New York, NY, Mar. 2--Telling careful lies but making careless mistakes, Martha Stewart and her stockbroker were bent on keeping investigators from the truth about why the homemaking icon sold stock, a federal prosecutor said Monday.
In a methodical three-hour closing argument, prosecutor Michael Schachter told jurors that Ms. Stewart and broker Peter Bacanovic believed they would never be caught in their deception.
"But Martha Stewart and Peter Bacanovic were wrong," Mr. Schachter said. "They left behind a trail of evidence exposing the truth about Martha Stewart's sale and exposing the lies they would tell."
Ms. Stewart and Mr. Bacanovic face nine federal counts, all related to the government's contention that they lied about why Ms. Stewart sold about $225,000 worth of stock in ImClone Systems on Dec. 27, 2001.
Prosecutors say Mr. Bacanovic sent word to Ms. Stewart that ImClone Chief Executive Sam Waksal and his family were frantically dumping their own shares. The stock fell sharply when the government declined the next day to review an ImClone cancer drug.
Mr. Schachter spent much of his argument trying to dismantle the centerpiece of the pair's defense -- that they had struck a deal before Dec. 27 to sell Ms. Stewart's shares when ImClone stock dropped below $60.
The prosecutor listed seven reasons jurors would know the $60 agreement is a lie, calling it "phony," "silly" and "simply an after-the-fact cover story." Among the reasons: The pair have no record of having made the plan, other than a worksheet produced by Bacanovic with the notation "@60" next to ImClone stock -- in a different ink from other marks on the page.
Mr. Schachter also listed inconsistencies -- mistakes, he called them -- in the stories Ms. Stewart and Mr. Bacanovic told federal investigators looking into the ImClone trade in early 2002.
For example, Mr. Bacanovic claimed they had the $60 conversation on Dec. 20, 2001. But Ms. Stewart placed it in late October or early November. And Mr. Schachter took jurors back to Jan. 31, 2002, four days before Ms. Stewart was first questioned about ImClone, when she allegedly tampered with a log of a message Mr. Bacanovic had left her the day she sold.
Ms. Stewart quickly ordered her assistant to restore the message to its original wording, according to the assistant's testimony. But the fact that she altered it at all is evidence she was worried about why she had sold the stock, Mr. Schachter said.
"This event is devastating evidence that she committed the crimes that she's charged with," he said.
A lawyer for Mr. Bacanovic presented his
closing argument later Monday, comparing the government's case to a house of cards. "When you push on it, when you look at it closely, it collapses," Richard Strassberg said. "Because it has no substance. It has no foundation."
He focused on the credibility of Mr. Bacanovic's young Merrill Lynch & Co. assistant, Douglas Faneuil, who he said had a motive to "shade the truth" when he testified about passing a tip about the Waksals from his boss to Ms. Stewart. Mr. Faneuil signed a cooperation agreement with the government in June 2002, when he first implicated Mr. Bacanovic and Ms. Stewart.
Ms. Stewart's lead lawyer was to make his case Tuesday morning. The jury could begin deliberating as early as Wednesday.
Last week, U.S. District Judge Miriam Goldman Cedarbaum dismissed a count of securities fraud, which accused Ms. Stewart of misleading investors in her own media company when she claimed publicly that she sold ImClone because of the $60 deal.
The judge said the government had failed to provide enough evidence of criminal intent by Ms. Stewart, who prosecutors said was trying at the time to protect her enormous wealth in Martha Stewart Living Omnimedia.
The remaining counts against Ms. Stewart carry up to 20 years in prison, although federal sentencing guidelines could mean a sentence of just a year or so if she is convicted.
