updated 10/6/2004 7:25:53 AM ET 2004-10-06T11:25:53

Secret Service ink expert Larry Stewart was found not guilty Tuesday of lying on the witness stand during the Martha Stewart trial.

“Mr. Stewart, good luck to you,” U.S. District Judge Denny Chin said. Stewart hugged his lawyers after the verdict was read.

The jury returned its verdict on the second day of deliberations.

Lawyers for Martha Stewart have said repeatedly that the perjury charges would play a large role in their effort to convince a federal appeals court to overturn the domestic entrepreneur’s conviction for lying about a stock sale.

While Martha Stewart’s former stockbroker, Peter Bacanovic, was acquitted of a charge of doctoring a stock worksheet — the count for which Larry Stewart was called to testify — her lawyers say the alleged perjury taints the entire prosecution.

Martha Stewart and Bacanovic were convicted of lying to federal investigators about why Stewart sold 3,928 shares of ImClone Systems Inc. stock in December 2001.

They received the same sentence — five months in prison, plus five months of house arrest. Both were allowed to remain free pending appeal.

Martha Stewart has decided to begin serving her prison sentence anyway. She must report by Friday to the minimum-security federal women’s prison in Alderson, W.Va.

In the Larry Stewart trial, the first perjury count accused him of exaggerating the role he played in testing performed on the worksheet in the summer of 2002 and in January 2004, just before the trial.

Susan Fortunato, a Secret Service scientist who worked under Stewart, testified that she performed the tests. Stewart repeatedly used the first person when describing the testing on the witness stand.

The second count accused Stewart of lying when he said on the stand that he was familiar with a proposal two colleagues had submitted for a book that included a chapter on densitometry, an ink-testing method.

The trial in Manhattan federal court offered a curious mix of scientific testimony about arcane ink testing methods and a detailed description of what the defense called a three-year feud between Fortunato and Stewart.

Fortunato testified that Stewart confronted her after an office meeting in 2001 and kissed her. She complained to her supervisors but later signed a statement withdrawing the claim.

The defense noted that the pair, as well at least one other Secret Service employee, regularly went to lunches where the conversation veered into sexually charged material.

The federal jury in Manhattan returned its verdict on the second day of deliberations.

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