By Todd Peterson
Updated February 11, 2004 12:04 PM

Just to clarify: Martha Stewart is not charged with insider trading, but her lawyers are still not allowed to argue that there was no insider trading.

Make sense?

The judge in the domestic diva’s trial has refused a request by Stewart’s lawyers to declare a mistrial after they claimed they were wrongfully barred from arguing that no insider trading took place, Reuters reports.

Stewart, who is on trial with her stockbroker Peter Bacanovic, is charged with lying to investigators about the sale of her stock in ImClone Systems Inc., which took place on Dec. 27, 2001. She also is charged with misleading investors in her company, Martha Stewart Omnimedia Inc.

But Stewart is not charged with insider trading, even though the prosecution believes she was tipped off about the stock’s plummeting price.

The defense had hoped to argue that because Stewart did not engage in insider trading, she cannot be found guilty of lying to investigators, Reuters reports.

But U.S. District Judge Miriam Cedarbaum stopped the defense’s line of argument, which resulted in Stewart’s attorneys filing a motion for a mistrial. Cedarbaum denied that motion Wednesday, claiming that a “minitrial on insider trading” would “confuse and distract the jury.”

Robert Morvillo, one of Stewart’s attorneys, requested the motion just before the trial shifted gears to focus on statements Stewart and Bacanovic made to investigators in 2002. Earlier in the week, Stewart’s case suffered damaging testimony from her former assistant Ann Armstrong, who testified that Stewart originally changed a voicemail log from Bacanovic.

The trial is in its third week.