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House Committee Mulls Stewart Case

Sep 10, 2002 | AP

Congress should focus more on the kinds of institutional problems that led to the Enron collapse and stop pursuing the Martha Stewart trading investigation, a key House member said Tuesday.

"My recommendation for the last several weeks was that we process and give the information (on Stewart) to the Justice Department, Rep. Peter Deutsch said as the Energy and Commerce Committee faced a deadline to decide how to proceed against the domestic design tycoon.

"The thing we're not very good at is investigating and prosecuting," the Florida Democrat said on CBS's "The Early Show." He said "our job is to deal with systemic issues in the country," such as preventing such collapses and protecting workers' 401(k) and other pension programs.

Deutsch was interviewed on the same day the House panel was to convene to decide where to turn next in its drawn-out investigation of Stewart, whose sale of Imclone stock has drawn heavy scrutiny. Stewart has refused to appear before the committee to answer questions.

She sold nearly 4,000 shares of ImClone stock on Dec. 27, a day before the company's application for federal review of Erbitux had been denied.

Stewart has steadfastly maintained that she told her Merrill Lynch broker to dispose of the stock if it dropped below $60 per share. The committee has been seeking to clear up discrepancies between her account of the sale and those of her now-suspended broker and his assistant.

Lawmakers have been trying to determine whether Stewart, before her stock sale, had information that the FDA ( news - web sites) was going to reject the drug. The company's stock subsequently plummeted. Questions have remained despite an earlier letter from Stewart's lawyers denying she had received any notice of the FDA's decision, according to the committee.

The decision on how to proceed was dividing members of the House panel.

"I think the committee, against my recommendation, is going to punt this whole matter over to the Justice Department," Rep. Bart Stupak ( news, bio, voting record), D-Mich., predicted Tuesday on NBC's "Today" program.

"I think they're going to come up with no conclusion," he said, "and I believe they owe it to Martha Stewart and to the American people to finish this, and I think today we will be abdicating that."

Ken Johnson, a committee spokesman, had said last week the panel "reached the end of the road" in trying to get Stewart's cooperation and was considering legal action.

He said at the time that possible courses of action included the referral to the Justice Department for potential criminal prosecution.

Johnson also said phone records obtained by the committee appear to contradict statements by former ImClone president and Stewart friend Sam Waksal that he did not speak to her or her agents between Dec. 14 and Jan. 5, as well as Stewart's assertion that Waksal did not return a call she made to him during that period.

Waksal is the only person who has been charged in the federal investigation of ImClone Systems Inc., which he founded. He pleaded innocent last month to charges of securities fraud, perjury, bank fraud and obstruction of justice.

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