Charges against Stewart considered

Prosecutors have enough evidence for criminal case against her, sources say

February 07, 2003|By KNIGHT RIDDER/TRIBUNE

NEW YORK - Federal prosecutors have let Martha Stewart know they have enough evidence to file criminal charges against her, sources say.

Manhattan U.S. Attorney Jim Comey is considering several charges - including securities fraud, obstruction of justice and lying to an FBI agent, two sources familiar with the matter told the New York Daily News.

Comey has not made a final decision on whether to make Stewart a defendant in his investigation of her sale of ImClone stock. But Stewart's lawyers were told in recent weeks that Comey is prepared to go forward with the criminal case, said the two sources, who spoke on condition of anonymity.

Stewart's lead criminal lawyer, Robert Morvillo, is lobbying prosecutors to consider allowing Stewart to avoid criminal culpability by merely settling civil charges with securities regulators, sources say.

Comey, who is prosecuting other securities cases against ImClone founder Sam Waksal and several WorldCom executives, has the final say. A spokeswoman for Stewart and a spokesman for federal prosecutors declined to comment.

The Securities and Exchange Commission has told Stewart it plans to file a civil suit charging her with insider trading violations, sources have told the New York Daily News.

On Dec. 27, 2001, Stewart sold her 4,000 shares of ImClone, a day before the government said it was rejecting the company's anti-cancer drug. The stock plummeted, and Stewart avoided about $40,000 in losses.

She has insisted she did nothing wrong, but an assistant to her stockbroker has said he gave her insider information about her friend Waksal trying to sell off much of his stock before the federal announcement.

The assistant, Douglas Faneuil, has pleaded guilty to a misdemeanor charge and has agreed to testify against Stewart if the case goes forward.

Meanwhile, a WNBC-Marist poll released this week showed 57 percent of those surveyed believed Stewart did "something illegal" in the ImClone matter. The Jan. 27 survey of 412 people found 7 percent said she did nothing wrong.

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