NEW YORK — NEW YORK - Martha Stewart pleaded not guilty in federal District Court in Manhattan yesterday to five criminal counts that include conspiracy, obstruction of justice and securities fraud stemming from a sale of stock in 2001.
Stewart entered her plea shortly before a panel of potential jurors filed in to be questioned about the case. Stewart, who will watch the questioning, arrived at the courthouse wearing a thick gray coat and waving as she made her way to the entrance.
Lawyers from both sides began the process of narrowing down hundreds of prospective jurors who have already filled out questionnaires. The lawyers will be asking questions designed to root out any sign of bias.
Conviction on any of the charges against her could put Stewart in federal prison. The five counts carry a total prison term of 30 years and a $1.25 million fine.
Jury selection will be a crucial part of the trial because Stewart, who built a billion-dollar business, Martha Stewart Living Omnimedia Inc., has proved to be a polarizing public figure.
She is admired by many as an arbiter of taste in home decorating and for her tough business skills. But many women have also come to resent her for setting unrealistic standards for housekeeping, crafts and dining.
The prosecution says Stewart saved about $51,000 by selling nearly 4,000 shares in ImClone Systems Inc. on Dec. 27, 2001, just before a negative government report about the biotech's cancer drug sent the stock plummeting.
Stewart, 62, says she sold the stock because she and her broker, Peter E. Bacanovic of Merrill Lynch & Co. Inc., had an agreement to sell when shares fell to $60. Bacanovic also pleaded not guilty to five criminal counts and will stand trial with her.
The government says Stewart was told that ImClone's founder, Samuel D. Waksal, a longtime friend of Stewart's, was trying to unload his shares.
She has not been indicted on charges of insider trading, although the Securities and Exchange Commission has filed a civil lawsuit accusing her of that.
The most serious criminal count against Stewart is securities fraud. She is accused of deliberately deceiving her own shareholders by saying publicly in 2002 that she had done nothing wrong.
Robert B. Hirschhorn, a jury consultant, has said that the prosecution is looking for "a more blue-collar jury" and the defense "a more white-collar jury."
He has suggested that Stewart's ideal jurors, who will be drawn from Manhattan, the Bronx and New York's northern suburbs, will have respect for people in business and admire successful women.
The prosecutors, he has said, will be looking for people who have lost money in the stock market or have had a bad experience with a business, as well as those who dislike or distrust the wealthy or successful.
Judge Miriam Goldman Cedarbaum of U.S. District Court in Manhattan has blocked members of the news media and the public from watching the jury selection process, saying she is concerned that jurors may be less forthcoming if reporters are present.