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American Morning

Pressure on Martha Stewart

Aired February 04, 2004 - 07:12   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


BILL HEMMER, CNN ANCHOR: Attorneys for Martha Stewart get their crack at the government's star witness today. That's expected. They'll begin cross-examining Douglas Faneuil. The former brokerage assistant delivered some potentially damaging testimony yesterday. To whom is not quite clear. Faneuil said Stewart's broker and co- defendant, Peter Bacanovic, ordered him to pass a secret stock tip to Stewart just before she dumped her ImClone shares.
And Jeffrey Toobin, our senior legal analyst, was in court yesterday.

Listen, I read your comments. This was a heck of a day yesterday, wasn't it?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: It was real high drama. You know, this is the biggest federal courtroom in New York. It was utterly silent, everybody just waiting for Faneuil to take the stand. And he really didn't disappoint. He gave an extremely dramatic accounting of the day of the stock sale.

HEMMER: What did he say?

TOOBIN: Well, he talked about coming to work. Peter Bacanovic, the stockbroker, his boss, was in Miami. So, he was alone in the office. All morning long, members of the Waksal family, advisors to the Waksal family are calling at him, screaming at him, sell. Sell all of our stock. And -- in ImClone. She -- he doesn't know what to do.

So, he calls his boss, and his boss says, "Sell the stock." And then, in this moment that was really just extraordinary, Bacanovic said on the phone, according to Faneuil, "Oh, my god, you've got to call Martha" -- meaning, you've got to call Martha and give her the tip that the Waksals, the people who ran ImClone, were selling.

HEMMER: Didn't Faneuil at some point say can I do this? Am I allowed to do this?

TOOBIN: That's right.

HEMMER: That's what he testified to, right?

TOOBIN: Well, that's what he said. And he said, of course, you've got to tell. Of course, you're allowed to do this.

Interestingly, the prosecution theory is sort of based on the idea that this was an illegal secret tip, but what's so peculiar about this case is that Martha Stewart isn't charged with insider trading. So, even though there's this insinuation that this tip was improper, there's no charge that it was. That's a problem in the government's case.

HEMMER: So, the cross-examination is expected this morning, I'm assuming, right?

TOOBIN: And they are going to go after Faneuil like crazy. But interestingly, I think there's a difference in strategy between Bacanovic and Stewart here. Because Bacanovic, he is guilty if the jury believes Faneuil. He is just totally buried by Faneuil. Stewart I think -- remember, her only dealing with Faneuil was this one brief phone call that Faneuil will testify about today.

HEMMER: Is that the only time they had talked, ever met?

TOOBIN: Well, they had never met. That's an interesting thing that came out in testimony yesterday. They have never met in person. They spoke fewer than five times in their whole life. And so, it's just this essentially one-minute phone call where he passes along the tip. It's possible I think that Stewart's lawyers may say, look, wasn't it a brief phone call? Wasn't it very confused? A lot of stuff going on? They might choose to dismiss Faneuil, and Bacanovic they to attack him.

HEMMER: Back up to two answers. Before we bury Bacanovic, just to borrow your phrase that you used here, defense attorneys are going to get a crack at him today. If you're a defense attorney, where do you start poking holes in Faneuil's testimony of yesterday?

TOOBIN: You start by pointing out two things. One, he's told a lot of different stories. He initially told investigators a story that very much backed up Bacanovic's story. He has now changed his tune. He's pled guilty to a misdemeanor. So, he's now become a government witness. But the changes in the story will be the heart of the testimony.

HEMMER: I have 10 seconds. What was Martha Stewart's demeanor during all of this?

TOOBIN: You know, she is a textbook criminal defendant.

HEMMER: Really?

TOOBIN: She is business-like, she's respectful, no smiling, no mugging, no grimacing. I mean, she takes notes, but I'm telling you, she is very well-behaved.

HEMMER: And she is a good legal student.

TOOBIN: This is not a skill she probably wants, being a criminal defendant, but she's very good at it.

HEMMER: You're going back today, I'm assuming, right?

TOOBIN: You bet. HEMMER: All right, see you tomorrow right here. Thanks, Jeff.

