Paper Chase in Martha Trial

Updated from 1:45 p.m. EST

Despite the judge's strict instructions against it, the two sides in the Martha Stewart trial used the press -- in the form of past newspaper articles -- to advance their cases.

In the trial's afternoon session Wednesday, the government asked Peter Melley, an NASD investigator, to chart the daily stock price movement for shares of Stewart's company, Martha Stewart Living Omnimedia(MSO Quote), for June 2002, the month the story broke in the news media.

As Melley charted the daily price of the stock, however, the government endeavored to tie price swings in the stock to press releases by Stewart proclaiming her innocence. By employing Melley to read Stewart's press statements, as well as newspaper articles from the period, the government was able to use the content of the articles to aid its securities fraud case against Stewart.

The government is trying to convince jurors Stewart knew her Dec. 27, 2001, sale of about 4,000 ImClone Systems(IMCL Quote) shares could hurt her own company's stock. Stewart faces as many as 10 years in prison if convicted of securities fraud, which the government alleges she committed by publicly maintaining her innocence after selling ImClone days before the shares were gutted by a regulatory setback.

The government's strategy of using Melley to read the articles to the jury in federal court in Manhattan was much to the dismay of Judge Miriam Goldman Cedarbaum, who repeatedly requested that both sides use the articles merely for context, not content.

For example, on June 18, 2002, at 5:33 p.m, Stewart released a statement saying her trade was lawful and that she has been speaking "with the SEC and have been cooperating with them to the best of my ability."

Melley testified that on June 19, 2002, the trading day following Stewart's statement, MSO rose from an opening price of $14.40 to close the day at $16.45.