text: 'Liar' Stewart took advantage of share tip-off, court told - www.theage.com.au
  Martha Stewart arrives at court in New York.
  The United States Government has called Martha Stewart a liar and her lawyer in turn has accused the Government of smearing her reputation with false leaks and then prosecuting her for defending herself.
  The broadsides came during opening arguments in the fraud and obstruction-of-justice trial of lifestyle tycoon Stewart, 62, and her former stockbroker, Peter Bacanovic, in a packed US District Court on Tuesday.
  Stewart and Bacanovic, with family members and friends in the room, listened grimly as lead prosecutor Karen Patten Seymour laid out the Government's case to the jury of eight women and four men. The charges arose from Stewart's December 27, 2001, sale of nearly 4000 shares in ImClone Systems Inc., the biotechnology company then headed by her friend Samuel Waksal. Stewart's share sale came a day before a regulatory ruling sank ImClone shares.
  Ms Seymour told the jury that Stewart sold because Bacanovic, in violation of confidentiality rules, told her that Mr Waksal was "desperately" trying to dump his stock.
  Mr Waksal and his family quickly came under investigation for shedding their stock, and the probe spread to others who had sold ImClone stock that day, including Stewart.
  Ms Seymour said Stewart and Bacanovic concocted a story that they had previously agreed to sell the ImClone shares when the price fell to $US60 ($A77), as it did that day.
  After lying to investigators, Stewart later "multiplied that lie by feeding it to investors in her company", Martha Stewart Living Omnimedia Inc., Ms Seymour said.
  Her motive, the prosecutor said, was to save her reputation, which she knew was central to the success of her company, where most of her half-billion-dollar wealth resided.
  "Martha Stewart knew full well that her fortune was threatened," Ms Seymour said. For each dollar drop in her company's shares, Stewart's personal stake fell $US30 million, Ms Seymour said.
  Robert Morvillo, Stewart's lead defence lawyer, countered that the prosecution's case amounted to "speculation, surmise and guesswork".
  He said the Government had no direct evidence that Bacanovic and Stewart concocted their story or that they even spoke to each other between the time of the share sale and January 7, 2002, when Bacanovic first told investigators of their prior agreement.
  Mr Morvillo scorned members of the US Congress who leaked information to the media in June 2002 that Stewart had received a "sell" tip from Mr Waksal.