U.S. Witness In Stewart Trial Accused Of Perjury

NEW YORK, May 21 -- Federal prosecutors charged a U.S. Secret Service analyst with perjury on Friday for allegedly lying on the stand during the criminal trial of Martha Stewart -- an embarrassment to the government that her defense said warranted a new trial.

Larry F. Stewart, a laboratory director and chief document examiner , who is not related to the multimillionaire businesswoman, lied when he said he was personally involved in testing ink on a worksheet that was a key piece of evidence in the trial, prosecutors said.

Broker Peter E. Bacanovic told investigators that the worksheet documented Martha Stewart's plan to sell her ImClone Systems Inc. stock when the price fell to $60. Prosecutors based their conspiracy case against Stewart on the assertion that no such agreement existed and that she and Bacanovic concocted the $60 story to avoid insider-trading charges.

But, according to the government, the evidence itself is not in question, only who was directly doing the tests.

"We are quite confident that the false testimony will have no impact on the convictions of Martha Stewart and Peter Bacanovic for both factual and legal reasons," U.S. Attorney David N. Kelley said at a news conference announcing the charges. The prosecutors did not say how they uncovered information that led to their conclusion that Larry Stewart had lied.

Larry Stewart's attorney, Lawrence S. Feld, declined to comment on the charges, saying neither he nor his client had had time to fully examine the case. Feld said Stewart was released on a personal recognizance bond and was returning home to Bethesda. Stewart faces a maximum five-year sentence and $250,000 fine on each of the two perjury charges.

Lawyers for Martha Stewart and Bacanovic quickly seized on the perjury allegations, saying they should be enough to have the guilty verdicts tossed out when viewed in conjunction with juror Chappell Hartridge's alleged failure to disclose previous brushes with the law prior to the trial.

"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," Stewart's attorneys Robert G. Morvillo and John J. Tigue said in a prepared statement.

The lawyers added, "This is an indication that not one but at least two significant perjuries took place during the course of the trial process." Her attorneys said if people believe Stewart's right to a fair trial "was not prejudiced, they are extremely naive."

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