Stewart altered message log - assistant

With an investigation looming, Martha Stewart sat down at her assistant’s computer and altered a record of a message left by her stockbroker about ImClone Systems stock, the assistant has told a New York court.

Ann Armstrong said the original message read: “Peter Bacanovic thinks ImClone is going to start trading downward.”

It reflected a call by Bacanovic on December 27, 2001, the day Stewart sold her 3,928 shares in the company – and the day before the company announced a negative decision from US government regulators about an ImClone cancer drug.

Armstrong testified that Stewart saw the message on January 31, 2002, and replaced it with the words: “Peter Bacanovic re imclone.”

But she added: “She instantly stood up, still standing at my desk, and told me to put it back to the way it was.”

Armstrong said at Stewart’s stock-fraud trial in Manhattan federal court that she was “startled” by Stewart’s conduct, and that Stewart had never before altered a message in the log, which Armstrong maintains at Martha Stewart Living Omnimedia, Stewart’s media company.

The US government alleges that Stewart was tipped by Bacanovic that the family of ImClone founder Sam Waksal was trying to sell his shares on December 27.

Stewart, who made a fortune in home decorating, is charged with obstruction of justice and securities fraud, among other counts.

Stewart and the broker say they had a pre-existing deal to sell ImClone when it fell to $60 (€47.40) a share.

Helene Glotzer, a Securities and Exchange Commission lawyer, testified that Stewart claimed in February that she did not recall any record of Bacanovic’s message from the day of the sale.

Stewart also claimed that she had sold her ImClone stock in a call with Bacanovic, Glotzer said.

Bacanovic’s assistant, Douglas Faneuil, handled the sale.

Glotzer also testified that Stewart changed her story in the course of the February interview – first saying she and Bacanovic had the same recollection of a $60 (€47.40) agreement, then saying she did not know what Bacanovic’s recollection was.