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Monday, December 29, 2003

Judge Blocks Government Bid for More Evidence Against Martha Stewart

With the criminal trial of Westports Martha Stewart set to begin within weeks, a judge today rejected government efforts to collect more evidence in the securities fraud case.
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U.S. District Judge Miriam Goldman Cedarbaum said attorney-client privilege protects some of the documents sought by federal prosecutors in Manhattan while other material is not relevant to the charges.

She did permit the government to obtain billing records from a law firm hired by Stewart.

Prosecutors had sought 11 categories of documents from a law firm that represents Stewart and from co-defendant Peter Bacanovic.

Stewart, whose criminal trial begins in mid-January, is accused of lying to investigators about why she unloaded ImClone Systems stock on Dec. 27, 2001, just before it plunged on a negative government review of the company’s cancer drug.

Stewart and Bacanovic, her stockbroker, are charged with conspiracy to “willfully and knowingly” obstruct justice and make false statements in the stock trading scandal.

Stewart, 62, has said she had a standing order with Bacanovic to sell the stock when it fell to $60. Both pleaded innocent.

In a written ruling, the judge said prosecutors failed to adequately prove they were entitled to most of the evidence they sought.

The judge noted that most of the materials were protected from becoming evidence because they are the product of work conducted between attorneys and their clients in preparation for trial.

She said the filing of criminal charges in the case “does not provide the broad elimination of attorney-client privilege and work product protection that the government seeks.”

The judge said prosecutors needed to prove that confidential communications furthered criminal or fraudulent conduct for them to be allowed as evidence.

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Posted 12/29/03 at 11:45 PM  Permalink



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