- The Washington Times - Monday, January 19, 2004

NEW YORK (AP) — Martha Stewart, the creative force behind what was once a $1 billion empire of domestic “good things,” is expected in court today to face trial on charges she lied about a well-timed stock sale that saved her $51,000.

In a judge’s private robing room, potential jurors will face Mrs. Stewart and answer questions from lawyers trying to pick a jury. Opening arguments will begin once 12 jurors are seated — possibly as soon as this week.

Mrs. Stewart, charged with five counts including obstruction of justice and securities fraud, is by far the best-known figure to face a judge since the government’s crackdown on white-collar corruption began two years ago.

Legal experts say the outcome is nearly impossible to predict, and will come down to which version of the stock sale convinces jurors — the lifestyle maven’s story or the government’s account, backed by a former brokerage assistant who will be its star witness.

The government says Mrs. Stewart saved about $51,000 by selling stock in ImClone Systems on Dec. 27, 2001 — just before a negative government report about a highly touted ImClone cancer drug sent the stock plummeting.

Mrs. Stewart asserts that she sold because she and her broker, Peter Bacanovic of Merrill Lynch & Co., had a standing agreement to sell when the stock fell to $60. Mr. Bacanovic faces five counts of his own and will stand trial with her.

But the government says she was tipped that ImClone founder Sam Waksal was trying to unload his shares.

The government’s case features a star witness, former Merrill assistant Doug Faneuil, 28, who is expected to testify that the government’s account of the stock sale is accurate — and that he was plied with gifts in exchange for initially supporting Mrs. Stewart’s version.

Mr. Faneuil changed his story in 2002, pleaded guilty to a misdemeanor and agreed to cooperate with the government.

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