Henry Blodget, a former securities analyst, lives in New York City. Read his full-disclosure statement about his potential conflicts of interest in covering the Martha Stewart trial
Chance of conviction
Tuesday, March 2, 2004: 40 percent
Bob Morvillo ended the trial as brilliantly as he began it, albeit with less flamboyance and flair. His three-hour summation helped both defendants, and (mostly) survived a solid rebuttal by Karen Patton Seymour. Stewart's chances of conviction drop back to 40 percent.
The last day of presentations in the United States v. Martha Stewart and Peter Bacanovic began with Bacanovic's attorney Richard Strassberg begging for time. Unfortunately, he then used a third of it to beat the same tired drum he whacked all day yesterday (The Many Evils of Douglas Faneuil is a story that, no matter how often or emphatically repeated, just doesn't jibe with the Faneuil who testified at this trial). In his last half-hour, Strassberg moved on to the actual charges and finally made some headway. Then, just as Judge Cedarbaum was ready to quit the bench and drag him offstage, Strassberg reminded the jury that Peter Bacanovic wasn't just "Martha Stewart's broker," but a "good guy," a good guy who had been "caught in the crossfire," a good guy for whom the last two years have been a nightmare, a good guy whose life and liberty are now in the jury's hands.
When Strassberg finished, the Master took over. Standing at the lectern, he peered at the jurors over a pair of reading glasses. This time, he didn't prowl the aisles like a grizzly bear or hang on the jury box like a koala. He still roared, however, and he still whispered, and it was still impossible not to hang on every word.
I submit to you, ladies and gentlemen of the jury, the government has accused Martha Stewart of participation in a confederacy of dunces, a confederacy of dunces, because nobody could have done what Peter Bacanovic and Martha Stewart are alleged to have been done and done it in a dumber fashion.
Morvillo walked through the inconsistencies in the Stewart and Bacanovic stories, the "five major gaping huge holes" that even the most brain-dead conspirators would have plugged within minutes, but that Stewart and Bacanovic just couldn't get right: WHEN did the $60 conversation take place? WHERE did it take place? WHAT was the price of ImClone when it took place? WHO took the order on the 27th? WHAT did the phone messages say? Didn't they want to get it right? Morvillo asked. Didn't they want to "fool the government"? And where were the witnesses to this conspiracy? Where were the documents that supported this conspiracy? Where were the people who overheard Stewart and Bacanovic conspiring?
Now, Doug Faneuil says that they were conspirators because Peter Bacanovic came back to him and said Martha Stewart and Peter Bacanovic were on the same page. Ladies and gentlemen of the jury ... they weren't on the same page. They weren't even in the same book. ... To believe the government's story, you ... the price right, couldn't get who spoke to whom right, couldn't get what the substance of the conversations was right, they couldn't get anything right. The only thing they agreed on was in fact there was a $60 conversation.
For the first time, Morvillo conceded that Stewart received the Waksal sale information. He conceded it, and then he attacked the government's alleged "motive" by suggesting that there was no evidence that Martha Stewart thought she had done anything wrong by trading after she heard that Sam Waksal was selling. When he got to the false statements, he demonstrated the difference between a "lie" and a "mistake" by picking an example close to home:
Let me read to you from the opening of Ms. Seymour. ... She said that on December 27, Sam Waksal and his daughter Aliza Waksal were trying to desperately sell [all] their shares of ImClone stock. ... We know that's wrong, don't we? It was actually 2 percent of the stock that the Waksals held. What Ms. Seymour said was inaccurate. Do I think she was lying to you? Of course not. She is an honorable person. She wouldn't lie to you. She made a mistake. She made a mistake, just like Martha Stewart may have made a mistake on the date in which she first thought the $60 conversation took place. ... Just because somebody misspeaks, just because somebody makes an inaccurate statement doesn't mean that they are lying, doesn't mean that they are intending to deceive. Ms. Seymour wasn't intending to deceive you. She knew full well that Sam Waksal had sold only 2 percent of his shares that day. She made a mistake in confusing the fact that he had sold all of the shares at Merrill Lynch with all of his shares. She misspoke. The government is asking you to convict on similar evidence. ... We are suggesting to you that whatever mistakes were made were good-faith mistakes, not bad-faith mistakes.
In his summation, prosecutor Michael Schachter had enumerated six reasons why the $60 conversation was a bunch of baloney. Morvillo enumerated 24 reasons why it wasn't. Then he contrasted his reasoning with the government's:
I've just given you have 24 facts which support the notion, affirmatively, that there likely was a $60 conversation that day, and I've given you three witnesses who remembered that a conversation like that took place during that period of time. ... What has the government given you? The government has given you rhetoric. The government has given you arguments. The government has given you circumstantial inferences, and the government has given you Doug Faneuil, the living definition of "reasonable doubt."
Like Strassberg, Morvillo did devote some time to Faneuil-bashing, but his attacks were more amusing, less angry, and more relevant to the key issues in the case. Morvillo, for example, mocked Faneuil's claim that he could remember almost every word, in order, of his two-minute call with Martha Stewart two years ago, on a day when he fielded between 75 and 100 telephone calls. This was the same Faneuil, Morvillo said, who declared that the prosecution hadn't prepared him for the bulk of the questions asked during his direct examination—who had said, in fact, that he was "surprised" by many of the questions—but who, when asked to name a few that surprised him, couldn't recall a single one. That pretty much sums up Doug Faneuil, Morvillo concluded. Doug Faneuil carries more baggage with him than a cargo handler loading a cruise ship for an around-the-world voyage.
Done with his general themes, Morvillo then discussed every charge in the indictment, draping them with various theories of reasonable doubt. He didn't co-opt Strassberg's refrain that the government's theory "makes no sense"—a problematic assertion in the areas where it does. Instead, he simply argued that the evidence to support the theory was "nonexistent or insufficient," that just because a charge was possible, or plausible, didn't mean it had been proved. Finally, Morvillo entreated the jury to not read anything into Stewart's decision not to testify, to avoid compromising by convicting on one or two counts ("one count of conviction and it's over for us"), and to remember that, in our system, the prosecution gets the last word, so that, just because he couldn't jump up and rebut Ms. Seymour, didn't mean he didn't want to. Then he concluded:
This has been a two-year ordeal for this good woman. It's an ordeal based on the fact that she trusted her financial adviser not to put her in a compromising position. It's an ordeal based on the fact that she voluntarily submitted to a government interview. And it's an ordeal that is in the process of wiping out all the good that she has done, all her contributions, all her accomplishments.
Ladies and gentlemen of the jury, you do have a big responsibility, as every criminal jury does in this country, because Martha Stewart's life is in your hands. The evidence that Martha Stewart deliberately committed a crime charged in this indictment is virtually nonexistent and does not, in my view, approach the reasonable doubt standard. ... I ask you to acquit Martha Stewart. I ask you to let her return to her life of improving the quality of life for all of us. If you do that, it's a good thing.
Karen Patton Seymour devoted most of her rebuttal to defending Douglas Faneuil. Then she took aim at Morvillo's contention that Martha Stewart and Peter Bacanovic couldn't possibly have been so dumb. Smart people committing stupid crimes, Seymour said. That's what white-collar criminals do every day.