Stewart fraud charge dismissed - KLTV.com - Tyler, Longview, Jacksonville |ETX News

2-27-04

Stewart fraud charge dismissed

NEW YORK Feb. 27 — A federal judge on Friday threw out the most serious charge against Martha Stewart, securities fraud, just before her trial goes to a jury.

The charge accused Stewart of deceiving investors in her company, Martha Stewart Living Omnimedia, by lying about her sale of ImClone Systems stock.

"Here, the evidence and inferences the government presents are simply too weak to support a finding beyond a reasonable doubt of criminal intent," the judge wrote.

U.S. District Judge Miriam Goldman Cedarbaum left intact four other charges against the celebrity homemaker conspiracy, obstruction of justice, and two counts of lying to investigators.

The securities fraud count carried a maximum prison term of 10 years. Each of the remaining four counts against Stewart carries a maximum prison sentence of five years.

The judge declined to throw out any of the five charges against Stewart's former stockbroker, Peter Bacanovic.

Cedarbaum issued her decision in a 23-page ruling just as lawyers began meeting with her to hammer out instructions she will give the jury when it begins deliberations next week.

Closing arguments in the trial are scheduled to begin Monday, with deliberations expected to begin Wednesday.

Stewart and Bacanovic are accused of lying to investigators about why Stewart sold 3,928 shares of ImClone stock on Dec. 27, 2001, just before it dropped on a negative government review of the ImClone cancer drug Erbitux.

The securities fraud count accused Stewart of trying to prop up the stock price of her company six months later by issuing false public statements about why she sold ImClone stock. Stewart at the time stood to lose $30 million for every dollar the stock dropped.


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