Martha Stewart's defense team set for jury selection

By Allan Drury
(Westchester, N.Y.) Journal News

Martha Stewart will stride into a lower Manhattan courtroom Tuesday to watch lawyers select the people who will determine whether she keeps her freedom, her carefully cultivated reputation and a chunk of her wealth.

Stewart's high-priced legal team and federal prosecutors will pepper dozens of prospective jurors with questions about their attitudes toward corporate corruption, assertive women, the government and numerous other topics.

They'll whittle the pool of prospective jurors down to 12 men and women who will determine whether Stewart is guilty of obstructing the investigation into her Dec. 27, 2001, sale of ImClone Systems Inc. stock. Stewart also faces a securities fraud charge.

Legal experts said Stewart's jury consultants and lawyers, led by famed trial attorney Robert Morvillo, have almost certainly conducted public opinion polling to learn what themes would play well with a jury and which demographic groups might be most sympathetic to her story.

Stewart, 62, will share the defense table with Peter Bacanovic, who was her broker at Merrill Lynch & Co., and his team.

Prosecutors say Stewart sold 3,928 shares of the drug company for $228,000 because Bacanovic's assistant, Douglas Faneuil, told her that ImClone chief executive Samuel Waksal was selling shares. Stewart's sale came a day before the U.S. Food and Drug Administration turned down ImClone's request for permission to market Erbitux, a cancer drug.

Stewart, who quit as chairman and chief executive of Martha Stewart Living Omnimedia Inc. after her indictment, has maintained that she had instructed Bacanovic to sell her shares if the price dropped below $60.

But some legal experts believe that prosecutors may have a tough time convicting Stewart of obstructing the insider trading investigation when they did not charge her with insider trading.

Jurors could think prosecutors charged Stewart with obstruction because they failed to build an insider trading case, said Joel Androphy, a Houston lawyer who defends people charged with white-collar crimes.

"It's like they're saying, 'We couldn't get her on what she's accused of doing so we went into our playbook of crimes and came up with something new,' " he said.

Prosecutors, led by Assistant U.S. Attorney Karen Patton Seymour, may try to get Bacanovic to "flip" — or testify against Stewart in return for leniency — if they see their case crumbling, Androphy said.

That could force a mistrial in the case against Stewart and give prosecutors a chance to start the case over, he said.

But Randall Eliason, a former federal prosecutor who specialized in fraud cases, said he believes that the government will be able to show that Bacanovic and Stewart sought to hide the reasons for her ImClone sale.

He said prosecutors will present "a mountain of conduct to the jury" and say, "Look, there is only one logical explanation for this: They were trading for an improper purpose, they knew it, and when the heat got turned up they tried to cover it up."

"It's a Watergate type offense," said Eliason, an adjunct law professor at American University in Washington. "The cover-up is worse than the crime."

Faneuil pleaded guilty in October 2002 to a charge of lying about Stewart's stock sale and is cooperating with prosecutors.

Faneuil told investigators Bacanovic lavished him with bonuses, extra vacation time and an airline ticket when he agreed to lie to the FBI and U.S. Securities and Exchange Commission about the stock sale. He is expected to testify that Stewart did not have a pre-arranged agreement to sell her stock when it hit $60.

Legal experts appear near unanimous in agreeing that the government will have trouble making the securities fraud charge stick. Prosecutors alleged that by publicly proclaiming her innocence, Stewart was trying to prop up the stock price of her own company.

"The problem is the stock price went down," said Paul Summit, a former assistant U.S. attorney in Manhattan and now a defense lawyer in Boston. "How's the jury going to understand that?"

"You need one juror to hang a criminal jury and there's a good chance that some juror is going to think to himself: 'Wait a minute. I'm an American citizen, she's an American citizen. I've got a right to say I'm innocent, she's got a right to say she's innocent.' "

Summit said the securities fraud charge could hurt the government's chances of getting convictions on the other charges.