Anthony and her father, George Anthony, panicked upon finding the child, Jose Baez said.
She found her father cradling Caylee's body the morning of June 16, 2008, he said, and George Anthony yelled at his daughter, "Look what you've done. Your mother will never forgive you."
George Anthony denies abuse claims
Prosecutor to jury: Casey killed Caylee
He told her she would go to jail for child neglect, Baez said.
"This is a tragedy that snowballed out of control," Baez said. "This is not a murder case. This is not a manslaughter case ... this is a tragic accident that happened to some very disturbed people."Anthony is accused of killing Caylee in 2008 and lying about it to investigators. The Orlando trial, which comes after nearly three years of legal twists, turns and delays, has garnered interest nationwide.
Anthony has pleaded not guilty, and denies harming her daughter or having anything to do with her disappearance. Baez has said that once all the facts are known, it will become clear his client is not guilty.
In addition to capital murder, Anthony faces six other charges, including aggravated child abuse, aggravated manslaughter of a child and providing false information to authorities. If she is convicted by the jurors -- seven women and five men -- she could face the death penalty.
Baez dropped another bombshell when explaining Anthony's behavior in the month before Caylee was reported missing on July 15 -- partying and lying about the child's whereabouts.
"Casey did what she's been doing all her life, or most of it: hiding her pain," he said, adding that Casey Anthony had been sexually abused by her father starting at age 8.
Anthony was taught from an early age to behave as if nothing was wrong, he said, describing an incident where she went to school and behaved normally at age 13 after performing oral sex on her father.
George Anthony sat stone-faced in the gallery as Baez made the allegations; Casey Anthony put her head on the shoulder of another defense attorney and sobbed.
However, in his testimony, George Anthony -- the trial's first witness -- denied ever sexually abusing his daughter. He also said he was not at his home when Caylee died.
"If I'd have known something happened to Caylee, we wouldn't be here today," he said as Casey Anthony shook her head.
Blog: George Anthony testifies
George Anthony said as a former police officer, he was trained in CPR and that he would have done everything possible to save his granddaughter's life if he had found her in the pool as Baez alleged.
Baez also alleged Casey Anthony was inappropriately touched by her brother, Lee, although "it didn't go as far" as it had with her father. It was bad enough, however, he said, that the FBI conducted a paternity test to see if Lee Anthony had fathered Caylee.
He told jurors the Anthony family "keeps its secrets quiet ... You're going to hear all kinds of bizarre family behavior."
Baez attacked much of the state's forensic evidence, saying such evidence has never before been admitted into courts -- and a death-penalty trial should not be the test case, as much of it is "questionable."
Blog: Defense opening statement
Police zeroed in on Anthony from the beginning, he said. "This investigation was extremely thorough when it comes to focusing in on Casey, probably the most comprehensive investigation that you will ever come across, and in the history of the state of Florida. It was directed at one person and one person only. The problem with this investigation is, it reached a level of desperation."
After Tuesday's court session, an attorney for George and Cindy Anthony issued a statement responding to Baez's claims made during his opening remarks.
"George and Cindy Anthony are shocked and appalled that the defense would resort to lies about them in today's opening statement. Baez's idle speculation today certainly are not facts, The only result achieved by the defense in this statement was to further hurt this grieving family, " Orlando attorney Mark Lippman said in the written statement.
"George Anthony maintains that he never had anything to do with the death of Caylee Marie Anthony including what happened to her remains after she allegedly drowned," Lippman added.
Defense: 'Sad, tragic accident'
Casey Anthony cries at trial
Key moments in the Caylee Anthony case
In an appearance later Tuesday on HLN's "Nancy Grace," Lippman was more pointed in his remarks, saying Baez's accusations were "all just fiction. His opening (statement) was fiction and there's nowhere to go with it."
Now 25, Casey Anthony wore a loose-fitting white shirt while she sat at the defense table for the first day of her trial.
Earlier, prosecutor Linda Drane Burdick told jurors that while it may be difficult to accept that a mother could kill her own child, there is no other conclusion that can be drawn, based on the evidence.
Blog: Prosecution opening statement
"No one but Casey Anthony had access to all the pieces of evidence in this case," Burdick said. "... No one else lied to their friends, to their family, to investigators. No one else benefited from the death of Caylee Marie Anthony. Caylee's death allowed Casey Anthony to live the good life -- at least for 31 days."
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