NEW YORK - Martha Stewart called ImClone Systems Inc.'s headquarters and demanded to talk to founder Samuel D. Waksal to find out "what was going on" with ImClone's falling share price on the day she sold her stock in the company, a former ImClone secretary testified yesterday.
Emily Perret, who was secretary to Waksal, said Stewart was "very hurried and harsh and direct" in the call Dec. 27, 2001.
Perret said she answered that she did not know why the stock was falling and would leave a message for Waksal to call Stewart.
He now is serving a prison sentence after pleading guilty to bank and securities fraud.
The government says Stewart made the call just after she sold 3,928 shares of ImClone stock. That sale triggered the investigation that has resulted in Stewart's trial on charges of obstruction of justice and securities fraud.
Stewart and her co-defendant, former stockbroker Peter E. Bacanovic, are accused of concocting a story that they had a pre-existing agreement to sell her shares of ImClone if the stock price fell below $60.
Prosecutors say Bacanovic told his assistant, Douglas Faneuil, to pass a tip to Stewart that the Waksal family was trying to sell its shares.
Waksal has admitted that he had advance knowledge of a negative government report about an ImClone cancer drug. The report, which wasn't released publicly until Dec. 28, sent ImClone shares into a sharp decline.
On cross-examination, Perret was asked by Stewart's attorney whether the harsh tone was any different from the way Stewart usually sounded when she called to speak to Waksal.
"No, most of the time it was the same," Perret said. She also said that Stewart did not use words such as "urgent" or "important" in leaving the message.
The government also put into evidence Perret's computerized log of Stewart's call that day: "Martha Stewart something is going on with ImClone and she wants to know what."
The defense has pointed out that Stewart's shares were a small fraction of the millions of ImClone shares that changed hands that day and argued that Stewart's call to Waksal was a reasonable thing for a knowledgeable investor to do.
Another witness testified yesterday that Bacanovic initially told investigators that he had spoken to Stewart on the day she sold the stock.
Brian Schimpfhauser, a Merrill Lynch & Co. Inc. compliance officer, said Bacanovic made the assertion in a Jan. 7, 2002, interview with the Securities and Exchange Commission and Merrill Lynch officials.
The government contends that Bacanovic lied in the interview and that on the day of the stock sale, he told his assistant to tell Stewart that the Waksal family was selling its shares.
Schimpfhauser's account is backed up by notes he took during the meeting. But he admitted on cross-examination that his memory of the interview had grown "hazier" in the two years since it occurred.
U.S. District Judge Miriam Goldman Cedarbaum ruled yesterday that Faneuil, the government's star witness, will be allowed to testify beginning today.
The decision was a boost for prosecutors because Faneuil's testimony - which had been postponed until later this week - is the most critical piece of their case.
Cedarbaum did not elaborate on her ruling. Prosecutors had to reconfigure their case after she postponed Faneuil's testimony.
He was to testify Thursday. But late Wednesday night, the government turned over to defense lawyers documents that could damage the credibility of Faneuil's testimony.
Defense lawyers argued that they should have received the material long ago, and Cedarbaum said prosecutors had been too slow in turning it over.