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Martha Stewart was indicted yesterday on nine criminal charges and faces an uncharacteristically messy fall from her public role as maven of ultradomesticity.

Last night Ms. Stewart stepped down as chairwoman and chief executive officer of Martha Stewart Living Omnimedia Inc. She will remain on the company's board of directors and takes the new title of chief creative officer.

Sharon Patrick, president of Martha Stewart Living, has been named to replace Ms. Stewart as CEO. Jeffrey Ubben, head of a private investment firm and the largest shareholder after Ms. Stewart, becomes chairman.

Ms. Stewart appeared in New York federal court and pleaded not guilty to charges including obstruction of justice, fraud and conspiracy, stemming from an investigation of alleged illegal stock trading.

She made her way into the courthouse through a phalanx of reporters, using a beige umbrella to shield herself as much from cameras as the weather.

She was not charged by the grand jury with actually committing insider trading, although the U.S. Securities and Exchange Commission has filed an insider trading suit against her.

Instead, the grand jury indictment Ms. Stewart faces -- along with her former broker at Merrill Lynch, Peter Bacanovic -- alleges that she lied to investigators about a stock sale that she made through her broker's assistant in shares of biotechnology company ImClone Systems Inc. in December, 2001.

"This criminal case is about lying, lying to the FBI, lying to the SEC and lying to investors. That is conduct that will not be tolerated by anyone," U.S. Attorney James Comey told reporters yesterday. "Martha Stewart is being prosecuted not because of who she is, but what she did."

The grand jury said in its indictment that on Dec. 27, Mr. Bacanovic left a phone message warning Ms. Stewart that ImClone's founder Samuel Waksal was trying to sell the shares in his company that he held in his account at Merrill Lynch.

At that point, ImClone was still awaiting formal approval for its cancer drug Erbitux from the U.S. Food and Drug Administration. On Dec. 31, however, it was announced that the FDA had rejected the drug.

When Mr. Bacanovic left the message on Dec. 27, the stock was trading at $61.53 (U.S.).

The government said Ms. Stewart phoned the broker's assistant, Douglas Faneuil, later that afternoon and told him to sell her shares in the company.

They were sold at an average price of $58.43.

Following an investigation by securities and government officials, ImClone's Mr. Waksal pleaded guilty to six criminal counts, while Mr. Faneuil, the broker's assistant, pleaded guilty to a misdemeanour charge.

The U.S. Attorney's office alleged in the indictment that rather than tell the truth, Ms. Stewart and Mr. Bacanovic "would instead fabricate and attempt to deceive investigators with a fictitious explanation of her sale," claiming that they had an agreement to sell the stock at $60.

Yesterday's charges against Ms. Stewart, who worked as a stockbroker in the late 1960s and early seventies, are considered to be lighter than illegal insider trading charges, possibly leading to a lesser sentence if found guilty.

Lawyers for Ms. Stewart countered in a press statement that "Martha Stewart has done nothing wrong. The government is making her the subject of a criminal test case designed to further expand the already unrecognizable boundaries of the federal securities laws."

They argued that because prosecutors did not pursue criminal insider trading charges, "it is most ironic that Ms. Stewart faces criminal charges for obstructing an investigation which established her innocence." The SEC has launched a civil insider trading case against Ms. Stewart.

They also questioned why the U.S. Attorney's office has taken a year and a half since the stock sale to file charges.

"Is it for publicity purposes because Martha Stewart is a celebrity?" they asked, while also questioning whether it was done "to divert the public's attention from its failure to charge the politically connected managers of Enron and WorldCom who may have fleeced the public out of billions of dollars?"

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