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Law

Martha Stewart found guilty on all counts

Stewart, broker could face up to 20 years in prison


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Martha Stewart leaves court Friday after hearing the verdict.

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NEW YORK (CNN) -- A jury found Martha Stewart guilty on all four counts she faced in her obstruction of justice trial Friday.

Her ex-broker, Peter Bacanovic, was found guilty on four of the five charges he faced. Each could be sentenced to up to five years in prison and fined $250,000 for each count.

Neither defendant appeared to show any emotion when the verdict was read, though the lead prosecutor appeared to be holding back tears of joy.

"The word is -- beware -- and don't engage in this type of conduct because it will not be tolerated," said David Kelley, U.S. attorney for the Southern District of New York, outside the courthouse.

And one juror said, "This is a victory for the little guys. ... No one is above the law."

About an hour after the verdict was read, Stewart -- wearing a fur around her neck and a black overcoat, and carrying a brown leather bag -- strode poker-faced down the stairs of the courthouse, accompanied by her lawyers, and departed. She did not respond to questions shouted at her by reporters.

As she entered the view of a crowd in the street, some people began chanting, "We want Martha!"

Stewart, Bacanovic to appeal

In a written statement posted on her Web site, Stewart said, "Dear Friends: I am obviously distressed by the jury's verdict but I take comfort in knowing that I have done nothing wrong and that I have the enduring support of my family and friends."

A few minutes later, an amended statement was posted, in which her claim of innocence was deleted. "I am obviously distressed by the jury's verdict but I continue to take comfort in knowing that I have the confidence and enduring support of my family and friends," it read.

Stewart said in the statement that she would appeal the verdict.

"I believe in the fairness of the judicial system and remain confident that I will ultimately prevail."

A lawyer for Bacanovic said he also will appeal.

Sentencing is set for June 17.

In December, Stewart said on CNN's "Larry King Live" that she was not prepared for the trial, which started in January.

"No one is ever prepared for such a thing," she said. "And no one is ever strong enough for such a thing. No one is -- you know, you have no idea how much worry and sadness and grief it causes."

She added: "Having done nothing wrong allows you to sleep, allows you to continue your work, gives you the opportunity to think about other things. But there's always the worry."

Charges and possible terms

The jury reached its verdict in the third day of deliberations after the five-week trial.

The panel of eight women and four men began deliberating Wednesday on whether Stewart and Bacanovic obstructed justice and lied to the government about her sale of more than 3,900 shares of ImClone Systems stock, worth about $250,000, in December 2001. Shortly after she sold, ImClone's stock value tumbled when the government rejected the biotech company's application for an experimental cancer drug.

The prosecution said Stewart sold her ImClone stock only after Bacanovic told his assistant, Douglas Faneuil, to tip her off that ImClone founder Sam Waksal was trying to sell. She said she had made an arrangement to sell the stock when it dropped to $60.

Last month, the Food and Drug Administration approved ImClone's drug Erbitux for treatment of colorectal cancer. ImClone stock closed up about 1 1/2 points Friday. (ImClone priceexternal link)

Stewart, 62, was found guilty of conspiracy, obstruction of justice and two counts of making false statements.

Bacanovic, 41, was found guilty of making false statements, conspiracy, perjury and obstruction of justice. He was acquitted on a charge of making and using false documents.

His mother, Helen Bacanovic, told a reporter after hearing the verdict, "He may look good in a jumpsuit, but he lost his career, his job, and he had no motive."

"This was a total rout," said CNN legal analyst Jeffrey Toobin, who sat through the trial. "The story she told investigators after she made the stock trade simply didn't add up."

Stewart, who two years ago was worth more than $1 billion, is still worth several hundred million dollars, he said.

"This was such an avoidable problem," Toobin said. "She wasn't even charged with insider trading," he said.

Mark Powers, Faneuil's attorney, said his client "came forward because his conscience told him it was the right thing to do. He was solely a witness telling the truth."

Martha Stewart Living Omnimedia Inc., stock had jumped nearly 20 percent during the day; trading was halted just before the verdict was announced.

As the stock market ticker revealed the verdict, stockbrokers reacted as though they had been punched, some saying, "Oh! Oh! Oh!" with each successive announcement.

Trading resumed shortly after the announcement, but by the closing bell the value had fallen 23 percent. (Martha Inc.: Beginning of the end?)

The homemaker was a darling of the investment community. In 1999, she served muffins and coffee at the stock exchange, and she was named to the exchange's board of directors, a position she gave up when she was charged.


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