Updated from 1:17 p.m. EDT
The U.S. Attorney in New York reportedly will announce perjury charges Friday against a government employee involved in the insider-trading prosecution of Martha Stewart. The news briefly sent shares of
Martha Stewart Living
20% higher at midday.
Prosecutors plan a 2 p.m. EDT news conference to announce charges against the suspect, a Secret Service employee,
reported. Officials with the U.S. Attorney's Office confirmed that a news conference about charges of "perjury in a major prosecution" was scheduled, but declined to comment further. The name of the person being charged wasn't available.
Stewart and her former Merrill Lynch broker, Peter Bacanovic, were convicted March 5 of lying to the government about Stewart's sale of about 4,000 shares of
in December 2001. Both are awaiting sentencing next month.
Among other things, Bacanovic was charged with altering a spread-sheet record of Stewart's stock sales, an allegation supported by testimony from the chief forensic scientist of the Secret Service. The scientist, Larry Stewart, testified that the ink used to make a notation on the sheet was different from other ink on the page.
The government contended Bacanovic changed the record to suggest his client had a standing order to sell ImClone "at 60." The existence of a preset stop-loss order was central to the defense argument that Martha Stewart didn't make a perfectly timed stock sale after getting a tip, but simply sold her stock according to existing plans.
Ironically, making and using false documents was the one count on which Bacanovic was acquitted by the jury.
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. Typically the defense must demonstrate the discovery of new evidence that could have led the jurors to a different verdict.
There's little doubt the perjury charge would be new evidence. It's not clear, however, that the jury would have acquitted the defendants without the testimony on the ink tests.
Judge Miriam Cedarbaum has already rejected an earlier motion for a new trial based on questions about the pre-trial truthfulness of one of the jurors in the case.
The government held that Bacanovic added the "at 60" annotation after the fact and called the Secret Service's Mr. Stewart to the stand on Feb. 19, about two weeks into the trial. The scientist testified that the pen used to make the annotation was an expensive one, while other markings on the same sheet were made by a cheap Paper Mate pen.
Lawyers from both sides were meticulous in vetting the finer points of ink analysis with Mr. Stewart and a subsequent defense expert who claimed that another marking on the page was similar to the "at 60" notation and that numerous pens were used all over the sheet.
Under defense cross-examination, Mr. Stewart acknowledged that not every mark on the page got the same initial analysis, and said infrared evidence that appeared to show that one mark matched the "at 60" was inconclusive. Mr. Stewart said adequately testing the second mark -- a dash next to an entry for
-- was impossible because the defense had used too much of the sample in its own tests.
After an initial spike, Marthat Stewart Living shares were recently up 95 cents, or 11%, to $11.11.