Maybe Martha Didn't Say It

Stewart's attorney managed to get key witness Mariana Pasternak to back off somewhat from her explosive testimony of Feb. 19. On to Round 2

By Kate Hazelwood

Prosecutors in the trial of domestic doyenne Martha Stewart and her ex-broker, Peter Bacanovic, on conspiracy, securities fraud, and obstruction of justice charges rested their case on Feb. 20. It poses challenges for the defense, which now has a chance to present its own side of the story (see "Halftime at the Martha Case"). But the presentation ended with attorneys for Stewart and Bacanovic taking at least some of the edge off the explosive testimony of a close friend of Stewart's the day before (see "With Pals Like This...").

On Thursday, Feb. 19, Mariana Pasternak, a neighbor of Stewart's and close friend for two decades, testified that she was with Stewart on vacation in Mexico on December 27, 2001 -- the day when, prosecutors allege, Stewart called Merrill Lynch to sell her ImClone (IMCL ) shares after she received a "secret tip" from an assistant of Bacanovic.

Just as the clock struck 5 p.m. on Feb. 19 -- adjournment time for the daily trial -- Pasternak blurted out that Stewart had told her three days after the phone call that it was "nice to have a broker who tells you those kinds of things." But when the trial resumed Friday morning, Stewart's defense attorney, Robert Morvillo, elicited an admission from Pasternak that she couldn't definitively say Stewart used those words.


  After a contentious interchange in which Morvillo asked Pasternak the same question at least 10 times, she admitted that her recollection of the moment in question was fuzzy. "I remember looking at Martha as those words appeared in a string before me," Pasternak said.

After another round of questions, her recollection was even fuzzier. "It is fair to say I don't know if the comment was made by Martha or a thought in my mind," she said. And instead of saying the words had actually been spoken, Pasternak said a short while later, she would be "much more comfortable defining [the comment] as 'a string of words I recall.'"

On redirect questioning, the prosecution was able to regain a small bit of ground. "My best belief," Pasternak said, when reminded of comments she made to the Securities & Exchange Commission and the U.S. Attorney in past interviews, "is that Martha said it." The trial resumes on Feb. 23.

Hazelwood is covering the trial for BusinessWeek

Edited by Douglas Harbrecht

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