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Tuesday, June 03, 2003

Martha Stewart Indictment Expected Soon;

Martha Stewart Indictment Expected Soon; Her Attorney Says She Will Plead Innocent and Go to Trial
Martha Stewart is expecting to be indicted soon by a federal grand jury in connection with her insider-trading case, her company said today.

Her chief attorney, Robert Morvillo, later in the day issued a brief statement saying: “If Martha Stewart is indicted, she intends to declare her innocence and proceed to trial,” according to the AP.

CNBC quoted sources as saying the indictment would come Wednesday and that Stewart would be arrested on the charges. It said it is not known whether agents would arrest her at her home or whether she would arrange to surrender to them.

All was quiet around the Stewart home on Turkey Hill Road South this afternoon. But there was a burly man sitting in a red SUV parked facing outward in her driveway outside her gate. He carefully eyed passing cars.

CNBC also said she would step down as head of the company following the indictment.

A statement issued this morning by Martha Stewart Living Omnimedia said the company was preparing for all contingencies.

The brief statement said: “Martha Stewart Living Omnimedia, Inc. (MSO) has been informed by Martha Stewart’s attorneys that the United States Attorney’s Office for the Southern District of New York has informed them that Ms. Stewart is a target of a criminal investigation and that the United States Attorney’s Office intends to request the grand jury to return an indictment against her in the near future.

“Additionally, MSO has been informed that a civil complaint by the Securities and Exchange Commission is also expected.

“MSO and its board of directors have been planning for a number of possible contingencies, are evaluating the current situation and will take action as appropriate.”

Federal investigators had been considering bringing criminal and civil securities-fraud charges against Stewart for her sale of ImClone Systems stock in December 2001, just days before an application for review of its promising cancer drug was rejected.

There were reports that her attorneys and investigators were trying to work out a plea agreement, but today’s statement indicated that the talks failed.

The announcement came hours before the company held its annual meeting in New York. Stewart did not attend the meeting but made a statement to shareholders via videotape saying she regretted she could not be there.

Arthur Martinez, an MSO board member, later told reporters that Stewart had taped the message this morning and in it expressed “her gratitude for support shown to her by her shareholder family.”

He said during the meeting a shareholder had asked whether Stewart had resigned as head of the company and was told it was “categorically untrue.”

Martinez said the company was in good shape, adding that he was confident about its future. He would not answer any questions from reporters.

The meeting lasted about 45 minutes and Stewart, chairman and CEO, was among those re-elected to the board, attendees said.

CNBC said Stewart would be indicted on charges of obstruction of justice and making false statements, according to its sources. The network said she would not be indicted on federal insider trading charges but would likely face civil insider trading penalties.

CNBC said her trial could be more than a year away, posing major uncertainties for her company in the interim.

Stewart, 61, has denied any wrongdoing in the ImClone sale. She said she had an arrangement with her broker for the automatic sale of the stock when it dropped to a certain price.



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