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| Martha Stewart attends a hearing on the appeal of her obstruction of justice conviction. CNN's Allan Chernoff reports. |
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NEW YORK (CNN/Money) -
She's been convicted, imprisoned and now wears a clunky electronic monitor while under house arrest. But through it all, Martha Stewart has insisted that she did nothing wrong.
Now her high-powered defense team, which includes a former top lawyer in the Clinton Administration, will have a chance to plead her innocence to a federal appeals court in New York.
On Thursday a new chapter in the saga of U.S. v. Martha Stewart begins when a three-judge appeals panel hears oral arguments in the case. At stake is Stewart's bid to clear her name following her conviction a year ago on charges she lied to investigators looking into a personal stock sale she made more than three years ago.
Two weeks ago, Stewart, 63, was released from prison after electing to serve a five-month prison sentence at a minimum-security facility in West Virginia instead of awaiting the outcome of her appeal.
Criminal law experts say Stewart's campaign to overturn her conviction is a long shot because appeals courts are generally loathe to reverse jury verdicts.
"It is rare for appeals courts to reverse criminal convictions," said Stanley Twardy, a former U.S. Attorney now in private practice in Connecticut. "The prime exception would be on technical legal grounds and that doesn't appear to be present in (Stewart's) case."
But Stewart, who's taking other steps to burnish her tarnished image, is going to try anyway. In her appeal, she claims she did not receive a fair trial. Her argument centers on two issues.
One, the Stewart team argues that jurors wrongly believed she had been charged with insider trading. In fact, she was charged with obstruction of justice, conspiracy and making false statements.
The second issue Stewart's lawyers argue is that both the jury and the prosecution were tainted.
One of the jurors allegedly lied about his past during jury selection. In addition, an expert witness who helped refute evidence submitted by Stewart and Bacanovic was later tried and acquitted on perjury charges related to his testimony.
Stanley Twardy, the former federal prosecutor, thinks the possibility that a juror broke the rules is Stewart's best chance at overturning her guilty verdict, but it's still a long shot. "The question will be whether the alleged juror misconduct in any way undermined the jury pool and I think the answer is going to be 'No.'"
The appeals court, which is not expected to issue a ruling for at least a few months, will either reaffirm Stewart's conviction or overturn it and order a new trial. If her conviction is allowed to stand, Stewart has the option of appealing to the U.S. Supreme Court.
If a new trial is ordered, prosecutors could choose to drop the case. Twardy, however, thought they would try to cut a plea deal whereby Stewart might, for instance, plead guilty to a misdemeanor charge instead of a felony.
"It's unlikely the prosecutors would walk away," said Twardy. Regardless of the outcome, Stewart wouldn't go to jail again. By the same token, if she won her case, she wouldn't get any restitution for her prison time because she volunteered to serve it early.
After the appeals process, Stewart faces a civil lawsuit brought by the Securities and Exchange Commission, which does charge her with insider trading. That case has been put on hold until Stewart's appeal gets resolved.
The case
The root of Stewart's troubles stems from her late 2001 sale of ImClone Systems stock right before shares in the small biotechnology company tumbled. While Stewart, a billionaire, turned only a small profit from the sale, it cost her and the lifestyle media and merchandising company she built, Martha Stewart Living Omnimedia (Research), plenty.
Government watchdogs soon launched an insider trading probe of Stewart and others, including ImClone Systems founder Sam Waksal and his close relatives, who also dumped ImClone shares. Also implicated was Peter Bacanovic, Stewart's stockbroker at Merrill Lynch.
Stewart insisted all along that she had a pre-existing agreement with Bacanovic to sell ImClone stock if it well below $60 a share, which it had by the time Stewart shed her stake.
Securities regulators thought that was just a coverup and that Bacanovic had tipped Stewart off to bad, not-yet-public news that subsequently sent ImClone shares sharply down.
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