Martha Stewart jurors begin deliberations

Panel asks to hear account of phone calls between her, ex-broker

March 04, 2004|By BLOOMBERG NEWS

NEW YORK -- The fate of Martha Stewart, who marketed her homemaking flair to the masses, is now in the jury's hands, as eight women and four men began deliberating on obstruction of justice and conspiracy charges after a five-week trial.

Stewart, 62, and her former broker at Merrill Lynch & Co. Inc., Peter E. Bacanovic, 41, are accused of conspiring to deceive investigators about why she sold 3,928 shares of ImClone Systems Inc. stock on Dec. 27, 2001. The trade occurred a day before federal regulators denied an application for Erbitux, an ImClone cancer drug approved last month by the Food and Drug Administration.

Jurors in Manhattan federal court, who heard nearly 30 witnesses, focused on the testimony of Douglas Faneuil, who said he tipped off Stewart that the family members of ImClone founder Samuel D. Waksal were selling their shares. Faneuil, a former aide to Bacanovic and the government's key witness, said he acted on orders from his boss.

At about 2:30 p.m., the jury asked for a reading of Faneuil's account of his calls with Stewart and Bacanovic on Dec. 27.

Before the jury began their deliberations, U.S. District Judge Miriam Goldman Cedarbaum instructed them "to decide where the truth lies. You are the sole judges of all the questions of fact and the credibility of witnesses."

Cedarbaum designated as foreperson Juror No. 1, a woman who said before trial began that she was "very familiar" with Stewart and had heard about the case on the news.

In their note to the judge, members of the panel also asked to see prosecutors' charts showing the timing of the Dec. 27 calls. A later note asked for Bacanovic's cell phone records for that day.

Faneuil had testified that Stewart instructed him to sell her ImClone shares after he alerted her to the Waksals' trading. The government contends Stewart's stock sale was triggered by the tip from Faneuil and that she lied about it to the Securities and Exchange Commission. Stewart and Bacanovic claim they had an agreement to sell once ImClone dipped below $60. Neither of them testified during the trial.

The jury also asked to see a Bacanovic worksheet listing Stewart's stock holdings. A government forensic scientist testified that a notation "60" next to ImClone was made in different ink than the rest of the document, suggesting it was added belatedly to bolster the defendants' claim about the order to sell at $60.

The panel requested a transcript of testimony by an SEC lawyer who interviewed Bacanovic and a report by an FBI agent who participated in the interrogation. Cedarbaum noted that the agent's report is not in evidence.

Jurors also asked to hear a tape of a portion of Bacanovic's testimony to the SEC and to view the phone message log of Ann Armstrong, Stewart's secretary. Armstrong testified that Stewart altered a computer entry of a phone message Bacanovic left Dec. 27, 2001, before she sold her ImClone shares.

Armstrong said she later restored the original message on Stewart's orders.

Stewart is charged with conspiracy, lying to investigators, and obstructing justice by making false statements to the SEC. Each count carries a five-year prison term. Bacanovic is accused of the same charges, as well as perjury.

Jurors include a paralegal, a woman who's a member of the clergy and offers matrimonial counseling, a member of the Art Directors Club in New York, and a woman who works for a publishing and events firm.

Cedarbaum instructed the jury that the indictment isn't evidence, that the burden of proof rests with the government and that the panel can't consider the fact that neither Stewart nor Bacanovic testified.

She said jurors "must" acquit if they have a reasonable doubt of a defendant's guilt.

Cedarbaum told jurors that they may convict one defendant and acquit the other; that they may convict if they find that only one of the statements at issue was false, and that they must unanimously agree on all aspects of every charge.

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