Posted on 03/06/2004 8:53:14 AM PST by El Conservador
NEW YORK - Martha Stewart (news - web sites) predicted she would be "completely exonerated" on appeal after a jury delivered a devastating verdict that could take her from the top of a homemaking empire once worth $1 billion to the inside of a prison cell.
Only a slight grimace at the sound of the word "guilty" broke the stoic face that Stewart had maintained throughout the six-week trial.
"I will appeal the verdict and continue to fight to clear my name," she said in a statement issued just minutes later. "I believe in the fairness of the judicial system and remain confident that I will ultimately prevail."
Stewart herself did not speak as she swept down the stairs of the lower Manhattan courthouse and into a waiting sport-utility vehicle.
A jury of eight women and four men deliberated 12 hours over three days before returning guilty verdicts Friday on all four counts against Stewart — conspiracy, obstruction and two counts of making false statements.
All the charges relate to an accusation that Stewart lied to cover up the reason she sold 3,928 shares of ImClone Systems stock on Dec. 27, 2001 — avoiding a hefty loss when the company announced bad news the next day.
The broker who handled the sale, Peter Bacanovic, was convicted of obstruction, making false statements, conspiracy and perjury, but was acquitted of falsifying a document. He, too, vowed to appeal.
While the charges carry maximum prison terms of 20 years for Stewart and 25 for Bacanovic, federal guidelines could reduce both to a year or so in prison. Sentencing was set for June 17.
"Maybe it's a victory for the little guys who lose money in the market because of these kinds of transactions," said juror Chappell Hartridge.
Another juror, Amos Mellinger, said the panel put Stewart's celebrity aside.
"I had no problem separating her from her TV persona," Mellinger told the New York Daily News. "We weighed all the testimony. I think everybody came to the table with their understanding of the facts."
The verdict jeopardizes the media empire that Stewart carefully built over the years in becoming the nation's premier homemaker — an image she put forth by way of magazines, television programs and everything from cookie cutters and garlic presses to bed sheets and pillows.
Stewart's syndicated television show, "Martha Stewart Living," is being pulled from CBS's New York affiliate following the conviction. The New York Times and the New York Post reported Saturday that WCBS will pull the plug on the show as of Monday and other CBS stations may follow suit.
Stock in Stewart's company, Martha Stewart Living Omnimedia, fell more than 22 percent after the verdict. Marketing experts have said that the company is so closely tied to her name and face that the effect could be devastating.
Stewart had a reputation before the trial as a ruthless businesswoman, and in court she was portrayed as rude, insulting, demanding and cheap. According to testimony, she once threatened to take her business elsewhere because she did not like her brokerage's telephone hold music.
She did not testify at the trial, and her defense put on just one witness — an unsuccessful gamble that jurors would decide the government had not met its burden of proof.
"I would have liked to have heard from her," Hartridge said. "I would have loved to have heard the other side of the story."
The charges centered on why Stewart dumped about $228,000 worth of ImClone Systems stock in 2001, just a day before it was announced that the Food and Drug Administration (news - web sites) had rejected ImClone's application for approval of a cancer drug. The announcement sent ImClone's stock plummeting.
Stewart and Bacanovic claimed they had a standing agreement to sell when the price fell below $60. But the government contended that was a cover story and that Stewart sold because she was tipped by her broker that ImClone CEO Sam Waksal was frantically trying to dump his own holdings.
Waksal later admitted selling his stock based on advance word of the FDA decision. He is serving seven years in prison for insider trading.
Stewart, who averted more than $51,000 in losses by selling when she did, was not charged with insider trading. Instead, she and her broker were accused of lying about the transaction and altering records to support the cover story.
Outside the courthouse Friday, U.S. Attorney David Kelley said all Americans were victims of Stewart and Bacanovic's crimes because lies to investigators weaken the nation's law enforcement system.
"When we first indicted this case, we said it was about lies, all about lies," Kelley said. "As you saw in the evidence, that's what it was."
The government's star witness was Douglas Faneuil, a former Merrill Lynch & Co. assistant who said he passed the tip about Waksal to Stewart on orders from his boss, Bacanovic. He also said Bacanovic pressured him to lie.
Other critical testimony came from Ann Armstrong, Stewart's assistant, who said Stewart personally altered a phone message from Bacanovic; and Mariana Pasternak, a longtime Stewart friend, who said Stewart confided to her days after the ImClone sale that she knew Waksal was trying to sell.
