A close friend of Ms Martha Stewart said yesterday that some of her most damaging testimony against the domestic trendsetter may have been a figment of her imagination.

Ms Mariana Pasternak, whose friendship with Stewart goes back 20 years, conceded under cross examination that parts of the testimony she gave on Thursday could be fabrications.

At issue is testimony the friend offered in which she said Ms Stewart boasted "Isn't it nice to have brokers who tell you those things" during a vacation in Mexico just after Ms Stewart dumped her shares of ImClone Systems Inc. Her attorney pressed the witness about that statement yesterday, asking whether that conversation had taken place or if it was all in her head.

"I do not know if the statement was made by Martha or if it was thought in my mind," Ms Pasternak said. She also said she had previously told prosecutors she was not sure about that recollection.

Ms Pasternak is among the last witnesses prosecutors plan to call in their case against Stewart and her former stockbroker Peter Bacanovic. - (Reuters)