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Martha Stewart’s sentencing on Friday set the stage for the next phase in her lawyers’ battle to overturn her conviction for obstructing a government investigation into her 2001 sale of ImClone Systems Inc. stock. Stewart was sentenced to 5 months in prison followed by 5 months of home confinement after Southern District Judge Miriam Goldman Cedarbaum rejected defense attorney Robert Morvillo’s request that his client serve no prison time or, if need be, serve her term in a halfway house. Stewart’s case now moves to the 2nd U.S. Circuit Court of Appeals, where she is expected to challenge her conviction on several grounds, including several pretrial and trial evidentiary rulings by Judge Cedarbaum, the alleged perjury of government ink expert Lawrence Stewart and the alleged bias of outspoken juror Chappelle Hartridge, who defense lawyers say lied about his background to get onto the jury and convict Stewart. Morvillo, of Morvillo, Abramowitz, Grand, Iason & Silberberg, also has said the defense will argue before the 2nd Circuit that Cedarbaum erred when she denied its request to tell the jury that Stewart was not charged with criminal insider trading by the government. And the appeal, which will be handled by a team led by Walter Dellinger III of O’Melveny & Myers in Washington, D.C., is also expected to renew the Stewart team’s challenge to the sentence under the U.S. Sentencing Guidelines in light of the U.S. Supreme Court’s recent decision in Blakely v. Washington. Cedarbaum on Tuesday summarily dismissed Morvillo’s last-minute challenge under Blakely, which ruled that judicial findings of fact that increase a defendant’s sentence beyond a prescribed range violate the Sixth Amendment right to a jury trial. Although Cedarbaum noted Thursday that the Supreme Court expressly said in Blakely it was dealing only with Washington state’s sentencing scheme and not the federal guidelines, on Friday the judge cited the confusion over Blakely’s applicability to the federal scheme in support of her decision to allow Stewart to remain free pending her appeal. But the judge gave no indication that her sentence would be any different had the guidelines been unconstitutional and she was forced to sentence her under the pre-guidelines system. In March, Stewart and her former stockbroker and co-defendant Peter Bacanovic were both convicted of conspiracy, obstruction and two counts of making false statements following a two-month trial and two days of jury deliberations. Bacanovic was also sentenced Friday by Cedarbaum to 5 months in prison and 5 months’ home confinement. In addition to Morvillo, Stewart was represented by John J. Tigue Jr. of Morvillo Abramowitz. Bacanovic was represented by Richard M. Strassberg and David J. Apfel of Goodwin Procter. Assistant U.S. Attorneys Karen Patton Seymour, Michael Schachter and William Burck handled the government’s case.

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