The Ink Guy and Mariana Pasternak
Reports on the antitrust suit.
Feb. 20 2004 12:53 AM

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Today's Martha Meter reading: 40 percent

Chance of conviction
Thursday, Feb. 19, 2004: 40 percent
In part due to today's proceedings (especially Pasternak's testimony) and in part due to a general feeling that, although the government hasn't yet proven its case, the evidence to support its theory is piling up, Stewart's chances of conviction increase to 40 percent.

After two dull days, we needed some drama. And we got it. Just before lunch, a short, ample-bellied man named Larry Farley Stewart slouched up to the witness stand.

Q: You're not related to Martha Stewart, are you?

A: No, sir.

Q: What do you do for a living?

A: I am the laboratory director and the chief forensic scientist for the United States Secret Service.

Q: Do you have a particular specialty?

A: I'm also the national expert for ink, of all things.

Q: How many experts are there?

A: There is just one.

Larry Farley Stewart has been the national ink expert for 15 years. He has two degrees in forensic science and heads a team of 120. He teaches for the Secret Service, FBI, DEA, Bureau of Alcohol, Tobacco, and Firearms, and other government agencies. He has published articles in 25 forensic fields. His laboratory has a collection of 8,500 inks.

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The Secret Service forensic team, Larry Stewart explained, first looked at Peter Bacanovic's allegedly altered worksheet under infrared light. The courtroom photos showed the results: All the marks on the page were black except two—the @60 next to "ImClone Systems" and a tiny dash after "Apple Computer." This, Stewart explained, indicated one of two things: Either a chemical had interacted with the two white marks, causing them to behave differently in infrared light, or they were different inks.

Next, Stewart explained, he exposed the sheet to ultraviolet light, which determined that a chemical had not interacted with the inks. Then he employed "chromatography": plucking off tiny samples of ink, reliquefying them, and then distilling the components. Initially, Stewart said, he and his team tested every mark it was feasible to test (the testing process consumed ink, he explained, and he had to leave enough for the defense experts to perform the same analyses). Later, after the defense was finished, Stewart's team tested every mark on the page.

And what did the initial tests, performed in the summer of 2002, conclude?

A: The @60 entry is a different ink than the remaining entries on the document. …

Q: What about the dash [next to Apple Computer]? Were you able to make any conclusions as to the dash?

A: I know that the dash is not the same as the bulk of the entries, but I do not know what ink the dash matches. It's possible that the dash is the same as the @60. It's possible that it's a different ink. We can't tell.

The next important question was whether the @60 mark was added later, to provide false corroboration for the allegedly bogus agreement. There were two "age-testing" ink analyses, Stewart explained, one accepted by the highbrow ink-testing community, one not. Neither would work in this case.

Peter Bacanovic attorney Richard Strassberg began his cross-examination by confirming that Stewart couldn't tell when the different inks were applied. He then asked whether Stewart could tell whether all the marks made with the same ink were made by the same pen, or just the same ink. Using a "densitometer," Strassberg said, couldn't Stewart determine whether all the ink was from the same batch?

A: No, that would not work.

Q. So, you are not familiar with a densitometer?

A. Oh, I'm very familiar with it. I have many of them. It would not work to do what you are asking it to do.

The "densitometer" wouldn't work for that! Strassberg's own ink expert, apparently, was a quack. Suddenly sounding whinier, Strassberg continued his ineffective assault. Infused with confidence, Stewart parried every question, often not bothering to even answer them. And then, suddenly, just when it seemed that Strassberg would be booed back to his seat, the momentum changed.

