Tangled Webs by James B. Stewart Read Free Book Online

Glotzer, the SEC’s regional director in New York, and Jill Slansky, senior counsel, came on the line. They introduced themselves, and Slansky explained that this was just a preliminary investigation into ImClone trading, and that Faneuil was not a target. They asked him to answer to the best of his recollection and not to speculate. And he must answer truthfully. Even though the interview wasn’t under oath, failure to do so was a federal crime. Did he understand that? Faneuil said he did.
    Faneuil felt he was truthful–up to a point. He answered everything they asked about the Waksal trading and events leading up to it, which by his estimate accounted for 98 percent of the interview. There were only a couple of questions about Martha Stewart. He said she’d called, asked for a quote on ImClone, and after he provided it, told him she wanted to sell her shares. That was all. They didn’t ask any follow-up questions. What he said was true in the narrowest sense.
    Everyone congratulated Faneuil when the interview was over. The SEC didn’t seem interested in Martha Stewart! He didn’t care about the Waksals. Bacanovic wasn’t involved in that and Faneuil had told the truth. Maybe he didn’t have to worry.
    That evening Bacanovic called. “What did they ask about?”
    “You know, Peter, they really didn’t focus on Martha at all. They mostly asked about Sam. But they did ask me about Martha.”
    “What did you say?”
    “I just told them that Martha asked for a quote and sold her stock.”
    “Good,” Bacanovic said.
    The next day, Faneuil was trying to put the whole Martha Stewart mess out of his mind. Then Heidi DeLuca called. She was Stewart’s personal accountant, and she sounded annoyed.
    “Doug, what’s up with this ImClone trade?”
    Faneuil felt a sinking feeling. Now what? He tried to sound nonchalant. “I don’t know. What’s up?”
    “Well, this ImClone trade completely screwed up our tax-loss-selling plan. We had everything down perfectly, and this screwed it all up! What happened?”
    If he’d needed any further evidence that Bacanovic’s insistence about the tax-loss selling was a fabrication, this was it. Of course the trade had screwed things up, because the whole point of tax-loss selling was to generate losses, and ImClone was a gain. “I don’t know,” he told her. “You’ll have to speak to Peter,” who was still on vacation. As soon as he finished, Faneuil put his head in his hands. He looked so devastated that an intern working nearby came over to console him. He insisted he’d be okay, but then again borrowed someone else’s cell phone and called Bacanovic.
    “Peter, what the hell is going on? Heidi DeLuca just called me.” He told him how upset she was that the ImClone sale had screwed up the tax-loss-selling plan.
    Bacanovic erupted again. “Martha Stewart sold that stock because there was a predetermined price at which we decided to sell!” It was a replay of their conversation about the tax-loss selling, with Bacanovic talking rapidly and constantly, only this time the alibi was that Stewart had decided to sell if ImClone shares hit $60. Faneuil wanted to interrupt. He felt like screaming, “This story is utter bullshit and you’re acting like an idiot.” Once again, he couldn’t find an opening.
    “Okay?” Bacanovic breathlessly concluded. “Okay? Okay?”
    Faneuil grudgingly acceded, just to get off the phone. He was stunned that Bacanovic had changed his story without even acknowledging the prior tax-loss-selling rationale. Faneuil knew the $60 story was equally false. He’d never heard a word from Bacanovic about any decision to sell ImClone at $60, as he surely would have, since Bacanovic was away and Faneuil was monitoring the markets. Besides, when he spoke to Judy Monaghan, she, too, told him that Bacanovic had ascribed the trade to tax-loss selling.
    Faneuil’s anxiety came back in full force. He was haunted by Slansky’s warning that failure to tell