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Martha Stewart Defense Rests in ImClone Trial

Posted on: Wednesday, 25 February 2004, 06:00 CST

Lawyers for Martha Stewart presented a defense of less than an hour Wednesday, calling a single witness to raise questions about what the homemaking icon was asked in her first interview with investigators.

Steven Pearl, a lawyer, testified about notes he took during the interview on Feb. 4, 2002 - a session in which the government claims Stewart told a series of lies about the day she sold ImClone Systems stock.

One accusation is that Stewart falsely claimed she did not know whether there was a record that stockbroker Peter Bacanovic had left her a message on Dec. 27, 2001, the day she sold.

But Pearl's scribbled notes show Stewart may have been responding instead to a question about what time Bacanovic called her that day.

Under cross-examination by prosecutors, Pearl admitted his notes were incomplete, and that there may have been a question about the message log that he did not write down.

Referring to his notes and a memo he prepared after the interview, Pearl said: "Neither one is a verbatim transcript."

There was no court reporter or tape recorder in the interview, and the government relied on the notes of an FBI agent who was present to charge Stewart with lying.

Lawyers for Bacanovic also rested their case Wednesday morning. They called five witnesses over three days.

The government claims Stewart sold her 3,928 ImClone shares because she was tipped that ImClone CEO Sam Waksal was frantically trying to sell his own. A negative report about an ImClone cancer drug soon sent the stock tumbling.

Stewart and Bacanovic claim they had made a plan before Stewart sold to get rid of the shares if ImClone's stock price fell below $60. Prosecutors say it was simply a cover story.

It remained unclear when U.S. District Judge Miriam Goldman Cedarbaum would schedule closing arguments, and when the jury would begin deliberating. Jurors are not expected to get the case until next week.

After both defense teams rested, prosecutors began putting on a brief rebuttal case. They called their ink expert, Larry Stewart of the U.S. Secret Service, back to the stand to testify about ink-testing methods.

Larry Stewart claims the defense used an unreliable machine to test the ink on a worksheet Bacanovic prepared for Martha Stewart's portfolio. The sheet contains the notation "(at)60" next to a listing for her ImClone stock.

One of the charges is that Bacanovic doctored the worksheet. The ink used for the "(at)60" mark is different from some other inks Bacanovic used to make notes on the page.

Cedarbaum has yet to rule on motions from both defendants urging her to dismiss the charges. She has indicated it is unlikely she will throw out all charges.

The judge has focused some of her attention in court on whether she should dismiss the securities-fraud charge against Stewart - which carries more prison time than any other charge in the case.

That count accuses Stewart of deceiving investors in her own company, Martha Stewart Living Omnimedia, by claiming in 2002 that she sold ImClone stock because of the $60 agreement.

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