Forensic Expert Charged With Lying in Martha Stewart Case

"It is further alleged that notwithstanding his testimony that he worked 'side by side' with another examiner in conducting a supplemental examination of the worksheet in January 2004, Stewart was consulted only briefly about the examination, and performed none of the actual work on it," the U.S. Attorney said.

"The government does not believe that the integrity or validity of any of Martha Stewart's or Peter Bacanovic's verdicts is called into question by today's filing," he said.

Defense laywers nevertheless vowed to seek redress.

"We believe that the perjury of a key government witness undermines any integrity there was in the jury's verdict and requires a new trial and we will pursue that," says Richard Strassberg, the attorney for Bacanovic.

Mr. Stewart, 46, was also charged with lying about knowledge of a book proposal on ink analysis shown to him by defense lawyers when on the stand. He is currently under arrest and faces a maximum total of 10 years in prison if convicted. Arraignment is scheduled for later Friday.

Shares of Martha Stewart Living(MSO Quote) spiked 20% when word of the allegations leaked out at midday. They were recently up 85 cents, or 10%, to $9.40 on about three times the average volume.

U.S. Attorney David Kelley said the charges were the result of information received by his inspection division 10 days ago.

"The charges are troubling because a lab examiner violated the public trust," Kelley said. "However, we are confident the false testimony will have no impact on the decision."

Conceivably, a perjury charge could give lawyers for Stewart and Bacanovic grounds for a new trial. But motions for a new trial are difficult to win and the road will be particularly hard in light of the U.S. attorney's statements. Typically the defense must demonstrate the discovery of new evidence that could have led the jurors to a different verdict.

Judge Miriam Cedarbaum has already rejected an earlier motion for a new trial based on questions about the truthfulness of one of the jurors in the case. Asked if Friday's revelations cast a cloud over the convictions, Kelley replied: "No."

Several defense lawyers contacted by TheStreet.com said the alleged misrepresentation probably won't be enough to compel a new trial. But it could help Stewart on appeal, as it adds to the list of potential errors committed during the trial.

Martha Stewart's lawyer, Robert Morvillo, said in a statement on her Web site: "The arrest of one of the government's key witnesses for perjury clearly demonstrates that the trial of Martha Stewart was fatally flawed and unfair. This is an indication that not one but at least two significant perjuries took place during the course of the trial process. If anyone believes that Martha Stewart was not prejudiced, they are extremely naive."