Stewart Maintains Innocence at Trial

Lifestyles tycoon Martha Stewart, facing years in prison, proclaimed her innocence again Tuesday as her fraud and obstruction-of-justice trial began in a federal courtroom in lower Manhattan.

Stewart and Peter Bacanovic, her former stockbroker and codefendant, repeated “not guilty” to each of the felony charges in a nine-count indictment filed this month.

The two then got their first look at some of the people who will decide their case, as 33 potential jurors were led into the jammed courtroom during a short open session.

U.S. District Judge Miriam Goldman Cedarbaum introduced the defendants, the defense lawyers and the prosecutors, asking each to stand and be seen by the prospective jurors.

“Only you can determine what happened,” the judge told the jury panel, adding that jurors would have to be “free of any preconceived notions or sympathies or prejudices.”

Cedarbaum then retired to her private robing room with the lawyers and defendants to begin questioning the potential jurors individually, outside the view of the public and the media. She said she would make transcripts of the questioning, with names and personal details edited out, on the day after each session.

This final phase of jury selection could last the rest of the week. The judge said witnesses probably would begin to be called next week. The trial is expected to last about six weeks.

The government contends that Stewart, 62, and Bacanovic, 41, lied to investigators and obstructed their probe of her Dec. 27, 2001, sale of 3,928 shares of stock in ImClone Systems Inc., a biotech company founded by her friend Samuel D. Waksal.

The sale came a day before the stock tumbled on an adverse Food and Drug Administration ruling against the firm’s key cancer drug. Waksal pleaded guilty to insider trading and is serving a seven-year prison sentence.

Stewart, dressed in a heavy, dark-gray cloak against the subfreezing temperatures, arrived at the courthouse in a Lincoln Town Car about 9:20 a.m.

Carrying two bulky handbags, she strode through a gantlet of reporters, photographers and two placard-carrying supporters, including one named John Small who was dressed in an apron and chef’s hat.

“She had her game face on,” said Small, a Manhattan marketing consultant who founded the website SaveMartha.com. He contends that Stewart has been unfairly targeted by prosecutors because of her celebrity.

As Stewart climbed the courthouse steps, another supporter, Linda Smith of New Jersey, yelled, “You go, girl!” Stewart turned and waved briefly to her.

Bacanovic arrived separately. Both defendants pleaded not guilty when they were indicted in June, but had to reenter their pleas because of technical changes to the government’s indictment.

The start of Stewart’s trial proceedings were without the hoopla that surrounded last week’s courthouse appearance of Michael Jackson, who climbed atop his sport utility vehicle and later threw a party for fans who came to the pretrial hearing in Santa Maria, Calif.

Small described Stewart’s arrival as “much more dignified” than Jackson’s.

“We didn’t expect her to get on top of a limousine and dance,” he said.

Inside the courtroom, Stewart and Bacanovic greeted each other at the defense table with kisses on the cheek. Stewart, dressed in a brown suit, carried a spiral-bound notebook. Bacanovic wore a black suit with a dark-colored tie.

If convicted of all five charges against her, Stewart faces as many as 30 years in prison and a $2-million fine. Bacanovic’s four felony charges could bring as many as 25 years in prison. However, federal guidelines probably would result in far lesser sentences, legal experts said.

The key witness for the prosecution is expected to be Douglas Faneuil, 28, former assistant to Bacanovic. Faneuil pleaded guilty to a misdemeanor count of accepting gifts from Bacanovic in exchange for initially lying to investigators.

Faneuil is expected to testify that Stewart’s stock sale came after he told her -- on Bacanovic’s orders -- that Waksal and his family members were trying to unload large amounts of ImClone shares.

Stewart and Bacanovic maintain that they had a prior agreement to sell her ImClone holdings if the price fell to $60 a share, as it did on the day of her sale.