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Verdict Is Reached in Martha Stewart Case

By ERIN McCLAM, Associated Press Writer

NEW YORK - The jury reached a verdict Friday in the trial of homemaking icon Martha Stewart (news - web sites), who is accused of obstructing justice and lying to the government about a superbly timed stock sale, a law enforcement source has told The Associated Press.

Shares of Martha Stewart Living Omnimedia jumped in early afternoon trading as word spread of a verdict, with investors apparently betting that she would be acquitted. The stock jumped $1.63, or 12 percent, to $15.66 within a half hour of the reports.

Her company, which announced its earnings Thursday, swung to a profit in the fourth quarter, but took a loss for the year. Many analysts believe the future of the company hinges on the trial, since her public image is tied so closely to the company's marketing.

The verdict came on the third day of deliberations in the case. It was not immediately known when it would be announced. Extra security was seen outside the Manhattan federal courthouse where the trial was being held.

Earlier Friday, the judge in the case ruled that jurors have sufficient evidence to decide whether Stewart's former stockbroker, Peter Bacanovic, committed perjury.

The testimony of Stewart's assistant, Ann Armstrong, and a telephone message log she kept are enough to meet the high standards of evidence to convict a defendant of perjury, U.S. District Judge Miriam Goldman Cedarbaum said.

Bacanovic is accused of lying under oath about a message he left for Stewart on Dec. 27, 2001, the day she sold ImClone Systems stock.

Bacanovic told the Securities and Exchange Commission (news - web sites) in 2002 that the message simply relayed ImClone's stock price. But Stewart's assistant recorded the message as: "Peter Bacanovic thinks ImClone is going to start trading downward."

To convict a defendant of perjury, jurors must rely on the testimony of two witness or on one witness whose story is supported by a document.

A focus on Bacanovic in the jury's notes shows only that they are considering the charges against him — not which way the jury may be leaning.

And it by no means indicates they are focusing more on him than on the counts against Stewart, who is charged with lying to investigators about her ImClone sale on Dec. 27, 2001.

Stewart and Bacanovic say they had agreed earlier to sell the stock when its price fell below $60 per share.

The jury still must decide on other legal questions, including whether Bacanovic intentionally gave false testimony about the message.

Bacanovic lawyer Richard Strassberg strongly objected to the ruling, saying the judge was essentially allowing jurors to reach a perjury conviction based on one witness' testimony.