Pasternak said Stewart added: "Isn't it nice to have brokers who tell you those things?"
But Pasternak admitted on cross-examination that the remark may have been something she herself thought, not something Stewart said.
With Stewart's conviction, the government may press to have her removed from the board of her company. She stepped down as chief executive after being indicted last summer but remains as chief creative officer.
Stewart could also face up to $1 million in penalties for the criminal convictions, besides fines the Securities and Exchange Commission (news - web sites) may seek.
Stewart was easily the most recognizable face in the government crackdown on corporate crime that began with the collapse of Enron in 2001. Stewart's supporters claim she was being targeted because of her celebrity status.
Translation: I'm f***ed!!!
Sorry. If you wanted to hear her side of the story, you'd have had to tune in to any of her numerous TV interviews.
The reason I say this is because I've heard and read statements by some jurors since the verdict stating that they saw her as arrogant and insulting and she got her come-upance.
I also read some juror statements that they were insulted by the parade of Martha's high profile sycophants through the courtroom during the trial.
These statements sound to me as if the defense may be able to argue that the jurors did not consider the evidence and were swayed by their emotions and their dislike for the defendent. They may argue that the jury was rendered unable to reach an impartial verdict. At the least they may be able to get a new trial if they get a sympathetic judge. Just my opinion.
Martha, you had an opportunity to tell your side of the story to the jury, but, for some unfathomable reason, you chose not to. Maybe you should have pulled an OJ and promised to look all over the world for the person who really sold your stock based on inside information.
I remember how well the jury considered the evidence in the 1994 case: The State of California vs. Orenthal James Simpson. The victims' blood was in his car, his blood was at the crime scene, DNA matched with a 99.999999% probability, yada, yada, yada, "Not Guilty!"
One time I met Martha Stewart at a party. She said if I would have sex with her, she'd give me ten million dollars. Oh, wait a minute--that might have just been something I, myself thought, not something she said. I forget.
Psychics are also swindlers so it seems she would be just as good a psychic as she was a stock trader.
Everyone: read Post #5
Appeals are on matters of law -- it is not like there is a second look at the verdict. There must be not just legal error, but aggegious (reversible) error for an appeal to win. Remember, it is judges who decide appeals and they are loathe to overtone the judgments of other judges.
Very, very few appeals win
I am not a lawyer, but I play one when no one is looking...
One wonders if she will be granted bail for that period.
Any FR lawyers familiar with fed laws in this regard?
I know that it can go either way in state courts.
The same stupid stuff that got here indicted.
I love this approach to appeal, (1) Hire one of the highest priced legal team available and the when you lose (2) appeal on the grounds that you had incompetent defense. It won't hunt.
I wouldn't be surprised if that one juror already has a book deal after his saying this was a victory for the little people. He couldn't wait to get in front of the cameras.
And as far as dislike goes, just listen to all the invectives from the class warrior conservatives here on FR.
Brokers are always passing rumors about who is selling and who is buying. I doubt that anyone's ever been convicted for getting that kind of information from a broker. That's why Martha wasn't charged with insider trading.
That includes many of the anti-capitalists here on FR who are jealous of self-made people. This case was about the politicians providing scapegoats for the bad economy leading up to the 2002 midterm elections.
I beg to differ, at least when govt and big money is involved. Myself and two friends were involved in a lawsuit in Cincinnati where the Cincinnati Reds baseball team did not pay rent for use of the Riverfront Stadium for several years. As landlord the City of Cincinnati had a responsibility to the pulblic to collect but refused to do so.
The Cincinnati Reds refused to pay rent for several years, most likely because of an agreement between the city of Cincinnati and Mike Brown, owner of the Cincinnati Bengals football team. The City was paying the Bengals approx. 2 mil a year to not leave; until the City and the County could figure away to screw the taxpayers into building new Football and Baseball stadiums.
Apparently the Reds didn't like the special treatment for the Bengals and simply refused to pay rent (approx. $2 mil a year) for several years. The city turned a blind eye to it (may even have endorsed it under the table) and did not collect the rent (taxpayer money). The amount owed to the Ciy plus interest totaled $10 mil.
Further, we found out that the $2 mil a year the city was paying the Bengals to stay actually came from a sinking fund designated for the continued upkeep/repair of the Riverfront stadium. By 1996 this amounted to over $15 million missing from the fund, and the stadium was falling apart because of it.
