Martha Stewart Refused April Deal To Avoid Prison

PR Newswire ^ | 3/7/04

[11th Earl of Mar]

Prosecutors Offered Martha Stewart a Deal Last April: Cop To One Count of Making a False Statement and Receive Probation and Continue to Work at Omnimedia, Sources Say

She Refused to Plead Guilty to a Felony

NEW YORK, March 7 /PRNewswire/ -- Newsweek has learned that the Feds gave Martha Stewart an opportunity to avoid prison. Federal prosecutors offered Stewart a deal last April to cop to one count of making a false statement, say several sources familiar with the offer. She would have received probation and could continue working at her company, they say. But she refused to plead guilty to a felony, and a defense source says the Feds couldn't guarantee she would stay out of jail.

And federal investigators say she could have avoided the entire mess if she had confessed in the beginning. Had she admitted wrong doing in early 2002, she could have gotten off with a $200,000 fine and no jail time, report Detroit Bureau Chief Keith Naughton and Special Correspondent Barney Gimbel in the March 15 issue of Newsweek (on newsstands Monday, March 8).

After a seven week trial, the jury deliberated for three days before convicting Stewart on all four counts.

One juror sobbed as the judge ticked off all the guilty counts. Martha's daughter, Alexis, doubled over in tears in the front row of the gallery. Alexis's husband John Cuti, also one of Martha's lawyers, buried his face in his hands at the defense table. Stewart stared straight ahead, showing no emotion.

Martha Stewart's case may set the new standard for judging fat cats who don't play by the rules, write Naughton and Gimbel. "We're now going to see the 'Martha test' as a fair punishment for white-collar crimes," says Jeffrey Sonnenfeld, associate dean of the Yale School of Management.

"This is going to have a strong influence on jurors from here on out." And legal experts say she'll likely go to prison for one to three years, probably at a minimum- security "prison farm."

[longtermmemmory]

Steward convicted herself of arrogance.

She thought she could spin her way out of anything.

[William Tell]

Carolinamom said: "When she had a meeting w/K-Mart executives early on to discuss her marketing in their stores, she served them apple pie and later billed them for it @$20.00 per pie."

This is not enough information to decide that Martha is petty.

Martha was probably already worth a large fortune at the time that K-Mart developed an interest. If K-Mart made the approach to Martha, they may have said, "Come make a presentation to our Board to convince us that we should choose you as our "homemaking" representative. We will pay all of the expenses for you and your staff up to $30,000."

Martha is running a business and owes her stockholders a fair deal. If the K-Mart board was willing to be billed for pie as part of Martha's presentation, then that is the deal that Martha's stockholder's should have. Would it have been "petty" for the K-Mart board to have paid for everything else but refused to pay for pie?

[PA Farmer]

G. Gordon Liddy wrote a book titled, When I Was a Kid, This Was a Free Country. The Stewart case (and sadly, most of the reaction here) is a perfect example. The crime of insider trading didn't exist until the 1960s. It was created not by an act of Congress, but by a regulatory agency. The "crime" wasn't defined precisely, creating doubt about what's allowed and what isn't. Martha Stewart wasn't an insider at Imclone, so when the SEC accused her of insider trading, it was making law out of thin air. After a year of publicly accusing her of insider trading, the authorities declined to charge her with that crime, but invented another crime, that of contending one is innocent. That was the "securities fraud" charge eventually--and correctly--thrown out by the judge. By denying the charges of insider trading, she supposedly defrauded investors in her own company.

So in the end, the Feds spent $40 million of our money convicting Stewart of lying about a crime she was never charged with. And how can we know she was lying? She had sold 1,000 shares of her own Imclone stock and all of her pension fund's much larger stake in Imclone months earlier--long before the Imclone founder began selling his.

In short, Stewart is as much a victim of prosecutorial excess as Rush Limbaugh is. To paraphrase Liddy, when I was kid, this was a free country, and neither "insider trading" nor "doctor shopping" were crimes.

[Vision]

It's funny, I had this exact conversation last night.

Stewart is not a president. Clinton was impeached.

[7.62 x 51mm]

Wanna bet? Name it.

[Hildy]

This is what I mean..I just don't understand how you can wish prison on someone like her. That doesn't mean I think because of who she is she shouldn't go to jail, I'm just saying the spirit of those who take glee with the thought of a jailed Martha Stewart just seems so very wrong to me. And yes, I do think it's class envy.

[Leavemealone]

I'll tell you why she should go to jail.

Average Americans (including myself to the tune of 6 figures) lost alot of hard earned money in the stock market games over the last 5 years. Anyone who took part in the manipulation of the stock market is nothing more than a common thief who stole money from MILLIONS of Americans.

Another thing to think about, all that lost money translates into lost 'revenue' for the federal government.

