Martha in her place."

The lawyers were hoping to show that Faneuil hated Stewart, was fixated with her and was out to get her.

As Stewart's lawyers get their first crack at cross-examining Faneuil, says Andrew Cohen, credibility is the issue.

"The man whom prosecutors themselves described in opening statements as an "admitted criminal" is the government's star witness - the lynchpin of the case," says Cohen. "Through nearly two days of cross examination he has stood his ground and stuck to the mainframe of his story: he helped Stewart and Bacanoic cover up a suspicious stock trade after he told Stewart - at Bacanovic's request, he says - to sell her Imclone stock because Imclone founder Sam Waksal and his family were selling theirs."