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Judge bars new Martha Stewart evidence

A federal judge Monday refused to allow prosecutors to collect a broad range of documents from lawyers for Martha Stewart and her former stockbroker just weeks before her case goes to trial.
/ Source: Reuters

A federal judge on Monday denied a request by U.S. prosecutors to collect a broad range of documents from lawyers for Martha Stewart and her former stockbroker just weeks before the obstruction of justice case against the lifestyle trend-setter goes to trial.

U.S. District Judge Miriam Goldman Cedarbaum said in a ruling filed in federal court in Manhattan that the request to subpoena documents by federal prosecutors was too sweeping and would have violated the confidential nature of attorney-client communications.

"The government has not made a sufficient showing with regard to many of the items sought," Cedarbaum said.

Prosecutors had asked Stewart's lawyers to hand over a range of documents, including records of statements that she made that formed the basis of the indictment against her.

Stewart, famed for having turned a small catering outfit into a multi-million-dollar media and home decorating business, has been charged with interfering with the investigation into her sale of stock in ImClone Systems Inc.

Stewart sold some 4,000 shares of ImClone in December 2001 the day before it became public that the government had refused to review an application for approval of Erbitux, an experimental cancer drug that the company was developing.

That news caused ImClone's stock to plummet. Sam Waksal, the founder of ImClone and a good friend of Stewart, is serving a prison term of over seven years after pleading guilty to charges of trying to sell ImClone shares before the Erbitux news broke.

Stewart and her former stockbroker, Peter Bacanovic, face both criminal charges and a civil suit from the Securities and Exchange Commission related to allegations that they lied to investigators about her sale of ImClone shares.

Stewart says that she had a standing order to sell ImClone shares. She and Bacanovic have pleaded innocent.

Prosecutors had also asked for documents that Bacanovic and his lawyer removed from his office when he was suspended by Merrill Lynch in June 2002, including records of his business expenses and a client contact database.

Cedarbaum granted a request by prosecutors to subpoena billing records from Stewart's lawyers related to her sale of ImClone shares.

The criminal trial is due to begin in federal court in Manhattan in January.