Stewart seeks dismissal of two charges
By Erin McClam
Associated Press
NEW YORK — Martha Stewart asked a federal judge yesterday to toss out part of the stock-trading indictment against her and said the government case violates her First Amendment rights.
Stewart, in papers filed in Manhattan federal court, asked the judge to dismiss charges of securities fraud and obstruction of justice — two of the five counts against the style maven.
The indictment accuses Stewart of selling shares of ImClone Systems Inc. stock on Dec. 27, 2001, because she had been illegally tipped that the family of ImClone founder Sam Waksal was planning to sell shares, and then lying about it.
The sale came just before ImClone stock plummeted on a negative government report about the company's cancer drug Erbitux. Stewart and stockbroker Peter Bacanovic, who was indicted with her June 4, have pleaded not guilty.
The securities fraud count accuses Stewart of deliberately deceiving shareholders in her company, Martha Stewart Living Omnimedia, when she declared in 2002 that she was innocent and was cooperating with investigators.
"This charge is unprecedented in the 70-year history of the federal securities laws," Stewart's lawyers, Robert Morvillo and John Tigue, said in a statement.
Her lawyers say the count should be dismissed because it violates her constitutional rights and the American legal principle that defendants are innocent until proven guilty.
"By criminalizing speech by a woman defending her reputation, speaking out against false congressional allegations and asserting her innocence, it violates the First Amendment," said the 122-page filing.
The lawyers said in court papers the obstruction count should be dismissed because none of Stewart's statements to investigators could have hindered an investigation by regulators into her stock sale.
While securities regulators filed a civil suit charging Stewart with insider trading, the government did not include the charge in its indictment. The charge is much more difficult to prove in a criminal case.
The five federal counts in the indictment carry a total sentence of 30 years in prison and fines of $2 million. The two counts Stewart wants dismissed account for 15 years and $1.25 million.
Under federal sentencing guidelines, Stewart would likely face far less time in prison if convicted.
The government has until Nov. 5 to respond to the filing. A spokesman for federal prosecutors, Michael Kulstad, said he had no comment.
Arguments before U.S. District Judge Miriam Goldman Cedarbaum are set for Nov. 18.
Stewart and Bacanovic are to go to trial Jan. 12.
