Stewart should be subpoenaed to testify before Congress, lawmaker says

Friday, August 9th 2002, 12:00 am
By: News On 6

WASHINGTON (AP) _ A lawmaker said Thursday that a House panel may need to subpoena Martha Stewart, while a former Securities and Exchange Commission official suggested that her legal prospects appear unfavorable.

``The line on her in Las Vegas obviously isn't too good right now,'' said Irving Einhorn, a former regional administrator for the SEC who is now an attorney in private practice. ``You've got to know that she's in serious trouble.''

Prosecutors probably are not seeking Stewart's cooperation to help make their cases against others in the ImClone stock scandal and may want to go after her with the full force of the law to show that ``even the high and mighty can be brought down,'' Einhorn said.

Rep. Bart Stupak, D-Mich., said the domestic design tycoon should be subpoenaed to answer questions about her sale of ImClone shares if she does not provide information by Aug. 20. An indictment Wednesday brought new charges against Stewart's friend, former ImClone CEO Samuel Waksal, who was accused of obstruction of justice and bank fraud in addition to previous securities fraud and perjury charges.

Members of the House Energy and Commerce Committee, which is investigating ImClone stock sales, are discussing the possibility of issuing a subpoena to Stewart to compel her testimony, committee spokesman Ken Johnson said.

Waksal was arrested in June on charges he secretly advised family members to sell their ImClone stock on Dec. 27 after learning that his biotech company's highly touted cancer drug had been rejected by the Food and Drug Administration.

The SEC, which filed a civil complaint against Waksal, formally notified ImClone in June that it was considering recommending charges against the company for its handling of the FDA rejection.

Stupak, a member of the House panel investigating ImClone stock sales, said of Stewart: ``Bring her in, and if she wants to take the Fifth (Amendment), that's her right. That's her legal right.''

Appearing on NBC's ``Today'' show, Stupak said that if Stewart hasn't responded to a committee request for information by Aug. 20, she should be forced to appear.

Stewart spokeswoman Allyn Magrino in New York declined comment.

The House committee requested some of Stewart's e-mails, records from her business manager and phone records.

In a letter to Stewart's lawyer earlier this week, Reps. Billy Tauzin, R-La., and Jim Greenwood, R-Pa., leaders of the panel, renewed the request for an interview with Stewart.

Committee investigators are trying to resolve discrepancies between her account of the sale of nearly 4,000 shares of ImClone a day before the stock plunged and those of her now-suspended Merrill Lynch broker and his assistant.

Stewart, who commands a multimedia empire as chief executive of Martha Stewart Living Omnimedia Inc., has declined to meet with the investigators, saying it would be premature. Stewart's lawyer has said they would do everything they could to comply with the committee's request for additional documents.

Shares of Stewart's company have been battered since June 6, when they were trading at around $19, as questions about her ImClone stock sale have swirled. Omnimedia shares dropped 72 cents, or 9.6 percent, Thursday to close at $6.78.

Stewart maintains she had an order to sell her ImClone stock when it went below $60 and disposed of the shares on Dec. 27. That was a day before it became known that the FDA would not accept ImClone's application to review the colon cancer drug Erbitux.

Johnson, the committee spokesman, has said that a June 12 letter from Stewart's lawyer said she had no inside knowledge about any action the FDA was taking regarding ImClone.

The letter did not address whether Stewart knew that Waksal was trying to sell shares and that his daughter had dumped a large block of stock, according to Johnson.

``We've requested Martha Stewart or her lawyers to come forward,'' Stupak said. ``As this thing has unraveled, they have drawn further away from the table.''

``It's really in Martha Stewart's court right now,'' the congressman said. ``If it will exonerate her, put forward the evidence.''