It’s been tough going for the defense attorneys in the stock fraud trial of Westport’s Martha Stewart, but today the judge gave them a win.
The ruling by U.S. District Judge Miriam Goldman Cedaraum dealt a blow to the government’s effort to prove Stewart committed securities fraud, the most serious count against her.
Cedarbaum blocked any expert testimony on whether investors would have considered Stewart’s public statements about her ImClone Systems sale important.
The securities fraud count accuses Stewart of propping up the stock price of her own company, Martha Stewart Living Omnimedia, by claiming in 2002 that her ImClone sale was proper and that she was cooperating with authorities.
Conviction on the securities fraud count carries a 10-year prison term. Each of the other four counts against Stewart carries five years. Cedarbaum granted a motion by Stewart to block expert testimony on the “materiality” of Stewart’s statements in 2002.
The ruling blocks testimony on “whether a reasonable investor would have considered the statements important in making an investment decision,” the judge said.
Cedarbaum ruled as the 10th day of testimony got under way at the trial of Stewart and ex-stockbroker Peter Bacanovic.
They are accused of lying to investigators about why Stewart sold 3,928 shares of ImClone on Dec. 27, 2001.
The pair claim they had a pre-existing understanding to sell the stock when it fell to $60 per share. But the government says Stewart was tipped that ImClone CEO Sam Waksal was trying to dump his own shares.
ImClone shares tumbled after the government announced the next day that it was rejecting the company’s application for approval of the cancer drug Erbitux.
The Food and Drug Administration finally approved the drug Thursday, sending ImClone shares sharply higher in early Friday trading.
Stewart’s lawyers spent this morning attacking the credibility of an FBI special agent whose notes are the only government record of Stewart’s two interviews with investigators in 2002.
One of the charges against Stewart is that she lied when she said in one of the interviews that she did not recall whether her office kept a log of a message left by Bacanovic on the day of the stock sale.
But FBI special agent Catherine Farmer testified today she had no notes of Stewart specifically saying she did not remember such a log. Farmer apparently wrote only in a report she prepared after the interview that Stewart said she could not recall.
“And you were the only person taking notes for the United States government that day, right?” Stewart lawyer John Tigue asked.
“Yes,” Farmer replied.
Stewart’s assistant has testified Stewart personally altered the log of the Bacanovic message, then ordered that it be restored.
Prosecutors expect to end their side of the trial by next Thursday. Robert Morvillo, one of Stewart’s lawyers, said the defense team will have an estimate of the length of their case next week. The trial resumes on Tuesday.
Good for the Judge. This Judge would earn even more respect if she allows the DEFENSE to present their strategy in the way Mr. Movillo sees fit as the top Securities attorney in this country. Also I am still waiting for the prosecutors to be tried and convicted for Obstruction of Justice by hiding documents from the Defense that could have been used in the Defense’s opening arguments to the Jury. I am waiting for Fenuel to be tried and convicted for his heavy use of drugs thus blocking any memory of Martha Stewart facts. Let’s go after Robin Byrd and leave Martha and her Mom alone. They are making a beautiful world for us Americans. Martha when this case ends lets take you WORLDWIDE with your American Dream success. ALL of EUROPE now wants your TV programs etc! You are in a better position NOW than even before!!! LOVE YOU LOVE YOU LOVE YOU. Barbara T., Wash. Sq. Village, NYC
It seems to me that the government has caused significantly more harm to Martha Stewart stockholders than Martha’s own proclamation of innocence. Furthermore, the potential harm to KMart may be even greater. I say let’s get rid of government we-can’t-find-a-real-crime prosecutors and set Martha free!