New York, NY, Jan. 19--Some two years after her controversial sale of shares in ImClone, Martha Stewart is poised to have her day in court when her trial begins this week in a Manhattan federal court on obstruction and other charges.
But will Stewart take the stand and testify in her own defense? Legal experts are split.
"I would be shocked if she didn't testify," said attorney David Marder, of law firm of Robins, Kaplan, Miller & Ciresi. "The jury wants to hear her say 'I'm innocent' because she's been so vocal protesting outside the courtroom."
Stewart has pleaded not guilty to charges including obstruction of justice, conspiracy and lying to prosecutors in connection with the share sale. She is not charged with insider trading.
It's alleged the former chairwoman of Martha Stewart Living Omnimedia received inside information when she sold the shares on Dec. 27, 2001. ImClone shares plummeted the next day when the Food & Drug Administration announced it had rejected the company's cancer drug application.
Stewart saved $51,222 when she sold the shares.
Outside the courtroom, Stewart has been outspoken about her innocence. She claims she had a stop-loss order with her Merrill Lynch broker, Peter Bacanovic, to sell the shares if they fell below $60.
In November, Stewart appeared on the television program 20/20 and told Barbara Walters that she had "done nothing wrong." She also has a web site, www.marthatalks.com, where she frequently attempts to exonerate herself. That site will be updated with transcripts and other information throughout the court proceeding.
Some think that Stewart's lead defense attorney, Robert Morvillo, will make a decision about her testimony once the government has concluded its case.
"To a certain extent, Stewart has already gotten her story out there," said Jan Handzlick, a former federal prosecutor and a partner in Kirkland & Ellis' Los Angeles office. "One might ask whether she needs to take the stand."
Everyone expects a media circus when jury selection begins this week. Prospective jurors will convene Tuesday and attorneys for the government and Stewart will conduct voir dire, a process where they individually question jurors in court.
Judge Miriam Cedarbaum, who is overseeing the trial, is not allowing the press to hear the questions. Instead, questioning will take place in the judge's robbing room. On the following day, transcripts--where personal names and information are blocked out--will be provided to the press.
The trial is expected to pit Stewart against Douglas Faneuil, Bacanovic's 28-year-old assistant and the government's star witness. Faneuil initially supported Stewart's version of the share sale, then recanted.
"Faneuil's testimony will be damaging and critical for prosecutors," said attorney Robert Heim, of law firm Meyers & Heim. "He is the one who has the inside knowledge about what Bacanovic was doing during those relevant times."
Faneuil has pleaded guilty to a misdemeanor charge for accepting money or other valuables for not informing investigators regarding inside information allegedly given to Stewart.
Federal prosecutors claim that Faneuil told Stewart on Dec. 27, 2001 that Sam Waksal, then head of ImClone, was trying to sell his shares. In June, Waksal pleaded guilty to insider trading and was sentenced to 87 months in prison.
The government alleges that Bacanovic ordered Faneuil to give Stewart the information after he was unable to find her. Stewart claims she spoke to Bacanovic on Dec. 27. He told her ImClone's stock had fallen below $60, triggering the stop/loss order, according to court documents.
The defense will attempt to "dirty up," and paint the former Merrill assistant as too far down the chain of command to know what actually transpired between Stewart and Bacanovic. They will also focus on the fact that Faneuil changed his story and has a deal with prosecutors, legal experts said.
