Martha Stewart pleads not guilty at trial - East Valley Tribune: Get Out

Martha Stewart pleads not guilty at trial

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Posted: Tuesday, January 20, 2004 8:58 am | Updated: 4:55 pm, Thu Oct 6, 2011.

NEW YORK - With a wave to a pair of supporters outside and a barely audible plea of not guilty inside, Martha Stewart went on trial in earnest Tuesday at a Manhattan federal courthouse.

In private, lawyers were to begin narrowing down a jury pool to the 12 who will could determine whether the style guru does time in prison. Hundreds of prospective jurors have already filled out questionnaires.

But first, Stewart, in a barely audible voice, reiterated her plea of "not guilty" to all five counts of the indictment before jury selection began. Co-defendant Peter Bacanovic also pleaded innocent to the latest version of the indictment, which made mostly cosmetic and typographical changes.

"Very well," replied U.S. District Court Judge Miriam Goldman Cedarbaum. "I will enter your pleas. You may be seated."

Wearing a gray coat, Stewart said "Good morning" and waved as she arrived at the courthouse. Bacanovic arrived a short time later.

But Stewart supporters were in short supply, with just a pair of her backers braving the bitter cold in lower Manhattan.

"You go, girl!" shouted Linda Smith of Audubon, N.J., clutching a sign that read "Martha is being prosecuted for who she is." The other supporter, John Small, wore a chef's hat and matching apron.

More than two dozen camera crews and at least as many photographers shot Stewart as she walked up the courthouse steps, a grim look on her face.

In the judge's private robing room, potential jurors were to face Stewart and answer questions from lawyers designed to detect any bias they may have. Opening statements will begin once jurors are seated - possibly as early as this week.

The trial is to determine whether Stewart, 62, is a criminal who lied to the government about unloading stock based on an inside tip about a well-placed friend - or simply a shrewd investor who saved money with a smart bet on the market.

It grew from a 2001 stock sale in which the government estimates Stewart saved about $51,000 - a tiny sum compared with her multimillion-dollar media empire.

The government says Stewart saved the $51,000 by selling stock in ImClone Systems on Dec. 27, 2001 - just before a negative government report about a highly touted ImClone cancer drug sent the stock plummeting.

Stewart says she sold because she and Bacanovic, her Merrill Lynch & Co. broker, had a pre-existing agreement to sell when the stock fell to $60.

But the government says she was tipped that ImClone founder Sam Waksal - a longtime friend of Stewart's who once dated her daughter - was trying to unload his shares.

Legal experts say the case is near-impossible to predict, and should come down simply to whose account jurors believe.

Former Justice Department obstruction prosecutor George Newhouse, now a lawyer in private practice, said the case - for sheer spectacle - is something like a white-collar version of the murder trial of O.J. Simpson.

"This case is very interesting," he said. "You have the classic elements - an incredibly high-celebrity, well-heeled client who has hired the A-team in terms of lawyers."

Former Merrill assistant Doug Faneuil, 28, is expected to testify that the government's account of the stock sale is accurate - and that he was plied with gifts in exchange for initially supporting Stewart's version.

The government is also expected to produce as evidence a telephone message log of a call from Bacanovic that Stewart temporarily altered, and a worksheet the government says Bacanovic altered to make the $60 agreement seem legitimate.

But the defense presents a compelling argument as well: Why would Stewart, herself a former stockbroker, deliberately break the law and risk a fortune to save what was, for her, a small amount of money?

Cedarbaum blocked the media and public from watching the juror-questioning process, saying she was worried jurors may be less forthcoming if they knew reporters are present.

Instead, a transcript of each day's questioning will be released the following day.

Conviction on any of the five counts against her could land Stewart in federal prison - doing untold damage to her reputation and her company, Martha Stewart Living Omnimedia, where she remains chief creative officer.

The five counts carry a total prison term of 30 years and a $1.25 million fine, but Stewart would likely get far less under federal sentencing guidelines if convicted.

The most serious count against her is securities fraud, alleging Stewart deliberately deceived her own shareholders by publicly saying in 2002 that she had done nothing wrong.

The defense has characterized the charge as an unprecedented infringement on a defendant's First Amendment rights, and even the judge in the case called the charge "novel."

But prosecutors say Stewart went further than simply predicting she would be exonerated, giving a "forceful, detailed and false explanation for her sale of ImClone."

The trial was relocated to a larger courtroom because of the anticipated crush of people. Fifty media passes were issued, including 10 for sketch artists, since no still cameras are allowed inside federal courts.

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