Martha Stewart Trial, Chapter 2

Ink expert Larry Stewart exuded confidence earlier this year as he testified against Martha Stewart. Asked whether he was familiar with international standards for ink analysis, he said: "I wrote them."

No one disputed his expertise - he was laboratory director for the Secret Service. But prosecutors say Larry Stewart went too far in other parts of his testimony, and he now faces his own trial on perjury charges.

Jury selection is scheduled to begin Wednesday, with lawyers for Martha Stewart watching the trial closely. Although she's headed to prison - a judge on Tuesday ordered her to surrender for her five-month sentence by Oct. 8 - the charges against Larry Stewart will continue to figure prominently in her appeal.

From the beginning, the perjury case has forced prosecutors to walk a fine line. They had to go after Stewart - once regarded as perhaps the nation's foremost ink expert, but now suspended from his Secret Service job - while insisting his alleged lies do not taint their prized conviction of the celebrity homemaker for lying about a stock sale.

"It's very rare where you'd have a situation where the government would concede that they had a lying witness," said Kirby D. Behre, a Washington white-collar defense lawyer.

Larry Stewart - no relation to Martha - testified in February about ink on a worksheet that prosecutors said was doctored by broker Peter Bacanovic to bolster a cover story for why Martha Stewart sold ImClone Systems Inc. stock.

But the government now says he exaggerated the role he played in the testing, insisting he was personally involved when a subordinate did most of the work.

Prosecutors also say Larry Stewart lied when he said on cross-examination that he was familiar with a proposal for a book on ink analysis that two colleagues had submitted.

Stewart has pleaded not guilty, and his lawyers have said prosecutors simply may not be "aware of all the things that Mr. Stewart did." The two perjury counts carry up to 10 years in prison.

Lawyers for Larry Stewart have said the case has been an ordeal for him. He has been placed on indefinite suspension, without pay, from his job as laboratory director for the Secret Service.

His lawyers have already tried to trip up federal prosecutors in their balancing act.

Arguing for a dismissal of the case, they noted that prosecutors had played down the perjury charges in arguing that Martha Stewart should not get a new trial.

But U.S. District Judge Denny Chin said that amounted to an "apples-and-oranges" argument, and let the perjury charges against Larry Stewart stand.

Lawyers for Larry Stewart and two appeals lawyers for Martha Stewart did not return calls for comment ahead of jury selection. Federal prosecutors declined comment.

Asked by reporters at a pretrial hearing in August whether he had anything to say, Larry Stewart said: "Lots. I can't."

Martha Stewart was originally allowed to stay out of prison while she appealed, but Stewart said last week she would surrender for prison anyway in order to put the "nightmare" behind her.

On Tuesday, Judge Miriam Goldman Cedarbaum, who presided over her trial, said she must surrender for prison by Oct. 8. Stewart is set to serve five months home detention after prison.

The perjury charges against Larry Stewart make up just one element of Martha Stewart's appeal. On the day of her sentencing in July, lawyers outlined five separate arguments for overturning the verdict.

"It is truly extraordinary when you have perjury committed at a trial - both by an outspoken juror and by a key government witness," said Walter Dellinger, the lawyer leading Martha Stewart's appeal.

Even if Larry Stewart is convicted, legal experts have predicted Martha Stewart would still face an uphill battle in convincing a federal appeals court to throw out her conviction.

And Judge Cedarbaum has written that Martha Stewart and Bacanovic were convicted based on "overwhelming independent evidence," not the testimony of any single witness.

"She's got far more interesting and novel appellate issues than the vast majority of criminal defendants," Behre said. "But they don't necessarily lead anywhere."

By Erin McClam By Erin McClam