Her Nemesis

updated 02/16/2004 AT 01:00 AM EST

originally published 02/16/2004 AT 01:00 AM EST

His was the testimony everybody was waiting to hear. So on Feb. 3, when prosecutor Karen Patton Seymour called to the stand Douglas Faneuil, the government's star witness, a buzz raced through the packed U.S. District courthouse in New York City. Five minutes later the boyishly handsome Faneuil, 28, the former assistant to Martha Stewart's Merrill Lynch stockbroker, was sworn in. Clad in a gray suit and speaking so softly he had to be reminded to talk into the mike, Faneuil testified that on the morning of Dec. 27, 2001, he received a flurry of phone calls from the daughters and accountant of ImClone Systems chief executive Sam Waksal—all of them about dumping ImClone stock. When he discussed those phone calls with his vacationing boss Peter Bacanovic, 41, Faneuil said Bacanovic blurted, "Oh my God, get Martha on the phone."

Stewart, 62, subdued in a black blazer and black pants, looked on but showed little expression. According to Faneuil, after Bacanovic conferred by phone with Stewart's assistant, he then told Faneuil, "Listen, Martha is going to call. You've got to tell her what's going on." Faneuil continued, "From that I took him to mean I had to tell her about the Waksals' sales. I said, 'What can I say? Am I allowed to tell her about Sam?' Peter said, 'Of course. You must, you've got to. That's the whole point.'" This portion of Faneuil's two hours of testimony clearly supported the government's contention that Stewart had made $228,000 worth of stock trades based on an insider tip. (Stewart maintains she previously discussed selling her ImClone stock at a certain price.)

The jury and 200 spectators were then dismissed for the night. At press time, Faneuil had not testified about his subsequent conversation with Stewart—or undergone cross-examination by the defense.

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