Corporate Scandals

Opening Statements

Prosecutor tells ghost story; Bak's lawyer wheezes-Martha's works the crowd: Bupkes from two witnesses

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These are Elizabeth's Koch's notes from the trial of Martha Stewart

Karen Seymour, the lead prosecutor, made the opening statements. She spoke slowly, and carefully, in a detailed fashion using simple language. Her voice is gentle, as is her style, if more than a tad condescending—the voice of a kindergarten teacher telling her class a scary story about an evil witch. She depicted Martha as a cheater, liar, and fabricator (using those precise words) and insinuated that she was the horrible woman whose motives were selfish; that she would screw over anyone, certainly her shareholders, for a buck. Seymour's language, even her tone, in general was black and white, almost reassuringly so—"This is not a memory test." she said, suggesting repeatedly that if the jury would just listen to her she'd tell them what to think.

The jury hardly blinked throughout Seymour's statement. Their facial expressions were pleasant and attentive throughout. Several members of the press and one attorney (there to watch Robert Morvillo, Stewart's lead attorney) thought she did a fantastic job. Her story was compelling—if you think life is a Disney movie with good guys and bad guys.

Peter Bacanovic's lawyer, Richard Strassberg, spoke next. He seemed very earnest, like a lawyer who genuinely wants to do the right thing (imagine that!). But his statements were harder to follow. At first I had no idea where he was headed; he went on and on about how successful Bacanovic's been as a broker—what a turn-off! He used more numbers and facts than Seymour, and jumped around a lot. One woman sneered at him the entire time he spoke. Several jury members fidgeted and looked at their laps throughout most of his statement. They became more attentive and interested toward the end, when he asked why Peter would risk his entire career for a $450 commission.

Morvillo's tactic was completely different then the others—he treated the jury as equals, as intelligent, rational human beings who must come to their own conclusions. His language was that of a friend: he started off with an apology for the unavoidable repetition, saying stuff like, "I won't bore you with [such and such]," then skips to something they can relate to, inciting them to look within: "Think back 30 years and see what you remember?"

The jury (even the sneering woman) all have curious looks on their faces, most are tapping their chins with that "I need to rethink things" look. They become more and more focused and less fidgety as Morvillo continues. He appeals to their egos, their self-importance, when he calls them "protectors of liberty" who must decide if the government's "surmises, speculation, and guessing" are sufficient evidence to prosecute. One guy in the back row nodded, like, "yeah! My job is important!"

Morvillo spent a great deal of time on the facts—when the stock price dropped, how Peter suggested she dump ImClone shares, the dates Stewart and Peter were out of town, and so on, but spoke clearly, almost conversationally. Like a human being you'd want to get to grab a beer with. Someone you'd trust to teach you a thing or two, unlike Seymour and Strassberg, who seemed utterly devoid of wit or grit.

All his jokes were hits. He called Sam Waksal "crazy" several times—"How was Martha possibly to know Waksal would do the craziest, most offensive thing in the world on Dec 27? She sold before even talking to him." Several members smiled at his colorful language. The loudest laughs came when he addressed the conspiracy charge. He debunks the government's accusation that Peter and Martha concocted a story during a period in which they had no contact is utterly ridiculous: "How'd that happen? Osmosis? Carrier Pigeon? I'm pretty sure there was no pony express in Mexico at the time."

Morvillo offered real life examples the jury could relate to: "There are two sides to every story, folks. It's like when you've got two kids coming at you with opposite version of the same thing—you've got to listen to them both." Several members smiled and nodded. In general, Morvillo seems to make the jury feel like insiders.

And finally, U.S. District Judge Miriam Goldman Cedarbaum. She's tough. Utterly intolerant of tricks and doubletalk, crimes poor Peter's lawyers committed the most. She smiles a lot, right after barking that she's "already ruled on that," or ordering the lawyers not to "ask the same thing over and over." Luckily, her impatience is equal opportunity. Seymour tried to object at one point during Morvillo's opening statements, but the judge hushed her. The two witnesses who took the stand today, Daniel Lynch (a financial officer from ImClone) and Luciano Moschetta ( the compliance overseer for Merrill Lynch), did no good for either side: the interruptions (objections and arguments and sidebars) were continuous. Cedarbaum seems to enjoy pointing out B.S. and doubletalk; she took up so much time reprimanding that it was rare to hear three consecutive sentences from any one person—neither the lawyers (prosecution and defense) nor the witnesses. No one I spoke with understood what either side accomplished with either witness.

We're taking a snow day on Wednesday, January 28, and will resume Thursday. The prosecution's star witness, former Merrill Lynch & Co. brokerage assistant Douglas Faneuil, will likely be the first witness.

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