NEW YORK (AP) – Moments before jury selection for the trial of Martha Stewart, her boyishly handsome stockbroker paused at the defense table, leaned in and exchanged kisses with her on the cheek.
The greeting seemed affirmation that Stewart’s bond with her co-defendant, Peter Bacanovic, was still strong despite government accusations they lied about a well-timed stock trade.
But the case took an unexpected turn last week that could strain their unified defense.
The twist involved the government’s star witness, former Bacanovic assistant Douglas Faneuil. He was expected to testify that Bacanovic instructed him to give Stewart a secret tip that led her to sell nearly 4,000 shares of ImClone Systems stock in 2001, just before it plummeted on bad news.
Stewart and Bacanovic say they had agreed beforehand to sell ImClone if the stock fell to $60 per share.
However, Bacanovic’s attorney also has suggested Faneuil, star-struck by the domestic style-setter, decided on his own to tip Stewart about the stock’s impending drop.
In a blow to prosecutors, transcripts of the interview suggest ImClone founder Sam Waksal himself – not Bacanovic – might have asked Faneuil to tip Stewart.
Bacanovic’s lawyers could use the document to subtly distance their client from Stewart while bolstering his defense, said Dan Small, a former federal prosecutor in Boston.
The stakes are high: Stewart is charged with obstruction of justice, securities fraud and other counts that carry a total of 30 years of prison time. Bacanovic faces up to 25 years if convicted of perjury, conspiracy and other charges.
Bacanovic ”has always been very social,” a tireless worker with the rare ability to convert friends into clients, said his brother, Paul, an investment banker at Lehman Brothers.