Martha's trial 'fundamentally unfair'

Lawyers for Martha Stewart told a US appeals court that she suffered a “fundamentally unfair” trial at the hands of prosecutors who incorrectly suggested she was accused of insider trading.

With the celebrity homemaker already serving time at a West Virginia prison, the lawyers asked the appeals court to overturn her conviction for lying to federal investigators about a shares sale.

Stewart was never charged with insider trading – only with deceiving investigators. But the appeals brief, made public today, argues prosecutors and the trial judge kept the jury from understanding the difference.

“A barrage of pre-trial leaks and in-court accusations left the indelible impression that she was guilty of that offence,” it says. “Tarring Stewart with an uncharged, highly inflammatory crime was fundamentally unfair.”

Prosecutors told jurors that Stewart had received a ”secret tip” about her ImClone Systems stock just before she sold, and said the case was about “cheating investors in the stock market”.

Stewart sold ImClone shares a day before a negative report that sent the price tumbling.

Prosecutors said she sold because she learned that ImClone founder Sam Waksal was selling.

Waksal pleaded guilty to insider trading after prosecutors said he had advance word of the negative report – a damaging government decision about an ImClone cancer drug.

Stewart was never formally accused of having insider knowledge of the drug decision – but her lawyers argued to the appeals court that prosecutors consistently tried to equate Waksal’s conduct to Stewart’s at the trial.

“All this argument and evidence was clearly designed to suggest not just that Stewart had a motive to lie, but that she had committed insider trading,” the appeals brief says.

Stewart and former stockbroker Peter Bacanovic were each sentenced to five months in prison and five months of house arrest after the jury convicted them of lying to investigators about the stock sale.

Both were allowed to remain free while they appealed. Stewart elected to begin serving her time, and earlier this month reported to the minimum-security federal prison in West Virginia.