NEW YORK — A federal jury found Martha Stewart guilty of all charges Friday in her stock conspiracy trial, leaving the homekeeping guru facing up to 20 years in prison and an uncertain future for the corporation she founded.

Stewart's eyes opened wide as she remained seated for the reading of the verdict by U.S. District Judge Miriam Cedarbaum. The celebrity defendant's daughter, Alexis, broke into tears upon hearing the decision.

The panel of eight women and four men found Stewart, 62, guilty of conspiracy, obstruction and two counts of lying to investigators for covering up the circumstances surrounding her Dec. 27, 2001, stock trade of biotech company ImClone. Her well-timed sale came a day before the FDA made public its decision to reject the application for a cancer drug manufactured by ImClone, and just after learning that the company's CEO, Sam Waksal, was dumping $7.5 million worth of his stock. 

Also facing up to 20 years in prison is Stewart's co-defendant and former stockbroker Peter Bacanovic. The same panel convicted him of conspiring with Stewart, obstruction, lying to investigators and perjury, but found him not guilty of falsifying a document.

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The decision, rendered after three days of deliberations, sent stock in Martha Stewart Living Omnimedia plummeting 23 percent Friday afternoon. Stewart stepped down as CEO of the corporation she founded when she was indicted, and it is uncertain how the verdict will affect her future role at the company.

Sentencing is scheduled for June 17. While both defendants face up to 20 years in prison and $1 million in fines, federal sentencing guidelines allow flexibility for the judge to give a much more lenient sentence.

Prosecutors Karen Patton Seymour and Michael Schachter successfully convinced the jury that Stewart and Bacanovic conspired to conceal the circumstances surrounding the stock trade, the timing of which saved Stewart approximately $45,000.

"The victims in this case are the entire American public, who rely on our system to ensure the safety of their investments," Assistant U.S. Attorney David Kelley said outside the courthouse. "No matter who you are, if you're Martha Stewart or Joe Q. Public, we're going to go after you."

The defendants did not take the stand, but maintained that news of Waksal's sale had nothing to do with Stewart, a close friend of Waksal, who is now serving an 87-month prison sentence. Both Stewart and Bacanovic held that they sold that day because the stock price dipped to $60 a share, a target price they previously agreed upon at least a week before the trade.

With their verdict, however, jurors rejected that explanation.

Defense lawyers vowed to appeal. "We look at this as having lost the first round," said Stewart's lawyer, Robert Morvillo, outside the courthouse. "Martha Stewart will ultimately be determined to have not done anything wrong."

Peter Bacanovic was convicted of four of the five charges against him.

Stewart's defense had enjoyed a legal victory last week when Cedarbaum granted its motion to toss the most serious charge lodged against her, securities fraud, citing a lack of evidence presented by the government. That charge alone carried a 10-year term.

Stewart offered no comment when leaving the courthouse, but issued a statement on her Web site in reaction to her conviction.

"I am obviously distressed by the jury's verdict but I continue to take comfort in knowing that I have the confidence and enduring support of my family and friends," she wrote. "I believe in the fairness of the judicial system and remain confident that I will ultimately prevail."

One juror, Chappelle Hartridge, told reporters following the verdict that it made no difference to the panel that Stewart did not take the stand. 

"If we had enough evidence, it wouldn't have mattered if Martha got on the stand to say the contrary," he said.

Friendly fire

Hartridge also revealed that the witnesses who had the most impact on the jury's decision didn't include star government witness Douglas Faneuil, Bacanovic's former assistant at Merrill Lynch — who testified that Bacanovic ordered him to tell Stewart about Waksal's shares — but Stewart's best friend and personal assistant. 

The friend, Mariana Pasternak, testified that days after the infamous trade, Stewart told her Waksal had sought to sell all his shares in ImClone the same morning as her stock sale. She then said that Stewart told her it was "nice to have brokers who tell you things."

Stewart's personal assistant, Anne Armstrong, had testified about a message Bacanovic left for Stewart shortly before she authorized the sale of her stock. Armstrong testified that Stewart changed the message in the computer log, but then told her to switch it back to its original wording.

While this incident, which the defense admitted, did not directly result in a criminal charge, it helped convince the jury that Stewart entered into a conspiracy with Bacanovic as part of a cover-up. 

"[Armstrong's] testimony was very important, the fact that she said Martha tried to delete that message," Hartridge said. "That message was probably the basis of that case."

Armstrong's testimony also led to Bacanovic being convicted of perjury. The message read, "Peter Bacanovic thinks ImClone is going to start trading downward," but in a sworn statement to the SEC, he denied telling Armstrong the stock was dropping.

The jury hinted at a conviction on the charge Thursday, when it sent a note to Cedarbaum asking if Armstrong's testimony and the phone log she kept could be counted as two pieces of evidence that Bacanovic was lying, rather than one since they stemmed from the same witness.

The judge ruled Friday morning that jurors could consider them separately. Armed with two pieces of evidence to corroborate the prosecution's assertion that Bacanovic lied, the jury found him guilty of the charge.

The would-be star witness

With four days on the stand, Douglas Faneuil gave the lengthiest testimony of the six-week trial and lawyers dedicated sizable portions of closing arguments to discussing his testimony and credibility.

Defense lawyers attempted to portray the 28-year-old as a former drug user who disliked Stewart and whose testimony might be skewed by the possibility of a more lenient sentence. But the portrayal seemed to fall flat with the jury.

"I feel bad for him because he was dragged into this," Hartridge said. "At the beginning, he thought there was something wrong and went along with what his bosses told him to do."

Ultimately, jurors believed Faneuil over Stewart and Bacanovic.

To convict Stewart and Bacanovic of conspiracy, jurors had the option of convicting them of conspiring to obstruct the investigation, of making false statements to investigators, or of perjury. They unanimously opted to convict the defendants of conspiracy under all three.

The two counts against Stewart for making false statements concerned one count for each of two interviews with the SEC — one on Feb. 4, 2002, and a follow-up interview on April 10, 2002.

Jurors were required to look at specific statements made during each interview, and determined Stewart told six lies in the first meeting and two in the second.

Bacanovic was convicted of making a false statement during a Jan 7, 2002, interview with federal authorities. The perjury charge stems from a Feb. 13, 2002, interview, in which Bacanovic was under oath.