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Martha Stuns Congressional Panel

Congressional probers looking into the ImClone insider-trading scandal were shocked at an apparent breach of etiquette by Martha Stewart.

The guru of gracious living ditched an invitation to appear voluntarily before the House Energy and Commerce Committee, responding instead with a letter from her lawyers that said her stock sell-off was "prompted solely" by a pre-existing stop-loss order. 

But lest congressional investigators feel slighted, Stewart, through her lawyers, sent probers an invitation of her own - to issue a statement exonerating her, Time magazine reports. 

"We were stunned," committee spokesman Ken Johnson told Time. "We couldn't believe what she was asking us to do." 

Stewart, who unloaded around 4,000 shares of ImClone stock the day before the drug company's only product was panned by regulators, has been negotiating through her lawyers to avoid testifying before the committee. The panel is chaired by Rep. Billy Tauzin (R-La.), who once appeared on Stewart's television show to pitch his Cajun cookbook. 

The stock price of Martha Stewart Living Omnimedia has tanked - down 65 percent since the brouhaha broke - and could plummet further should the founder refuse to testify. 

But, Time reports, Tauzin feels Stewart's letter was an attempt to mislead the committee - and talk of a congressional subpoena is heating up. 

ImClone officials had been told informally in early December by the Food and Drug Administration that their only product, the cancer drug Erbitux, would not be approved. 

Seven company bigwigs sold more than $50 million in ImClone stock in the next few weeks. 

On Dec. 26, the FDA told then-ImClone chief and Martha pal Sam Waksal that they would break the bad news in two days. 

When Waksal was blocked by a company-imposed moratorium from selling his shares, he transferred about $5 million worth to his daughter Aliza. 

The next day, Aliza Waksal sold $2.5 million in ImClone through broker Peter Bacanovic. 

Sam Waksal, who was arrested by feds in June, was indicted Wednesday on charges of insider trading, bank fraud and obstruction of justice. He is scheduled to be arraigned today. 

Stewart has said she gave oral instructions to Bacanovic to sell her entire ImClone position when the stock fell below $60 a share. 

But records from Stewart's office revealed Bacanovic spent the morning of Dec. 27 frantically trying to reach Stewart while the stock price remained above $60.

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