This may seem hard to believe, but the Martha Stewart trial is actually bigger than the celebrity herself.
Monday, as the government and defense begin their final arguments, lawyers believe even more than they did at the outset that the verdict will have an important bearing on future cases.
If Ms. Stewart is found not guilty of conspiracy and lying to the government, it could make the government hesitate to charge a national icon. But a guilty finding might send a message that no matter how well you're known, the government will pursue wrongdoing. "This is an enormously significant case for the government given the corporate devastation in the post-Enron era," says D. Lloyd Macdonald, a former federal prosecutor.
If the government wins the case, it might also have a spillover effect on the way justice is perceived. Rightly or wrongly, many Americans feel the rich are treated differently. "If the government wins, it will serve as a means of showing the common working person that the government does not treat the upper crust of society with kid gloves," says Chris Bebel, a Houston lawyer who has worked for both the SEC and the Department of Justice.
The Justice Department has spared almost no expense in prosecuting the case, involving everyone from the Secret Service to the FBI. Outside the federal courthouse, a media army relays every body twitch to the public. Congress is watching, too.
"I would think the very publicity of the evidence will make people more cautious about overtly covering their tracks," says Mr. Macdonald, a partner at the Boston law firm Kirkpatrick & Lockhart.
On Friday, Stewart's side received a boost when US District Judge Miriam Goldman Cedarbaum tossed out the charge that Stewart deceived investors in her company, Martha Stewart Living Omnimedia, when she issued statements that she had not done anything wrong. That charge carried the longest potential penalty.
Many lawyers weren't surprised by the judge's decision, though. "To do otherwise would penalize any official of any company charged with criminal wrongdoing for asserting their right of innocence until they are proven guilty," says Stanley Twardy, Jr., a partner at Day, Berry and Howard LLP in Stamford, Conn.
With the securities charge out, prosecutor Karen Patton Seymour will have a much simpler case to explain in her closing remarks. Now the case pivots on the allegation that Stewart and her co defendant, Peter Bacanovic, lied to the government and conspired to conceal that lie.
She will try to boil down five weeks of testimony into a narrative that explains how it all fits together. The government alleges that on Dec. 27, 2001, Stewart learned that the founder of ImClone Systems, Samuel Waksal, was trying to unload his shares. He had learned that the Food and Drug Administration was not going to approve a drug his company was developing.
The government's chief witness was Douglas Faneuil, a young assistant to Mr. Bacanovic. He testified that a vacationing Bacanovic told him to call Stewart with the news Mr. Waksal was selling his shares. His testimony was clear about what happened on that fateful December day. A Stewart assistant testified how Bacanovic had tried to reach the celebrity and how Stewart later tried to change the message.
During the trial, Stewart and Bacanovic maintained they had an agreement to sell the ImClone shares if they reached $60 per share, which they did on that December day. Bacanovic produced a worksheet as evidence. The government, in an effort to discredit it, had its top ink expert explain two pens were used to produce the worksheet. A defense expert said more than two pens were used. The government then tried to discredit the defense expert.
One surprise in the trial was the decision by Robert Morvillo, Stewart's lawyer, not to put her on the witness stand. Many lawyers felt the jury would need to hear her explanation. "The question for Morvillo was whether his defense was going to be better or worse having put her on," says Twardy. "It's something only he knows - what type of witness she would have been."
Stewart may have also been under pressure from some of her other lawyers not to testify, says Bebel, noting the impact it could have on civil litigation and an SEC insider-trading lawsuit. Also, if Stewart had testified and were found guilty, the judge could consider this when figuring the penalty. "The sentencing range can be moved up a notch or two," says Bebel.