Stewart is accused of staging a stock-tip cover-up with her former Merrill Lynch & Co. broker, Peter Bacanovic. Their fate will go into the hands of the jury later this week after closing statements by prosecutors and defense lawyers.
The jury of eight women and four men must determine if Stewart and Bacanovic lied to investigators looking into the celebrity businesswoman’s suspicious sale of ImClone Systems Inc. stock in December 2001.
Prosecutor Michael Schachter told the jury in his three-hour closing argument that Stewart opted to lie when she first was interviewed by investigators with the U.S. Attorney’s office and Securities and Exchange Commission.
“Martha Stewart and Peter Bacanovic had two options — tell the truth or decline to be interviewed,” Schachter said. “They chose an option the law does not allow — to lie, conceal and cover up.”
Stewart, wearing a pale blue tweed jacket, gray slacks, a white blouse and a string of pearls, watched the jury intently with a grim look on her face. She has shown little emotion throughout the closely watched six-week trial.
The 62-year-old Stewart faces one count of conspiracy, two counts of making false statements and one count of obstruction of agency proceedings. Each count carries a possible prison term of five years and a $250,000 fine.
Prosecutors say Bacanovic, 41, ordered his assistant to give Stewart a tip that ImClone’s founder, Sam Waksal, was dumping all of his shares. Stewart then quickly acted on the news by selling all of her stock in the biotech company.
ImClone shares fell steeply the next day when it was announced that health regulators had given the “thumbs down” to the company’s cancer drug.
The defendants maintain they had a pre-existing agreement to sell Stewart’s shares if ImClone fell to $60. Neither Stewart, a former model and stockbroker who turned a catering company into a media empire called Martha Stewart Living Omnimedia Inc.(MSO.N: Quote, Profile, Research) , nor Bacanovic took the witness stand.
The prosecutor cited evidence including telephone records, messages and the testimony of Douglas Faneuil, Bacanovic’s former assistant and the cornerstone of the government’s case.
Faneuil, who pleaded guilty to related charges, testified that his boss ordered him to tip Stewart off about Waksal’s sale of ImClone.
Defense lawyers battled hard to undermine his credibility and get him to admit to using drugs, and implied his damaging testimony was in exchange for leniency from prosecutors.