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Free Tix May Cost Martha

Oct 2, 2002 | The New York Daily News

For Martha Stewart, it may all come down to a couple of Knicks tickets.

Today a lowly stockbroker's assistant is set to plead guilty to accepting Knicks tickets in exchange for hiding from investigators his knowledge of an insider stock deal that has rocked Stewart's once perfect world.

Douglas Faneuil, 23, will plead guilty to a misdemeanor charge of blackmail, accepting a gratuity to cover up knowledge of a crime, two sources familiar with the matter said.

In his plea before a Manhattan federal magistrate, Faneuil - who personally handled Stewart's suspiciously timed sale of ImClone stock will contradict Stewart's version of why the stock was sold, the sources said.

The deal makes it clear Manhattan U.S. Attorney James Comey believes a crime was committed on Dec. 27, the day Faneuil handled the sale of Stewart's 4,000 shares of ImClone's stock.

Faneuil will say he was pressured by his boss, Merrill Lynch broker Peter Bacanovic, to concoct a story about a prearranged stop-loss order to sell Stewart's ImClone shares when they hit a certain price, sources said.

That pressure included being given Knicks tickets around April, when Stewart and ImClone founder Sam Waksal were being called in by federal investigators to explain their stock sales, the sources said.

Faneuil will face up to a year behind bars and will likely get probation - especially because he's agreed to testify in the ongoing investigation of the Stewart matter, the sources said.

Stewart's name will not appear in the criminal information filed before the magistrate, but her presence as an unidentified "tipee" will be quite obvious, sources say.

Faneuil will admit to receiving the tickets "as a consideration for not informing against any violation of any law," according to one source familiar with the deal that was worked out over the last few months.

Investigators are trying to determine if Waksal, a close friend, gave Stewart inside information his firm's anti-cancer drug would be rejected by the government. The announcement sent the stock into a tailspin.

Waksal has been indicted on charges of tipping off his relatives to dump their stock just in time, but he has insisted he never gave her insider information.

Stewart, a former stockbroker, has insisted she sold all the stock only because she had an arrangement with Bacanovic to cash out if it dropped below $60.

But in the last few months, Stewart's stop-loss story has begun to unravel. At first, Bacanovic backed her version, and so did Faneuil, sources said. Then Faneuil changed his story, and told investigators there was no stop-loss order.

Sources say prosecutors will now use Faneuil to pursue a case against Bacanovic, and then perhaps against her.

Neither Faneuil's lawyer nor a spokeswoman for Stewart returned calls seeking comment. Bacanovic's lawyer and a spokesman for Comey declined to comment.

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