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Former Clinton attorney joins Stewart team

Martha Stewart has added a lawyer who represented the Clinton administration before the Supreme Court to a legal defense team newly energized by last week's charges that a government witness lied at her criminal trial.
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true"><p>The Washington Post</p></a

Martha Stewart has added a lawyer who represented the Clinton administration before the Supreme Court to a legal defense team newly energized by last week's charges that a government witness lied at her criminal trial.

Walter Dellinger, who was acting solicitor general in 1996 and 1997, is a partner at O'Melveny & Meyers LLP. He has argued 17 cases before the Supreme Court and has a reputation for finding gold in apparently hopeless appeals.

Dellinger will work with Stewart's aggressive trial attorney Robert G. Morvillo, who will continue to play a leading role in efforts to overturn Stewart's March 5 conviction. Morvillo plans to file a motion next week asking U.S. District Judge Miriam Goldman Cedarbaum to throw out the verdict because of the government's assertion Friday that Secret Service chief document examiner Larry F. Stewart perjured himself when he testified about his work on documents in the trial.

"We are beginning to explore some very serious arguments about some very serious issues. The cumulative effect . . . could be quite powerful," said Dellinger, who has been on the case for about a month behind the scenes.

Martha Stewart and her former broker Peter E. Bacanovic were convicted March 5 of conspiracy, obstruction and making false statements about her Dec. 27, 2001, sale of ImClone Systems Inc. stock. Bacanovic also was convicted of perjury for lying under oath about his dealings with Stewart's office that day. Prosecutors alleged that Bacanovic improperly had his assistant tell Stewart that ImClone's founder was dumping his shares and that the pair later concocted a story that she had previously agreed to sell the stock when its price fell to $60, as it did that day.

Both defendants are scheduled to be sentenced June 17, but that could be delayed while Cedarbaum considers the impact of the perjury arrest.

The U.S. attorney's office in Manhattan, which is handling Martha Stewart's case and filed charges against Larry Stewart, declined to comment.

Lawyers not connected to the case said Martha Stewart is wise to add an appellate specialist to her team. Appeals require special skills -- boiling down an entire case record to a single narrative and making a compelling argument that the process was fatally flawed.

Dellinger, who is also a Duke University law professor, did just that in the case of U.S. v. Whiteside, a criminal appeal filed by two former HCA Inc. executives convicted of making false statements on Medicaid cost reports.

"The estimate I had was that we had a 1-in-50 shot of overturning it. He took it up, came up with novel theories, and those guys went free," said Robert A. Waterman, HCA's general counsel. "He made a believer out of me."

The defense team is focusing appeal efforts on a couple of areas, sources familiar with the case said. Among them: Cedarbaum's ruling that barred Morvillo from arguing that Martha Stewart had no reason to lie because her stock sale was not illegal insider trading; allegations that a juror, Chappell Hartridge, was biased against Stewart and failed to reveal prior brushes with the law; and a Supreme Court decision that came down after the trial that limited the government's ability to use statements from witnesses who cannot be cross-examined by the defense.

But outside legal analysts said the Larry Stewart arrest probably offers the best chance. Prosecutors argued last week that the arrest's impact should be limited because the examiner's conclusion that a notation "@60" was in a different ink was still valid. They also noted that the jury acquitted Bacanovic of the lone count specifically tied to the worksheet.

But some legal analysts raised questions about why it took prosecutors three months to learn about the alleged perjury, given that some of Larry Stewart's colleagues were in the audience when he testified.

Former prosecutor Jacob S. Frenkel said Martha Stewart is likely to argue that the jury would have viewed government witnesses differently if they had known of the ink expert's alleged lie. "If there were jurors who were skeptical of government testimony, that [information] would have been fodder for them," he said.

The legal complaint filed against Larry Stewart also raises questions about the prosecution's assertion that the ink tests were valid, despite the examiner's alleged misstatements. The complaint alleges that Larry Stewart said to another Secret Service employee that the examiner who had actually tested the ink on the worksheet had messed up the analysis.

Former federal prosecutor Seth C. Farber said Martha Stewart's defense team will be able to argue that the ink evidence was important because it supported the prosecutors' contention that the $60 arrangement was part of a coverup. "If the $60 arrangement was true, she would not have relied on the secret tip [about the ImClone founder] to do her trading and she had no reason to lie or obstruct justice."