Dispatches From The Martha Stewart Trial

Opening Statements

At first glance, the government’s lead prosecutor, Karen Patton Seymour, seems about as intimidating as a preschool teacher. She wears understated gray suits and pearls. She eschews theatrics, bombast, and hysteria. She smiles often and warmly. She speaks in terms that a third-grader could understand. She comes off as smart, confident, forthright, and reasonable. In short, she is the perfect physical antidote to Martha Stewart’s lead attorney, Bob Morvillo, and his not-so-subtle suggestion that United States v. Martha Stewart and Peter Bacanovic is little more than a politically motivated lynching orchestrated by jack-booted thugs.

In her opening statement, Karen Seymour explained what, in the government’s view, the case is about: Obstruction. Lying. Covering up. Fabricating evidence. Cheating investors in the stock market. A “secret tip” that gave Martha Stewart an edge over other (honest) investors. Seymour described Peter Bacanovic as a man who, on Dec. 27, 2001, was annoyed that his assistant, Douglas Faneuil, didn’t immediately know to break the rules and tell Stewart that Sam Waksal was desperately trying to sell all of his ImClone stock—”That’s the point, you have to, you must”—a Peter Bacanovic who “knew this was a violation of Merrill Lynch policies, but didn’t want his friend to get obliterated,” a Peter Bacanovic who, upon learning of the investigation, screamed at Faneuil that Martha Stewart had sold her ImClone for tax-loss purposes, and then, when Faneuil grew anxious, soothed him with a fancy meal and smarmy assurances: Everyone was telling the same (bogus) story; everything would be OK.

Karen Seymour made some fresh points. She said that Mariana Pasternak, a friend of Martha Stewart’s, will testify that Stewart confided that the Waksals were selling (the “secret tip” that Faneuil allegedly provided). She said that Peter Bacanovic initially told Merrill officials that Stewart had sold her ImClone for tax-loss reasons—and then, realizing how easily this lie could be refuted (Stewart had a gain in the stock), changed his story to the $60 agreement. She announced that the “@60” mark on the allegedly altered worksheet was the only mark made with different ink—making it less likely that, as Bacanovic attorney Richard Strassberg later argued, Bacanovic simply picked up a different pen. She also neutralized one of Douglas Faneuil’s obvious weaknesses by acknowledging it herself: “Because he stands to benefit,” she said, “you should scrutinize his testimony and see if it stands up.”

Karen Seymour’s opening statement was strong. If nothing else, it convinced me that she believes that Martha Stewart and Peter Bacanovic are guilty beyond a reasonable doubt. I still don’t think she’ll be able to convince the jury they are, though.

After Seymour yielded the podium, Peter Bacanovic’s attorney, Richard Strassberg, took over. His opening statement was also strong. The Peter Bacanovic he described was hard-working, successful, trustworthy, and responsible. Strassberg’s charts showed that the circle around ImClone Systems on the allegedly altered worksheet wasn’t the only circle that Bacanovic had made on the page—and that the other circles helped corroborate the $60 story. The ink tests was were “flawed,” Strassberg said; the government had simply seen what it wanted to see. Most important, Strassberg’s Douglas Faneuil was an “admitted liar,” a dazzled young assistant who was “fixated” on Martha Stewart, who bragged to his friends about his every contact with her, who lied to the government twice and then sought to minimize the damage by blaming his boss, who is aware that he will get off with a “free pass” if he can give the government what they want—and is eager to provide it.

“Douglas Faneuil is the one who spoke to the Waksals,” Strassberg said. “Douglas Faneuil is the one who spoke to Martha Stewart. Douglas Faneuil is the one who lied to the government. Douglas Faneuil is the one who got the deal.”

Strassberg provided the crucial context that is missing from the government’s version of events. He described the other business Peter Bacanovic and Martha Stewart were conducting in December 2001, as well as the other events of Dec. 27. In my opinion, he wrapped most of the government’s key contentions in reasonable doubt. He also set the stage for the day’s main event, the opening statement of Martha Stewart’s lead defense attorney, Robert G. Morvillo.

At times, Bob Morvillo’s voice completely filled the cavernous courtroom—something that no other speaker in this trial has yet come close to doing (even with the aid of microphones). At times, he nearly whispered. At times, he prowled the aisles like a grizzly bear, swiping paws, roaring in indignation; at times, he leaned on the edge of the jury box, as cuddly and unthreatening as a koala. At times, he launched into rhetoric that would have resonated in a Martin Luther King speech; at times, he spouted New York City vernacular. The message I imagine the jury took away from Morvillo’s performance was, “Ladies and gentlemen, my client is innocent.” The message I imagine the rest of the courtroom took away was, “We are in the presence of a master.”

