Martha Stewart lawyers deliver documents sought by House panel

<br>WASHINGTON (AP) _ Lawyers for domestic marketing powerhouse Martha Stewart handed over more than a thousand pages of e-mail and phone records Tuesday to a House investigative panel examining her sale

Tuesday, August 20th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ Lawyers for domestic marketing powerhouse Martha Stewart handed over more than a thousand pages of e-mail and phone records Tuesday to a House investigative panel examining her sale of ImClone stock.

But lawmakers heading the investigation didn't rule out issuing a subpoena to force Stewart to appear before the panel.

``It may be the only means to get her to come forward and tell her story,'' said Rep. James Greenwood, R-Pa., chairman of the House Energy and Commerce investigative subcommittee.

Stewart spokeswoman Allyn Magrino said lawyers delivered ``over a thousand pages of documents'' to Capitol Hill. The documents were received less than an hour before a 5 p.m. EDT Tuesday deadline set by lawmakers probing Stewart's stock sale.

The records included e-mail messages from Stewart's laptop computer and telephone records from Stewart's company, Martha Stewart Living Omnimedia Inc. Investigators will need at least two weeks to scour the documents, said Ken Johnson, committee spokesman.

One concern is that a number of pages contained information that had been redacted, or blacked out, he said.

``It raises eyebrows,'' Johnson said. Stewart's lawyers told the committee that the information was financial and unrelated to ImClone.

``Given the fact that this is a formal investigation, we simply can't take their word for it,'' he said. ``We've told her attorneys that we expect them to come in our offices this week and show the original documents to our investigators.''

Lawmakers are trying to determine if Stewart, prior to her stock sale, had information that the Food and Drug Administration was going to reject ImClone's new colon cancer drug. The company's stock subsequently plummeted. Questions remain despite an earlier letter from Stewart's lawyers denying any advance notice of the FDA's decision, Greenwood said.

``We feel obligated to find out if she was being straight with us or not,'' he said.

Stewart has maintained she had an order to sell her stock when it dropped below $60 per share. The committee wants to clear up discrepancies about her account of the sale and those of her broker and assistant.

``They are all in conflict. Clearly someone is lying to us,'' Johnson said. ``The point is this: We will never be able to conduct a meaningful investigation in the future if people are allowed to come before the committee, lie and get away with it.''

Stewart sold nearly 4,000 shares of ImClone on Dec. 27, a day before the biotech company's application for FDA review of its cancer drug had been denied.

In trading Tuesday on the Nasdaq Stock Market, shares of ImClone were down 5 cents to close at $8.21 a share. Shares of Martha Stewart Living were up 91 cents to close at $9.05 on the New York Stock Exchange, but fell 3 cents in extended trading.

Stewart has declined to meet with House investigators.

Greenwood said he is puzzled that Stewart ``has not availed herself of multiple opportunities to come forward and tell her story and exonerate herself.''

Committee Chairman Billy Tauzin, R-La., has not ruled out issuing a subpoena after Labor Day, forcing her to appear before the panel. Tauzin will decide after reviewing the documents, Johnson said.

The committee would be happy to exonerate Stewart if she would verify that she indeed did nothing wrong, Greenwood said.

``Sure. I want to go back to my salad,'' he said.

Meanwhile, a former employee of WorldCom's subsidiary in the United Kingdom has claimed she tipped off British authorities to possible fraud at the company as far back as 1999, but was ignored.

Geraldine Kelly, in a sworn affidavit to House Energy and Commerce Committee investigators last week, says she told the Trade and Industry Department about widespread fraud.

A department spokeswoman said Tuesday that ``she did supply us with information and we did make inquiries,'' but would not elaborate.

Johnson, the committee spokesman, said investigators are looking into Kelly's allegations.