Gay stockbroker pleads guilty in ImClone scandal

By Advocate.com Editors

Originally published on Advocate.com October 03 2002 12:00 AM ET

Douglas Faneuil, an openly gay man who worked as an assistant to Martha Stewart's stockbroker, was expected to plead guilty Wednesday to a misdemeanor and cooperate in an investigation of Stewart and others in the ImClone Systems stock sales scandal. Prosecutors believe Faneuil was paid off to keep secret what he knew about insider information allegedly given to the domestic doyenne, who sold ImClone stock before bad news devalued its shares, according to court papers released Wednesday.

Faneuil, 26, was expected to admit receiving money or other valuables "as consideration for not informing," according to the terms spelled out in the papers filed in U.S. district court in Manhattan.

Court papers released Wednesday accuse Faneuil of failing to "truthfully reveal all he knew" when he was contacted on January 3 by attorneys for the Securities and Exchange Commission. Investigators are looking into Stewart's sales of nearly 4,000 ImClone shares last December, just before the stock price plummeted after news broke that the FDA would not review its highly touted cancer drug, Erbitux. Merrill Lynch handled Stewart's ImClone sale.

Prosecutors are trying to determine if Stewart was tipped off by her close friend Sam Waksal, ImClone's founder and ex-CEO. Stewart has said she had a standing order to sell the ImClone shares if they fell below $60 a share.