Faneuil, 28, was the government’s star witness in its case against Martha Stewart and her former Merrill Lynch & Co. broker, Peter Bacanovic. Sixteen months before taking the witness stand, Faneuil, who worked for Bacanovic, pleaded guilty and agreed to cooperate with prosecutors who were pursuing Stewart.
U.S. District Judge Miriam Cedarbaum previously called Faneuil the “key witness” in the case. Stewart, the founder of Martha Stewart Living Omnimedia Inc., and Bacanovic were sentenced last week to five months in prison and five months home detention for lying to investigators about stock she had sold.
“I am giving you enormous credit for your assistance,” Cedarbaum said as she granted a recommendation by U.S. probation officials that she not impose probation. “I am accepting your representation that this was truly aberrational.”
Faneuil is among a growing number of wrongdoers who’ve come forward in a bid for leniency because of stiffer penalties for white-collar crimes, said former federal prosecutor Anthony Pacheco. Pacheco, now a lawyer at Proskauer Rose in Los Angeles, isn’t involved in the case. Today’s sentencing may encourage other offenders to cooperate.
“Faneuil was by all accounts an outstanding witness,” said George Newhouse, a former U.S. prosecutor now with the Los Angeles office of the New York law firm Thelen Reid & Priest.
“He was smart, well prepared, had done his homework, and was self-effacing. The government can pat him on the back and say, at the end of the day, he delivered the goods — Martha Stewart,” said Newhouse, who’s also not involved in the case.
Stewart, 62, and Bacanovic, 42, were convicted of lying about the circumstances surrounding her Dec. 27, 2001, sale of about 4,000 shares of ImClone Systems Inc. stock. Faneuil testified he told Stewart, on Bacanovic’s orders, that ImClone founder Sam Waksal was selling his family’s shares, prompting Stewart to unload hers. Stewart said she sold because of a pre-existing sell order.
Faneuil faced a maximum of six months in prison, under U.S. sentencing guidelines. He said in October 2002 that he accepted money and an extra week of vacation from Bacanovic in return for not telling investigators all he knew about Stewart’s trade.