Stewart was convicted of obstruction of justice, conspiracy and two counts of false statements for lying to federal investigators about the reason behind her sale of ImClone stock in December, 2001. She and stockbroker Peter Bacanovic maintained they had an agreement to sell ImClone if the price fell under $60-a-share.
Prosecutor Karen Seymour in her opening argument said Stewart “was told a secret tip” from broker Bacanovic that “the head of ImClone was trying to get rid of his shares.”
“Morvillo (Martha Stewart’s lead attorney Robert Morvillo) was never allowed to clarify that,” the source said. “If you’re looking at the state of mind of Martha Stewart you need to know there’s no underlying crime to cover up.”
During the trial Judge Miriam Goldman Cedarbaum ruled, “a secret tip is different from insider trading.”
Morvillo responded, “I don’t know what the difference is in the context of this case,” arguing the Government had maintained Stewart’s motive was to cover up her illegal trade. The defense attorney complained, “to the extent that your Honor is going to preclude us from demonstrating that Ms. Stewart is not guilty of insider trading, I respectfully submit that we are being unduly restricted.”
Lawyers who observed portions of the trial say the argument is unlikely to succeed with an appeals court.