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American Morning

House Committee Looking into Stewart's Sale of ImClone's Stock Gives Her Until August 20th

Aired August 13, 2002 - 05:16   ET

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

CAROL COSTELLO, CNN ANCHOR: Now an update on decorating guru Martha Stewart. A House committee looking into Stewart's sale of Imclone's stock last December has given her until August 20 to hand over some documents or risk being subpoenaed. In the meantime, the former CEO of Imclone has entered a not guilty plea to insider trading.
CNN's Allan Chernoff reports.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Sam Waksal was known as a self-promoter when he was CEO of Imclone Systems. On the day he plead not guilty to insider trading and bank fraud charges, Waksal again promoted his cause.

SAM WAKSAL, FORMER CEO, IMCLONE: First, I believe the drug Herbatux, which I have worked to bring to the public for over 10 years, has the potential to help millions of cancer patients. My attorneys and I look forward to addressing these charges in the appropriate forum, the courts.

CHERNOFF: As Waksal prepares his defense, the House Energy and Commerce Committee is threatening to subpoena his friend, Martha Stewart, suspecting she's misled them about her sale of Imclone's stock last December 27, the day before Imclone revealed the Food and Drug Administration had rejected its cancer drug.

Martha said she and her broker had agreed to sell if the stock dropped below $60, that she had no inside information. But records obtained by Congress raise questions about her explanation. Phone logs show her broker, Peter Bacanovic, who also serves the Waksal family, repeatedly trying to reach her the morning of December 27, before the stock fell under $60. And e-mail between the broker and his assistant before Martha's sale has investigators wondering if the two had advance word of the drug rejection.

"Has news come out yet? Let me know. Fax. Pete."

The response from assistant Doug Faneuil, "Nothing yet. I'll let you k."

No call from Martha either.

Merrill Lynch told Congress the two were put on leave because their stories about the Stewart sale conflicted. Congressman James Greenwood says he has grave suspicions about Martha's story.

REP. JAMES GREENWOOD (R), PENNSYLVANIA: We want information about her phone call records, her e-mail records and we want that by the 20th of August. If she provides that information to us voluntarily, we will review it. If she does not provide the information to us voluntarily, then we will subpoena that information. Then we'll make a decision as to whether we need to call her forward under subpoena and we may have to do that.

CHERNOFF: Stewart's lawyers Monday told investigators they will comply.

Allan Chernoff, CNN, New York.

(END VIDEOTAPE)

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