Stewart Guilty of All Counts

Updated from 4:35 p.m. EST

Martha Stewart, who created a media empire and made her name a household word, was found guilty Friday of obstruction of justice, conspiracy and two counts of making false statements to investigators, handing the government its biggest financial markets conviction since Michael Milken was locked up in 1990.

The conviction of Stewart, 62, marks a stunning reversal for an executive who had, until now, been known for her savvy, cunning and sheer hard work in building her media company.

Stewart faces up to five years in prison on each count, although federal guidelines could reduce the prison time to a mere fraction of that total.

Sentencing is set for June 17.

The future of her company, Martha Stewart Living Omnimedia(MSO), appears in peril. Shares were halted just before the verdict was read, after spiking to a 52-week high of $16.27 in the minutes leading up to it. The stock closed at $10.86, down $3.17, or 22.59%.

True to her reputation as a determined executive, Stewart -- sometimes to the point of being imperious -- wasted no time in proclaiming that she would appeal today's verdict.

In a statement on her Web site, www.marthaspeaks.com, she said: "I will appeal the verdict and continue to fight to clear my name. I believe in the fairness of the judicial system and remain confident that I will eventually prevail."

Stewart's former Merrill Lynch broker, Peter Bacanovic, 41, also was convicted Friday of conspiracy, one count of making false statements, obstruction of justice and perjury, but he was cleared on one count of making and using false documents.

The government had brought the case against Stewart and Bacanovic over her Dec. 27, 2001, sale of 3,928 shares of ImClone Systems(IMCL), shares that cratered one day later on news of a Food and Drug Administration setback.

Stewart's trial focused public attention on the use of privileged information in stock trading and is the latest dose of justice in a long list of executive scandals that have plagued U.S. financial markets for three years.

Stewart and Bacanovic showed no emotion when the verdict was read in federal court in downtown Manhattan. Bacanovic also reportedly plans to appeal the verdict.