Stewart pleads innocent

Media mobs courthouse, but press barred from jury brief

This article was updated at 6:32 p.m.

NEW YORK — As the Martha Stewart trial entered its final phase of jury selection, the diva of domesticity pleaded innocent Tuesday to counts of securities fraud, obstruction of justice and making false statements to prosecutors.

Judge Miriam Cedarbaum of the U.S. District Court for the Southern District of New York said she expects opening arguments in the case to start next week.

A pool of more than 30 jurors was seated in the Gotham courtroom for general remarks, then led individually to a separate room for questioning by the judge in front of prosecutors, defendants and their lawyers. Cedarbaum has barred the press from these sessions, despite loud protests and legal appeals by news organizations.

Still, camera crews and reporters mobbed the courthouse in one of the most widely covered trials in recent years. Stewart’s legal travails are proving to be as potent a media draw as Michael Jackson’s, which are unfolding on the opposite coast.

John Small, editor of Web site SaveMartha.com, was wearing a chef’s hat and apron that read, “She didn’t do the crime, but she sure can do the thyme!”

Stewart’s former broker, Peter Bacanovic, pleaded innocent to charges that also included making and using false documents, and perjury. The two are being tried together over circumstances surrounding Stewart’s sale of shares in biotech company ImClone in December of 2001.

Stewart unloaded some stock just before the shares plunged after the company failed to get FDA approval for a key cancer drug. Prosecutors suspect she sold based on inside information from her broker that ImClone chairman Sam Waksal sold his stock the same day. However, prosecutors have not charged her with insider trading, but with covering up and lying to investigators.

The key question jurors will have to decide is whether Stewart had a so-called stop-loss order on ImClone -a standing order to sell the stock if it fell below $60. She says she did and Bacanovic had written “@60” on a worksheet where he kept Stewart’s accounts. But prosecutors say Bacanovic inserted that notation later since it was made with different ink than other marks on the page.

Confusing phone logs are also in evidence. Prosecutors say Stewart changed her phone log to read “Peter Bacanovic Re: ImClone” from the original Dec. 27 message that read “Peter Bacanovic thinks ImClone is going to start trading downward,” and later changed the phone log back to its original message.

Bacanovic’s assistant, Douglas Faneuil, is expected to testify against his former boss and Stewart.

Investors on Tuesday seemed optimistic at Stewart’s prospects. The battered stock of her media company surged 12.65% to close at $5.68.

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