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dispatches from the martha stewart trial:

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from: Henry Blodget

Killing Them Softly With Phone Calls

Posted Tuesday, Feb. 17, 2004, at 11:10 PM ET

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 here. This series covers the prosecution's case; to read the dispatches from the defense's case and closing arguements for both sides, click here. For a complete listing of Blodget's dispatches, see Slate's Guide to the Martha Stewart Trial, which also has links to related Slate articles.


Chance of conviction
Tuesday, Feb. 17, 2004: 22 percent
After a crushingly dull day, Stewart's chances of conviction remain at 22 percent. The prosecution presented calls that might indicate conspiracy, but Judge Cedarbaum refused to allow inferences, thus neutering them. On a positive note (for the prosecution), Faneuil's friends can testify that he said he was ordered to do something wrong.

Today, we received more lessons in the rules of evidence. For example, when you want to introduce phone calls, you can't just say, "Here are the phone calls"—you have to get a phone expert to testify, question by question, to the records he or she reviewed, the analyses he or she performed, and the results he or she generated. Then you have to elicit, question by question, in monotonous, stupefying detail, the calls themselves, all the while presumably praying that the jury isn't slipping into an irreversible coma.

By early afternoon, the courtroom featured several live exhibits in the art of sleeping on the job: One juror employed the "appraisal" method—tilt head back until it rests on edge of jury box and gaze down contemplatively with eyes narrowed to slits; another rested his cheek on his palm, also in contrived contemplation, while disguising the fact that his arm was supporting the dead weight of his barely conscious head; a third, in a trance, opened and closed her mouth like a guppy; a fourth's head lolled sideways, like a sloop heeling in the wind, until a particularly somnolent gust knocked it nearly flat (at which point it snapped back up). Even the phone-expert witness, in the chair all day long, had the dazed look of a cow in a hayfield lazily chewing cud.

Still, amid the stupor, some important decisions were made, mostly with the jury out of the room. The apparently suspicious timing of certain telephone calls is key to the government's ability to prove its conspiracy case, and, today, Karen Patton Seymour re-argued that at least some of these calls should be allowed into evidence. By laying out a short sequence of events on Jan. 7, 2002, moreover, she raised the possibility that, contrary to the defense's suggestion in opening statements, Martha Stewart and Peter Bacanovic did communicate prior to Bacanovic's first meeting with the SEC, the meeting in which he formally introduced the concept of the pre-existing agreement to sell Stewart's ImClone if the stock fell to $60.

In Bob Morvillo's opening statement, remember, he ridiculed the conspiracy theory in part because there was no record of any communication between Stewart and Bacanovic while Stewart was on vacation in Mexico. How did they conspire? Morvillo railed. By osmosis? I don't think they did it by carrier pigeon. I don't think they had the pony express in Mexico. ... This argument was persuasive because it meant that, if Bacanovic spoke with the SEC prior to talking to Stewart, the $60 story was true or he concocted it himself. Today, however, Seymour pointed to a series of events that might be a record of a Stewart-Bacanovic conversation prior to his visit to the SEC.

Specifically, according to Seymour, at 11 in the morning of Jan. 7, 2002, Stewart and Bacanovic's first day back from their respective vacations, Stewart was picked up at her home in Connecticut. At 11:22, a call was placed from a Peter Bacanovic phone to Stewart's New York office. At 11:44, a call lasting 22 minutes was placed from Martha Stewart Living's Connecticut office to Bacanovic's phone.

Importantly, as the judge and the defense team observed, this sequence doesn't prove that Bacanovic and Stewart even spoke on Jan. 7, let alone that they conspired. Martha Stewart Living Omnimedia's phone records do not show which extension (or person) made or received each call, and Bacanovic had many clients at the company. Stewart and Bacanovic, moreover, had other business to conduct that January, and after two weeks out of the office, they presumably had plenty to catch up on. Still, this sequence came only an hour or two before Bacanovic headed downtown for his first interview with the SEC. It is possible, therefore, that the 22-minute call is the missing link in the conspiracy—the call in which Bacanovic and Stewart either refreshed each other's memory about the $60 agreement (in which case their later assertions that they hadn't discussed it would be false statements) or, worse, made it up.

Fortunately for the defense, Judge Cedarbaum ruled that the prosecution can't use the call to invite the jury to speculate about conspiracy (or even as proof of a conversation that day between Stewart and Bacanovic). The defense, meanwhile, can't imply, as Morvillo did in his opening statement, that Stewart and Bacanovic did not communicate prior to Bacanovic's Jan. 7 meeting with the SEC.

The second important call discussed was placed a month later, on Feb. 4, 2002: "At 7:09 a.m.," the indictment reads, "on ... the morning of Martha Stewart's interview with the SEC, FBI, and U.S. Attorney's office, Peter Bacanovic placed a call from his cell phone to Martha Stewart's cell phone." Described this way, the call sounds like what the indictment represented it to be: an overt act of the conspiracy (a surreptitious dawn call between co-conspirators to make sure Stewart had her story straight before lying to the feds). Today, however, it emerged that this call did not result in a conversation but a voice-mail message, one that Stewart didn't retrieve until after her interview with investigators—an outcome that sounds a great deal less devious. Karen Patton Seymour argued strenuously that the unusual timing of this call made it evidence of Bacanovic's state of mind. In another blow to the prosecution, though, Judge Cedarbaum, refused to admit the call into evidence, arguing that its potential prejudicial emotional impact far outweighed its "minimally relevant" information content.

Today was enervating, but the future holds promise. The judge agreed to allow testimony from two of Douglas Faneuil's friends who apparently say that, in early January 2002, six months before Faneuil confessed to the government, he blabbed to friends about how he had done something wrong and had been ordered to do it. Judging from a New York Post article on the same subject, the defense will probably contend that these "confessions" stemmed from a New Year's Eve Ecstasy binge.

dispatches from the martha stewart trial
entries
123456789101112131415
from: Henry Blodget

Killing Them Softly With Phone Calls

Posted Tuesday, Feb. 17, 2004, at 11:10 PM ET
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Henry Blodget is the editor of Silicon Alley Insider.
Photographs of: Martha Stewart arriving at court by Jeff Zelevansky/Reuters; Robert Morvillo, Martha Stewart's lawyer, by John Marshall Mantel/AP; Douglas Faneuil by Doug Kanter/Agence France-Presse.
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