News Article

Recipe for Disaster

Prosecutor calls Martha Stewart a liar. She says Stewart deceived investigators and her own shareholders over ImClone sale to protect her reputation

It's not the crime, it's the cover-up. That seemed to be the argument made by federal prosecutor Karen Patton Seymour in her opening statement that began the Martha Stewart trial on Tuesday in New York. According to Reuters, Seymour called Stewart a liar, saying the domestic diva ''decided to lie to investigators and come up with a cover-up, a false story'' about her controversial ImClone stock sale. Stewart also deceived her own shareholders, Seymour said, knowing that damage to her own reputation could devalue shares of Martha Stewart Living Omnimedia. ''She was determined to put her own interest in front of investors,'' Seymour said.

Stewart is charged with securities fraud and obstruction of justice -- but not insider trading -- in the matter of her Dec. 2001 sale of nearly 4,000 shares of ImClone, the biotech firm run by her friend Sam Waksal, a sell-off that took place one day before the stock price tanked on news of federal rejection of ImClone's new cancer drug. Stewart and her broker, Peter Bacanovic, have both pleaded not guilty, claiming that she had placed a standing order with him to sell the stock if the share price fell below $60. If convicted on all five counts, Stewart faces up to 10 years in prison.

Stewart's lawyer, Robert Morvillo, said in his opening statement that the government's case was based on ''speculation, surmise and guesswork,'' the Associated Press reports. ''And they will ask you to ignore the lack of direct evidence,'' he told jurors. ''There will be no direct evidence that Martha Stewart conspired to obstruct anything.''

Both Morvillo and Richard Strassberg, who's defending Bacanovic, suggested that the charges were brought because of Stewart's celebrity. ''They have rushed to bring a case against Ms. Stewart,'' AP quotes Strassberg as saying, ''and in that rush to judgment they have charged an innocent man.'' The trial is expected to last a month.

Originally posted Jan 27, 2004