Martha Stewart, the diva of gracious living, is facing prison after a New York jury found her guilty of conspiracy and obstruction of justice over stock sales. From Conor O'Clery in New York
As the jury of eight women and four men announced its verdict at the end of a five-week trial, there was a shocked gasp in the crowded courtroom.
Ms Stewart (62) grimaced as each verdict was read, and her daughter Alexis burst into tears. Reporters ran from the courthouse waving red cloths and holding up red numbers to signal the news to television cameras.
Ms Stewart's former stockbroker, Peter Bacanovic, (41), was convicted of conspiracy, perjury, making a false statement and obstruction of justice, but was acquitted of making a false document. Sentence will be passed on June 17th.
The charges arose from the sale of $228,000 (€184,000) worth of ImClone Systems stock on December 27th, 2001, a day before the Food and Drug Administration announced it had rejected ImClone's application for approval of a cancer drug, which sent ImClone's stock plummeting. Ms Stewart and Mr Bacanovic claimed they had a standing agreement to sell when the price fell below $60.
Prosecutors maintained this was a cover story and that she sold the stock because she was tipped off by Mr Bacanovic that her friend, ImClone chief executive Sam Waksal, was dumping his own stock.
As a convicted felon, Ms Stewart may have to step down from her magazine and television company, Martha Stewart Living Omnimedia, which made her the national authority on everything from dinner parties to flower arrangements.
Trading in her company was halted after the verdict and immediately fell $3 when it resumed. Before leaving court in a fur neck-wrap, Ms Stewart issued a statement saying: "I am obviously distressed by the jury's verdict but I continue to take comfort in knowing that I did nothing wrong."
She said she would appeal the verdict and fight to clear her name.
A juror said as he came out of the court: "Maybe it's a victory for the little guys who lose money on the market because of these kinds of transactions."
Legal experts said that Ms Stewart in reality faced up to two years in prison and was unlikly to get away with probation because of the seriousness of lying to prosecutors.
Waksal is serving seven years in prison after admitting that he sold his stock based on advance word of the FDA decision.
Ms Stewart, a multi-millionaire, avoided losses of $51,000 by selling her Imclone stock. She was not charged with insider trading but with lying about the transaction and altering records to support the alleged cover story.
The government's star witness was Douglas Faneuil, a former Merrill Lynch employee who said he passed the tip about Waksal to Ms Stewart on orders from his boss, Mr Bacanovic, who had said: "Oh my God, get Martha on the phone" and later pressured him to lie about the transaction.
Juror Chappell Hartridge said the jury was convinced of Ms Stewart's guilt by the testimony of her secretary that she tried to delete a message about ImClone and that of her friend Mariana Pasternak that Ms Stewart had known the Waksals were selling and had said: "Isn't it nice to have brokers who tell you those things?"
