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Defense lawyers for Martha Stewart made little headway Monday trying to convince Southern District of New York Judge Miriam Goldman Cedarbaum to order a government investigation into possible grand jury leaks. Judge Cedarbaum questioned whether the defense had been prejudiced by published press reports leading up to Stewart’s indictment for making false statements, obstruction of justice and securities fraud on June 4. One report that appeared three weeks before June 4, accurately stated the government would not charge Stewart with criminal insider trading. And a series of reports published on the day of her indictment correctly stated the charges that were handed down by the grand jury. Stewart’s attorney, Robert Morvillo of Morvillo, Abramowitz, Grand, Iason & Silberberg, said he was not pointing the finger at prosecutors for U.S. Attorney James B. Comey. But Morvillo said that a number of others, including attorneys with the Securities and Exchange Commission, the Federal Bureau of Investigation and the U.S. Department of Justice in Washington, D.C., had access to the charges against Stewart in advance, and grand jurors may have seen press reports about the impending indictments. “We didn’t have this information,” Morvillo said. “So it couldn’t have come from us.” He asked the judge to invoke her supervisory powers over the grand jury to order an investigation into whether there was a violation of Federal Rule of Criminal Procedure 6(e), which states that government attorneys and others “shall not disclose matters occurring before the grand jury.” Morvillo argued that the mere fact of the press reports obligated the judge to order an inquiry, and that the defense did not have to show prejudice from the leaks until after the government had completed its investigation. He also said that judges have ordered such inquiries in other high-profile cases in the past, and in some of those cases, leaks have prompted U.S. Attorneys to initiate their own investigation without prodding from a judge. But Cedarbaum said the facts in those cases were different from those in Stewart’s case. Inquiries have been ordered, she said, only where the potential prejudice “related to the content of what is said in the grand jury.” “These are the kind of matters that have serious consequences for the administration of justice,” she said, adding that the defense motion for a full government probe was “not a small request.” Assistant U.S. Attorney Michael S. Schachter said an investigation was a waste of “limited government resources,” given that “we don’t have reports of what witnesses testified” or “what documents were presented” to the grand jury that indicted Stewart. The fact that there were no such reports in the media during the extended investigation of Stewart’s sale of ImClone Systems Inc. stock, Schachter said, “speaks volumes about how tightly information in this case was controlled.” Schachter also charged that some of the information appearing in press reports had been shared with the defense counsel on June 1, and that some of the press reports cited by the defense concerning the Stewart charges do not even mention a named or unnamed government source. Morvillo took exception to what he said was an attempt to blame the leaks on the defense. He said he was angry to read about a report in the New York Post three weeks before the indictment saying Stewart would not be charged with criminal insider trading, even though prosecutors refused to tell him the same thing when he pressed them for answers about possible charges. “I drafted three press releases to issue on June 4 because I didn’t know what was going to be in that indictment,” he said, calling the government’s argument “a red herring.” POTENTIAL PREJUDICE Cedarbaum again compared Stewart’s request to other high-profile cases where investigations have been ordered, saying the “potential prejudice” in those cases was “enormous.” “Even if we were to assume that somebody jumped the gun, which is obviously improper,” she said, a report on what Ms. Stewart would not be charged with “has a much more limited impact.” Cedarbaum said she would delay making a ruling until she reviews excerpts from what the grand jury was told about the media.

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