Stewart lied to prop up her firm, prosecutors say
NEW YORK -- Pointing to fluctuations on a stock graph, prosecutors tried to prove yesterday that Martha Stewart attempted to prop up the value of her own company by lying to investors about why she sold her ImClone Systems stock.
Jurors saw a bright red chart of Martha Stewart Living Omnimedia stock that showed brief spikes in the price after the domestic entrepreneur issued two statements in June 2002, denying wrongdoing in the ImClone investigation.
In both statements, Stewart denied receiving advance word on Dec. 27, 2001, just before she dumped ImClone stock, that the government would decline to review ImClone's cancer-fighting drug. The government never charged her with insider trading.
But Stewart also insisted that she and her stockbroker had a prior deal to sell ImClone when it fell below $60. The government contends that agreement never happened, and that Stewart was tipped that ImClone chief executive Samuel Waksal was trying to sell. Prosecutors contend that Stewart, trying to protect the hundreds of millions of dollars she had in her own company's stock, was misleading investors. The charge, securities fraud, is the most serious of the five against her.
US District Judge Miriam Goldman Cedarbaum has called the charge "novel," and Stewart lawyer Robert Morvillo indicated yesterday that he would ask her to dismiss the count when the government rests its case this week.
Stewart and broker Peter Bacanovic are charged with other crimes, including conspiracy and obstruction of justice, related to Stewart's explanation for her ImClone sale.
The government and defense spent much of the day highlighting for jurors segments of news articles that appeared after word of the ImClone probe broke in June 2002.
The judge repeatedly warned lawyers and the jury that the articles were not evidence.
"The fact that you hear what the articles say does not mean that any of those statements are true," Cedarbaum told jurors. "It just means that was the publicity at the time."
Morvillo pointed to news accounts speculating that Stewart sold the stock on insider information and was romantically linked to Waksal, which Stewart has denied. Waksal is serving a seven-year prison sentence for insider trading.
In one account, a Minnesota Public Radio anchor says: "It looks like Martha Stewart may have kissed and sold."
Stewart's lawyers also suggested any boost the stock price received from her statements, on June 12 and June 18, 2002, was short-lived. Martha Stewart Living Omnimedia dropped from $19.01 on June 6 to below $15 on June 19.
Prosecutors said they expect to rest their case late today or tomorrow.
