Faneuil Praised, Pilloried in Stewart Summations

Updated from 2:23 p.m. EST

Martha Stewart's fate should turn on the believability of Douglas Faneuil, the 28-year-old former Merrill Lynch clerk who claims to have given her a perfectly timed stock tip at the behest of his boss, lawyers on both sides argued Monday.

If jurors believe Faneuil, "then this trial is over," said prosecutor Michael Schachter in his closing argument. Schachter argued that Faneuil's testimony confers credibility on every count remaining against Stewart and his boss, Peter Bacanovic, in their month-old criminal obstruction trial.

Faneuil's credibility also was the topic of defense lawyer Ricahrd Strassberg's closing argument. Bacanovic's attorney called Faneuil a "convincing liar" whose fascination with celebrity led him to invent a story that would bring down his boss and win him fawning publicity.

Strassberg will finish his closing argument Tuesday and be followed by Robert Morvillo, Stewart's attorney. The jury in the case could begin deliberations as early as Tuesday afternoon. (For a story on the future of Martha Stewart Living(MSO), the company Stewart founded, click here.)

In a meticulous summation that ran more than three hours, Schachter laid out why the government doesn't believe Stewart had an informal stop-loss agreement with Bacanovic that led her to sell about 4,000 shares of ImClone Systems on Dec. 27, 2001. The stock tanked one day later on an FDA setback.

"Four days after the sale, [Bacanovic] did not say a word about what is the cornerstone of his defense," Schachter noted, referring to an interview with his Merrill Lynch office manager. "Peter Bacanovic said nothing about a $60 order."

Instead, the government believes Faneuil, who testified Bacanovic ordered him to call Stewart with information that ImClone's founder was trying to sell his own stake in the company. The co-defendants face five years in prison on charges they obstructed justice by inventing a story that Stewart had an agreement to sell the stock when it fell to $60.