We caught them and sued in court (a taxpayers class action suit). We even had an injuction in place to prevent the Reds Opening Day in 1996. Of course the Reds quickly found another judge to remove the injunction.
The laws in Ohio regarding this situation were very, very, clear and specific against the Reds and the City. We had an absolute no brainer case. The case was assigned to a retiring judge, and of course the pro-sports local media didn't like to talk about it much. Everyone was so elated about the recent passing of the Stadiums county sales tax increases and on the new maid and valet jobs that would be created when the stadiums were built.
Initially, the Reds attorneys claimed that the Plantiff (a friend of mine) was a skin head racist; even though his wife was a person of color and he had two children from the marriage. The media ran with the disgruntled skinhead story. The only other media mention for 6 years was when we won the trial case and they ran a story of how the citizens of Cincinnati owned the plaintiff thanks for winning back the $10 mil.
The trial court drug it out for six years, trying to allow the Reds and the City every out, but we finally won the case.
The Reds subsequently appealed (there were NO apparent appealable errors), even admititing to certain things, and the case was overturned. The convoluted appellate decision seemed to confirm the wrongdoings but overturned the trail court anyway (After two years I'm still trying to figure out the appelate courts rational). We then appealed to the Supreme court of Ohio (a body of politicians not known for their judicial intellect) and they refused to hear it.
Curiously, after the trial court decision, the high dollar shysters for the Reds wanted us to settle for a minimum $30,000 grand hassle fee, but were adamant that the had the appeal locked up. Guess we were really naive. The old boy RINO Hamilton County Court system prevailed.
Laws and rules are for the little people; not big money and politics. That being said, I think Martha got railroaded, and even though I don't like her, I believe she got screwed. Perhaps a case of the elitist eating one of their as an offering to the peasants.
Sui
You are allowed to sell your stock if your broker tells you they are about to fall off a cliff. The only time you couldn't sell would be if the broker obtained the information illegally and passed it on to you. If his recommendation was the result of technical analysis, fundamental analysis, or reading tea leaves--no problem! If he knew the stock was going to tank because the CEO of the company told him so--big problem!
And since when is lying a crime.
Lying, when it obstructs justice, has always been a crime. Suppose you see your best friend running out of a bank carrying a gun in one hand and a bag of money in the other. If you tell the cops he went north when he, in fact, went south, you have committed a crime. Doctoring computer and telephone logs is a crime. Shredding evidence is a crime. Hiding gifts to Monica Lewinsky under Betty Currie's bed is a crime, unless you are Bill Clinton.
Let me amend that slightly. You would have to be aware that the information had been obtained illegally before you could be prosecuted for insider trading. If the broker obtained the information from an insider, but boasted to you that his recommendations were based on his brilliant analytical skills, you would not be at fault.
No shat! I ran it thru the Spell Check and as Gos Is my Witness, I thought I selected your spelling!
I have a new tagline in mind re: the spealing cheker. But it is nice that JR (John if I understand the FR setup correctly) provided something ;)
Yep, they walked right into your trap, Martha. They're at your mercy now.
As I understand the situation, the court's findings of fact will stand. The only chance an appeal has of freeing her is to uncover some technical flaw in the trial. The facts as the jury saw them will stand.
I stand corrected, sort of. Yes, the supposed "law basis" for appeals is frequently slanted to the Johnny Cochrans of the workd (your case in point is on point). But, my post was to tell people what an "appeal" means.
But, as long as human beings adjucate the law, we will have what happened in your case.
What a breath-takingly WRONG post -- so many errors in reasoning. Wow.
She WAS under oath when she lied. She profitted illegally by $50K -- no small amount. People are convicted of Grand Larceny -- a felony -- every day for thefts of amounts in excess of $200.00 -- that's TWO HUNDRED dollars.
As for the witchhunt, sometimes you may actually catch a witch.
She had lawyers present when she was questioned by the SEC investigators. THEY were incompetent, as they should have never helped her concoct he lying scheme / false story.
Her trial lawyers also conducted poor cross-examinations that further damaged Martha, and put on a piss-poor defense case, even leaving aside the decision as to whether Martha should testify.
Won't succeed. Prosecutors are not allowed to comment negatively (i.e., in closing argument) on a defendant's decision not to testify (because of the defendant's Fifth Amendment right) but jurors can and do apply common sense in their deliberations, and no judge can prevent that.
Is it your position that it is okay to lie to prosecutors?
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