Martha Stewart Pleads Not Guilty, Resigns

ByABC News
June 4, 2003, 10:56 AM

N E W   Y O R K, June 4 -- Martha Stewart and her former stockbroker pleaded not guilty today to charges stemming from an insider trading scandal that has plagued the domestic doyenne for more than a year.

Tonight, Stewart's company Martha Stewart Living Omnimedia Inc. announced that Stewart would step down as CEO but would remain on the board.

"I love this company, its people and everything it stands for,and I am stepping aside as chairman and CEO because it is the rightthing to do," Stewart said in a statement.

The lifestyles maven and broker Peter Bacanovic were charged in a nine-count indictment returned by a federal grand jury investigating her sale of ImClone stock. The Securities and Exchange Commission also filed a civil securities fraud lawsuit against the pair, accusing them of illegal insider trading.

Criminal charges against Stewart, 61, include making false statements and obstruction of justice, while charges against Bacanovic include perjury and obstruction, according to a statement from the U.S. attorney's office in Manhattan.

Shielding herself with an off-white umbrella, Stewart entered the U.S. District Court building in Manhattan earlier today, passing a pack of waiting news reporters and photographers without saying anything.

In the courtroom, she spoke very deliberately as she told the judge her plea: "Not guilty."

She was released without bail until her next court appearance, scheduled for June 19. Bacanovic also pleaded not guilty and wasalso released without bail.

The Case Is About Lying

At a news conference in Manhattan, U.S. Attorney James B. Comey said both Stewart and Bacanovic conspired to cover up the reason behind her trading in biotechnology company ImClone.

Stewart had been under investigation for selling almost 4,000 shares of ImClone shortly before the Food and Drug Administration rejected the company's application for approval of a colon cancer drug. The FDA rejection sent ImClone's stock plummeting.