The Rittenhouse Review

A Philadelphia Journal of Politics, Finance, Ethics, and Culture

Saturday, February 28, 2004  

Federal Judge Dismisses Fanciful “Securities Fraud” Allegation

A nice, but far from complete, victory for publisher Martha Stewart yesterday: U.S. District Court Judge Miriam Goldman Cedarbaum dismissed count nine of federal prosecutors’ indictment against Stewart, issuing an opinion in which she said “a reasonable juror could not, without resorting to speculation and surmise, find [guilt] beyond a reasonable doubt.”

Judge Cedarbaum wrote in her dense but narrowly drafted opinion:

I have concluded that no reasonable juror can find beyond a reasonable doubt that the defendant lied for the purpose of influencing the market for the securities of her company. Another way of putting it would be that in order to find the essential element of criminal intent beyond a reasonable doubt, a rational juror would have to speculate.

According to the New York Times (“Most Serious Charge Against Stewart Is Dismissed,” by Jonathan D. Glater), “Judge Cedarbaum will probably instruct the jury to disregard the securities charge and not to read anything into its absence, lawyers said, although several noted that jurors may or may not pay attention to the order. The judge will probably also prohibit lawyers from trying to lead the jury to draw conclusions from the absence of the charge.”

Although it’s true, as the Times reports, that “until yesterday morning when the judge told lawyers for Ms. Stewart and Mr. [Peter] Bacanovic about her decision, there was no hint that she would dismiss the securities charge,” Judge Cedarbaum previously had alluded to her skepticism, referring to the prosecution’s indictment as “inartfully drawn,” and at one point nearly scolding government attorneys, in remarks that must have stung, “I hope at some point it’s going to be clearer to me what you are charging. There are a lot of things in this indictment I don’t know whether you are or are not charging.”

Moreover, the delay in announcing her decision on the matter, which she took under advisement a week earlier, may have raised some questions. If nothing else, the interim period, in retrospect, gave the judge and her clerks ample time to draft the 23-page opinion.

With U.S. Attorney Karen Seymour’s novel, to say nothing of fanciful, charge of securities fraud dismissed (charges many observers have questioned repeatedly), jurors now will focus more closely on the remaining charges of conspiracy, obstruction, and false statements. Although they carry less severe penalties, these are serious charges. And while Stewart and her attorney, learning of Judge Cedarbaum’s decision, reportedly headed to Chinatown for a celebratory lunch, she can’t be sleeping easily, even for a woman who is said to live on four hours of z’s a night.

The Times reports closing arguments will begin Monday. Instructions to the jury are to be read on Wednesday.

[Post-publication addendum: By the way, why is it so hard for people to call Stewart “a publisher,” as I generally do, or a similar term, rather than something stupid and subtly demeaning like “domestic doyenne” or “style maven”?]

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