The House Energy & Commerce Committee has handed off the Martha Stewart/ImClone investigation to the Justice Department, "strongly" suggesting that it investigate whether Stewart lied to the committee but coming to "no conclusion" on whether her conduct constitutes a federal crime.
Committee Chairman Billy Tauzin (R-La.) said Stewart's refusal to appear before the committee and her pledge to take the Fifth Amendment if subpoenaed necessitated passing the investigation along to Justice. Oversight and Investigations Subcommittee Chairman James Greenwood (R-Pa.) said committee members negotiated with Stewart's attorneys until 2 p.m. on Sept. 10 to try to get her to testify but were informed in a letter that she would not, although her attorneys, Arnold & Porter, said in the letter that she would "almost certainly" be available if the committee could defer its proceeding until the conclusion of other ImClone investigations. But the committee was ready to move on.
If Justice finds that Stewart lied, she could be imprisoned for five years and/or fined, said Tauzin, who added that he expects Justice to take the referral seriously. Greenwood pointed out that Stewart is a former stock broker, is chairman of a major corporation and sits on the board of the New York Stock Exchange.
Stewart, who parlayed a lifestyle TV show into a wide-ranging media empire, sold 4,000 shares of ImClone Systems stock on Dec. 27, 2001, the day before it became public that the Food and Drug Administration had denied the company's application to market a new cancer drug. Stewart is a friend of ImClone CEO Samuel Waksal, several of whose other friends and family also sold their shares, "avoiding millions of dollars in losses as the stock price subsequently tumbled," as the committee said in its letter to Justice.
Stewart told the committee in a letter that she had a preexisting agreement with her broker to sell ImClone if it fell below $60 per share, that it was the fall of the price that triggered the sale and that she had no non-public information on the stock. Tauzin said the committee has "other evidence [which includes phone records and e-mails] that casts substantial doubt on the truth" of Stewart's version of events.
The committee also said the documentation it passed along to Justice might help in a reported separate investigation. The committee told Justice, "We believe that the information we are providing you today may assist your Department in its own reported criminal investigation of Ms. Stewart's actions by demonstrating that her potentially obstructive conduct with respect to Executive Branch investigations into the ImClone matter may not have been a one-time mistake or inadvertent error, but may have been part of a deliberate, repetitive course of conduct."
Justice does not comment on ongoing investigations.