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|  | FEBRUARY 5, 2004
By Kate Hazelwood Two Steps Back for Martha's Defense Their attempts to undermine the prosecution's chief witness seemed to accomplish little but earn the jury's disgust As courtroom drama goes, it was a day of watching the best-laid plans of defense attorneys go astray. From morning to dusk on Feb. 4, the legal team defending domestic doyenne Martha Stewart and her broker Peter Bacanovic on conspiracy and obstruction-of-justice charges tried to destroy the credibility of the prosecution's chief witness, Douglas Faneuil, Bacanovic's former assistant at Merrill Lynch. That strategy might have seemed like a good idea in the planning stages. But in the execution, it appeared to be a disaster for the defense. Watching the jury box in a U.S. District Court in Manhattan said it all. Raising doubts about Faneuil's veracity and motivations shouldn't have been all that difficult. Under questioning from prosecutors the day before, the 28-year-old admitted lying about his grade-point average on his résumé, and initially lying to investigators about his role in the alleged cover-up. When first interviewed by the U.S. Attorney's office in January, 2002, and for the next six months in subsequent questioning, he swore that Martha Stewart's sale of 3,928 shares of ImClone (IMCL ) stock on the same day that company president and co-founder Sam Waksal dumped his own shares was simply a matter of relating ImClone's dropping share price to her. However, in June, 2002, Faneuil turned prosecution witness and is now awaiting sentencing after pleading guilty on a misdemeanor charge in the case. On the witness stand, he testified he had a far more extensive discussion with Stewart -- one in which he told her Waksal was trying to sell all shares, that the share price was dropping, and how he followed through with her instructions to sell her shares immediately. WHICH "WASTED"? Before the defense even began its cross-examination, things started going badly. With the jury and Faneuil sequestered outside the courtroom, a spirited debate broke out between Judge Miriam Goldman Cedarbaum and the defense team over the definition of the term "wasted." Was "wasted" a synonym for being drunk or being high on drugs? And would the jury know which? The point was clear: The defense was about to try to attack the Faneuil's credibility by presenting evidence he had used drugs. David Apfel, Bacanovic's attorney, said during the Vietnam era he clearly remembered "wasted" could be understood to mean high on pot. "It's too bad, then, that you're not an expert witness in the case," Judge Cedarbaum cracked, to twitters in the courtroom. With the jury back and Faneuil on the stand, the grilling began. Had he ever done drugs, Stewart's attorney Robert Morvillo asked Fanueil. Yes, Faneuil replied, but just marijuana during his employment at Merrill Lynch. Later, however, he conceded that he also did other drugs such as "ecstasy," a popular dance-club drug known as ketamine or "special K," and maybe even a line or two of cocaine. EVERYBODY DOES IT. The defense tried to establish that Faneuil's drug use was so extensive that he had struck a deal with the prosecution to avoid charges. Not true, Faneuil responded. Besides, he added, he still could be charged. Morvillo questioned him about a trip to Jamaica during which Faneuil admitted to the U.S. Attorney's Office he openly smoked pot in public. "I did not believe I was violating the law by smoking pot in Jamaica," Faneuil testified. "What led you to this assumption?" Morvillo shot back. But Faneuil had an answer that caused the courtroom -- including Judge Cedarbaum -- to erupt in laughter: "I believe it was based on the ubiquity of marijuana use in Jamaica," he deadpanned. The judge asked Morvillo to move on with his questioning. The lawyer then attempted to equate smoking marijuana in Jamaica with committing a murder in Britain -- both would be punishable under U.S. law, regardless of jurisdiction, he declared. But Cedarbaum clearly had had enough. "I'm not interested in 'lawr,'" she said, poking fun at Morvillo's Brooklyn-laced accent. "I'm interested in law." DOWNRIGHT HOSTILE. It was that kind of morning for the defense, and the jury grew restless with the relentless cross-examination. Part of the problem may lie with the cut of the witness. For all his admissions of wrongdoing, Faneuil comes across as a strangely fascinating, sympathetic figure on the stand. His lean, boyish appearance and shabby dress seem to clash with an earnestness that sometimes slips into arrogance. The effect, on me at least, is that one minute, you want to feed him a good, hot meal -- the next give him a scolding. In the afternoon, however, when Bacanovic's attorney Apfel cross-examined Faneuil, the jury seemed to move quickly from restlessness to hostility toward the defense. Several jurors threw disgusted looks at Apfel, their shoulders thrown back and their eyebrows shot up to their hairlines in response to his questions. A handful turned their faces away from him entirely, refusing to look at the lawyer as he pummeled Faneuil with repeated assertions that the young man had been prepped into being a tool of the U.S. Attorney's Office. Little was revealed in Apfel's lines of inquiry. An old courtroom axiom holds that good lawyers never ask a question for which they don't already know the answer. Yet, Apfel appeared not to know the answers to some of his own queries. And when he didn't get the answers he wanted, he simply repeated himself, rephrasing the question until the prosecution objected and Cedarbaum shut him down. Perhaps Apfel and Morvillo will fine-tune their strategy when cross-examination of Faneuil resumes on Feb. 5. Perhaps there was a method in what they attempted on Feb. 4. But I couldn't help but come away with the sense that a case that appeared to be going well for Bacanovic and Stewart earlier in the week just got a whole lot rougher.  Hazelwood is covering the trial for BusinessWeek Online Edited by Douglas Harbrecht
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