Published August 20, 2002
WASHINGTON – Style guru Martha Stewart on Tuesday turned over about 1,000 pages of documents to a U.S. House panel that is probing whether she had inside information when she sold shares of ImClone Systems Inc. a day before the firm disclosed bad news.
The House Energy and Commerce Committee had requested phone and e-mail records from Stewart and had threatened to subpoena them if she did not give them up voluntarily.
The committee staff "did receive 1,000 pages from Martha Stewart," said Stephanie Walsh, a spokeswoman for Rep. Jim Greenwood, who chairs the panel's oversight subcommittee.
The staff was reviewing the documents "to make sure the request was completely met," Walsh said.
The committee is trying to clear up questions about what, if anything, Stewart knew about trouble at ImClone when she sold almost 4,000 shares on Dec. 27. She has said she sold because she had a pre-existing deal with her broker to dump the stock if the price fell below $60 a share.
On Dec. 28, ImClone announced that the Food and Drug Administration had refused to review its application for its highly touted cancer drug, Erbitux, a shock to investors that sent the company's shares plunging.
ImClone former Chief Executive Samuel Waksal, a friend of Stewart's, has been charged with allegedly trying to sell ImClone shares before the FDA news became public and tipping two relatives to unload theirs. Waksal has denied wrongdoing and has pleaded not guilty to securities and bank fraud charges.
Congressional investigators want to know if Stewart knew of the upcoming FDA rejection, or if her Merrill Lynch and Co. broker, who also served as Waksal's broker, told her that Waksal was trying to sell his shares.
Stewart repeatedly has denied wrongdoing.
The questions surrounding Stewart's stock sale have hit her publishing and merchandising company, Martha Stewart Living Omnimedia. Stewart is the chief executive and the company's shares have lost half their value since news of her ImClone sale emerged.
Committee investigators already have reviewed documents from Merrill Lynch. The panel has not found evidence of an agreement to sell Stewart's shares at $60, said Greenwood, a Pennsylvania Republican.
"We haven't seen any evidence of it whatsoever," Greenwood said on the CBS television program The Early Show.
Stewart has declined to talk privately with congressional investigators, and Greenwood said on CNN that the committee "probably will need to subpoena her" to appear before the panel. A decision probably will be made around Labor Day, he said.
"I don't have any great heart to drag her before the committee for a media circus. On the other hand, just because you're rich and famous doesn't mean that you get treated specially," Greenwood said.