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New Witness In Martha Probe

A friend of home decorating maven Martha Stewart is assisting investigators looking into the insider trading scandal, according to the Wall Street Journal

The newspaper said Mariana Pasternak may be able to provide more information to counter Stewart's own account of her stock sale. [Stewart is a contributor to CBS News' The Early Show.]

In a separate development on the corporate scandal front, bankrupt telecommunciations giant WorldCom Inc. said an internal audit of its books back to 1999 has turned up another $3.3 billion in improperly recorded earnings. The additional fraud would bring the total of phony accounting at WorldCom to more than $7 billion.

The Journal said Pasternak was aboard Stewart's private jet headed for a Mexico vacation the same day Stewart's 4,000 shares were sold.

Stewart has said she sold her ImClone Systems shares last December because of a standing agreement with her Merrill Lynch stockbroker.

The next day ImClone announced that the FDA was turning down its application for a highly-touted cancer drug, sending the shares sharply lower.

The Journal said Stewart is under investigation for possible insider trading as well as obstruction of justice and making false statements. She has denied any wrongdoing.

Another Stewart friend, former ImClone chief Sam Waksal, has been indicted on charges of securities fraud and is also charged with bank fraud, perjury and obstruction of justice.

Federal investigators are negotiating a plea deal with a Merrill Lynch employee that would give him immunity from prosecution in exchange for his testimony against Stewart.

The Journal said trading assistant Douglas Faneuil, 26, has contradicted Stewart's account of the stock sale.

Faneuil has told investigators that on the instructions of Stewart's broker, Peter Bacanovic, he told Stewart to sell the stock because ImClone founder Waksal and members of his family were unloading their stock in the company, the newspaper said.

Congress is conducting a separate inquiry into Stewart's stock sale.

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