Corporate Scandals

Judge's Pet!

Faneuil gets motherly love: Shrill Shyster gets smackdown-and who's the idiot around here?

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These are Elizabeth Koch's notes on the Martha Stewart trial.

Bacanovic defense attorney David J. Apfel's approach today is milder and less accusatory, but still repetitive and frankly just annoying. Apfel initially asks Faneuil about Jeremiah Gutman, his previous lawyer, who allegedly told Faneuil that Merrill Lynch struck a deal with the government: Hand over the Waksal's and we'll let Martha off easy.

"When you came forward to tell the whole truth, first to Merrill Lynch and then to the SEC, [June '02] why didn't you ask whether the deal existed?"

"By that time it was clear and obvious there was no deal," F. said, also claiming that Gutman urged him to "go forward and continue to tell the story you've been telling, but don't lie. It was impossible to do both." F. portrays himself not only as a victim of an intimidating boss, but also of his own lawyer. And frankly, his soft voice, endearing naivety, and humbled, contrite body language make his testimony easy to believe. A.'s line of questioning is hard to follow—is he accusing F. of lying about the "deal," of really only coming forward to avoid jailtime? Hard to tell. He seems to get lost in his own repetition.

Faneuil remains polite and calm, but often answers questions as he pleases, with a lot of qualifying remarks. "That's nice," Apfel sneers, "but do me a favor and answer the questions I ask? Shall we try it again?" He barks at him a few more times, "YES or NO, sir!! YES or NO!" When Faneuil looks to U.S. District Judge Miriam Goldman Cedarbaum to save him, she babies him, "It's really hard to be a witness, but do your best to answer Mr. Apfel's questions directly, without analyzing or thinking ahead." She often comes to Faneuil's rescue: By lunch, not only had Cedarbaum directed A. to change topics eleven times, she'd sustained almost every single one of Seymour's objections. The jury seems almost embarrassed for Apfel—the ones, that is, who'll look at him. Seymour likes to preen when her wish is granted—she gives Apfel a "ha ha" smirk then whips her head around and smiles at the press. The guy may be a jackass, but she's an assuming, ingratiating manipulator.

Apfel spent hours trying to extract an admission that Faneuil's primary reason for coming forward, for turning in Martha and Bac., was to avoid jailtime. "Were you aware of the numerous articles published in March April, May of '02 on the Waksals, Martha, and Bac? Did you remember the calls from compliance officers at Merrill?" Faneuil claims, "My cooperation was not against anybody. I came forward to tell the truth." The Jury is paying close attention. Some appear puzzled, namely #3 and 4.

Next Apfel attacked F. for claiming that Bac's post Dec 27th behavior "scared" him. He tried to enter into evidence a number of jokey, friendly e-mail the two exchanged after the fateful day in an effort to squash the intimidation claim. When A. tried to enter them into evidence, Cedarbaum blocked them, "You are nor going to clutter the record with lots of pieces of paper." When Apfel asked F about an e-mail he sent Bacanovic picturing a man screwing a goat, Cedarbaum was screaming before Seymour could get to her feet. "When I sustain an objection to a document, you are not allowed to describe its contents!" Is it normal for a judge to sustain her own objections? A few jury members smirk, and Seymour flashes her dimples at them.

Apfel recovers some while shooting holes in F's bribery claims. F. testified yesterday (Feb 4), that the plane ticket, extra week off, and late spring compensation Peter offered were all "rewards" to F. for keeping quiet. At this point the entire jury leans in, #1, 3,5, and 8 looking especially curious. F. says, "I neither accepted not declined the rewards," which means he didn't take Bac up on his offers. Apfel suggests Faneuil is lying about the extra week, and that Bac. offered the plane ticket before Dec 27. As for the compensation, Bac. had promised F. a raise the day he was hired in Aug 01, as soon as payroll would put it through. F. doesn't exactly refute Apfel's suggestions—he does a lot of double-talk. He seems tired and confused. When Apfel suggests that the misdemeaner charge F. worked out with the government—"receiving money and things of value in consideration for not informing law enforcement about a crime"—is not a valid charge, but a bogus settlement, the jury all lean in. Apfel basically accuses F. of agreeing to anything—even crimes he did not commit—in order to avoid a felony charge.

"Mr. Apfel, you are not allowed to testify," Cedarbaum barks. But the jury's already digesting.

The most compelling aspect of the testimony, to my mind, is A's attempt to shoot holes in F's claims that Bacanovic told him to perform a trade with his number one, most prized client, after he'd worked at Merrill for a mere six months. First off, A establishes that Faneuil quit his last job because he wanted more responsibility. Faneuil admits he "tried to promote himself with certain clients by suggesting [he] was the person they should deal with." On the morning of Dec 27, Bac called from Florida ten to twelve times. "So he had his cell with him all day, and spoke to you literally minutes before Martha called, but still wanted a 6 month employee to handle the trade?" F admits that as for as he knows, Bac never told any other client on any other occasion about another client's activity. Now Apfel has the entire jury's attention—most appear something between curious and skeptical: many fingers are tapping lips, many foreheads are resting in hands.

Even stranger is that the obviously demanding, spoiled Martha would let a rookie assistant she apparently could not stand make such an important trade when/if she knew Bac. was reachable. "Once she asked to speak to another assistant," F. admitted. Apfel submitted a series of e-mails Faneuil sent friends about his few—three or four—phone interactions with Martha. They may depict her as a lunatic, but it's also pretty clear she was not a Faneuil fan. "I have never, ever been treated more rudely by a stranger on the telephone," Faneuil writes. "She actually had the nerve—the NERVE—to mention the layoffs in her anger.

She said, 'Do you know who the hell is answering your phones? You know what he sounds like? He says this and then she made the most ridiculous sound I've heard coming from an adult in quite some time, like a lion roaring underwater. I laughed; I thought she was joking. And then she yelled, 'This is not a joke! Merrill Lynch is laying off 10,000 employees because of people like that idiot!' And then she hung up."

What Apfel failed to point out is that clearly Martha thought she was speaking to Bacanovic. Nor did he nail the idea that since Faneuil obviously was eager for more responsibility, for a more important role at Merrill, perhaps he took the initiative with Martha, even tipping her off himself.

Even if Apfel did drop the ball, he still got the jury thinking. Finally. But Morvillo has a HUGE clean-up job ahead of him.

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