By Erin McClam
The Associated Press

NEW YORK - Prosecutors slipped an unusual twist into their indictment of Martha Stewart - a charge that she committed a crime simply by declaring her own innocence.

Prosecutors say the domestic guru committed securities fraud - that is, she deliberately tried to inflate the stock of her own company - when she stood up in public last summer and denied engaging in insider trading.

"I was a little surprised at that," said Richard A. Serafini, a former economic crimes prosecutor in New York. "There's kind of a natural tendency when you're confronted with something to deny it. Now they're charging it as market manipulation."

Legal experts said the charge is a high-risk move designed to convince a jury that Stewart hurt thousands of ordinary stockholders in Martha Stewart Living Omnimedia by trying to cover up her legal problems.

Stewart was indicted Wednesday on five counts - including obstruction of justice, conspiracy and lying to investigators - tied to her December 2001 sale of almost 4,000 shares of ImClone Systems stock. She pleaded innocent to all charges, which could land her in prison for several years. Her former stockbroker, Peter Bacanovic, was also indicted and pleaded innocent.

Stewart dumped her ImClone stock one day before the government issued discouraging news about an ImClone cancer drug. The government says Stewart had inside knowledge the stock was about to plummet.

But it was the charge of securities fraud, placed near the end of the 41-page indictment, that surprised many legal watchers.

The charge cited a speech Stewart gave at an investors conference in New York June 19, 2002, a week after ImClone founder Samuel Waksal, her longtime friend, was arrested on fraud charges.

In the speech, Stewart maintained that her sale of ImClone had been perfectly legal and that she was cooperating "fully and to the best of my ability with investigators."

Prosecutors say those were lies designed to pump up the stock price of her company.