Stewart convicted on all counts

Mogul guilty of lying, conspiracy, obstruction

`No one's above the law'

Charges relate to probe of sale of ImClone stock

March 06, 2004|By Jean Marbella | Jean Marbella,SUN NATIONAL STAFF

NEW YORK - Martha Stewart, whose multimillion-dollar empire is based on her impeccable skills on both the homemaking and business-building fronts, was found guilty yesterday of making an uncharacteristic mess of things: lying, conspiring and obstructing a federal investigation of her suspiciously timed sale of stock in a biotech company.

As the verdict was read - guilty on all four counts - Stewart maintained the stony expression she wore throughout much of the six-week trial, as her daughter, Alexis, crouched over and buried her face in her hands. Stewart's co-defendant, former Merrill Lynch stockbroker Peter Bacanovic, also was found guilty on four counts but exonerated on a charge of making a false document.

Stewart, who vowed to appeal the verdict, could be sentenced to 20 years in prison, although she is expected to receive no more than one to three years at her sentencing, scheduled for June 17.

Yesterday's verdict concluded a closely watched trial that cast a harsh spotlight on Stewart, a polarizing figure whose highly successful television shows, magazines, Web site and retail lines have drawn seemingly equal parts admiration and antipathy.

Stewart was convicted of concealing the true reason for selling her shares on Dec. 27, 2001, in ImClone Systems - a company owned by her friend, Sam Waksal, who was convicted of insider trading of his own company's stock. Jurors apparently did not believe her statements to federal investigators that she had a pre-existing agreement with Bacanovic to sell the stock when it fell to $60 a share.

Instead, their verdict affirmed the version told by the prosecution's star witness, Bacanovic's former assistant, Douglas Faneuil. He said that he gave Stewart an inside tip that Waksal and his family were trying to dump their shares that morning and that she followed suit.

Although Stewart was not charged with insider trading - she did not know, as Waksal did, that the Food and Drug Administration was about to announce negative news for ImClone that would send the company's stock price plummeting - the sense that yet another rich executive was benefiting from information that the public didn't have seemed to play on jurors' minds.

"Maybe [the verdict is] a victory for little guys who lose money in the market because of these kinds of transactions," said Chappell Hartridge, 47, the only juror who spoke to the news media. "No one's above the law."

In a statement quickly released on a Web site created to tell her side of the story over the course of the investigation and trial, Stewart vowed to appeal and "continue to fight" to clear her name.

"I am obviously distressed by the jury's verdict but I continue to take comfort in knowing that I have the confidence and enduring support of my family and friends," she wrote on

Wearing a fur scarf around her neck and carrying her now-famous Hermes Birkin handbag, Stewart left the federal courthouse without comment after the verdict. A crowd of several hundred people, including passers-by and Stewart fans, had gathered. Some began chanting, "We love Martha."

Yesterday morning, Stewart looked more drawn when she arrived in the courtroom than she had on other days, and several of the defense attorneys were bleary-eyed after spending much of the night researching what turned out to be the final question from the jury before it reached its verdict:

When considering the perjury count against Bacanovic, could they consider the testimony of Stewart's assistant about her conversation with him advising that the stock price was falling and the telephone log that she maintained of the talk as two separate pieces of evidence? (Bacanovic had told investigators that he merely relayed ImClone's price; the perjury law requires two pieces of evidence to find a defendant guilty.)

Government prosecutors looked chipper after the judge said "yes."

Shortly after 2 p.m., as the courtroom was filling up after the lunch break, the buzzing began. Court officials were heard talking about "big guns" showing up - and David Kelley, the U.S. attorney for the Southern District of New York, slipped into one of the benches.

About 3 p.m., U.S. District Judge Miriam Goldman Cedarbaum confirmed the whispers: "We have received a verdict, and we should get the jury."

The eight women and four men filed in, most not looking at the defendants, who were staring straight ahead. As Cedarbaum read off the multiple "guilty" pronouncements, she had to call for order as reporters raced out of the room to call in the news. In the hubbub, she forgot to read one count and had to be reminded of it by lead prosecutor Karen Patton Seymour.

"It's very important to us to protect the integrity of the market system," Kelley said outside the courtroom, flanked by prosecutors Seymour and Michael Schachter. "The victims in this case are the entire American public. If you are John Q. Citizen or Martha Stewart or Peter Bacanovic, we're going to go after you."

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