A jury has convicted Martha Stewart of lying to federal investigators about her sale of 3,298 shares of ImClone (IMCL) stock on Dec. 27, 2001, the day before the Food & Drug Administration rejected the drug outfit's application for Erbitux, a cancer drug. The four charges carry a possible sentence of up to 20 years in prison.
Stewart was found guilty of conspiracy, obstruction of justice, and making false statements. In a statement following the verdict, the domestic diva continued to insist, "[I] have done nothing wrong."
Stewart's former broker, Peter E. Bacanovic, also was found guilty of four of five charges in connection with the stock trade, which prosecutors alleged was the result of a tip by Bacanovic that ImClone CEO Sam Waksal, a close friend of Stewart, had already dumped his own ImClone shares. ImClone's share price plunged after the FDA decision was announced. Stewart and Bacanovic tried to cover up their actions when questioned by the Securities & Exchange Commission and federal law-enforcement officials, according to the government.
BACK TO COURT. Stewart's attorney, Robert J. Morvillo, said his client will appeal the convictions to a federal appeals court. "We are disappointed at the outcome," Morvillo told reporters outside the U.S. District courthouse in lower Manhattan after the trial ended on Mar. 5, but he added: "We look at this as an opportunity to go to the next round."
However, U.S. Attorney David Kelley said the verdict sends a strong message: "For anyone in Corporate America, beware, this type of conduct will not be tolerated. We are going to go after you if you lie. We will not and cannot tolerate dishonesty and corruption in any judicial process." Sentencing has been set for June 17.