Key witness against Martha Stewart gets $2,000 fine for accepting payoff

Friday, July 23rd 2004, 11:48 am

By: News On 6

NEW YORK (AP) _ A former brokerage assistant who helped Martha Stewart make her fateful stock trade and later emerged as a key government witness was fined $2,000 but spared both prison and probation Friday for accepting a payoff during the government's investigation.

U.S. District Judge Miriam Goldman Cedarbaum imposed the fine against Douglas Faneuil one week after she sentenced the convicted homemaking entrepreneur to five months in prison and five months of home detention for lying to authorities.

``I want to apologize for my mistakes,'' Faneuil told Cedarbaum. ``Thankfully I've learned my lesson.''

Faneuil, 28, worked at Merrill Lynch as an assistant to Stewart's stock broker and co-defendant, Peter Bacanovic, who was convicted along with Stewart and received the same sentence.

Faneuil had faced up to a year in prison after pleading guilty to the misdemeanor charge of accepting a payoff _ extra vacation time and travel expenses. Prosecutors recommended he be spared jail time after his testimony helped them secure Stewart's conviction in federal court.

His voice quavering, Feneuil said he had feared his testimony would never prevail ``against rich and powerful people. I was wrong, and for that I am immensely grateful.''

Prosecutors had alleged that in 2001, Bacanovic ordered Faneuil to tip Stewart that her longtime friend, Sam Waksal, was dumping shares of his biotechnology company, ImClone Systems Inc. Waksal had advance knowledge of a government report on an experimental drug that later sent shares of ImClone into a freefall.

Stewart and Bacanovic always maintained she sold because of a preset plan to unload the stock when it fell to $60 _ a claim Faneuil backed before pleading guilty.

At trial, Faneuil told jurors that Bacanovic, after learning Waksal was trying to sell, told him: ``Oh, my God. Get Martha on the phone.''

On orders from his boss, Faneuil said he told Stewart about Waksal, then _ on orders from Stewart herself _ sold her stable of 3,928 shares, netting about $228,000.

The government contended Bacanovic plied Faneuil with the extra vacation time and airline tickets in exchange for supporting the story about the $60 stock order.

The defense tried to discredit Faneuil as an admitted drug user and a liar. Lawyers used e-mails to show jurors he had a spiteful fixation on Stewart while he worked at Merrill Lynch.

After handling a call from Stewart, Faneuil told a friend in an e-mail: ``I have never, ever been treated more rudely by a stranger in my life.''

Three days later, he wrote to another friend: ``Martha yelled at me again today, but I snapped in her face and she actually backed down! Baby put Ms. Martha in her place!!!''

Both Stewart and Bacanovic are free pending appeal.

After court, Faneuil dashed through the rain to a waiting car without commenting to reporters.