- NEW YORK (Reuters)
- A federal judge on Tuesday refused to dismiss the two most serious criminal
charges against Martha Stewart, the lifestyle trendsetter due to face a
federal trial early next year.
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- U.S. District Judge Miriam Cedarbaum ruled against defense
motions to have obstruction of justice and securities fraud charges against
Stewart dropped, saying language used in the indictment was not defective.
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- Stewart is charged with a total of five counts stemming
from the sale of stock in ImClone System Inc. (IMCL.O: Quote, Profile,
Research) , a biotech company founded by her friend Samuel Waksal. In late
2001, Stewart sold 3,928 shares in ImClone for about $228,000 a day before
the company said health regulators had rejected a key drug application,
sending its shares plunging.
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- Waksal is currently serving a seven-year prison term
for insider trading in his own company.
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- Stewart's lawyers had sought to have the most serious
criminal charges against Stewart dropped, calling the government's accusations
"as unusual as they are unfair" in papers filed with the court.
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- The motions argued that the obstruction of justice charge
should be dismissed since Stewart did not make any statements that hindered
an investigation by regulators at the Securities and Exchange Commission.
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- Her lawyers also argued in motions that the securities
fraud charge sought to "criminalize Ms. Stewart's public declarations
that she had not engaged in insider trading in making a personal stock
sale." Securities fraud carries a sentence of up to 10 years.
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- Stewart, a former model and stockbroker who became a
fashion, decorating and media power by founding her own company, Martha
Stewart Living Omnimedia Inc. (MSO.N: Quote, Profile, Research) , is due
to face trial in January.
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- Stewart's former stockbroker at Merrill Lynch & Co.
(MER.N: Quote, Profile, Research) , Peter Bacanovic, has also been charged
by federal prosecutors in the case. Cedarbaum on Tuesday refused to separate
the cases against Stewart and Bacanovic.
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- Stewart has repeatedly said her ImClone sale was triggered
by a standing order to sell the stock if it fell below $60 per share, which
it did on Dec. 27, 2001.
- © Reuters 2003. All Rights Reserved.
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