Judge Nixes Martha Stewart's Plea to Drop Most Serious Charge

19 November 2003

US District Judge Miriam Goldman Cedarbaum on Tuesday denied a motion by fallen media maven Martha Stewart (62) that the most serious of the criminal charges filed against her be dropped.

Stewarts' lawyers argued unsuccessfully that the charge of securities fraud violated her First Amendment rights by prosecuting her for asserting her innocence during an insider-trading probe of her sale of ImClone Systems stock in December 2001.

That argument, opined Judge Cedarbaum, "is unquestionably a novel interpretation of the securities laws". But, she continued: "The Constitution does not prohibit the prosecution of lies that are part of a course of criminal conduct."

Nor was the judge willing to accept the argument that there is insufficient evidence to prove Stewart was trying to obstruct the Securities and Exchange Commission. This, she said, was "a decision better left to a jury".

The SEC has arraigned Stewart for alleged civil insider trading. The charge relates to her sale of $228,000 worth of ImClone shares after learning from her broker's assistant that ImClone's founding family, the Waksals, were selling bigtime.

The following day ImClone stock went into freefall after the company revealed that its trumpeted cancer drug Erbitux had been refused approval by the FDA.

Data sourced from: The Washington Post Online; additional content by WARC staff