Stewart subpoena not ruled out

Despite turning over documents, legislators say she still needs to tell her side of the story on ImClone stock sale

By Leigh Strope | Associated Press

August 21, 2002

WASHINGTON - Lawmakers leading an investigation of Martha Stewart's sale of ImClone Systems Inc. stock aren't ruling out issuing a subpoena to force her to appear on Capitol Hill.

"It may be the only means to get her to come forward and tell her story," said Rep. James Greenwood, R-Pa., chairman of the House Energy and Commerce investigative subcommittee.

Stewart's lawyers handed over more than 1,000 pages of e-mail and telephone records to the subcommittee Tuesday, less than an hour before the committee's deadline.

The records included e-mail messages from Stewart's laptop computer and telephone records from Stewart's company, Martha Stewart Living Omnimedia Inc.

Investigators will need at least two weeks to go through the documents, said committee spokesman Ken Johnson.

Already, a major problem is the number of pages that had information blacked out, he said.

"It raises eyebrows," Johnson said. Stewart's lawyers told the committee that the information was financial and unrelated to ImClone.

"Given the fact that this is a formal investigation, we simply can't take their word for it," he said. "We've told her attorneys that we expect them to come in our offices this week and show the original documents to our investigators."

Lawmakers are trying to determine if Stewart, before her stock sale, had information that the Food and Drug Administration was going to reject ImClone's application for its new colon cancer drug. The company's stock subsequently plummeted.

Questions remain despite an earlier letter from Stewart's lawyers denying she had received any notice of the FDA's decision, Greenwood said.

"We feel obligated to find out if she was being straight with us or not," he said.

Another committee member said he doubted Stewart would be subpoenaed.

"I'm hopeful that she and her attorneys can work with the committee staff and work it out," Rep. Joe Barton, R-Texas, told CNBC on Tuesday. "But I myself don't think that she'll be subpoenaed."

Only one person has been charged in the federal investigation of ImClone. Its founder and former president, Samuel J. Waksal, pleaded innocent this month to charges of securities fraud, perjury, bank fraud and obstruction of justice.

Investigators have targeted Stewart but have charged her with nothing.

Stewart sold nearly 4,000 shares of ImClone stock Dec. 27, a day before the biotech company's application for FDA review of its cancer drug had been denied.

She has maintained she had told her broker to dispose of the stock if it dropped below $60 per share.

Greenwood's subcommittee wants to clear up discrepancies about her account of the sale and those of her broker and his assistant.

Rep. Bart Stupak, a Michigan Democrat and member of the investigative panel, said last Thursday an initial review of the documents failed to back up Stewart's assertions about a sell order.

"No, unfortunately, that's one of the things we looked at quickly," Stupak said in an interview on CBS's "The Early Show."

"I would see that a stock loss order, they would have presented that front and forward and said: "Here it is. Here's what you were looking for. We had it all the time,'" Stupak said.

"They are all in conflict. Clearly someone is lying to us," Johnson said. "The point is this: We will never be able to conduct a meaningful investigation in the future if people are allowed to come before the committee, lie and get away with it."

Stupak said Thursday he did not want to jump to conclusions about areas of the documents that were blacked out. "There's some parts that may be redacted. ... We're not interested in going into Martha Stewart's personal finances.

"We're not trying to pry where we have no right to go," he said.

Stewart has refused to meet with House investigators.

Greenwood said he is puzzled that she "has not availed herself of multiple opportunities to come forward and tell her story and exonerate herself."

Committee Chairman Billy Tauzin, R-La., has not ruled out issuing a subpoena after Labor Day to force her to appear.

Tauzin will decide after reviewing the documents, Johnson said.