Faneuil Says He Didn't Believe He Was Doing Wrong

NEW YORK - The star witness against Martha Stewart testified Monday that he did not believe he was doing anything wrong when he passed her the tip that led to her sale of ImClone Systems stock.

Former brokerage aide Douglas Faneuil, who handled the stock sale in 2001, also testified that the homemaking mogul never encouraged him to lie.

Faneuil was asked by Stewart's lawyer Robert Morvillo whether he knew that he was violating Merrill Lynch & Co. policy when he gave Stewart the tip - that ImClone founder Sam Waksal was trying to dump his shares in the company.

But Faneuil said he thought about the violation only afterward, and he repeated that Stewart's broker at the time, Peter Bacanovic, had ordered him to give Stewart the tip and encouraged him to lie about it later.

"I would say because Peter told me to do it, I did not think I was doing anything wrong," Faneuil said.

Faneuil, 28, was cross-examined by Morvillo for several hours. It was his fourth day on the stand, and the start of the third week of Stewart's trial on charges of obstruction of justice and securities fraud.

On Dec. 27, 2001, Faneuil handled both Stewart's sale of ImClone and an earlier request by Waksal's accountant to transfer Waksal's shares into the account of his daughter, Aliza.

Faneuil has testified that both events made him uneasy. But Morvillo, trying to damage the former assistant's credibility, questioned why he did not immediately alert Merrill Lynch officials that there might have been wrongdoing.

"Were you deliberately attempting to assist two of your customers in violating the insider-trading laws?" Morvillo asked.

"At the time I was attempting to be a client associate, take clients' orders, do what Peter told me to do," Faneuil answered. "I would say no, I was not deliberately attempting."