Judge tosses most serious charge against Martha. She's no longer charged with fraud, but as her trial wraps, she still faces four charges of covering up her prescient ImClone trade

By Gary Susman
Updated February 27, 2004 at 05:00 AM EST
Martha Stewart
Credit: Martha Stewart: Stephen Chernin/Getty Images/NewsCom

As she awaits the closing arguments in her trial, which jurors will hear starting next week, Martha Stewart got one piece of happy news on Friday. U.S. District Court Judge Miriam Goldman Cedarbaum dismissed the most serious charge against the celebrity defendant, that of securities fraud, which alone could have landed her behind bars for 10 years. ”Here, the evidence and inferences the government presents are simply too weak to support a finding beyond a reasonable doubt of criminal intent,” the judge wrote in her ruling, according to the Associated Press. Stewart still faces four charges of obstructing justice and lying to investigators regarding her controversial sale of her ImClone stock shares in Dec. 2001.

The fraud charge stipulated that Stewart defrauded stockholders in her own company by defending herself against the ImClone accusations with what the government claims is a false cover story. By trying to preserve her reputation, the fraud charge suggested, she was artificially inflating the share price of Martha Stewart Living Omnimedia, a company whose success clearly rests on her good name. In an apt twist, news that Judge Cedarbaum had dropped the fraud charge boosted MSLO’s stock price on Friday by 12 percent at press time. Stewart issued her own statement regarding the decision, saying: ”I’m pleased that the judge has dismissed the most serious of the charges against me, concluding that there is no evidence to support it.” In other words, it’s a good thing.