| Stewart convicted on all charges |
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| Jury finds style maven, ex-broker guilty of obstructing justice and lying to investigators. |
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NEW YORK (CNN/Money) - A jury found Martha Stewart guilty Friday on all four counts of obstructing justice and lying to investigators about a well-timed stock sale, and the former stockbroker turned style-setter could face years in jail. Her ex-broker, Peter Bacanovic, was found guilty on four of the five charges against him. Each of them faces up to five years in prison and $250,000 in fines for each count. Sentencing is set for June 17.
Neither defendant appeared to show any emotion as the verdict was read, while the lead prosecutor seemed to be holding back tears of joy. "The word is -- beware -- and don't engage in this type of conduct because it will not be tolerated," David Kelley, U.S. attorney for the Southern District of New York, said outside the courthouse. One of the jurors said, "This is a victory for the little guys. No one is above the law." About an hour after the verdict was read, Stewart -- wearing a fur around her neck and a black overcoat and carrying a brown leather bag -- strode poker-faced down the stairs of the courthouse, accompanied by her lawyers, and left. She did not respond to questions shouted at her by reporters. As she came within sight of a crowd in the street, some people began chanting, "We want Martha!" Eyewitnesses said Stewart's daughter Alexis was crying. In a statement posted on her Web site, Stewart said, "Dear Friends: I am obviously distressed by the jury's verdict but I take comfort in knowing that I have done nothing wrong and that I have the enduring support of my family and friends. "I believe in the fairness of the judicial system and remain confident that I will ultimately prevail." (For more on Stewart's statement, click here). Stewart's lead attorney said his client would appeal. "It was a difficult process for all of us," Robert Morvillo said outside the courthouse, adding that he was disappointed in the verdict but confident about an appeal. A lawyer for Bacanovic said he also will appeal. The ex-Merrill Lynch broker made no comment as he left the courthouse not long after Stewart. Neither Stewart, 62, nor Bacanovic testified at the trial, which began Jan. 27 and ran for five weeks. Attorneys for Bacanovic called just a handful of witnesses while Morvillo called only one witness. "Unless this is somehow undone on appeal, she's a felon and she's going to prison," legal analyst Kendall Coffey said. "This was a total rout," said CNN legal analyst Jeffrey Toobin, who sat through the trial. "The story she told investigators after she made the stock trade simply didn't add up." The panel of eight women and four men began deliberating Wednesday on whether Stewart and Bacanovic, 41, obstructed justice and lied to the government about her sale of ImClone Systems Inc. stock in December 2001. The conviction came exactly a week after U.S. District Judge Miriam Goldman Cedarbaum threw out the most serious charge against Stewart -- securities fraud -- which carried a maximum penalty of 10 years in prison and a $1 million fine. The charge -- which the judge had called "novel" during the trial -- accused Stewart of using her own statements that she was innocent as a ploy to mislead investors in her company, Martha Stewart Living Omnimedia. Martha Stewart Living (MSO: Research, Estimates) stock rallied early Friday on hopes for a favorable verdict but then plunged 22.6 percent afterward on the New York Stock Exchange, where Stewart once served as a director. The company said it would survive but analysts said the verdict was a serious threat. Stewart quit as chairman and CEO of Martha Stewart Living after she was indicted last summer but stayed on as chief creative officer. (For more on the company's outlook, click here). Despite the intense publicity surrounding the trial -- the most closely watched of the recent corporate fraud cases -- the stock trade at its center involved a relatively small amount of money. Stewart avoided a loss of about $51,000 by selling nearly 4,000 shares of ImClone stock on Dec. 27, 2001, rather than the next trading day, when the stock tumbled after regulators rejected the company's application for a key cancer drug. By contrast, Dennis Kozlowski and Mark Swartz are charged with looting Tyco of $600 million, John Rigas and his sons are charged with stealing millions from Adelphia, the cable company Rigas founded, and the collapse of Enron and WorldCom led to billions of dollars in losses for investors and costs thousands their jobs. Ironically, Erbitux, the ImClone drug at the heart of the scandal, was approved by regulators last month to treat certain forms of cancer. Prosecutors argued that Stewart sold her ImClone stock only after Bacanovic told his assistant to tip her off that ImClone founder Sam Waksal was trying to sell. Stewart and Bacanovic had told investigators they had an arrangement to sell once the stock fell to $60. Bacanovic was broker to both Stewart and Waksal, who is serving a seven-year prison term after pleading guilty to securities fraud over his family's sale of ImClone shares. The government's star witness in the case, Douglas Faneuil, Bacanovic's former assistant, testified that his boss ordered him to pass the inside tip about ImClone to Stewart. Mark Powers, Faneuil's attorney, said his client "came forward because his conscience told him it was the right thing to do. He was solely a witness telling the truth." Stewart told CNN's Larry King Live last December that she was not prepared for the trial. "No one is ever prepared for such a thing," she said. "And no one is ever strong enough for such a thing. No one is -- you know, you have no idea how much worry and sadness and grief it causes." |
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