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Martha's lawyer rebuts charges
Defense attorney belittles government case, saying conspiracy wouldn't have been so ill-conceived.
March 2, 2004: 6:15 PM EST

NEW YORK (CNN/Money) - Martha Stewart's defense lawyer belittled the government's case against his client Tuesday, saying that if the home decor expert was involved in a conspiracy to obstruct justice, it was a "conspiracy of dunces."

Attorney Robert Morvillo pointed out five inconsistencies between Stewart's version of her sale of ImClone Systems stock in late 2001 and the version given by her broker and co-defendant Peter Bacanovic. He said if the defendants were conspiring, they could not have done so in a "dumber fashion."

He said, for example, that Stewart and Bacanovic could have agreed on the date they agreed to sell Stewart's ImClone stock if the shares sank below $60. "But they didn't. What you have here are two conspirators forgetting to tell each other the crucial elements of the conspiracy."

"What kind of conspiracy is this? It's a conspiracy of dunces," Morvillo said.

He also asked the jury not to hold the fact that Stewart did not testify against her. "You were probably looking forward to hearing from her," he said, and asked jurors not to let their disappointment get in the way of their judgment.

He closed with a play on Stewart's familiar catchphrase, saying, "let her return to her life, improving the quality of life for all of us, and if you do that, it's a good thing."

Related Links
Opinion (U.S. v. Stewart and Bacanovic)
Superseding Indictment (U.S. v. Stewart and Bacanovic)
Court Ruling Dismissing 'Selective Prosecution' Defense
Stewart's Employment Agreement at Martha Stewart Living Omnimedia Inc.

Morvillo is representing the home decor expert as she tries to avoid conviction on four counts that could net her up to 20 years in prison.

On Wednesday, U.S. District Judge Miriam Goldman Cedarbaum will instruct the jury, and it will begin deliberations.

Earlier Tuesday, attorney Richard Strassberg summed up his defense for Bacanovic, asking the jury to be "the guardian of justice" by finding the former Merrill Lynch broker not guilty on all counts.

"He has been the victim, caught in the crossfire," Strassberg said of Bacanovic. "This has been a nightmare for him. He lost his reputation, he lost his career."

Strassberg tried to cast more doubt about the government's star witness, Bacanovic's ex-assistant Douglas Faneuil, saying Faneuil was not someone to be trusted. And he defended the credibility of witnesses called by the defense to cast doubt on the government's case.

On Monday, Strassberg called the prosecution's case a house of cards, repeating "it makes no sense" 23 times in the first hour of his closing argument. Strassberg described Faneuil as "a person with extreme motivation to shape the truth," and suggested that Faneuil was so excited to know a celebrity that he could have tipped Stewart off without Bacanovic's instructions.

Earlier Monday, Assistant U.S. Attorney Michael Schachter, summing up the government's case against Stewart and her broker, tried to paint a picture of how the home decor expert and Bacanovic lied about her sale of ImClone in December 2001.

Justice and Rights

"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."

"She thought she would probably never get caught," Schachter told the jury. "They made serious mistakes and left behind a trail of evidence."

U.S. District Judge Miriam Goldman Cedarbaum on Friday dismissed the securities fraud charge against the 62 year-old Stewart. The four remaining charges she faces each carry a sentence of up to five years.

Stewart and Bacanovic still face obstruction of justice charges involving their statements to investigators after she sold nearly 4,000 shares of ImClone (IMCL: Research, Estimates) on Dec. 27, 2001, the day before bad news about the biotech firm's key drug started the stock plunging.

Prosecutors say Stewart sold after Bacanovic told Faneuil to tip her off that ImClone founder Sam Waksal was trying to sell. Stewart and Bacanovic have told investigators they had an arrangement to sell once the stock fell to $60.

Bacanovic was broker to both Stewart and Waksal, who is serving a seven-year prison term after pleading guilty to securities fraud over his family's sale of the ImClone shares.

Ironically, Erbitux, the ImClone drug that led to the insider trading scandal when its application was rejected, recently was approved to treat certain forms of cancer.  Top of page

-- from CNNfn's Allan Chernoff and staff and wire reports

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