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WHAT HAD appeared an open-and-shut case - the trial of lifestyle guru Martha Stewart, which got under way this week in Manhattan - is looking a lot less certain amid speculation she stands a better chance of acquittal than expected.

Even as high-profile financial prosecutions go, there is a lot at stake. If Stewart loses, her career could be over and her multimillion dollar media empire at risk. But if the federal prosecutors lose, their credibility in a slew of other fraud and obstruction of justice trials over the next few months could go up in smoke. That could seriously set back the assault on white-collar and corporate crime in the US.

Even Wall Street has changed its mind about Stewart's chances.

Shares in her company, Martha Stewart Living Omnimedia, have been creeping up, reaching their highest since last May, reflecting a change in public perception.

She was reviled when accusations surfaced last year that she sold shares in ImClone Systems, the pharmaceuticals company founded and run by her friend Sam Waksal, on inside information he gave her.

But a skilful $1 million ([pounds sterling]498,000) PR campaign by Stewart - including a website and focus groups at which versions of her defence were tried out - appears to have turned the tables. She says more than eight million people have visited the site.

The public is less inclined to see her as a greedy, dishonest multi-millionairess than as a victim of heavyhanded regulators whose actions are taking away her wealth and reputation even before she gets to trial.

She is not, in fact, on trial for insider trading - notoriously hard to prove - but for obstruction of justice.

Prosecutors claim she and her stockbroker, Peter Bacanovic, also on trial, lied to them about ImClone trades and falsified records. Stewart herself has refused to admit anything or consider a plea-bargain. "I am confident I will be exonerated from these baseless charges," she says.

Her uncompromising stand is echoed by a string of other executives charged of wrongdoing but determined to bet everything in the lottery of a jury trial. Still to come are the trials of Scott Sullivan, former chief financial officer of WorldCom, John Rigas, founder of Adelphia Communications, Frank Quattrone, the former Silicon Valley star of Credit Suisse First Boston, Richard Scrushy, the former head of HealthSouth, and a gaggle of Enron executives.

Their willingness to go on trial is partly because tougher sentencing guidelines for white-collar crime, imposed by the Justice Department after the Enron collapse, make it unattractive for defendants to settle.

But also, says John Coffee, a Columbia University law professor: "Prosecutors don't want to risk settling for a mere four or five years' jail time. …


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