Bacanovic Behind the Eight Ball
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March 2 2004 1:01 AM

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Chance of conviction
Monday, March 1, 2004: 60 percent
After a strong closing argument by Assistant U.S. Attorney Schachter, followed by (most of) a rambling, inconsistent one by Bacanovic attorney Strassberg, Stewart's chances of conviction jump to their highest point of the trial—60 percent. (Stewart's attorney Morvillo hasn't delivered his summation yet, so, to some extent, this leap is expected.) Bacanovic's chances jump, too, and remain significantly higher than Stewart's.

If Assistant U.S. Attorney Michael Schachter gets sick of the prosecution business, he can make a living as a pool hustler. For the first five weeks of this trial, with one foot-in-mouth gaffe after another, Schachter appeared to convince everyone—defense, judge, jury, spectators, and even his boss, Karen Patton Seymour—that he was a clod. Just when he had been all but written off, however, he expertly drove a stake through the heart of a key defense witness's credibility, and today, he delivered a cogent, concise, and effective summation that left the government poised to win at least one conviction in this trial.

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Like any good storyteller, Schachter began with an image:

On the afternoon of Feb. 4, 2002, as Martha Stewart walked up the steps to the United States Attorney's Office, she had firmly fixed in her mind two things. One was that she was going to tell the FBI and the SEC that before selling her ImClone stock she had not spoken to Sam Waksal, and he had not tipped her that the FDA was rejecting ImClone's drug application. ... The other ... was that she would conceal from the FBI and the SEC the true reason for her sale. ...  

It is no easy trick to hold a courtroom's attention for two straight hours, but, by sticking to the basics, Schachter did. He began with an outline: In this summation, ladies and gentlemen, I want to do three things. ... He enumerated his points: the three categories of lies (the what-happened-on-Dec.-27 lies, the $60-cover-story lies, and the we-didn't-discuss-the-investigation lies), the six reasons why the $60 story is a crock, etc. He coordinated his show-and-tell aids: The exhibits magically appeared on the screen behind him, seemingly uncued. He didn't whisper or howl; he didn't pace the aisles; he didn't thump the jury box or paw at the air. He just read his speech and let the story do the work.

Schachter focused on the government's strengths (Douglas Faneuil, Stewart's alteration of Bacanovic's phone message) and ignored its weaknesses (the vaporized contention that Faneuil had been bribed). He observed that no single piece of evidence is by itself enough to prove the alleged crimes—but that, when all the evidence is taken together, the government's story fits. He described, convincingly, why Faneuil should be believed: his demeanor, his careful responses, his acceptance of responsibility for his actions. He sprinkled his narrative with the defense's own words, quoting the lawyers, playing fragments of Bacanovic's SEC testimony. He defanged Morvillo's John-Ashcroft-is-Satan refrain—not by denying it (no sense in destroying his own credibility) but by suggesting that Morvillo just "hopes that some of you will feel strongly about John Ashcroft ... hopes you will ignore the evidence. ..." He (justifiably and effectively) ridiculed the defense's contention that Faneuil was "fixated" by Stewart, that he wanted to be the "Big Man." (If Faneuil was fixated or uppity, this isn't evident in the e-mails the defense cites.)

Why do they come up with such crazy theories? Schachter asked. Because they are desperate.

After two-and-a-half hours, Schachter concluded predictably: The only reasonable verdict is guilty on all counts. Then Bacanovic attorney Richard Strassberg took over. Schachter was a tough act to follow, but Strassberg has followed several tough acts in the last five weeks and risen to the challenge, so this observer, anyway, wasn't ready to bid Peter goodbye.

Initially, Strassberg's calm, confident demeanor dispelled the impression of slam-dunk-conviction Schachter had created. With the exception of a nauseating moment when Strassberg said he wanted to thank the jury for listening so carefully, that he "appreciated" this, he began strong, immediately exploiting several Schachter mistakes. The Schachter claim that Bacanovic told Merrill administrator Judy Monaghan that the ImClone trade was a "tax-loss sale," for example?—the claim that was supposed to be evidence that Bacanovic had changed his story? Yes—Schachter had mischaracterized the testimony. Monaghan had never said anything of the sort.

In the first hour, moreover, Strassberg made several key points. He reminded the jury that the government's burden of proof is a "high and exacting standard"—not possible, not plausible, but beyond a reasonable doubt.  He said that, like other good liars, Faneuil did not make everything up, he just twisted a few key facts. He homed in on what I've referred to as the "fantasy life of Douglas Faneuil," citing several instances in which Faneuil's inferences have been more dramatic than reality: Faneuil's recollection that his first attorney, Jeremiah Gutman, had described a secret deal with the government in which Merrill would deliver "Sam Waksal's head on a silver platter" in exchange for the government letting Martha Stewart go, or Faneuil's belief that, because Judy Monaghan offered him a free dinner to ease the tension of his SEC interview, she was bribing him to keep silent. If Faneuil was a good enough liar to have fooled the SEC, FBI, and Merrill Lynch for six months, Strassberg emphasized, he was probably good enough to fool us, too.

All this was sharp and effective. But then, uncharacteristically, Strassberg wandered off into his own fantasyland. Having made the critical points about Faneuil, Strassberg started making lesser ones—and making a lot of them. During long speeches, Judge Cedarbaum often holds her head so still that she seems to be asleep. This afternoon, in the middle of Strassberg's really long speech, she was asleep: Her eyes closed and, gradually, her head slumped forward until a gyroscopic jerk startled her back to (half) consciousness. Strassberg, moreover, soon went from stupefying to strident. Marching beyond Faneuil-as-conspiracy-theorist, Strassberg described a Faneuil who—as we had apparently all seen—has a pathological need to blame others for every mistake he makes. The trouble is, we didn't all see this. What we all saw (I thought) was a 28-year-old who had taken responsibility for his mistakes, who had not blamed others for his having made them (except to say that he trusted people when he shouldn't have), and who had paid a major price for this (at the very least, the loss of his job and career).

As Strassberg continued in this vein, his examples got weaker and weaker—Faneuil refused to take responsibility for not having gotten one of the necessary securities-industry licenses, Faneuil refused to take responsibility for having thrown away the Aliza Waksal order ticket—and, eventually, they just sounded vindictive. And what do we know about Mr. Faneuil and who he is? We know he is smart ... And we know that he wanted you to know he was smart.  Remember, he told you how his GPA was 3.44, not just 3.5, 3.44. Yeah, pretty smart guy. ... We know he passed his Series 7 exam with flying colors. He actually told us that. In the last half-hour of the day, Strassberg's rant became so venomous and petty that it was occasionally painful to listen to him.

The magnitude of Strassberg's mistake was clear at day's end, when he informed Judge Cedarbaum that, somewhere in the afternoon (somewhere in the seething, anti-Faneuil diatribe, perhaps?), he had lost an hour, that he would need an additional 90 minutes in the morning—and Judge Cedarbaum gave him only 45. After two-and-a-half hours in which Strassberg did nothing but trash Faneuil, in other words—and trashed him in such a way that the astute, effective attacks are now buried under a heap of pettiness—he has only 45 minutes to explain away every other bit of incriminating evidence brought forth in the trial. As a result of this miscalculation, some of the evidence, and Assistant U.S. Attorney Schachter's summation, Strassberg and Peter Bacanovic are behind the eight ball. If Bob Morvillo doesn't deliver, Martha Stewart soon will be, too.

Henry Blodget is the founder, editor, and CEO of Business Insider. Follow him on Twitter.

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