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Defense attorney Robert Morvillo mocked the government’s case against Martha Stewart and broker Peter Bacanovic Tuesday, saying it was built on “surmise, conjecture and guesswork.” In an emotional closing argument filled with humor, sarcasm and outright anger, Morvillo said the so-called plot to cover up Stewart’s sale of 3,928 shares of ImClone Systems Inc. stock in 2001 was preposterous because a real conspiracy between two “bright and successful” people would have been executed in a reasonably competent manner. “The government has accused Ms. Stewart of participating in a confederacy of dunces,” Morvillo said. “Because nobody could have done what Ms. Stewart and Mr. Bacanovic are alleged to have done — and done it in a dumber fashion.” Morvillo ran through five “glaring” inconsistencies in the stories of the co-defendants when they related, in separate interviews with federal investigators, and in conversations with broker’s assistant Douglas Faneuil, how they had planned all along to sell ImClone when it sunk to $60 per share — and how Stewart’s sale had nothing to do with a Dec. 27, 2001, tip from Faneuil on company founder Samuel Waksal’s efforts to unload millions of his own ImClone shares. First, Stewart and Bacanovic said they spoke in the fall about selling ImClone stock, but could not agree as to exactly when they spoke, said Morvillo of Morvillo, Abramowitz, Grand, Iason & Silberberg. Second, they gave different stories about whether it was Faneuil, or Bacanovic, who told Stewart about the Waksal sales. Third, they had different versions of whether Stewart’s business manager Heidi DeLuca agreed she had discussed with Bacanovic in November selling a stock he labeled “a dog.” Fourth, on Feb. 4, Stewart said she talked with Bacanovic in January 2002 about ImClone, but Bacanovic said on Feb. 13 the two had not discussed the investigation. Finally, Bacanovic, as late as Feb. 13, was allegedly giving a different version of a phone message he left for Stewart on Dec. 27 regarding the downward spiral of ImClone stock. This alleged conspiracy was so sloppy, Morvillo said, that it was impossible to believe. “Didn’t they want to get it right?” he asked. “Didn’t they want to fool people?” The government cited these inconsistencies between the Stewart and Bacanovic stories as evidence that the $60 plan was concocted, but Morvillo tried to turn this around by arguing that prosecutors are attempting to portray two people with innocent motives as “The Gang That Couldn’t Shoot Straight.” REBUTTAL ARGUMENT On rebuttal, prosecutor Karen Patton Seymour turned Morvillo’s argument on its head, saying “Smart people make mistakes and smart people do dumb things.” “The fact that this wasn’t all tied up and perfect doesn’t mean that it didn’t happen,” she said. “Now, smart people committing stupid crimes or doing stupid things — your common sense tells you that that’s what white-collar criminals do every day.” In his closing, Morvillo admitted outright that Stewart was told by Faneuil on Dec. 27 that Waksal was selling, or trying to sell, ImClone stock. “Nobody is disputing whether or not Ms. Stewart was told that the Waksals were selling their shares,” he said. “What we are disputing is that it made a difference to her.” In her rebuttal, Seymour said her opponent made that admission “only in the face of overwhelming evidence.” Seymour was almost laughing as she reminded the jury that Morvillo, in his opening argument, had casually conceded only that “maybe somebody slipped something in” about the Waksal sales when Stewart called Merrill Lynch and spoke to Faneuil on Dec. 27. “You know he just didn’t ‘slip something in,’” Seymour said. “That’s preposterous. It’s a ridiculous defense at this stage of the proceeding.” The final day of the five-week trial began with Bacanovic’s attorney Richard Strassberg of Goodwin Procter, saying his client was caught in the crossfire in a case that “has really been about Ms. Stewart from the beginning.” Unlike government witness Faneuil, who “cut a sweet deal” to avoid prison time for his role in the cover up, Strassberg said, Bacanovic is on trial for his life “because he’s not a liar and he’s not willing to falsely implicate anyone.” With the exception of a few subtle differences, the Stewart and Bacanovic teams dovetailed their defenses, with Strassberg doing the bulk of the attack on Faneuil’s credibility. That left Morvillo with the liberty to toss throw-away lines such as “Doug Faneuil, the living definition of reasonable doubt.” Seymour on rebuttal fortified Faneuil’s credibility, saying he was willing to admit mistakes, including his own role in the conspiracy and the lies he told, and that his story of being browbeaten by Bacanovic into supporting the $60 cover story rang true. But Faneuil was not present for the discussions about selling ImClone before Dec. 27, Morvillo reminded the jury — and the actions of both Bacanovic and Stewart in the critical weeks following the sale support their story. Morvillo attacked the details underlying two counts against Stewart of making false statements to investigators on Feb. 4 and April 10, 2002, as nitpicking accusations that showed no intent to deceive. He reminded the jury that Stewart is accused of obstructing a Securities and Exchange Commission proceeding. He then said the investigation was really driven by the FBI and the U.S. Attorney’s Office, which eschewed normal SEC procedures such as recording interviews and warning suspects about false statements. In rebuttal, Seymour told the jury that Morvillo was wrong to make the case about “sending a message” to the government, or for the jury to pass judgment on the FBI’s interview procedures. Morvillo also took the leap of reminding the jury what was at stake, drawing an objection from Seymour and an admonishment from Judge Miriam Goldman Cedarbaum for his comments after he noted that one false statement Stewart allegedly made was that she sold her stock because she did not want to be bothered on vacation. “And for that you go to jail?” Morvillo said. After Seymour’s objection was sustained, Morvillo shrugged and said “And for that you get prosecuted?” Again attempting to emphasize the absurd, Morvillo said it made no sense for Stewart to engage in a conspiracy merely because Bacanovic, through Faneuil, had made the mistake of sharing confidential information about Waksal with Stewart. “The record is barren of documents showing a conspiratorial meeting,” he said. “When did it happen?” Then assuming the voice of Bacanovic, Morvillo said “Martha, I’m going to ask you to put at risk your entire career and your entire life and tell the story about,” the $60 agreement. “And Ms. Stewart said ‘Of course Peter, why not? That would be fun,’” he said. As he wrapped up, Morvillo quietly asked the jury not to compromise, saying “one count for conviction — it’s over for us.” He then displayed some divergence from the Bacanovic defense strategy. “This has been a two-year ordeal for Ms. Stewart,” he said. “She trusted her financial advisor not to put her in a compromising position.” Saying “Martha Stewart’s life is in your hands,” and the “evidence is virtually non-existent,” he pleaded with the jury not to wreck “all she has done, all her accomplishments.” “I ask you to acquit Ms. Stewart. I ask you to let her return to her life and improving the quality of life for all of us,” he said. “If you do that, it’s a good thing.”

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