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Stewart pleads not guilty as juror screening resumes

Testimony phase likely to begin next week, judge says

Stewart, second from left, and co-defendant Bacanovic, far left, are depicted in this courtroom sketch from Tuesday's hearing
Stewart, second from left, and co-defendant Bacanovic, far left, are depicted in this courtroom sketch from Tuesday's hearing

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Martha Stewart's day in court is approaching as jury selection nears completion.
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• Superseding indictment U.S. v. Stewart and Bacanovic  (FindLaw, PDF)external link
• Stewart's employment agreement Martha Stewart Living Omnimedia, Inc. and Martha Stewart  (FindLaw)external link
Corporate Scandals

NEW YORK (CNN) -- Jury selection continued behind closed doors Tuesday for the trial of style maven Martha Stewart and her stockbroker despite news outlets' efforts to overturn a judge's decision to bar them from the normally open procedure.

Stewart and Peter Bacanovic have pleaded not guilty to charges stemming from allegations of insider trading.

A federal appeals court Tuesday granted a request by attorneys for 17 media organizations, including CNN, to expedite their appeal of Judge Miriam Goldman Cedarbaum's ruling -- but jury selection is likely to be completed before that case can be heard.

Cedarbaum brought in more than 30 prospective jurors, chosen from their answers to a questionnaire, and asked them for their patience as they are called, one-at-a-time, into her robing room for interviews with attorneys on both sides.

She also told the prospective jurors that the trial would likely begin next week.

In the media organizations' appeal, the government's brief is due in court on Thursday, the media attorneys' brief on Friday, with oral arguments scheduled for 9 a.m. Monday.

Stewart, 62, has been charged with conspiracy, obstruction of justice, two counts of making false statements and securities fraud. She sold nearly 4,000 shares of ImClone Systems stock on December 27, 2001, a day before regulators rejected the company's application for approval of Erbitux, ImClone's experimental cancer drug -- news that sent its stock tumbling.

Sam Waksal, ImClone's founder and a friend of Stewart, is serving a seven-year prison term after pleading guilty to charges of trying to sell ImClone stock before the Erbitux news broke. Stewart has maintained that she didn't have inside information and had a long-standing arrangement with her broker to sell ImClone stock at a certain price.

Bacanovic has been charged with conspiracy, false statements, making and altering documents and perjury.

Merrill Lynch suspended Bacanovic in June 2002 after the firm found conflicting accounts about whether Stewart's agreement with Bacanovic about an ImClone sale existed. Stewart stepped down as CEO of Martha Stewart Living in an effort to minimize that company's falling stock prices, resulting at least in part from the publicity surrounding the allegations against her.

An aide to Stewart said she had been "hands on" preparing her defense and was eager to testify once the trial itself begins.

A guilty conviction on all counts could mean a prison sentence of as much as 30 years for Stewart and 25 years for Bacanovic, the U.S. attorney's office said.

If Stewart is convicted on all counts, she'll probably face three to five years since full maximum sentences are rarely imposed, said Henry Mazurek, a lawyer with the firm Gerald Shargel in New York.

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