Strassberg showed Stewart the first report that Stewart's team had produced, back in August 2002. In the report, Strassberg observed, Stewart had concluded that "a different blue ballpoint was used to produce all of the remaining entries on the documents." Then Strassberg returned to the infrared test, the first test performed. In this test, Strassberg said, wasn't it fair to say that two marks on the page showed up white while all the other marks were black—the @60 and the dash? (It was.) And wasn't it fair to say that the infrared analysis indicated that the two marks might have been made with the same ink? (It was.) And wasn't it fair to say that, despite this, Stewart and his team did not test the dash in August 2002? (It was.) And wasn't it fair to say that Stewart and his team not only did not test the dash in August 2002 but did not mention in their August 2002 report that the two marks appeared to be the same ink? (It was). In fact, wasn't it fair to say that the team went so far as to say that the @60 mark was different from all the other entries on the page? (It was.) And wasn't it fair to say that, only later, after Stewart realized that the defense's ink experts had tested the dash—after he had realized that he might have been wrong—that he tested the dash? (There were other reasons, but, yes, it was after the defense had tested it. ...) And wasn't it fair to say that when Stewart finally compared the ink in the dash to the ink in the @60 mark, there wasn't enough ink left to determine whether it was the same? (It was.)

Strassberg's messages, presumably, were twofold: One, Larry Stewart, the national ink expert, had screwed up. Two, the defense knows something that the prosecution doesn't—that the dash next to "Apple Computer" was made with the same ink as the @60 mark next to ImClone. This is important, the defense will presumably argue, because Apple and ImClone have something in common: Together with Nokia, they are the only stocks on the worksheet with circles around them (the rest have checks), and, not coincidentally, they are the only stocks sold later than Dec. 21. The defense will probably also argue, that, on Dec. 24, when Peter Bacanovic sold two of the circled stocks, Apple and Nokia, he touched his pen to the worksheet (the dash) and then, remembering the $60 agreement, made a notation next to ImClone ("@60"). Would this be the likeliest explanation for why the @60 was made with a different ink than almost every other mark on the page? Maybe not. But is it plausible? Certainly. And "plausible," in most people's minds, equals reasonable doubt.

As if the ink face-off wasn't enough drama, the last witness was Stewart's close friend Mariana Pasternak, one of two people with Stewart when she sold her ImClone stock. Pasternak has yet to be cross-examined, but in her short testimony today—in, really, one extraneous remark today—she did more damage to Martha Stewart than any witness has yet.

As expected, Pasternak described observing Stewart on the telephone when their jet landed in Texas to refuel. She didn't overhear the conversation, she said, but she did note that Stewart was speaking in a "raised tone of voice." She then described a conversation that took place a few days later, on the terrace of their "nice hotel on the beach," a conversation in which she recalled Stewart saying:

A: That Sam [Waksal] was walking funny at a Christmas party, that he was selling or trying to sell his stock, that his daughter was selling or trying to sell her stock, and Merrill Lynch didn't sell.

With the exception of the part about Waksal's daughter selling or trying to sell, this testimony was expected. What Pasternak said next wasn't.

Q. Do you have any recollection of speaking with Ms. Stewart on the subject of brokers while you were in Mexico?

A. I remember one brief statement, which was: "Isn't it nice to have brokers who tell you those things."

"Isn't it nice to have brokers who tell you those things." The courtroom wouldn't have been more stunned if Pasternak had said, "And then Peter Bacanovic and I made up this ridiculous story about a $60 agreement." The comment blasted Bob Morvillo out of his seat.

MR. MORVILLO: Your Honor, I am going to move to strike. There is absolutely no context to that remark. It is obviously not at the same time as the subject—   

JUDGE CEDARBAUM: This is said to be a different conversation.

MR. MORVILLO: Correct. That conversation is absolutely meaningless. It could mean anything. Therefore, it is not relevant. I move to strike it.

JUDGE CEDARBAUM: Overruled.

Upon consideration, Stewart's alleged remark is not, in fact, an admission of anything new: Stewart has never denied receiving the Waksal sale information, and, in his opening statement, Morvillo essentially admitted that she had. The remark is also a two-year-old memory fragment taken out of context. Still, this short phrase—"Isn't it nice to have brokers who tell you those things"—suggests volumes more than that Stewart knew the Waksals were selling. It suggests that this information was more important to Stewart than her defense team has let on. It suggests that Stewart knew that that such "things" were not the kind of things that regular brokers convey. It suggests that VIP clients like Stewart get special treatment from VIP brokers like Bacanovic.

These "suggestions" don't prove a crime. They do, however, play into one of the themes of this case—The Rich and Privileged vs. The Little People—and they reinforce the story the prosecution has been telling from the beginning.

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

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