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After absorbing the shock of a guilty verdict on all counts for Martha Stewart, lead defense attorney Robert Morvillo has three priorities: Move to set aside the verdict as against the weight of the evidence, prepare her appeal to the 2nd U.S. Circuit Court of Appeals, and work his hardest to win the most favorable sentence possible under the Federal Sentencing Guidelines. Veteran white-collar attorneys and former prosecutors say that the facts of Stewart’s case are fairly straightforward and that absent a surprise, the arguments will most likely focus on a defense motion for a downward departure from a sentencing range of 10 to 16 months. The jury found Stewart guilty of conspiracy, obstruction and two counts of false statements following two full days of deliberations. Co-defendant and former Merrill Lynch broker Peter Bacanovic was found guilty of conspiracy, obstruction and perjury. He won acquittal on only one count, making and using a false document. The document was a worksheet to which he allegedly added markings to back the pair’s “cover story” that he and Stewart had agreed in advance of Dec. 27, 2001, to sell 3,928 shares of ImClone Systems Inc. if it fell to $60 and that the sale was not motivated by information about ImClone founder Samuel Waksal selling his own shares. The tougher sentencing ranges for white-collar crimes that have been set by Congress were not in effect when Stewart was charged. Various violations have different guideline ranges, and Judge Miriam Goldman Cedarbaum, when she sentences Stewart June 17, will apply the range for obstruction, which has the highest range among Stewart’s four convictions. She will start with a base level of 12, which, without adjustments upward or downward, carries a prison sentence of 10 to 16 months. Stewart’s decision to go to trial and not accept a plea agreement eliminated her chance to lower that base level by two points for acceptance of responsibility. From that base level, Cedarbaum will most likely be asked to consider special offense characteristics. In this case, said Robert J. Cleary, a Proskauer Rose partner and former U.S. attorney for New Jersey, “the only one that may apply is that the offense resulted in a substantial interference with the administration of justice.” Should Cedarbaum find this adjustment applies, she must increase the base level offense by three levels. The next step in the process is determining the “Chapter Three adjustments” — aggravating or mitigating factors that apply in multi-defendant cases and focus on the defendant’s place in the leadership or hierarchy of the criminal plot. At the highest level of impact, aggravating levels are added where the defendant played a lead role in criminal activity that is extensive. At the lowest level, a leadership or supervisory role is played where the criminal activity is not extensive. The criminal activity here covered the time between the immediate aftermath of the stock sale in January 2002 and Stewart’s last statement to investigators on April 10, 2002. “Probably none of them apply in this case because there are two people who got together and there didn’t seem to be an organizer,” Cleary said. On mitigating factors, Morvillo is likely to argue that his client was a “minimal or minor” participant. “It’s very difficult to see that,” said Cleary. “You have two people, both who played key roles in this and both told the lies, as well as the evidence that Martha changed a phone log. The evidence is that they are both engaged in the scheme fairly extensively.” If three levels are added for specific offense characteristics, that would take Stewart to level 15, which would set a range of 18 to 24 months. The addition of an aggravating role, in all likelihood two more levels, would set a range of 24 to 30 months. That leaves a request for a downward departure, whereby the judge could reduce the sentence all the way down to probation in certain circumstances. But several of the grounds for downward departure, such as the existence of a mental deficiency or an especially vulnerable defendant, clearly do not apply in Stewart’s case. “The concept is that the guidelines were designed to give you a formula and they do not take into account very special circumstances of the offense or the individual – but it usually has to be extraordinary circumstances,” Cleary said. The likely course of attack for Morvillo, of Morvillo Abramowitz Grand Iason & Silberger, is to argue that a downward departure should be granted because the crime represented aberrant behavior, said Alan Vinegrad, former Eastern District U.S. attorney and now a partner at Covington & Burling. But, Vinegrad cautioned, “simply having no criminal record is not enough for a downward departure based on aberrant behavior — regardless of the guideline range.” “You have to show that this was basically not a well-thought-out or well-planned offense — that it was spontaneous.” Other factors that must be shown in making a case for aberrant behavior is that is was a single criminal occurrence or a transaction of limited duration that was committed without significant planning and, in the words of the guidelines, a “marked deviation by the defendant from an otherwise law-abiding life.” The prosecutors, Assistant U.S. Attorneys Karen Patton Seymour and Michael Schachter, will most likely rebut this argument by noting that Stewart, a former stockbroker, knew well what she was doing when she made several false statements and that the plot spanned several months, during which she had ample opportunity to set the record straight. Cedarbaum’s decision to throw out a securities fraud charge against Stewart, who was accused of lying to investors in her own company about the ImClone sales, is critical here, Cleary said, because market losses in the millions of dollars would have given the prosecution, working on a 10-year maximum sentence, the chance to argue for a much longer prison term. A final factor is “offense grouping,” in which Cedarbaum will be asked to add the impact of Stewart’s other convictions to the basic calculation she makes on the obstruction count. “It gives the defendant a little more sentencing exposure, but the defense can argue that it would be inappropriate to add a point or two to her sentence when, even though she committed a number of crimes, it was all part of the same scheme,” Cleary said. This article originally appeared in the New York Law Journal , a publication of American Lawyer Media.

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