Indicted Martha Steps Down from Job

06/05/2003 AT 11:00 AM EDT

National icon Martha Stewart was indicted Wednesday in Manhattan federal court, accused by prosecutors of dumping her stock in the biotechnology company ImClone in December 2001 after receiving illegal insider information, then covering her tracks and lying to investigators and shareholders.

The Securities and Exchange Commission also filed a lawsuit leveling the same charges.

Hours after her noon court hearing -- where a composed, yet stone-faced Stewart, 61, appeared wearing a tan suit -- the domestic diva stepped down as chairman and chief executive officer of the media company that carries her name. She will remain the chief creative officer of Martha Stewart Living Omnimedia -- widely seen as an empty title by most observers.

Also indicted Wednesday was Stewart's stockbroker Peter Bacanovic, 41. Both he and Stewart pleaded not guilty to all charges and were released on their own recognizance, though Bacanovic was reportedly forced to surrender his passport.

"This criminal case is about lying -- lying to the FBI, lying to the SEC and investors," said U.S. Attorney James Comey, according to wire reports. "That is conduct that will not be tolerated. Martha Stewart is being prosecuted not because of who she is, but what she did."

The actual charges against the domestic diva include securities fraud, conspiracy, obstruction of justice and making false statements. If convicted of all counts, she could face up to 30 years in prison and $2 million in fines, although the penalty would likely be far lighter under federal sentencing guidelines, reports the Associated Press.

The suit by the SEC asks the court to force Stewart and Bacanovic to pay more than $45,000 -- the amount Stewart allegedly saved by selling her shares in ImClone stock before news hit that the FDA would decline to approve a cancer drug.

In an ad published as an open letter in Thursday's editions of USA Today (as well as on the marthtalks.com Web site), Stewart restated her innocence and asked for fans to send messages of support.

"I simply returned a call from my stockbroker," Stewart writes in the letter. "The government's attempt to criminalize these actions makes no sense to me."

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