U.S. Secret Service laboratory director Larry F. Stewart pleaded not guilty to perjury charges Wednesday, and his lawyer said the ink expert stands by both his analysis and his testimony in Martha Stewart's criminal trial.
Larry Stewart, 46, was arraigned on a two-count indictment that alleges he exaggerated his role in examining a worksheet prepared by Martha Stewart's former broker Peter E. Bacanovic. Bacanovic and Martha Stewart were convicted in March of conspiracy, obstruction and lying to federal investigators about her December 2001 sale of ImClone Systems Inc. stock. Stewart faces an estimated 10 to 16 months in prison; her sentencing is scheduled for July 8.
Larry Stewart testified during the trial that he personally analyzed a worksheet that Bacanovic claimed memorialized an agreement he made with the multimillionaire businesswoman to dump ImClone stock if the price fell below $60. The ink analyst said his work showed that the notation "@60" next to ImClone was in a different ink than other markings on the page. Prosecutors used that information to argue that the $60 arrangement was a cover story designed to conceal that Martha Stewart sold after Bacanovic's assistant improperly told her that ImClone's founder was trying to sell his company stock.
Now the U.S. attorney's office in Manhattan contends that one of the ink expert's underlings actually did the work. Larry Stewart, who has been placed on administrative leave, is also charged with falsely claiming that he knew about a book proposal by some other experts in his laboratory.
He did not speak during or after the brief hearing except to say "not guilty" and answer a couple of yes or no questions from U.S. District Judge Denny Chin.
But his attorney Judith L. Wheat said her client "stands behind the work he did in this case. He stands behind the testimony he gave in this case. . . . He did not commit perjury."
Chin set the trial for Sept. 20, and prosecutors told Chin they expected the trial to last 11/2 to two weeks.
Larry Stewart's testimony has become an issue in Martha Stewart's efforts to get her conviction overturned. Her lawyers argued in a motion last week that the businesswoman should be granted a new trial because Larry Stewart was part of the prosecution team, and his testimony affected the outcome of the case. They have asked for a hearing to determine what the prosecutors knew about his testimony.
U.S. Attorney David N. Kelley has said his office learned of Larry Stewart's alleged misstatements only in May. Wheat said yesterday that her client "worked with the prosecutors in developing his testimony." She said he talked to "a number of them" but did not specify which ones.
"Mr. Stewart's testimony that he participated, observed and reviewed the work was truthful," Wheat said, adding that "we do have questions about the motivation of at least one of the witnesses" who told investigators that Larry Stewart lied. According to the indictment, Larry Stewart complained that the employee who prosecutors say did the actual testing had messed up the work.
A spokeswoman for Kelley declined to comment.
This is not the first time that Larry Stewart's work in a high-profile case has come under scrutiny. Stewart was one of two Secret Service document examiners who evaluated research notebooks during a National Institutes of Health investigation of alleged fraud by Thereza Imanishi-Kari, then a researcher at the Massachusetts Institute of Technology. They analyzed the ink and printers used for the data in Imanishi-Kari's notebooks and concluded she had committed fraud because some of the printouts appeared to have been created or altered after their official dates.
The case, which became known as the "Baltimore affair" for Imanishi-Kari's world-renowned co-author and staunch defender David Baltimore, a Nobel laureate, ended ignominiously in 1996 when an appeals panel found that the NIH Office of Research Integrity had failed to prove its allegations. The panel's decision said Stewart and the other researcher's testimony was "professional . . . and informative" but called their work "unpersuasive" because they failed to compare the researcher's notebooks with an established norm for that kind of work. The panel also said Stewart had failed to keep his original data and later altered his working notes, two things for which the investigators had criticized Imanishi-Kari.