By taking a minimalist approach, her legal team is gambling that the prosecution hasn’t made a strong-enough case
The only drama came as prosecutors tried to poke holes in the testimony of a short parade of defense witnesses, most of it intended to bolster a key defense contention: Stewart and Bacanovic had a standing agreement to sell her ImClone (IMCL ) stock if the price fell below $60 a share.
Stewart and Bacanovic are charged with obstructing justice and for making false statements concerning her sale of 3,928 ImClone shares on December 27, 2001. In addition, Bacanovic faces charges of perjury and falsifying documents, while Stewart faces an additional securities fraud charge. The prosecution maintains that Stewart sold her shares only upon learning from Bacanovic’s assistant Douglas Faneuil — the prosecution’s star witness — that ImClone founder Sam Waksal, her friend, was selling his own shares. Then, Stewart and Bacanovic allegedly tried to mislead investigators about the transaction, while Stewart allegedly misled investors in her company, Martha Stewart Omnimedia (MSO ), with her actions, the prosecution contends.
While Bacanovic’s defense lawyer presented several witnesses, Stewart’s attorney, Robert G. Morvillo, offered only one, Steven Pearl, a former Wachtell Lipton attorney who accompanied Stewart to a February 4, 2002 interview with investigators. But Pearl’s testimony seemed to raise more questions than it answered.
The prosecution maintains that Stewart lied when she told investigators she didn’t know if Bacanovic had attempted to reach her to alert her that Waksal was selling his shares. Yet, Pearl testified he couldn’t recall what she said during the interview with probers: “I have an incomplete recollection of some things,” he said, as some jury members rolled their eyes.
The jurors sat up straight, however, when Assistant U.S. Attorney Karen Seymour displayed a copy of Pearl’s handwritten notes from the meeting on an overhead projector screen, alongside his formal memorandum account of the same meeting. His handwritten notes had no reference to Stewart knowing or not knowing. Yet, his memo on the subject claimed she didn’t know.
Why was it, Seymour asked, that Pearl’s completed memo differed substantially from his handwritten notes? Because, Pearl replied, he was able to draw on his memory on the afternoon of, and the day following, the meeting, to round out the memo. Pearl said his role was to take notes to capture the substance of the meeting, rather than to spit out a verbatim transcript. Later, however, he raised the possibility of typos in the memorandum.
The prosecutor asked Pearl if the memorandum might have been altered in the two years since Pearl had left Wachtell Lipton. But Judge Miriam Goldman Cedarbaum shut down that line of questioning.