Courtroom Tales of Martha's Lies . . . [NYT Editorial supports jury's conviction of Martha]

The NYT ^ | March 6, 2004 | NYT Editorial Board

[summer]

Courtroom Tales of Martha's Lies . . .

Published: March 6, 2004

Martha Stewart, the woman who capitalized on her sense of decorum and good taste to build a business empire, is likely to go to jail for lying. Despite some significant overreaching in framing the original charges against her, the trial vindicated the government's decision to prosecute her and her broker. A Manhattan jury convicted Ms. Stewart yesterday of lying to federal prosecutors and of conspiring with her broker, Peter Bacanovic, to obstruct inquiries into why she sold her nearly 4,000 shares of ImClone Systems on Dec. 27, 2001. Ms. Stewart was found guilty on all four counts considered by the jury; her broker, on four of five.

Earlier, at the conclusion of the testimony, Miriam Goldman Cedarbaum, the presiding federal district judge, had tossed out the most serious charge, securities fraud, against Ms. Stewart. That was the right call. Prosecutors did overreach with their fanciful charge that in defending herself, Ms. Stewart had been conspiring to prop up her company's stock price.

Absent a straightforward insider-trading charge, the jury was left to determine that there had been an illegal cover-up — and on that, the evidence was compelling — without defining the underlying impropriety. Still, the narrative that emerged at the trial justified the government's determination. This trial was not about unfairly targeting a celebrity defendant, but about enforcing the transparency of financial markets.

The trial depicted a cozy world where insiders routinely use their wealth and connections to benefit from insider information. Samuel Waksal, ImClone's former chief executive and Ms. Stewart's close friend, is serving a seven-year prison term for illegally dumping his own holdings in his company's stock on that same Dec. 27, before it became public knowledge that the Food and Drug Administration had refused to approve the company's anticancer drug, Erbitux. En route to a Mexican vacation, Ms. Stewart was informed by her broker's office that Dr. Waksal was dumping his shares.

The clumsy attempts by Ms. Stewart and her broker to fabricate alternative explanations for her subsequent stock sale are what did them in.Despite being a former stockbroker and director of the New York Stock Exchange, Ms. Stewart's actions were openly contemptuous of the government's right to police the integrity of the markets. As for Mr. Bacanovic, his prosecution should dissuade others in financial services who might be tempted to let a few favored clients benefit from insider information.

[TheSpottedOwl]

I want to know just who she pissed off so much, that she was actually tried on these charges. Too many people have walked or been slapped on the wrists for much more serious charges.

[sergeantdave]

Bullseye, Regulator. It was a show trial. I admit that I didn't follow this trial, so some of my observations on the lesser trivial bits might be off. But the big picture comes down to prosecuting someone for lying, while the liars in government skate home free.

[summer]

What if an "insider trader" charge had also been prosecuted? Would you feel the same way? BTW, I still don't understand why that charge was not added.

[sergeantdave]

It's not apparent that I'm not convinced, it's obvious. An oath is an oath. If politicians violate their oath, should not they be brought up on charges? And if found guilty, should they not be imprisoned?

[summer]

Yes, I think all people SHOULD be held to the same standard.

[summer]

And, yes, you are right - it was "obvious," not merely apparent.

[Bonaparte]

"Where's the guy in the FDA who leaked the info to Waksal?"

I've been wondering about that too. I think the feds want him (her?) but may only get him if Waksal or one of his agents deals. That's why a very stiff mandatory sentence is a good idea in these conspiracy cases. It motivates the customer.

[summer]

I think what you and Regulator are getting at in your comments is one reason why 50% of all eligible voters in this country do not bother to vote - some people probably feel a liar is a liar, and everyone lies in politics, so, why care which party is in power? And, I must admit, I too have felt that way at times, though I also think Clinton did far more damage to the Dem Party than most people realize. But, as Dems continue to lose elections, and he continues to play a major role in that party, some people may eventually pick up on the actual amount of damage.

[summer]

Well, Waksal is currently serving a 7-year prison sentence, so it seems "deal" time is over with him.

[sergeantdave]

Summer, it's not about insider trading. She was convicted of lying to a fed investigator. The matter to consider is equal treatment under law. Stewart was convicted for lying under oath.

