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Court Hears Martha Stewart Appeal

By Brooke A. Masters
Washington Post Staff Writer
Thursday, March 17, 2005; 6:00 PM

NEW YORK, March 17 -- Now that Martha Stewart is out of prison, she also wants out of home confinement.

Stewart, 62, has asked the U.S. Court of Appeals for the Second Circuit to remand her case for a possible resentencing in light of a U.S. Supreme Court decision that found that federal sentencing guidelines were unconstitutional. Not only that, but Stewart's lawyers also told a three-judge panel of the Second Circuit Thursday that her conviction should be reversed, because prosecutors relied on perjured and inadmissible testimony, and a juror allegedly lied on his screening questionnaire.

If granted, the resentencing request would give trial judge, Miriam Goldman Cedarbaum, the option of shortening Stewart's sentence. Stewart completed five months in prison earlier this month and is now serving five months of confinement in her Bedford, N.Y., home. Her sentence also limits the hours each week she may work at the corporate empire she built on the image of domestic perfection.

Under a February ruling by the Second Circuit, cases on appeal can be sent back to the trial judge, who has the option of imposing a different sentence now that the guidelines are purely advisory.

Cedarbaum said last fall that she was giving Stewart the minimum permissible sentence under the guidelines, adding, "You have suffered and will continue to suffer enough."

At Thursday's hearing, Stewart's attorney Walter Dellinger argued that, under a second new Supreme Court ruling, Stewart's constitutional right to cross-examine the witnesses against her was violated when prosecutors played tapes from her former broker Peter E. Bacanovic's 2002 interview with the Securities and Exchange Commission. Bacanovic, 42, who was tried alongside Stewart, did not take the stand.

Bacanovic's lawyer Richard M. Strassberg followed Dellinger to the podium and told the appeals court that Bacanovic's rights were similarly violated by the use of Stewart's statements to investigators. Both lawyers also decried the testimony of a government ink expert who was later charged with perjury.

"These errors mattered," Dellinger said.

And Strassberg asserted: "What this process is about is making sure that justice is done and fairness occurs, and that will lead you to reverse this conviction."

Stewart and Bacanovic were convicted in March 2004 of conspiracy and lying to authorities about the circumstances surrounding her December 2001 sale of ImClone Systems Inc. stock just before ImClone announced its leading cancer drug had run into regulatory trouble. Prosecutors said she sold because Bacanovic had his assistant tell her that ImClone's founder was dumping his shares, but the defendants said they had a previously reached agreement to sell when the price dropped below $60, as it did that day.

Assistant U.S. Attorney Michael Schachter defended the conviction, arguing, "There was no error. . . . There was no violation of the defendants' sixth amendment rights" because the Supreme Court made an exception to the confrontation requirement for co-conspirators.

But Schachter faced sharp questioning from one of the judges, Richard C. Wesley, on whether the court should hold a hearing to find out why juror Chappell Hartridge allegedly lied about prior brushes with the judicial system on his screening form.

"When you have a juror who lies, don't you think the court has an obligation to take a look at it?" Westley asked.

The judges seemed less receptive to the defense's arguments based on the ink expert's alleged perjury, noting that Bacanovic was acquitted of making a false document, the charge most closely related to the ink evidence.

Stewart, who attended Thursday's hearing in long pants that made it impossible to see whether she is wearing the ankle monitor required as part of home confinement, did not comment after the hearing. Bacanovic is serving his five-month prison sentence and did not attend. He also has asked have his sentence reconsidered.

It is not clear when the Second Circuit will rule on either the request for resentencing or the validity of Stewart and Bacanovic's convictions.

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