Faneuil says he feared he would be fired

Douglas Faneuil, an assistant to Martha Stewart's stockbroker, listens to his attorney, Marc Powers, outside federal court in New York last October after Faneuil pleaded guilty to a misdemeanor charge that he was paid to keep secret information allegedly given to Stewart about ImClone Systems Inc.
The star witness against Martha Stewart testified today that she had berated him at least twice and once even threatened to take her business to another brokerage because she didn't like the telephone hold music.

Douglas Faneuil, who handled the questionable stock trade at the heart of Stewart's trial, confirmed he wrote e-mails to friends describing tirades by the homemaking queen.

In one e-mail on Oct. 23, 2001, after handling a call from Stewart at Merrill Lynch & Co., Faneuil told a friend: "I have never, ever been treated more rudely by a stranger in my life. She actually hung up on me!"

Three days later, he wrote to another friend: "Martha yelled at me again today, but I snapped in her face and she actually backed down! Baby put Ms. Martha in her place!!!"

Shown copies of the e-mails in court Thursday, Faneuil said: "I believe I wrote those words exactly."

The e-mails emerged under questioning by a lawyer for Peter Bacanovic, Stewart's former stockbroker, who is accused of ordering Faneuil to give Stewart the tip that led her to dump all her ImClone Systems stock on Dec. 27, 2001.

Faneuil initially supported Stewart and Bacanovic's story that they had a deal to sell her ImClone shares at $60. Faneuil claims Bacanovic ordered him to tell Stewart the family of the ImClone founder was dumping its shares.

Lawyers for Bacanovic have described Faneuil as "fixated" on Stewart while he worked at the brokerage, and were using the e-mails to try to convince the jury he did not like Stewart and may have been out to get her.

Bacanovic lawyer David Apfel asked Faneuil whether it was true Stewart once said "something about how bad the hold music was. She told you she was going to leave Mr. Bacanovic and leave Merrill Lynch unless the hold music was changed."

Faneuil confirmed the account. Jurors broke up in laughter.

In one e-mail to a friend, Faneuil describes Stewart -- apparently thinking she was speaking with Bacanovic instead -- mocking someone who answered phones at the brokerage.

"This is not a joke!" he quoted Stewart as saying, just before hanging up. "Merrill Lynch is laying off 10,000 employees because of people like that idiot!"

As the e-mails from Faneuil were flashed on a giant screen in the courtroom, Stewart maintained the stoic expression she has held throughout the two-week-old trial. She did not speak to reporters as she left court.

Stewart has been mocked by pundits, comedians -- even in a campy TV movie -- for a fierce temper. The image is at odds with the calm, gracious image she has projected for years in her media outlets and her line of homemaking products.

Faneuil is the government's star witness against Stewart and Bacanovic, who are charged with repeatedly lying to investigators about why Stewart dumped her ImClone stock.

Earlier, Faneuil said he believed he would lose his job unless he lied to cover up the true reason Stewart sold.

"I felt I would be fired if I didn't lie," Faneuil answered.

The remark came as Apfel apparently was trying to show that the payment plan stockbroker Peter Bacanovic arranged for Faneuil had no connection to Stewart's stock trade.

But when Faneuil answered instead that he believed his job was at risk, Apfel asked U.S. District Judge Miriam Goldman Cedarbaum to strike the remark from the record. She did not.

In addition to working with Bacanovic to obstruct justice, Stewart is accused of deceiving investors in her own company, Martha Stewart Living Omnimedia.

Faneuil has already testified that Bacanovic ordered him on Dec. 27, 2001, to tip Stewart that ImClone founder Sam Waksal was trying to dump his shares in the company.

The young assistant has also testified that Bacanovic -- without explicitly asking him to lie -- repeatedly pressured him to back up his and Stewart's assertion.

As Faneuil took the stand for a third day of testimony Thursday, Apfel tried to introduce e-mails to show Faneuil and Bacanovic had a joking relationship at work for months after Stewart's stock sale.

One e-mail was a to-do list that Faneuil had prepared for his boss, on which he added that Bacanovic could call him any time with questions _ "but not too early, hee hee." Another referred Bacanovic to an article describing a man having sex with a goat.

But Cedarbaum refused to allow the e-mails into evidence, and instructed jurors not to consider what they had heard.

On the witness stand Thursday, Faneuil admitted he joked with Bacanovic at work even as the broker was pressuring him. Faneuil described their relationship as "schizophrenic."

"Everything having to do with the events of Dec. 27 was extremely compartmentalized," Faneuil said.

Apfel asked Faneuil whether Bacanovic had specifically asked him to lie to investigators. Faneuil said Bacanovic had not -- but "I understood what he was telling me."

The judge -- showing more irritation than she has at any point in the trial -- cut Apfel off repeatedly Thursday as he tried to damage Faneuil's credibility, scolding him for asking questions about particular topics even after she had ruled he could not pursue them.

Robert Morvillo, Stewart's lead lawyer, was expected to begin his own cross-examination of Faneuil on Monday. The trial will be in recess Friday.

Faneuil admitted on the stand Wednesday that he has repeatedly used Ecstasy and marijuana, and that he has experimented with the party drug ketamine, or "Special K," and cocaine.

Defense lawyers are also hoping jurors will take his testimony with a grain of salt because he admitted lying by changing his account to the government six months into its investigation.