- The Washington Times - Friday, May 21, 2004

NEW YORK (AP) — A Secret Service ink expert who testified for the government at the Martha Stewart trial was charged yesterday with lying repeatedly on the stand. Lawyers for a stockbroker convicted with Stewart called for a new trial.

Stewart’s attorneys said the perjury charges cast new doubt on the government’s case against the stylish-living entrepreneur. Prosecutors insisted that the charges did not undermine the convictions of Stewart or her former stockbroker, Peter Bacanovic.

The expert, Larry F. Stewart, was called as an expert witness by the government to discuss ink used on a worksheet prepared by Bacanovic listing stocks in Martha Stewart’s portfolio.

Prosecutors had accused Bacanovic of doctoring the worksheet to back up a cover story for why Martha Stewart sold ImClone Systems Inc. stock. Bacanovic was cleared on that charge, but convicted on four other counts.

Larry Stewart, who is not related to Martha Stewart, testified that he had worked on two ink-analysis examinations of the worksheet, in August 2002 and January 2004. Prosecutors said the Secret Service informed them last week that Mr. Stewart, the laboratory director at the Secret Service, did not work on those tests.

In addition, Mr. Stewart falsely testified that he was familiar with a proposal for a scientific textbook on ink analysis that had been submitted by two of his subordinates, Manhattan U.S. Attorney David Kelley said.

The two counts of perjury — based on eight statements made by Larry Stewart during his testimony on Feb. 19 and Feb. 25 — carry up to 10 years in prison.

“We have to hold all people to the same standard of integrity, and today we hold true to those commitments,” Mr. Kelley said.

Martha Stewart and Bacanovic were convicted March 5 of lying to federal authorities about why Stewart sold 3,928 shares of ImClone in December 2001, just before it plunged in response to a negative government report.

Stewart was convicted of conspiracy, obstruction of justice and making false statements. Bacanovic was convicted of perjury, obstruction, conspiracy and making false statements — but was acquitted of falsifying the worksheet.

Federal prosecutors disclosed the perjury charges in a complaint filed in Manhattan federal court and in a letter to U.S. District Judge Miriam Goldman Cedarbaum, who presided over the Martha Stewart trial.

“The discovery that Mr. Stewart testified falsely in no way compromises the validity of the guilty verdicts returned in this case against either defendant,” the prosecutors wrote.

Lawyers for Martha Stewart and Bacanovic quickly issued statements saying the perjury charges called the validity of the convictions into question.

“We believe that the perjury of a key government witness undermines any integrity there was in the jury’s verdict and will require a new trial, and we will pursue one,” Bacanovic attorney Richard Strassberg said.

Martha Stewart’s attorneys, Robert Morvillo and John J. Tigue, said the disclosure “further undermines the integrity of the prosecution of Martha Stewart and Peter Bacanovic.”

Judge Cedarbaum has already rejected calls by both defendants for a new trial based on assertions that a juror lied about a past arrest on assault charges in order to get on the jury. In that ruling, earlier this month, the judge said the defendants had not offered sufficient proof that the juror lied.

The key portion of Larry Stewart’s testimony was that a notation of “(at)60” made on the Bacanovic worksheet was in a different ink than almost every other mark on the sheet.

The notation was an important part of Martha Stewart’s and Bacanovic’s defense in which they claimed that there was a pre-arranged deal to sell ImClone when the stock fell below $60 per share.

Mr. Kelley said there was no reason to believe the actual testing of the worksheet — performed by another lab worker at the Secret Service — was inaccurate.

He also pointed out that lawyers for Bacanovic never disputed that the “(at)60” ink was different from other marks on the sheet. The lawyers argued Bacanovic had simply used several different pens on the worksheet.

Larry Stewart, 46, of Bethesda, Md., was taken into custody by federal agents and was expected to appear in Manhattan federal court.

Mr. Kelley said Mr. Stewart had been suspended from the Secret Service.

Andrew Wurst, a spokesman for the Secret Service, said the agency was fully cooperating with federal prosecutors, and he defended the agency’s lab work.

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