Martha Stewart Gets 5 Months in Prison

Yahoo News ^ | 7/16/04 | AP

[robertpaulsen]

"She could have even avoided criminal prosecution by disgorging all profits and offering to turn over the stock as a civil penalty with no admission."

All she had to do was tell the truth, period. She lied to protect her friend, Bacanovic.

Maybe someone could correct me if I'm wrong, but I don't believe that the recipient of insider information is committing any crime by acting on that information.

If the broker says that Sam Waksal (ex-President, Imclone) is selling, and you sell, the broker may be in trouble but not you. Am I wrong?

If I'm not wrong, then Martha could have told the truth and kept her stock.

[what's up]

She got what she deserved. She's not a Ken Lay...but she got a smallish sentence for a smaller crime. Good.

It's not like she's going to be sharing a cell with a serial rapist. Sheesh. If she lied to the FBI she gets what she deserves.

[gitmo]

She is dangerous. A lot of money was lost by her stockholders and she's only been on the exchange for 5 years. In an instant, she controlled other people's monies. AS A FORMER BROKER, she knew the rules.

Then THAT'S what she should have been charged with. Apparently, they had no case. So they convicted her of lying, even though they couldn't prove the lie.

[Rushiel]

First, let me say that I'm no fan of Martha Stewart. Her smuggish white-bread home-in-the-Hamptons you-can-be-a-good-homemaker-if-you-just-try attitude always brought my hand up in a make-believe pistol, aimed squarely at her clean white smock.

That being (too much) said, Martha Stewart would have never even been charged with anything if it weren't for the fact that it happened so soon after the Enron debacle. The prosecution needed an example to show that now "we're tough on inside trading." But she wasn't guilty of that.

Not wanting to lose face, and knowing that the American people were hinged on this trial, they were determined to make an example. In the end, they caught her for lying!

I didn't know lying was against the law, unless you were under oath or advised that if you lied you could face a prison sentence. If that's the case, I have 239 thousand five-month sentences staring me in the face.

Finally, if the prosecutors didn't know that the Martha Stewart case wouldn't be picked up by the media, and played like a circus, then they would have never gone forward with it.

This is all just an another example of the pandering to the envious in country, to quench our lust for seeing those to whom we think inferior, excoriated, be it just or unjust. The thought of Martha Stewart in a Federal Penetentiary is so soothing to some, because now they can think they are better then she is, after all.

I have never been a fan of Martha Stewart, but I've never been a fan of a Federal lynch mob either, especially when the public cries out in cheer.

[longtermmemmory]

legally you are wrong, sorry.

She is a broker.
She is on the board of the NYStock Exchange.
She is on the board of her own publicly traded company.

She acted on information that was not public, before it became public. If she had and did nothing nobody would be in trouble. She acted on it, lied to the FBI to cover that act.

This was not information sent to "joe consumer", this was information sent to "jane insider/stocker broker/boardmember NYSE/boardmember MarthaStewart Omnimedia". Clinton never practiced law but he did loose his law degree for perjury.l

[Rushiel]

As I have an extremely short-term memory, I'm sure you have expertise in this issue. But by your statements, you seem to be trying to make the case for the insider trading allegation, which was dropped. Are you trying to extend the allegation?

If so, then to say, in one set of statements, that she is a broker on the NY Stock Exchange, and to say, in another set of statements, that she acted on information that was not public, you omit the fact that any actions she was alleged to have taken are irrelevant to her position as a broker, inasmuch as they had nothing to do with Omnimedia, but Martha Stewart, individual.

The fact that she lied (although not under oath or under warning of consequence) is clear. Under what situations, then, is lying illegal?

If her intent was to use her position as a stock broker to receive inside information to better Omnimedia stock, then hands down, she's guilty, send her to the chair. That would be an Enron analogy.

But in truth, the allegations were simply a fabrication that the prosecution, in the bitter haze of Enron, failed to prove. Nevertheless, they still needed an example to set, and whom better than Martha. So they went for whatever they could get (unlike Joe Consumer, since he has no "media value.")

Lying may be a sin, but if anyone reading this has never lied, let me know, especially under what proved to be a prosecetorial charade.

I have no love for Martha Stewart. But, logically, I do not comprehend the bitterness brought up by those who feel the comparison between her and "Joe Consumer" are substantive. Most Joe Consumers don't have portfolios, and if they did, most of them didn't own ImClone, and of those that did, what financial damage did they suffer by Martha Stewert selling her stock?

The stock value itself shows that those that might have sold it due to the prosecutorial ambitions of post-Enron legal bureaucrats lost more than those that held it.

If there is any culpability for the losses of ImClone, it's those that attempted to make Martha Stewart an example, not Martha Stewart herself.

[Blue Highway]

Nice try Robert, but you fail to show that she was selling this stock 3 years earlier. This is a more accurate idea of WHY she sold. She knew this this was going to the BOTTOM.

[robertpaulsen]

Nice graph!

Yes, she knew it was going to tank. What she didn't know was that it would return a nice 50% profit had she just held onto it.

Which I'm sure she now wish she had.

[F16Fighter]

Just before her sentence was pronounced, Stewart asked the judge to "remember all the good I have done."

I imagine the exact same scenario over and over come Judgement Day.

[Blue Highway]

Nice graph! Yes, she knew it was going to tank. What she didn't know was that it would return a nice 50% profit had she just held onto it. Which I'm sure she now wish she had.

Actually even if she did know it would return to $60/share 2 1/2 years later, that's just the break even point for her, that is dead money as well.

What we don't know is she may have been one to have bought IMCL back when it was in the $10 range from April 2002 till February of 2003. If so she made a killing.

[johnwayne]

Sorry to reply so late.

What did she lie to her shareholders about?

[robertpaulsen]

"What did she lie to her shareholders about? "

She said she did nothing wrong, that she told her broker to sell at $60. and she wasn't acting on inside information, that she didn't lie to authorities, that it was all a mistake.

(If an officer of the company intentionally lies to the shareholders to prop up the price of the company stock, that's known as securities fraud. This charge against Stewart, which carries a 10-year prison term, was dismissed on a technicality.)

So, people held onto her stock. Others, who didn't believe her, sold. The stock plummeted.

I believe there's a sharholder civil suit now against her.