In a procedural victory for prosecutors, the judge in Martha Stewart's obstruction trial ruled that the key witness against her, former
broker's assistant Douglas Faneuil, will take the stand as early as Tuesday.
Faneuil's testimony was delayed last week when Stewart's defense received a memo that sowed confusion about parts of Faneuil's story. In the memo, Faneuil's former lawyer, Jeremiah Gutman, gave two different accounts of who Faneuil clamed ordered him to give Stewart the perfectly timed stock tip that is at the heart of the government's case against her.
Faneuil's testimony was initially postponed to Thursday, but was moved up without elaboration in a ruling issued by U.S. District Judge Miriam Goldman Cedarbaum Monday.
Stewart, the former chief executive of
Martha Stewart Living
, and her Merrill stockbroker, Peter Bacanovic, are charged with obstruction of justice and other crimes for allegedly lying about why Stewart sold her stake in
just days before a regulatory setback crushed the stock in late 2001. Prosecutors think the pair concocted a story to explain the fortuitous divestiture, when in fact they were acting on Bacanovic's knowledge that his client, Sam Waksal, was trying to sell his own ImClone shares.
Waksal, ImClone's founder, is currently serving seven years in prison for insider trading.
Gutman told FBI investigators that he couldn't remember from whom Faneuil claimed to have gotten the order to tip Stewart: his boss, Bacanovic or Waksal himself. The FBI interview was described in a memo turned over to the defense last week.
Monday's ruling could indicate Cedarbaum has found Gutman's confusion to be just that -- the fuzzy memory of an octogenarian lawyer, and not a legitimate reason to reassess Faneuil's credibility. She indicated as much last Thursday when she told lawyers in the case: "I do think that the government should have turned this information over sooner. Not that I think it's anything but Mr. Gutman's recollection."
Furthermore, evidence that Faneuil told differing stories to his lawyers wouldn't be surprising in and of itself. He reportedly changed his account to implicate Bacanovic in obstruction after cutting a plea agreement with prosecutors. Monday's ruling appears to resolve a procedural dispute over whether prosecutors acted improperly by not turning over the Gutman memo earlier.
Cedarbaum dismissed motions for a mistrial and to bar Faneuil's testimony when the memo came to light last Thursday.