Tuesday, 09 March 2004
Bringing down Martha Stewart - THE COMMENTARY
By Joseph Planta
VANCOUVER - There was some delicious irony in the spectacle had outside the Federal Court building in Manhattan on Friday afternoon, when the jury in the Martha Stewart trial brought down their verdict, and effectively brought down the world of Martha Stewart. Anyone glued to the cable news outlets saw all at once, a swarm of people rushing down the steps of the courthouse, some waving red scarves and some carrying, mostly red-coloured placards with a number writ large on the front. This was, as it turned out later, reporters for some of the cable outlets, signalling to their press caravans across the street as to which of the charges Stewart and her stockbroker Peter Bacanovic were found guilty on. One would suspect, as it was for one of Bacanovic's charges, were Stewart and her co-accused not guilty, they would have used green cards and scarves. Anyways, the ironic flourish in all of this was that MSNBC and CNBC, which employed the use of numbered coloured cards to signal to their outlet the outcome of the charges, managed to screw it up. In the media's haste to report the conviction of the domestic diva, they got it wrong for some moments before correcting the story that Stewart was guilty of all four counts against her: two counts of making false statements, and one count each of conspiracy and obstruction of justice.
Doubtless, there are those on both sides of the culture war divide who find some glee in the fact that Martha Stewart was found guilty and that she could be spending up to 20 years in prison. She probably won't spend 20 years in prison, yet those that say that are some of the same cable news pundits who said she wouldn't have been found guilty. Martha Stewart, who for years cultivated an image of tasteful living, was found, beyond a reasonable doubt too greedy for her own good. The root of all of the palaver surrounding Stewart may be forgotten, but the taint is obvious.
It dates back to during the 2001 Christmas season when her friend and ImClone founder Sam Waksal was tipped off that the Federal Drug Adminsitration would not approve the use of ImClone's revolutionary new cancer drug, Erbitux. Stewart, who had 3,298 shares of ImClone stock, acting on this tip, advised her stockbroker Bacanovic to sell a day before the FDA would make their decision to stay approval public. The Securities and Exchange Commission, of course investigates the dumping of stock so close to the price dipping, and Bacanovic says that he and Stewart had previously agreed on selling the stock were it to fall below $60. Stewart, when asked by the SEC, federal prosecutors and the FBI, tells the same story. In June 2002, Waksal is arrested and charged with insider trading. He gets seven years in the hoosegow. Stewart contends she had the $60 stop-loss order, and insists she is fully cooperating with authorities. In October 2002, Bacanovic's assistant, Douglas Faneuil pleads guilty to taking a payoff to keep quiet about Stewart's stock trade, and thus the house of cards Stewart built slowly collapses. Waksal admits he tipped his own daughter to dump her ImClone stock, and that leads to Stewart and Bacanovic being indicted. The trial started in late January and as the prosecution mounted a successful case against Martha Stewart, Stewart's own defence team calls but one witness. That coupled with the reprieve just over a week ago of the judge throwing out the most serious charge - that of securities fraud - out, she was found guilty of the remaining four charges Friday.
Essentially, Martha Stewart lied and was caught out. The lesson is of course to always tell the truth, and to never shirk responsibility by running away. Better yet, when Stewart was participating in the investigation, it would have been better for her had she clammed up and said nothing. Her lawyers should have advised that, and if she didn't have legal counsel at the time, she should have gone out and paid for it. Were Stewart to have owned up a long time ago, she'd have gotten a slap on the wrist and a fine. A fine, which pales in comparison to the 50% decline the Martha Stewart Living Omnimedia company, has seen. And what with this conviction, does it mean, as Barbara Amiel in today's Daily Telegraph in Britain says, lead to the company winding up its affairs, putting out of work 15,000 employees, not to mention their subcontractors?
Stewart's conviction and the spectre of her going to jail are not for the crimes she's been convicted of per se. No, the trial's spectacle and her proverbial crucifixion are rooted thanks to the tenor of the times. The corporate world in America is not looked upon too well, what with the scandals and malfeasance permeating the culture. One word is often necessary in making the case: Enron, Tyco, and WorldCom. Haliburton, Dick Grasso and Jack Welch don't help in taking away the stink either.
Martha Stewart, whose appeal and fame is far more reaching than a Dennis Kozlowski, Ken Lay or Bernie Ebbers, is probably the government's best example for corporate America and all two-bit white collar, and wannabe crooks. The weight of the government, the SEC, the FBI and others investigating this petty crime, perhaps make corporate criminals quake in their Gucci's, however some will clamour that hoisting Stewart up is rather excessive.
The bleatings of Rosie O'Donnell aside, one has to feel sorry for Martha Stewart. Yet, the law is the law and she was found guilty. Nothing less than metting out the appropriate punishment for the crime at hand is what's necessary. Is it excessive? Well, of course, but someone who lives the way Martha Stewart lives, knows full well the outlay for living so fastidiously. You pay the price, and Martha Stewart is paying dearly. Oh and what's further ironic: the FDA recently approved Erbitux.
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An archive of Joseph Planta's previous columns can be found by clicking HERE .