Posted on 03/06/2004 11:25:49 AM PST by 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.
Seriously, with Stewart being such a big Democratic donor, I'm surprised they don't want her released.
They're going after her on insider trading in civil court. They're doing that so they can get the lower standard of proof, because they're using a brand new theory of insider trading.
Martha Stewart did not, even if you accept the prosecution's case whole-heartedly, have insider information. She had, instead, market information. No one has ever before been convicted of insider trading based on market information, so this will be an entirely novel theory the government is trying out.
Given the burdens of proof, it is far better for them to try it out in civil court, rather than criminal. I have no idea what the outcome might be if they succeed.
Drew Garrett
Exactly what I thought when I was trying to sift through what her crime amounts to--
Thing is, MS was married to a lawyer for almost a quarter century. Her life's been lousy with lawyers. So, what does she do when the feds ask her questions? Lie, and not call her lawyer...wow.
Read this: Martha is Innocent and then tell me what you think about what you've been seeing in the media.
I actually had not followed this case up until a few days ago, because as I said, she's not exactly a pleasant person. But the thing that caught everyone's attention was the charge the judge dismissed: the prosecutors charged her with fraud for pleading innocent, which they alleged was a fraudulent scheme to keep her stock price up, even though she "knew she was guilty"! Something like that is straight out of a Communist show trial. And it makes all the other charges suspect. Even the judge politely called it a "Novel" theory. Novel is damn right: it inverts all of Anglo-Saxon law for 1000 years.
As far as why she was not charged with "insider trading", I'm not sure, but I think I know why: "Insider Trading" is not a Federal crime listed in the United States Code. I think it is only part of the SEC regulations, which are not laws of the United States, but rules of a particular agency of the United States, for which you can only be fined (or lose certain privileges, such as a Broker's license). Someone on this thread may correct me, I'm too lazy to go to Findlaw and look it up myself.
But that in itself is a story. In Europe, "insider trading" is not a crime, and in the U.S., it happens all the time, it simply must be disclosed. In this case, I don't think you could even make a civil case of it, since her broker told her, not the other 'insider', Waksal. She and the broker don't constitute an insider group, so all they could do was nail her on some small fibs about how it actually happened. And if you read the other article, that hinges on simple wording - it appears that she was trying to avoid the impression that it was insider trading.
The whole thing is jive that wouldn't have made it to the docket if her name wasn't Martha and she wasn't a dislikable blonde. Even the juror who talked basically said he wanted to convict because she was a big fish - leading to the question, would he have convicted if the accused were merely some no-name investor?
I leave you to ponder these reality checks. Personally, I think a nice little civil fine with restitution might have been the most she should have gotten.
So if you have 5,000 killers awaiting trial and the first one is let go because he's wealthy and connected, you would favor setting all the rest of them loose on the community?
Novel theories = Trumped up charges. If they don't have real crimes to prosecute, just invent some...sorry, little editorial.
See my previous post about the status of "insider trading". I don't know that it is an actual crime under federal law. Can you verify? As far as going after her in "civil court", do you mean that she is being charged under SEC administrative laws or is the government actually suing her ?
The law against insider trading has been in the USC for 70 years.
You knew more about the Stewart case before you read Rockwell's commentary.
True to being the liberal paper of record, they have an article today speculating that some people think she was brought down for being a Democrat.
If they can't, I'll expect a front page retraction and apology to the prosecution.
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