If you still don't think she did anything wrong and is being treated unfairly remember this:

When she sold her shares there was someone on the other end who bought them. So you think that other person had the same illegal information she did?

[Hildy]

Anyone who took part in the manipulation of the stock market is nothing more than a common thief who stole money from MILLIONS of Americans.

Do you have any idea how many people would be in jail if they prosecuted all of this? There would be more jails than schools.

[Wilhelm Tell]

This is the best description of the situation I have read. Ayn Rand had a lot to say about the danger of "nonobjective laws" that undermine the rule of law and make everyone a criminal. Once everyone is a "criminal" and the law is only the word of the biggest criminal to get control of the system, you are well on the way to a totalitarian state.

Our system is best described as a cleptocracy, where wealth and favors are distributed to the most vocal special interest goup of the moment. That these same people want to enforce "justice" and "fairness" is laughable double-speak.

[geedee]

The stupid ones are the ones that commit crimes and think they are above the law.

Well said, ma'am. Well said.

[11th Earl of Mar]

the Feds spent $40 million of our money convicting Stewart of lying about a crime she was never charged with.

So if the Enron/WorldCom people shredded documents, deleted emails, burned journals and destroyed phone logs after a federal investigation had started and otherwise hindered a federal investigation, you would agree to let them go?

Did you also support Hillary when she 'lost' her billing records.

[11th Earl of Mar]

Do you have any idea how many people would be in jail if they prosecuted all of this?

Legalize shoplifting! [for the same reasons]

[Henrietta]

"Under today's nonsense laws you can be convicted of conspiracy to do something that you did not do."

Actually, this concept has been enshrined in common law for hundreds of years. The reason you can be convicted of conspiracy when you didn't actually DO anything is because at common law, the "crime" of conspiracy is the actual agreement itself. If you agreed to do the crime, and then actually DID the crime, you would be guilty of conspiracy to do the crime, and the crime itself.

This is not a new concept under American jurisprudence.

[EDINVA]

She may knock out one count on appeal, max. Appeals are based on mistakes the judge may have made in conducting the trial, not the jury's deliberations and verdict, or the public's reaction

[Henrietta]

"Martha Stewart wasn't an insider at Imclone, so when the SEC accused her of insider trading, it was making law out of thin air. "

Actually, you don't have to be an insider to be guilty of "insider trading." If you are the "tipee" and you know that the "tipper" has a fiduciary duty to the company, you can't use the tippers insider information and trade based on that. Given that, though, I don't think that her broker would be a fiduciary as to the company.

The whole time that this case has been underway, I've never been able to figure out (aside from the bogus "securities fraud" charge that was dropped) just what the government's theory was with regard to her wrongdoing. Can someone explain? The news media hasn't been very good at explaining it.

[Rainmist]

How embarrassing to have the rumors of your tight-fistedness be proven true when you try to save a measly 50 thou ( even tho you're a billionaire ) instead of doing the right thing. That hag deserves to go to jail.

[Cboldt]

The whole time that this case has been underway, I've never been able to figure out (aside from the bogus "securities fraud" charge that was dropped) just what the government's theory was with regard to her wrongdoing. Can someone explain? The news media hasn't been very good at explaining it.

The link below is on the SEC website. It describes a civil cause of action. Martha lied to the investigators regarding the civil case. Her trial for the lying was recently completed. A caveat, while the civil case was brought, and while I have seen no evidence that it has been dropped (I looked), the civil case may in fact have been dropped or settled.

The news media is not good at reporting most things.

Martha Stewart and Peter Bacanovic: Lit. Rel. No. 18169 / June 4, 2003 <-- Link

On June 4, 2003, the Securities and Exchange Commission filed charges against Martha Stewart, Chairman and CEO of Martha Stewart Living Omnimedia, Inc., and Peter Bacanovic, a former registered representative associated with Merrill Lynch, Pierce, Fenner, and Smith Incorporated, for illegal insider trading. ... The Commission alleges that, based on this conduct, Stewart and Bacanovic violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

[lainde]

---she could have gotten off with a $200,000 fine and no jail time, Martha needs to fire her lawyer for being stupid or hire someone to kick her in the butt. ---

I'm just stunned. I knew in theory she could have cut a deal. But seeing the specifics of this lenient deal makes me think she simply "up and lost her mind"!

[lainde]

---- She a common perjurer who didn't have the sense enough not to show up in court with a $12,000 pocketbook...----

Is that true about the purse? I fear I'm culturally deprived: WHO makes $12,000 handbags? Guess they're like Thereeeeza's Pashmina shawls...

[gcruse]

She probably thought she'd charm people...

I might agree if she had taken the stand in her own defense.

...and because of her stature that she'd get away with it .

Lizzie Gruber, Leona Helmsley, Barbra Streisand, Martha Stewart....yup.