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STEWART LAWYER MAY TAKE STAND NEW YORK — The extent to which Martha Stewart’s first lawyers have become personally embroiled in her defense was raised in open court Tuesday, as prosecutors tried to prepare for the chance that one of them may be a witness in her obstruction of justice trial. Prosecutors Tuesday wanted to ask Stewart’s personal assistant, Ann Armstrong, about a possible contact with attorney John Savarese of Wachtell, Lipton, Rosen & Katz on Jan. 31, 2002. That was the day Stewart altered a phone log linking her to broker and co-defendant Peter Bacanovic and the alleged coverup that led to their indictment for obstruction and other charges. Savarese accompanied Stewart to a Feb. 4, 2002, meeting at the Southern District U.S. attorney’s office in Manhattan, where Stewart allegedly told several lies about her sale of ImClone Systems Inc. stock just six weeks before — including a lie about the phone log. A key question asked of Stewart, with the answer recorded only in handwritten notes taken and summarized by an FBI agent, was whether Stewart still had a message left by Bacanovic on Dec. 27, 2001. The prosecution claims Stewart said she did not know whether the message still existed. Government lawyers believe the defense may call Savarese to rebut the claim that she said that at the meeting. Armstrong testified Tuesday that on Jan. 31, 2002, Stewart replaced a message on a phone log for Dec. 27 that read “Peter Bacanovic thinks ImClone is going to start trading downward” with a simpler, less incriminating message, “Peter Bacanovic: re ImClone.” Armstrong said that Stewart had an immediate change of heart and told her to “put it back the way it was” — as in restore the message. Armstrong said Stewart then instructed her to phone Stewart’s son-in-law, John Cuti of Emery Celli Cuti Brinckerhoff & Abady. Cuti was not Stewart’s lawyer at the time but has been part of her defense team at trial. After he spoke to Stewart, he then called Armstrong. Later, Armstrong and Cuti had dinner to discuss the phone log. — New York Law Journal

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