Updated from 5:13 p.m. EST
Now it's the defense's turn.
The government rested its case Friday in the Martha Stewart trial after a week of wild swings in momentum for both sides. From an appearance by the "national expert on ink" to the stunning and then befuddling testimony of Martha Stewart's best friend, the week had plenty to offer Martha lovers and haters alike.
What should trial watchers expect when the trial resumes next week with Peter Bacanovic's defense team in charge? And will the domestic diva herself take the stand?
"The defendants will be thinking over the weekend whether the government's case was strong enough to require a defense," says legal expert Gerry Shargel. "It seems that the defense has a good argument that the government didn't present a credible case. A good argument can be made that Martha Stewart shouldn't testify."
Shargel says the defense should be able to extract some reasonable doubt from the testimony of Peter Bacanovic's assistant Douglas Faneuil, as well as the shaky note-taking abilities of FBI agents.
Shargel's opinion that the defense shouldn't have Martha and her former broker Peter Bacanovic testify seems to be the prevailing view among criminal defense attorneys, who generally believe that it is a risky strategy.
"If defense attorneys feel they have a reasonable doubt, then they don't put the defendant on the stand because a mistake could erase any doubts in the juror's minds," says criminal defense lawyer Labe Richman. "But if the defense does not feel they have reasonable doubt, then they have to put the defendant on. There's nothing to lose."
Richman notes that a lot of people didn't perceive investment banker Frank Quattrone as performing so well on the stand in his high-profile trial last year, but he still received a hung jury. "So maybe the conventional wisdom against taking the stand is changing," says Richman.
Aside from deciding whether their clients will take the stand, Bacanovic and Stewart's attorneys must decide how they want to portray them to the jury. In other words, government lawyers had the past three weeks to paint their respective pictures of the co-defendants, and now it's the defense's turn to recast their clients in their own light.
"If I were (Stewart defense attorney Robert) Morvillo, I would be attempting a subtle effort to underscore the feminism issues in this case, specifically that Martha Stewart is a woman who has managed to succeed in an old boys club," said criminal defense attorney Bill Singer, who specializes in Wall Street regulatory cases.
"The defense has to maintain the public's natural tendency to be sympathetic for a woman who has been caught up in a white collar criminal prosecution," says Singer.
With regard to Bacanovic, Stewart's former broker and co-defendant, Singer says his lawyers have been painted into a tight corner.
"If Bacanovic comes across as a weasel of a boss who made his subordinate lie to protect him, then he loses credibility," said Singer.
Singer suggested that Bacanovic's defense team would be better off casting their client as a chivalrous, stand-up guy who felt he was doing the right thing by protecting his company, Merrill Lynch, and his best client, Martha Stewart.
Bacanovic's defense team was able to call one witness at the end of Friday's proceedings. They called one of Bacanovic's former clients, Ken Rainin, as a character witness. Rainin, a multimillionaire and longtime Bacanovic client, described the broker as "meticulous" and "completely honest."
Bacanovic's team resumes its defense on Monday, but the major news of Friday's proceedings was the testimony of Mariana Pasternak, a longtime friend of Stewart. Pasternak conceded in court Friday that her recollection of what Stewart told her about a December 2001 stock trade is imperfect and could even be imaginary. The testimony came hours before prosecutors in the 3-week-old trial rested their case.
Pasternak, the Connecticut real estate agent whose testimony Thursday cast serious doubt on the story Stewart gave investigators, said under cross-examination that she wasn't sure if Stewart actually claimed knowledge of insider selling in shares of
"I don't know if the statement was made by Martha, or just a thought in my mind," Pasternak said. "I don't know whether Martha said that, or whether I just thought those words."
Pasternak testified Thursday that Stewart knew about insider selling when she unloaded a slug of ImClone before a regulatory setback routed the shares in December 2001.
Pasternak, who accompanied Stewart on a trip to Mexico after her now-famous ImClone trade, testified Thursday that Stewart claimed to know Sam Waksal "was trying to sell his stock, that his daughter was trying to sell her stock, that Merrill Lynch refused to sell."
Merrill Lynch refused to allow Waksal, ImClone's founder, to transfer his personal shares into his daughter's account on Dec. 27, 2001, the same day Stewart made her ImClone trade. The government claims that Bacanovic, the former Merrill Lynch broker, ordered an assistant to tip Stewart to sales by Waksal's family members.
Friday's testimony created enough doubt that prosecutors were allowed to further plumb Pasternak's memory.
"What is your best recollection?" asked assisant U.S. Attorney Michael Schachter.
"I'm not very sure," Pasternak replied. "I remember looking at Martha. I believe Martha is the one who said it."
"My best belief is that she said it," Pasternak said.
Earlier Friday, the trial judge ruled that Pasternak's recollections couldn't be considered when the jury weighed charges against Bacanovic, evidently on grounds they were hearsay. Bacanovic's lawyers began making their case Friday afternoon and will continue on Monday.
Testifying Thursday about a conversation that she claims occurred with Stewart on the balcony of a Mexican resort on Dec. 30, Pasternak said Stewart enthusiastically praised Bacanovic.
"She said, 'Isn't it nice to have a broker who tells you those things?'" testified Pasternak, the Westport, Conn., real estate agent with whom Stewart vacationed.
Stewart and Bacanovic say the domestic entrepreneur had an informal agreement to sell the roughly 4,000 ImClone shares when their price fell below $60.
Another witness testified Friday that Bacanovic's assistant, Douglas Faneuil, was worried about Stewart's stock trade when she spoke to him at a party in January 2002.
Zeva Vellel quoted college friend Faneuil quoting Bacanovic telling him, "Listen nothing happened. There was nothing wrong with the sale, end of story."
The judge said she would read motions over the weekend both for and against the dismissal of securities fraud allegations against Stewart and Bacanovic. Both sides were allowed to argue the charges, which center on the government's belief that Stewart's proclamations of innocence amounted to a plot to prop up the shares of
Martha Stewart Living
Addressing that aspect of the government's case, which depends on convincing the jury Stewart's statements affected her company's stock price, Cedarbaum said: "I think there is evidence of materiality."
"Materiality is information that a reasonable investor would consider important when making a decision to invest in a company," Cedarbaum added.
Defense lawyer Robert Morvillo will be allowed to argue against the charge further on Monday before Cedarbaum delivers her ruling.