A DIVA IN DISTRESS

It had been almost three hours since the last break in the Martha Stewart trial. The marbled federal courtroom in Manhattan was stuffy and the jurors were restless. The prosecution's star witness, Douglas Faneuil, had just given potentially damning testimony against Stewart and her stockbroker, Peter Bacanovic. And now the best defense lawyers money can buy were ready to carve up Bacanovic's former assistant. But the slight 28-year-old was no easy prey. He cleverly sidestepped their land mines. He even praised Bacanovic as "the best boss I ever had," while implicating him and Stewart in a conspiracy to cover up her suspicious ImClone stock sale. Bacanovic's lawyer, David Apfel, tried to paint Faneuil as the real liar. But Faneuil deftly deflected Apfel and put the blame back on Bacanovic and Stewart. "I felt I would be fired," Faneuil insisted, "if I didn't lie."

Trials are about casting and calculations, and Faneuil's poised parrying on the stand last week offered surprises that are changing the course of this case. Going into last week, Martha was rolling, while prosecutors were stinging from a scolding from the judge for being slow to turn over key documents to the defense. Martha also could take some comfort in the jury. It is two-thirds women, a point in her favor, say jury consultants who contend men are more likely to find against a powerful woman. Conventional wisdom held that the key witness, Faneuil, would be easy to discredit. But his riveting testimony--which included impressions of his boss and No. 1 client--is leading to a fast rewrite of the script. Juries tend to sympathize with witnesses who've been browbeaten, especially when they hold up well, says Columbia law professor John Coffee. And by the weekend Faneuil was looking cool, while Martha appeared on the verge of tears. There's only one way for her to recover from this setback: take the stand.

How did Wall Street's best defense lawyers so badly underestimate Faneuil? They had hoped to reveal him as a feckless party boy who was in over his head at Merrill Lynch. But it turns out that dealing with Merrill's temperamental clients perfectly prepared Faneuil for the attacks in court. At Merrill, Faneuil had to know when to humor Martha and when to politely push back (in one e-mail to a friend he crowed, "Baby put Ms. Martha in her place!!!"). On the stand, he was the cooperative, earnest schoolboy, and turned Apfel into the playground bully, who at one point sputtered: "You haven't answered my question."

But Faneuil answered plenty of questions for the jury. He stared intently at the four men and eight women as he told his tale of the trade. Faneuil channeled Bacanovic's reaction to the news that Stewart's pal, ImClone founder Sam Waksal, was trying to dump his stock. " 'Oh my God'," Faneuil said in Bacanovic's voice, " 'you've got to get Martha on the phone!' " Then he imitated Stewart's clipped demands when she called in: " 'I want to sell all of my shares'." The jurors were spellbound. And they're no pushovers. Jury experts consider this a sophisticated panel and believe the defense erred by highlighting Faneuil's occasional recreational drug use. "A smart jury like this is probably turned off by the defense wanting them to hate Faneuil because he smoked pot," says John Kelly, a former New York prosecutor. The jury also grew impatient with Apfel's relentless cross-examination. An audible groan filled the courtroom when he said he still had four hours to go. One juror dropped her head in exasperation; three others had nodded off.

If Martha is to get out of the courtroom and back in the kitchen, she must win back this jury, legal pros say. Her carefully cultivated plan to soften her image was blown to bits by Faneuil's tale of her tirades. In an e-mail, he described Stewart's berating the poor diction of a Merrill receptionist by making "the most ridiculous sound I've heard coming from an adult in quite some time, kind of like a lion roaring underwater." The courtroom erupted in laughter, except for an ashen Stewart. But she'd better bring a big dollop of charm to court soon. Her future now rests on getting the jury to forget the unflappable Mr. Faneuil.

A DIVA IN DISTRESS | News
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