By Erin McClam
The Associated Press

NEW YORK - Prosecutors tried to prove Wednesday that Martha Stewart propped up the stock price of her own company by lying to investors about why she sold ImClone Systems stock.

The government introduced a stock chart that showed spikes in the price of Martha Stewart Living Omnimedia immediately after Stewart issued statements denying wrongdoing in June 2002.

In the statements, June 12 and June 18, Stewart insisted that she had a pre-existing deal with her stockbroker Peter Bacanovic to sell ImClone when it fell to $60.

The government says the real reason for the sale was that Stewart was tipped ImClone founder Sam Waksal was trying to sell his shares.

Stewart attorney Robert Morvillo tried to show jurors that Stewart simply was trying to discredit inaccurate reports and was making smart business decisions when she issued the statements saying her ImClone sale was proper.

Gregory R. Blatt, the former top lawyer at Stewart's company, told Morvillo that company officials were "concerned" about the storm of publicity because of the negative effect it could have on advertisers.

Still, Morvillo's questioning did not address a key element of the securities fraud charge - that Stewart's lawyer told The Wall Street Journal that Stewart and Bacanovic had an agreement to sell ImClone at $60.