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Experts say Martha Stewart faces tough appeal
Reuters, 03.09.04, 4:58 PM ET

By Gail Appleson

NEW YORK, March 9 (Reuters) - Martha Stewart will have a tough time convincing an appeals court to throw out her convictions, raising the question: how much time might the woman who made millions giving advice on gracious living have to serve behind bars, lawyers said on Tuesday.

Legal experts said the best-case scenario -- the dismissal of the guilty verdicts handed down on Friday -- will be extremely difficult for defense lawyers to win and that Stewart's trial poses a particularly high hurdle because of the accuracy of the judge's rulings.

Ivan Fisher, a prominent Manhattan defense attorney, said that appeals court reversals are typically based on errors made by the trial judge.

"I don't think she made any," he said of U.S. District Judge Miriam Goldman Cedarbaum, who oversaw Stewart's seven-week trial for lying about a suspicious stock trade.

Stewart, 62, was convicted on Friday of conspiring with her former Merrill Lynch stock broker to hide the reason behind her suspicious sale of shares in the biotech company ImClone Systems Inc. (nasdaq: IMCL - news - people) on Dec. 27, 2001. She was found guilty of one count of conspiracy, two counts of making false statements and one count of obstruction of agency proceedings.

Experts said Stewart could be sentenced to between 10 months and two years for her crimes.

Although Stewart was convicted of lying to investigators about the circumstances of the stock sale, she was not charged with insider trading. Because of this, the judge barred the defense team from arguing that no illegal trading took place.

GROUNDS FOR APPEAL?

Andrew Schapiro, a white collar defense lawyer who specializes in appellate work at Mayer, Brown, Rowe & Maw, said this could give Stewart grounds for an appeal.

"Her lawyers certainly have their work cut out for them but they have one strong issue and maybe more," Schapiro said.

"They can be expected to argue that Judge Cedarbaum violated Martha Stewart's right to put on a complete defense by prohibiting her from putting on testimony or evidence about insider trading law."

But Joel Cohen, a lawyer at Greenberg Traurig, was doubtful.

"I'm not aware of any fundamental errors by the judge," he said. About the insider trading issue, he said, "It isn't what you do, it's the cover-up."

Stewart is scheduled to be sentenced on June 17, although that date could be delayed if lawyers contest key issues the judge will consider in setting the trendsetter's punishment.

The celebrity homemaker, who built a media empire out of a catering business, began that torturous process on Monday as she met with the probation department. That office will submit a report to Cedarbaum suggesting a sentencing range.

Legal experts predict that the range will most likely be between 10 to 16 months in prison. However, Fisher said it could be a higher level of 18 to 24 months if it is determined that Stewart substantially interfered with the ImClone probe.

Defense lawyers are expected to seek a downward departure of the suggested guidelines.

"A good argument will be that this was aberrant conduct," said Fisher. "She has led a spectacular life ... in the course of a lifetime, she has given much to society."

After sentencing, the next big question will be whether Stewart will remain free pending appeal.

Schapiro said for this to happen, the judge will have to find a "plausible" issue that the defense could win on appeal.

There is a good chance Stewart could temporarily remain free, said Cohen, because the U.S. Second Circuit Court of Appeals has traditionally taken a liberal view of the "plausible" issue standard in non-violent crime cases.

But even if Stewart is not confined while the case is pending before the Second Circuit, that freedom will most likely be short lived.

Cohen said that while it is possible Cedarbaum could sentence her to home confinement, his guess is that she might be given a maximum of 13 months.

"She will come out of a jail a very wealthy woman," he said. "She will survive. Even her professional career will survive."

Mar. 10, 2004. 01:00 AM

Martha shares continue to dive in wake of verdict
Founder's future still up in the air

Home diva may face tough appeal

NEW YORK—Martha Stewart's felony conviction rattled through her rapidly eroding business empire as shares of her namesake company kept falling, Viacom Inc. cancelled her syndicated television show and she quit the board of cosmetic giant Revlon Inc.

But the big question that remains is the future of the domestic diva's bread-and-butter job as a leader within the company that bears her name.

Martha Stewart Living Omnimedia Inc.'s board met Monday to discuss Stewart's future, according to a source close to the company who spoke on condition of anonymity. Company officials would not comment and it was unclear whether the board took any action.

Company officials did not return calls seeking comment yesterday.

Shares of Martha Stewart Living Omnimedia fell 35 cents (U.S.), or 3.5 per cent, to $9.55 yesterday, adding to a drop of 8 per cent Monday and nearly 23 per cent Friday after the verdict.

Stewart stepped down from her roles as chairman and chief executive after being indicted in June but remains a board member and chief creative officer. With her conviction, the U.S. government will likely press to have Stewart removed from the board.

Stewart was convicted Friday, along with stockbroker Peter Bacanovic, of lying about why she sold 3,298 shares of ImClone Systems Inc. stock on Dec. 27, 2001, just before it plunged because of a negative report from government regulators.

Stewart was convicted of conspiracy, making false statements and obstruction of justice. Bacanovic was convicted of conspiracy, false statements, obstruction and perjury — but cleared of falsifying a document. Both have said they will appeal.

Legal experts said the best-case scenario, the dismissal of the guilty verdicts handed down Friday, will be difficult for defence lawyers to win and Stewart's trial poses a particularly high hurdle because of the accuracy of the judge's rulings.

Ivan Fisher, a Manhattan defence lawyer, said appeals court reversals are typically based on errors made by the trial judge. "I don't think she made any," he said of U.S. District Judge Miriam Goldman Cedarbaum, who oversaw Stewart's seven-week trial.

Although Stewart was convicted of lying to investigators about the circumstances of the stock sale, she was not charged with insider trading. Because of this, the judge barred the defence team from arguing that no illegal trading took place.

Andrew Schapiro, a defence lawyer who specializes in appellate work at Mayer, Brown, Rowe & Maw, said this could give Stewart grounds to appeal. "Her lawyers certainly have their work cut out for them but they have one strong issue and maybe more," Schapiro said.

"They can be expected to argue that Judge Cedarbaum violated Martha Stewart's right to put on a complete defence by prohibiting her from putting on testimony or evidence about insider-trading law."

But Joel Cohen, a lawyer at Greenberg Traurig, was doubtful. "I'm not aware of any fundamental errors by the judge," he said. About the insider trading issue, he said, "It isn't what you do, it's the cover-up."

Both Stewart and Bacanovic are expected to get 10 to 16 months in prison when they are sentenced June 17.

However, Fisher said Stewart could draw a longer sentence of 18 to 24 months if it is determined she substantially interfered with the ImClone probe.

Defence lawyers are expected to seek a lighter sentence.

"A good argument will be that this was aberrant conduct," Fisher said. "She has led a spectacular life ... in the course of a lifetime, she has given much to society."

Cohen said that while it is possible Cedarbaum could sentence her to home confinement, his guess is that she might be given a maximum of 13 months.

"She will come out of a jail a very wealthy woman," he said. "She will survive. Even her professional career will survive."

FROM THE STAR'S WIRE SERVICES