Martha Stewart suffered a serious setback to her criminal defense yesterday when a judge refused to throw out two charges against her that carry a maximum 15-year prison sentence.
Stewart, looking tired and nervous, gulped from a water bottle as Manhattan federal Judge Miriam Goldman Cedarbaum ordered her to stand trial on charges of securities fraud and obstruction of justice, as well as three other federal counts.
Showing a no-nonsense attitude, Cedarbaum surprised a packed courtroom by issuing her ruling on the basis of written arguments, telling the lawyers she did not need to hear them debate the issues.
The judge dealt Stewart a blow by knocking down her argument that the securities count was unconstitutional because it criminalized her public declarations of innocence.
Prosecutors claimed Stewart defrauded investors by making false public statements to prop up her company’s share price when she was engulfed in the ImClone scandal last year.
Cedarbaum declared the government’s application of the charge “novel,” but said she did not find Stewart’s arguments persuasive.
“The Constitution does not prohibit the prosecution of lies that are part of criminal conduct,” she said.
In upholding the obstruction charge, the judge said Stewart’s arguments were “premature” because they challenged alleged facts that could only be judged by a jury.
Stewart, 62, who entered court clutching a Hermes bag, scribbled notes throughout the 70-minute hearing.
Stewart – who is also charged with conspiracy and making false statements and faces up to 30 years in prison – is accused of obstructing a Securities and Exchange Commission probe by concocting a fictitious explanation of her sale of 4,000 shares of ImClone Systems stock in 2001.
She told investigators she sold because she had a pre-existing agreement with her broker, Peter Bacanovic, to sell if the stock price dropped below $60.
The trial is set to begin Jan. 12 and is expected to last more than six weeks.