The testimony by Mariana Pasternak was perhaps the most damaging yet against the homemaking mogul, who told investigators three months later she had no memory of being tipped about Waksal.

Pasternak, a friend of Stewart for more than 20 years, said she had the conversation with Stewart on Dec. 30, 2001, while they were vacationing in Mexico.

"I remember Martha saying Sam was walking funny at the Christmas party, that he was selling or trying to sell his stock, that his daughter was selling or trying to sell her stock," Pasternak testified.

She said Stewart added: "Isn't it nice to have brokers who tell you those things?"

Stewart and broker Peter Bacanovic are accused of lying to investigators about why Stewart dumped her 3,928 shares of ImClone — just before the stock sank on a negative government review of an ImClone cancer drug.

While Stewart is not charged with knowing about the review, she told investigators in 2002 she did not recall being told anything about Waksal trying to sell.

Waksal is serving a seven-year prison sentence for insider trading. He and his family frantically sold, or tried to sell, their shares ahead of the drug announcement.

Stewart and Bacanovic claim they had made a deal earlier in December 2001 to dump Stewart's ImClone shares if the stock fell below $60. Prosecutors say that was a cover story.

Earlier yesterday, a Secret Service forensics expert testified that a notation of "@60" on a worksheet Bacanovic used to track Stewart's portfolio had been made in a different ink than other marks on the sheet.

Larry Stewart, considered the nation's top ink expert, said infrared and ultraviolet light tests had confirmed differences between the "@60" entry and other marks.

Under cross-examination, the ink expert said it was impossible to tell how many pens had been used to mark the document. Bacanovic's team contends he just used different pens in his work.