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The extent to which Martha Stewart’s first lawyers have becomepersonally embroiled in her defense was raised in open court Tuesday,as prosecutors tried to prepare for the chance that one of them may be awitness in her obstruction of justice trial. Prosecutors Tuesday wanted to ask Stewart’s personal assistant,Ann Armstrong, about a possible contact with attorney John F. Savareseof Wachtell, Lipton, Rosen & Katz on Jan. 31, 2002. That was the day Stewart altered a phone log linking her to broker and co-defendant PeterBacanovic and the alleged coverup that led to their indictment forobstruction and other charges. Savarese accompanied Stewart to a Feb. 4, 2002, meeting at theSouthern District U.S. Attorney’s Office in Manhattan, where Stewartallegedly told several lies about her sale of ImClone Systems Inc. stockjust six weeks before — including a lie about the phone log. A key question asked of Stewart, with the answer recorded only inhandwritten 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 themessage still existed. Government lawyers believe the defense may callSavarese to rebut the claim that she said that at the meeting. Armstrong testified Tuesday that on Jan. 31, 2002, Stewartreplaced a message on a phone log for Dec. 27 that read “Peter Bacanovicthinks ImClone is going to start trading downward” with a simpler, lessincriminating message, “Peter Bacanovic: re ImClone.” Armstrong said that Stewart had an immediate change of heart andtold 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 R. Cuti of Emery Celli Cuti Brinckerhoff &Abady. Cuti was not Stewart’s lawyer at the time but has been part ofher defense team at trial. After he spoke to Stewart, he then calledArmstrong. Later, Armstrong and Cuti had dinner to discussthe phone log. Tuesday, outside the presence of the jury, prosecutor MichaelSchachter said he wanted to ask Armstrong about her memory of theevents of Jan. 31, 2002, after Stewart said, “Put it back the way itwas.” The issue, Schachter said, “is that Ms. Stewart’s son-in-law says hehas a call in to John Savarese to discuss this issue, the destruction ofthe message, the alteration of the message.” “That’s what is relevant,” Schachter said, “because just a few shortdays later, Savarese is representing Stewart at her interview onFebruary the 4th,” where Stewart tells the government, “she doesn’tknow whether this message even exists.” Schachter referred to a statement made last month by Stewart’strial attorney, Robert Morvillo, who told Judge Miriam Goldman Cedarbaumat a hearing that he would present a “lay witness” to tell a version ofthe Feb. 4 interview that was “diametrically opposed” to the versionrecorded in the notes of FBI Agent Catherine Farmer. The point, Schachter said, was that “we anticipate that Mr. Savaresemay very well be a witness in this case,” a witness who might testifythat he made the Feb. 4 representations about the phone log that thegovernment pinned on Stewart in the indictment. “We believe that that is untrue, that in fact it was Ms. Stewart thatsaid those things, because, frankly, Mr. Savarese — we don’t think wouldsay this,” Schachter said. But Cedarbaum said the prosecution could ask only about the simplefact of Cuti’s contact with Savarese, as related by Armstrong. The judge said she would not allow the government to go into”anticipatory rebuttal.” Schachter raised the fact that “Mr. Savarese was also acting as Ms.Stewart’s agent” on Feb. 4. “That may be, but you are not accusing him of anything,” the judge said.”It sounds as if you are making an accusation against him. That’s not anissue before the jury, whether he acted appropriately.” Prosecutor Karen Patton Seymour said the government wanted to ask Armstrong about the Cuti-to-Savarese connection because “by proving hewas in possession of knowledge about the destruction of evidence, itmakes it much less likely that Mr. Savarese was the one who made thestatement about not knowing whether the message existed to thegovernment.” “Because Mr. Savarese,” Seymour added, “as an officer of the court,is much less likely to be making that statement.” Morvillo said “it is clear there is a dispute between us and thegovernment as to precisely what was said on Feb. 4, and that has nothingto do with Mr. Savarese unless he is actually called as a witness totestify as to what his recollection of the events of Feb. 4 is.” But Morvillo, of Morvillo, Abramowitz, Grand, Iason & Silberberg,refused to commit himself, saying, “As of this moment, it is not myintention to call Mr. Savarese as witness.” He then added, “I could revise my opinion on that, but I think it ismost unlikely that the defense is going to call Mr. Savarese.” Schachter was able to question Armstrong, but only out of thepresence of the jury. Armstrong related that during her phone conversation with Cution Jan. 31, he said “something to the effect of ‘You know not to touchanything or just stop in your tracks or — and I need to talk later.’” “And I said that I was glad to hear from him and I was going to callhim, too,” Armstrong said. Schachter then asked, “And when you received this call from Ms.Stewart’s son-in-law … how much time had passed since Ms. Stewart gotoff the phone with her son-in-law ?” “Seconds,” she said.

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