New York, NY, Oct. 6--Homemaking entrepreneur Martha Stewart has asked a federal judge to dismiss the obstruction and securities-fraud charges against her.
Stewart's lawyers filed the motions to dismiss Monday in Manhattan federal court, according to an executive summary posted on a Web site devoted to her defense, marthatalks.com.
The government investigated Martha Stewart for seventeen months to determine whether she committed insider trading. According to the summary of the motions, filed by her lawyers Robert Morvillo and John Tigue, "she did not, and the indictment does not even claim that she did."
The motions also seek to strike "inflammatory and irrelevant" language from the indictment because it "insinuates that Martha Stewart committed insider trading when there is no insider trading charge in the indictment," according to the executive summary of the 137-page court filing.
Motions--or requests to the court--to dismiss certain aspects of a case are routinely made by criminal defendants. In Stewart's case, prosecutors from the Manhattan U.S. attorney's office must respond to the requests by Nov. 5; U.S. District Judge Miriam Goldman Cedarbaum has already scheduled oral arguments for Nov. 18.
Stewart, the founder and former chief executive of Martha Stewart Living Omnimedia was indicted in June in connection with her sale of ImClone Systems, Inc. shares in December 2001. The sale occurred shortly before bad news about ImClone's cancer drug Erbitux caused ImClone's stock price to plummet.
Stewart wasn't indicted on insider trading charges but instead was charged with interfering with the inquiry that sought to determine if she sold the stock based on a tip that ImClone founder Sam Waksal and his family were unloading their holdings. Her former broker, Peter Bacanovic, also was indicted.
Prosecutors say Stewart defrauded investors in her own company through a series of false statements that they allege were designed to curb the losses in her company's stock. The securities-fraud charge, outlined in count nine of the indictment, is "unprecedented in the seventy-year history of the federal securities laws," her lawyers claim in the executive summary.
The charge "seeks to criminalize Ms. Stewart's public declarations that she had not engaged in insider trading in making a personal stock sale," her lawyers said in the summary. "It violates the First Amendment, the Due Process Clause, and the securities statute itself."
The securities-fraud count is the most serious against Stewart, and carries a maximum prison term of ten years in prison plus a $1 million fine.
Stewart's lawyers said in the summary that the obstruction-of-justice charge should be dismissed because none of Stewart's statements could have hindered a related Securities and Exchange Commission investigation. The SEC in June filed civil insider trading charges against Stewart. Stewart is scheduled to go to trial on the criminal charges Jan. 12.
