ImClone Investigators Probe Stewart E-mails

Aug. 9, 2002 -- A chain of phone messages and e-mails involving Martha Stewart and her broker may shed new light on what happened the day Stewart dumped her ImClone stock ahead of a price slide for the company's shares, ABCNEWS has learned.

Investigators are looking over the communications in a bid to determine if the home-furnishings magnate broke the law the day she dumped her ImClone shares. Copies of the documents have been obtained by ABCNEWS' Good Morning America.

On Dec. 27, Stewart sold $227,000 worth of stock in the biotech company ImClone. The very next day, the company announced bad news that pushed the stock price sharply lower.

On the morning of Dec. 27, Merrill Lynch stockbroker Peter Bacanovic was asked by ImClone founder Samuel Waksal's daughter Aliza to sell all her stock in the company. Samuel Waksal, a friend of Stewart's, was indicted on insider trading and other charges Wednesday.

Within an hour of the sale of the daughter's stock, Bacanovic was trying to call Stewart, who was also his client, according to one of Stewart's assistants. Congressional investigators probing the ImClone case are now exploring whether Bacanovic could have tipped off Stewart.

First Contact

In a copy of an affidavit obtained by Good Morning America, the assistant said: "The call from Peter Bacanovic … came in some time between approximately 10 a.m. and 11 a.m."

Stewart, however, was unreachable. She was on a private plane, on her way from Connecticut to San Antonio, Texas. As they waited for Stewart's plane to land, Bacanovic and his assistant, Douglas Faneuil, swapped e-mails, copies of which have also been obtained by Good Morning America.

At 1:17 p.m, Bacanovic wrote: "Has news come out yet? Let me know."

At 1:20, Faneuil replied, "Noting yet. I'll let you know. No call from Martha either."

When Stewart's plane landed at 1:30 p.m., she called her office, where her assistant had earlier noted in the message log: "Peter Bacanovic thinks ImClone is going to start trading downward." Almost immediately, Stewart called Bacanavic's office, and 11 minutes later, the broker was selling all of Stewart's ImClone stock.

In the last of the Dec. 27 e-mails obtained by GMA, Faneuil wrote: "Dear Mrs. Stewart, You sold your remaining (3,928 imcl) shares at an average price of 58.43(25). As always, feel free to call me with any questions …"

Stewart Friend May Talks

The Wall Street Journal reported today that a friend of Stewart's, Mariana Pasternak, will also assist investigators looking into the ImClone sale. The Journal said Pasternak was aboard Stewart's private jet, headed for a Mexico vacation, the same day Stewart's nearly 4,000 shares were sold. The newspaper said Pasternak may provide more information to counter Stewart's own account of her stock sale.

Stewart, chief executive of Martha Stewart Living Omnimedia Inc., has declined to meet with investigators, saying it would be premature. Stewart has said she had a standing order with Merrill Lynch to sell her ImClone stock when it went below $60. But she and Bacanovic, differ on when the order was placed.

On Dec. 28, ImClone shares went into a deep slide when it was announced that the Food and Drug Administration would not accept its application to review the colon cancer drug Erbitux.

Questions about Stewart's ImClone stock sale have sent her own company's shares on a downward spiral. Omnimedia shares dropped 72 cents, or 9.6 percent, Thursday to close at $6.78. It had been trading at around $19 in June.

ABCNEWS' Dan Harris reported this story on Good Morning America.