Martha Stewart 'lied about tip'

Did Martha Stewart get insider information?

American lifestyle guru Martha Stewart lied to cover up a serious case of fraud, a US court room has heard.

That is the argument prosecutors put forward as Ms Stewart's high profile trial opened in New York.

The TV celebrity is accused of making false statements, obstructing justice and committing securities fraud.

The charges surround the allegation that she sold almost 4,000 shares in a firm the day before its price slumped, after receiving an insider's tip.

The federal prosecutors allege that Ms Stewart was told of the impending stock collapse at biotech company ImClone by her co-defendant, Merrill Lynch broker Peter Bacanovic.

Sell and hide

They claim that Bacanovic told her that ImClone founder Sam Waksal - by coincidence a friend of Ms Stewart's - was trying to sell off his own shares.

Ms Stewart is further accused of attempting to hide the sale of her own shares by lying to cover her tracks.

She sold them the day before the company's price collapsed after the news that US health regulators had rejected its key drug application.

Ms Stewart and Mr Bacanovic both deny their charges.

Yet chief prosecutor Karen Seymour said Ms Stewart "was told a secret that no other investor had".

Alleged collusion

Ms Seymour added that Stewart then "decided to lie to investigators and come up with a cover up, a false story, because she had a secret."

Ms Stewart's defence team maintains she did nothing wrong and is being singled out because of her celebrity.

They allege that she and Bacanovic had a pre-existing agreement to sell ImClone shares when they reached a certain point.

Ms Stewart's attorney, Robert Morvillo, said the case against his celebrity client was circumstantial at best.

The prosecution was based on "speculation, surmise and guesswork," he said in his opening statement.

Fame defence

"And they will ask you to ignore the lack of direct evidence," he added.

In a blow to Ms Stewart's defence team, the presiding judge, Miriam Cedarbaum has ruled that her lawyers cannot argue before the jury that their client is being prosecuted because of her fame.

If found guilty, Ms Stewart, who runs her own multi-million dollar company Martha Stewart Living Omnimedia, could face 10 years in jail.

The trial is expected to last a month.