- The Washington Times - Tuesday, January 20, 2004

NEW YORK (AP) — Martha Stewart waved to her supporters, strode into a Manhattan courthouse and repeated her plea of innocent at the formal start of her stock-trading trial yesterday.

The 62-year-old gracious-living guru stood in court and nodded at the first group of potential jurors, which was interviewed one by one in a judge’s private robing room.

“Not guilty,” Mrs. Stewart said five times, speaking almost inaudibly and nodding as she re-entered her plea to five criminal counts related to her 2001 sale of nearly 4,000 shares of ImClone Systems.

Mrs. Stewart, in a dark overcoat, clutched two bags as she stepped out of a black town car and said, “Good morning” while passing a phalanx of cameras. She then climbed the courthouse steps and briefly waved to two fans standing in the freezing cold, including a man wearing a “Save Martha” chef’s hat and matching apron.

In court, she pulled out a ballpoint pen and green stenographer’s notebook and listened to U.S. District Judge Miriam Goldman Cedarbaum instruct the jury candidates on their role in the trial.

“Only you can determine what happened, and the verdict as to each count will be your decision alone,” the judge said.

Judge Cedarbaum told them that opening statements will likely begin next week. The trial is expected to last into March.

Mrs. Stewart faces 30 years in prison and penalties of $1.25 million, although she would likely receive lighter punishment under federal sentencing guidelines if convicted.

Mrs. Stewart is the highest-profile figure to stand trial since the government began its crackdown on corporate corruption two years ago.

She became the queen of home decor and amassed a fortune as the head of Martha Stewart Living Omnimedia, which stamped her style on everything from magazines and recipes to bed linens and bath towels.

Her supporters argue she is being targeted because of her celebrity status.

“This is a witch hunt,” said Linda Smith, who took a two-hour bus ride from New Jersey to stand outside the courthouse in support of Mrs. Stewart. “Martha’s public believes her, believes in her innocence.”

Prosecutors contend that Mrs. Stewart lied to investigators to cover up a sale of ImClone stock prompted by a tip that company founder Sam Waksal was trying to sell his shares.

Mr. Waksal had received advance word of a negative government report about an ImClone cancer drug, and the company’s stock fell sharply upon news of the report.

Mrs. Stewart has asserted that she and her stockbroker had a pre-existing-order agreement to sell ImClone stock when it fell to $60 per share.

The broker, Peter Bacanovic, is also charged with five criminal counts in the trial. Arriving in court after Mrs. Stewart, he briefly leaned in to hug her and exchange kisses on the cheek.

Mr. Bacanovic, 41, also re-entered a plea of not guilty to each count, clearly and emphatically repeating the phrase. Mr. Bacanovic’s five counts carry a total of 25 years and $1.25 million.

Mrs. Stewart and Mr. Bacanovic entered the same innocent pleas June 4, the day they were indicted. They had to formally re-enter them yesterday because the government made last-minute changes to its indictment.

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