WASHINGTON -- Martha Stewart has been spared from having to testify before Congress about her sales of a biotech stock. But lawmakers are asking federal prosecutors to begin a criminal investigation into whether she lied to a House panel about her trading.
Stewart's attorneys viewed the House Energy and Commerce Committee's request to the Justice Department on Tuesday as preferable to a subpoena and congressional appearance.
Shares of the company, Martha Stewart Omnimedia, jumped almost 10 percent immediately after the lawmakers' announcement Tuesday afternoon. The shares closed at $9.05 -- up $1.30, or 16.8 percent, from a day earlier on the New York Stock Exchange.
Attorneys for the domestic design tycoon said they welcomed the committee's action because the Justice Department -- already investigating possible insider trading of ImClone stock -- is the appropriate authority to address questions related to her stock sale.
"I strongly disagree with the analysis of the committee and its staff but am pleased that the matter will now be exclusively in the hands of professional law enforcement authorities," said Stewart attorney Robert Morvillo.
In a letter to Attorney General John Ashcroft, the Republican and Democratic leaders of the committee wrote, "As members of Congress we believe it is our obligation to forward specific and credible information in our possession that could suggest a federal crime has been committed."
Stewart is a friend of former ImClone chief executive Sam Waksal, the only person so far charged in the federal investigation of ImClone Systems Inc., which he founded. He pleaded innocent last month to charges of securities fraud, perjury, bank fraud and obstruction of justice.
Stewart sold nearly 4,000 shares of ImClone stock on Dec. 27, a day before the company's application for federal review of its highly touted colon cancer drug, Erbitux, was denied.
Committee spokesman Ken Johnson said panel investigators negotiated with Stewart's attorneys until shortly before the announcement, offering not to seek a Justice Department probe if she would agree to appear voluntarily and testify at a hearing next week.
In the letter, the lawmakers said they have been prevented from resolving discrepancies and "suspicious communications" involving the stock sale. Stewart has refused repeatedly to be interviewed by committee staff members, they said, and her attorneys have said that, if subpoenaed, she would invoke her Fifth Amendment right not to incriminate herself.
Evidence obtained by the committee caused lawmakers to be "deeply skeptical" of Stewart's version of events and raised questions about whether it was "false, misleading and designed to conceal material facts," the letter to Ashcroft said.
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