Stewart’s Attorneys Seek Probe of Leaks

Lawyers for Martha Stewart asked a federal judge Monday to order an investigation of possible leaks to the media in her obstruction of justice case.

During a hearing in federal court, Stewart’s attorneys said the U.S. government should conduct a probe of the U.S. attorney’s office, the FBI, the Securities and Exchange Commission and the Justice Department to determine the source of possible leaks.

At issue is whether someone with knowledge of the case gave information to the media about what would be included in the June 4 indictment of Stewart, 61, known for having turned a small catering outfit into a multimillion-dollar media and home-decorating business.

“What the media was informed of prior to the indictment was the nature of the indictment,” Stewart’s attorney, Robert Morvillo, told the federal judge overseeing the case.

As a result, he said, “the court should instruct the U.S. attorney’s office to conduct an investigation.”

In a nine-count criminal indictment, the government charged that Stewart and her former stockbroker, Peter Bacanovic, interfered with the investigation into the suspicious timing of her ImClone Systems Inc. stock sale.

Stewart has pleaded not guilty to the criminal charges. She has resigned her positions as chairman and chief executive of Martha Stewart Living Omnimedia Inc. and her trial is scheduled to begin in January.

During the hearing, Morvillo cited media reports from June 3, the day before the indictment was handed down, that said charges against Stewart would not include insider trading, which was indeed the case.

He told U.S. District Judge Miriam Goldman Cedarbaum that he did not believe the media was given confidential information by the U.S. attorney’s office, but said it could have come from other governmental agencies such as the FBI or the SEC.

Judge Cedarbaum did not rule on the motion Monday, but said investigations of leaks to the media typically were ordered only if there are concerns the information reported by the media could be prejudicial.

“Do I think there was potential prejudice?” Morvillo responded. “Yes, I do.”

Lawyers from the U.S. attorney’s office argued that if there had been leaks, they could have come from the defense lawyers. They said some news reports had cited Stewart’s lawyers as sources.