Bob Morvillo stopped just short of the line Judge Cedarbaum established yesterday about arguing that the government’s prosecution of Martha Stewart was unfair—but only just. “You are the protectors of liberty,” he murmured to the jurors, beseeching them to “focus hard” and see through the government’s substitution of “speculation, surmise, and guesswork” for evidence. “This case is brought to you buy the United States Department of Justice under John Ashcroft,” he then sneered, pronouncing John Ashcroft with the same disgust that most people reserve for Adolf Hitler. Later, referring to the tag-team efforts of the congressional committee that leaked the Stewart investigation in the summer of 2002 (an election year), and the Ashcroft Department of Justice prosecutors who are trying to finish the job, he concluded: “Some government: leak on one side, prosecute on the other. … George Orwell was about 20 years too early.”

To my ears, anyway, Morvillo’s anti-government rant was slightly off-key: The venom, I think, comes too early in the economic cycle, just as Karen Seymour’s “secret tip” refrain comes a year or two late. Two years ago, at the nadir of the recession and stock market swoon, Seymour’s “secret tip” theme would have been greeted with cheers: No news was more welcome than that everyone’s pain had been caused by a few greedy insiders—greedy insiders who were obviously guilty and should obviously go to jail. Martha Stewart’s investigation and indictment, along with her instantaneous conviction in the press, were byproducts of that rage.  Two years have passed, however, and the ethos has changed.. Similarly, if we were two years further into the recovery, I think Morvillo’s John-Ashcroft-is-Satan defense would have earned a unanimous standing ovation. Now, however, the seesaw is in mid-swing, and I think people are still suspicious enough of business and supportive enough of regulation that Morvillo perhaps went too far. But then, he wasn’t speaking to me.

With regard to the evidence, Morvillo picked up where Strassberg had left off. Adding more context, he attacked the supposedly incriminating events one by one. Of Dec. 27, 2001, he said, “This is the day that Sam Waksal decided to go crazy. What he did that day was an act of sheer insanity. … I submit to you that no one in his right mind would have done this.” And, by association, Morvillo implied, no one in their right mind—except the government—would interpret Sam Waksal’s selling as a sign that the FDA was about to reject ImClone’s Erbitux application. “It was only when the announcement came out on Dec. 28th,” Morvillo said, “only then did everyone see that Sam Waksal had gone crazy.”

Morvillo described how, on Jan. 7, 2002, 10 days after Stewart’s ImClone trade, in his very first meeting with investigators, Peter Bacanovic outlined the $60 agreement. The government says, “No, no … it was concocted. …” Morvillo continued, his mockery resounding off the wood-paneled walls. How was it concocted? By “osmosis”? “Let the government produce a single record of any contact [between Bacanovic and Stewart] between Dec. 28th and Jan.7th. …  I don’t think they did it by carrier pigeon. I don’t think that the pony express existed in Mexico. …” How? When? Where did they concoct it?

Morvillo said that Shakespeare wrote a play summarizing the import of Stewart’s temporarily altered phone message: Much Ado About Nothing. “The incident lasted 25 seconds,” he continued. Martha Stewart altered the message to the best of her recollection and then immediately changed it back. Morvillo admitted that Stewart made some factual mistakes in her interviews with investigators, but asserted, as expected, that they were mistakes, not lies. Stewart’s primary purpose in the interviews was to convince the government that she hadn’t been tipped by Sam Waksal, Morvillo said—and in that, at least, she succeeded …

As I described in my analysis of the evidence, I think the facts favor the defense. When Karen Seymour finished her opening statement, I thought, “Well, maybe the government has a chance.” When Richard Strassberg finished, I thought, “Nope, it’s over.” When Bob Morvillo finished, I thought, “It is so over that the next six weeks are going to be a waste of time.” Then, still in awe of the Morvillo performance, I spilled out of the courtroom with the other spectators. A minute later, in the marble hallway outside, I asked another reporter what he thought. His level of conviction, it turned out, was even greater than mine.

“She’s going down,” he said.

Introduci ng: The Martha Meter!

This meter represents my ongoing sense of the probability of Martha Stewart being found guilty of one or more charges. The likelihood is expressed as a percentage: 0 percent (no chance of conviction) to 100 percent (certain conviction).

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