TOOBIN: OK.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.






Aired February 4, 2004 - 07:12   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Attorneys for Martha Stewart get their crack at the government's star witness today. That's expected. They'll begin cross-examining Douglas Faneuil. The former brokerage assistant delivered some potentially damaging testimony yesterday. To whom is not quite clear. Faneuil said Stewart's broker and co- defendant, Peter Bacanovic, ordered him to pass a secret stock tip to Stewart just before she dumped her ImClone shares.
And Jeffrey Toobin, our senior legal analyst, was in court yesterday.

Listen, I read your comments. This was a heck of a day yesterday, wasn't it?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: It was real high drama. You know, this is the biggest federal courtroom in New York. It was utterly silent, everybody just waiting for Faneuil to take the stand. And he really didn't disappoint. He gave an extremely dramatic accounting of the day of the stock sale.

HEMMER: What did he say?

TOOBIN: Well, he talked about coming to work. Peter Bacanovic, the stockbroker, his boss, was in Miami. So, he was alone in the office. All morning long, members of the Waksal family, advisors to the Waksal family are calling at him, screaming at him, sell. Sell all of our stock. And -- in ImClone. She -- he doesn't know what to do.

So, he calls his boss, and his boss says, "Sell the stock." And then, in this moment that was really just extraordinary, Bacanovic said on the phone, according to Faneuil, "Oh, my god, you've got to call Martha" -- meaning, you've got to call Martha and give her the tip that the Waksals, the people who ran ImClone, were selling.

HEMMER: Didn't Faneuil at some point say can I do this? Am I allowed to do this?

TOOBIN: That's right.

HEMMER: That's what he testified to, right?

TOOBIN: Well, that's what he said. And he said, of course, you've got to tell. Of course, you're allowed to do this.

Interestingly, the prosecution theory is sort of based on the idea that this was an illegal secret tip, but what's so peculiar about this case is that Martha Stewart isn't charged with insider trading. So, even though there's this insinuation that this tip was improper, there's no charge that it was. That's a problem in the government's case.

HEMMER: So, the cross-examination is expected this morning, I'm assuming, right?

TOOBIN: And they are going to go after Faneuil like crazy. But interestingly, I think there's a difference in strategy between Bacanovic and Stewart here. Because Bacanovic, he is guilty if the jury believes Faneuil. He is just totally buried by Faneuil. Stewart I think -- remember, her only dealing with Faneuil was this one brief phone call that Faneuil will testify about today.

HEMMER: Is that the only time they had talked, ever met?

TOOBIN: Well, they had never met. That's an interesting thing that came out in testimony yesterday. They have never met in person. They spoke fewer than five times in their whole life. And so, it's just this essentially one-minute phone call where he passes along the tip. It's possible I think that Stewart's lawyers may say, look, wasn't it a brief phone call? Wasn't it very confused? A lot of stuff going on? They might choose to dismiss Faneuil, and Bacanovic they to attack him.

HEMMER: Back up to two answers. Before we bury Bacanovic, just to borrow your phrase that you used here, defense attorneys are going to get a crack at him today. If you're a defense attorney, where do you start poking holes in Faneuil's testimony of yesterday?

TOOBIN: You start by pointing out two things. One, he's told a lot of different stories. He initially told investigators a story that very much backed up Bacanovic's story. He has now changed his tune. He's pled guilty to a misdemeanor. So, he's now become a government witness. But the changes in the story will be the heart of the testimony.

HEMMER: I have 10 seconds. What was Martha Stewart's demeanor during all of this?

TOOBIN: You know, she is a textbook criminal defendant.

HEMMER: Really?

TOOBIN: She is business-like, she's respectful, no smiling, no mugging, no grimacing. I mean, she takes notes, but I'm telling you, she is very well-behaved.

HEMMER: And she is a good legal student.

TOOBIN: This is not a skill she probably wants, being a criminal defendant, but she's very good at it.

HEMMER: You're going back today, I'm assuming, right?

TOOBIN: You bet. HEMMER: All right, see you tomorrow right here. Thanks, Jeff.

TOOBIN: OK.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.