December 6, 2003 --
Martha Stewart yesterday lost the chance to grill the government's key witness against her, rookie broker Douglas Faneuil, before her ImClone securities trial kicks off next month.
Stewart's lawyer Robert Morvillo tried to depose Faneuil in October after being given permission by a judge who is presiding over a civil lawsuit brought by disgruntled shareholders in the domestic diva's company.
But Faneuil refused to answer Morvillo's questions and asserted his Fifth Amendment privileges, arguing that he is still waiting to be sentenced on a misdemeanor charge for his role in the ImClone trading scandal.
Manhattan federal Judge John Sprizzo yesterday rejected Morvillo's request that Faneuil be forced to answer questions, saying it would be "ludicrous" to override his Fifth Amendment rights.
In legal papers to the court, Faneuil's lawyers, Marc Powers and Marvin Pickholz, said Stewart was trying to "trample" Faneuil's rights.
Sprizzo also ordered two Securities Exchange Commission lawyers involved in the Stewart investigation to be deposed, but left open the likelihood they will also refuse to answer questions.
Testimony by Faneuil, who handled Stewart's sale of nearly 4,000 ImClone shares in December 2001, will be critical at her criminal trial starting Jan. 12, because he says he took a payoff to back up her explanation she had a pre-existing arrangement to sell her stock when the shares hit $60.
The feds allege Stewart sold after being told by Faneuil that ImClone founder Sam Waksal was trying to dump $15 million worth of shares.