New York, NY, Jan. 20--Martha Stewart pleaded not guilty on Tuesday to securities fraud charges that could land her in jail, while prospective jurors were quizzed behind closed doors by a judge worried that their privacy not be violated by the high-profile case.
"Not guilty," Stewart responded softly as a federal judge read each of the five counts against her. She looked calm and composed as she turned to glance at reporters who filled the courtroom.
Charges that Stewart and her former Merrill Lynch & Co. broker Peter Bacanovic obstructed an investigation into her sale of ImClone Systems Inc. stock have grabbed the public's attention and generated a media frenzy. The judge in the case described the press interest as "extraordinary."
One after another, more than 30 potential jurors were called into a private room to be questioned by U.S. District Judge Miriam Goldman Cedarbaum. Reporters were not allowed to attend the sessions, known as voir dire.
Some jurors sat through the early evening hours--reading books, making small talk or dozing--while waiting to be taken back for questioning. Stewart, who was present during the voir dire, emerged shortly before 6:30 p.m. EST, declined comment and was escorted to a waiting black sedan in front of the federal courthouse.
A small number of fans braved the cold to show their support for Stewart, whose trial is expected to last six weeks. Among them was John Small, the editor of the SaveMartha.com Web site who appeared in a chef's hat and apron that proclaimed: "She didn't do the crime, but she sure can do the thyme!"
"I think Martha Stewart is on trial for being Martha Stewart," he said.
Inside, jury selection began shortly after Stewart and Bacanovic pleaded not guilty to charges contained in a new indictment issued earlier this month.
Stewart, who built her catering company into Martha Stewart Living Omnimedia, stood when introduced by the judge and nodded her head slightly toward the potential panelists.
Cedarbaum told the jurors she expected opening statements in the case to begin next week, suggesting it will take several more days to find a jury for the high-profile case.
Stewart's sale of stock in ImClone, a company founded by her friend Sam Waksal, came just before ImClone shares tumbled on news that health regulators had rejected a key drug application by the company.
While not indicted for insider trading, Stewart is accused of lying to investigators, obstructing justice and securities fraud. If convicted of the most serious charge, securities fraud, Stewart faces up to ten years in prison.
Results from a Reuters/DecisionQuest poll released on Monday night showed that only 27% of Americans would find Stewart guilty if they served on her jury.
"She has a fighting chance," said Philip Anthony, chief executive of DecisionQuest, a leading trial consulting firm, owned by Bowne & Co.
The key question that jurors will have to decide is whether Stewart had put in a so-called stop-loss order on ImClone. While Bacanovic jotted "+60" on a work sheet he used for Stewart's account, prosecutors charge that particular notation was made in a different ink than other markings on the page.
Bacanovic, they say, simply added that notation when investigators began to question the timing of the sale.
Phone records will also be used as evidence. Stewart changed her phone log, the government says, to read "Peter Bacanovic Re: ImClone" from the original Dec. 27 phone message that read "Peter Bacanovic thinks ImClone is going to start trading downward."
Stewart later changed the phone log back to its original message, they say.
Bacanovic's assistant, Douglas Faneuil, is also expected to be called as a witness to testify he informed Stewart that Waksal was dumping his shares.
