Tears At Martha Trial
In an abrupt collision of Martha Stewart's cooking expertise and her criminal stock-fraud trial, a secretary burst into tears on the witness stand while describing a gift of plum pudding from her boss.
Ann Armstrong, Stewart's secretary for six years, broke down while describing a phone conversation with Stewart on Dec. 27, 2001, the day she made her well-timed sale of ImClone Systems stock.
Stewart was calling from Texas during a refueling stop on her way to a vacation in Mexico. Armstrong said the two first chatted about the holidays, the first chance they'd had to talk since Christmas.
"I thanked her for the plum pudding she sent home," the secretary said — then began crying. Armstrong tried to continue, but the judge ended the trial 15 minutes early for the day.
But it was another message prosecutors were more concerned about. That same day Armstrong told Stewart that she had gotten a call from her stockbroker: "Peter Bacanovic thinks ImClone is going to start trading downward."
The government claims Bacanovic was trying to get word to Stewart that ImClone founder Sam Waksal was dumping his shares. Stewart and Bacanovic say they had a pre-existing deal to sell ImClone when it fell to $60 per share.
Prosecutors, trying to undercut that theory, introduced two message logs that showed Bacanovic sometimes called Stewart to tell her the exact ImClone stock price. But Armstrong said Bacanovic left no such information on Dec. 27.
Just hours later, Stewart called Bacanovic's assistant and sold her 3,928 shares in the company — avoiding a steep drop in the stock price when the company announced negative news the next day.
Court TV's Catherine Crier tells the CBS News Early Show that the more significant development of the day than the Armstrong's crying may have been the discussion over a phone message on the day Stewart sold her Clark.
Stewart allegedly changed the phone message in which she was told about Baconovic's call, then changed it back, all in an alleged attempt to cover her tracks, Crier said.
Stewart's assistant returns to the stand Tuesday, reports CBS News Correspondent Jim Acosta.
Stewart and Bacanovic are accused of repeatedly lying to investigators about why Stewart sold her shares of ImClone. Stewart is also accused of deceiving investors in her own media company about the ImClone probe.
Prosecutors called Armstrong to testify after the government's star witness — former Merrill Lynch & Co. assistant Douglas Faneuil, who handled the ImClone sale — finished his testimony after four days on the stand.
Faneuil has insisted that Bacanovic ordered him to tip Stewart about Waksal. He says he never knew of any pre-existing arrangement between Stewart and the broker to sell ImClone when it fell to $60.
On Monday, under questioning from Stewart lawyer Robert Morvillo, Faneuil said he did not believe he was doing anything wrong when he passed her the tip about the Waksal sale.
Faneuil also testified Stewart never encouraged him to lie.
Faneuil was asked by Morvillo whether he knew he was violating Merrill policy by relaying the tip. The company forbids its employees to give information about one client's account to another client.
But Faneuil said he only thought about the violation later, and he repeated that Stewart's broker at the time, Bacanovic, had ordered him to give Stewart the tip and encouraged him to lie about it later.
"I would say because Peter told me to do it, I did not think I was doing anything wrong," Faneuil said.
Faneuil initially supported the defendants' assertion of the $60 arrangement, then changed his version of events in June 2002 and agreed to cooperate with the government.
Lawyers for Stewart and Bacanovic have tried to show the jury Faneuil has only told the government what it wants to hear to evade prosecution himself.
Alex Prudhomme wrote a book about the ImClone scandal, and believes Faneuil's testimony was eclipsed by the tears over plum pudding.
"It shows that Martha is not an ogre. She gives plum pudding to some of her assistants," Prudhomme said.