Here's the question: If a citizen can be convicted and thrown in prison for lying under oath, should not a politician or bureaucrat who does not obey his oath also be tried, convicted and thrown in prison for violating his oath?

It's about lady justice standing with a scale and blindfold, telling everyone that all shall be treated equally under the law, without regard to social standing, connections or money.

[hershey]

Martha's lawyer bills her company, not Martha personally. It's all in the fine print of the original contract when she started the firm. So in effect, her stockholders are paying her bills, plus losing their shirts.

[Oztrich Boy]

And saved herself $9 million in attorney fees,...
That amount is obscene. It's legal, it's a free market and Martha agreed to the fees.

I wonder what the price tag on the good defence was?

[hershey]

One of the lawyer-business expert talking heads on TV last night said he hoped Martha's daughter wasn't dragged in to prop up the company as its spokesperson, because it wouldn't work. What's needed is a new title, with no reference to Martha's name or persona. They could get one or several chef types in to cook and bake and host the show, if any. They were trying desperately to figure out a way to save all those jobs. Martha assembled a terrific workforce, great designers, creative people. She's up for I think eight Emmys next week, all well deserved.

[hershey]

Good. I'd like to see her businesses survive. Those people who worked for her need their jobs, and they're really wonderful at what they do. Hopefully, they can figure out a way to transform the show, magazine, product line, and not only survive, but prosper. I wonder if they'll put Martha on a suicide watch when she dons the orange jump suit...at least for a time. It's bound to be hard when you're accustomed to absolute control. Leona Helmsly comes to mind. She survived jail. (Same personality problems, same bad press.) I wonder if she contemplated suicide and was watched closely.

[Bonaparte]

Not really. When all parties are agreed, early release can be (and often is) arranged. There is early release for good behavior and then there is early release for great behavior. It's really up to Waksal.

And there are other factors at play in his case. For example, he solicited his own daughters to enter into a criminal conspiracy, didn't he? Accordingly, they are subject to prosecution as well. I doubt he wants to see that happen.

Milken was sentenced to 10. He wound up serving only 2. Upon release, he promptly violated terms of parole by involving himself in investments again. And yet he didn't serve more time. Deals are cut all the time, pre- and post-sentencing. We'll just have to wait and see...

[Bonaparte]

"I wonder what the price tag on the good defence was?"

There was no good defense, because Martha refused to deal. The arrogant little fool actually believed she was above the law and entitled to rob others. Given her posture, there was little that even a superb lawyer like Morvillo could do. The government had a very strong case, as proven by the short duration of both the trial and jury deliberation.

Believe it or not, she still has some wiggle room even though she's been convicted. I doubt her ego will let her take advantage of it, but her lengendary vindictiveness may trump all that. If another bad actor in this matter deals at her expense, she just might "reconsider her position."

[summer]

Summer, it's not about insider trading. She was convicted of lying to a fed investigator. The matter to consider is equal treatment under law. Stewart was convicted for lying under oath.

Yes, I do realize that; but, it seems to me the seed for all these falsehoods was indeed insider trading, so, I still can't fathom why that was not one of the charges.

Here's the question: If a citizen can be convicted and thrown in prison for lying under oath, should not a politician or bureaucrat who does not obey his oath also be tried, convicted and thrown in prison for violating his oath?

Yes, again, I think all should be treated the same under the law. I do not disagree with you on that.

[summer]

Martha's lawyer bills her company, not Martha personally. ... So in effect, her stockholders are paying her bills, plus losing their shirts.

I don't know about that - I think you may be wrong there since it was not a company matter. I think Martha has to pay her own legal bills here. But, who knows, you may be right.

[summer]

Re your post #52 - LOL....well, they all say this lawyer was so great, but really - I mean, how did he expect a jury of lay people to see this case as perhaps he himself, a lawyer, sees it? Lay people see things the way they are: 6 weeks of damaging testimony, and - uh - what's on the other side for them to consider? Not much. And, I am not implying she should have testified. The jurors did not expect that either, but uh, the defense didn't give them an alternative version of events. On on the one count against the stockbroker where there was not enough evidence to convict, this jury acquitted. I thought they were fair.

[BurbankKarl]

I heard Greta Van Suffering had a meltdown over this...I suppose her buddy Larry Kudlow did too....