Martha Stewart was found guilty
Friday of lying to federal investigators about a timely and profitable stock
sale, a verdict that could mean prison time for the domestic arts queen and
deals a setback to the media empire she built to promote "good things." Each of
the four charges Stewart was convicted of -- conspiracy, obstruction of justice
and two counts of making false statements -- carries a statutory term of up to
five years in prison and fines of up to $250,000. Under federal sentencing
guidelines, however, it is likely she will face a lesser term.Rick Maiman/
Bloomberg News Martha Stewart arrives at Manhattan Federal Court in New York on
Friday. I am obviously distressed by the jury's verdict but I continue to take
comfort in knowing that I have the confidence and enduring support of my family
and friends. I will appeal the verdict and continue to fight to clear my name. I
believe in the fairness of the judicial system and remain confident that I will
ultimately prevail. I can't tell you how much I appreciate all the words of
encouragement I have received from thousands of supporters. It is your continued
support that will keep me going until I am completely exonerated. She will
remain free at least until a June 17 sentencing hearing. Stewart's former
stockbroker, Peter Bacanovic, 41, was convicted along with her for perjury,
conspiracy, making a false statement and obstruction of justice, but was
acquitted of making a false document. He faces similar sentencing. Stewart, the
highest-profile figure in a procession of corporate scandals that emerged after
the tech stock boom-and-bust of the 1990s, reacted with a wide-eyed grimace when
the jury of eight women and four men delivered their decision after three days
of deliberations. Her daughter, Alexis Stewart, was in tears."I am obviously
distressed by the jury's verdict," Stewart, 62, said in a statement issued
shortly afterward. "I will appeal the verdict and continue to fight to clear my
name. I believe in the fairness of the judicial system and remain confident that
I will ultimately prevail." A stoic-looking Stewart left the courthouse about an
hour after the verdict, passing through a media frenzy as fans yelled, "We love
Martha!" U.S. Attorney David Kelley said the verdict sends a message to
corporate America. "The word is, beware. Don't engage in this kind of conduct
because it will not be tolerated," the prosecutor said on the courthouse steps.
"The victims in this case are the entire American public who rely on the
integrity of our system to make sure that justice is done and they can invest
their money safely and securely." Stewart's attorney, Robert Morvillo, said he
was confident about an appeal and viewed the guilty verdict "as having lost the
first round." While devastating for Stewart, the verdict is also a blow to her
company, Martha Stewart Living Omnimedia. Magazines, TV shows and numerous
homemaking and decorating products bear her now-tarnished name. Stewart stepped
down as chief executive after her indictment last summer, but retains the title
of chief creative officer. The government may seek to have her removed from the
company's board. The board will meet soon to "evaluate the situation and take
actions as appropriate," the company said in a statement. Chappell Hartridge, a
juror who spoke with reporters after the verdict, said the ruling should help
the little investor. "They may feel a little bit more comfortable that they can
invest in the market and not worry about these types of scams where they can
lose their 401(k)s," he said. Three other trials for alleged corporate
wrongdoing continue in New York, as prosecutors target former executives from
Tyco, Adelphia Communications Corp. and WorldCom. The government accused Stewart
of selling her nearly 4,000 shares of ImClone Systems Inc. -- worth about
$228,000 -- on Dec. 27, 2001, after receiving an illegal tip that the family of
ImClone founder Sam Waksal was planning to sell their stock. tewart maintained
she and Bacanovic, who worked for Merrill Lynch & Co. at the time, had an
agreement to sell her ImClone stock if it fell to $60 per share. While not
charging them with insider trading, prosecutors said Stewart and Bacanovic
concocted that agreement and deceived investigators to cover up their true
motivations. The day after the stock sale, ImClone shares plunged on the news
that the government would issue a negative report about an ImClone cancer drug.
Stewart avoided about $51,000 in losses by selling when she did. In the most
damaging testimony, Douglas Faneuil, a brokerage assistant who worked for
Bacanovic, said Stewart ordered him to sell her ImClone shares after he gave her
the illegal tip. Faneuil has pleaded guilty to a misdemeanor charge of receiving
gifts in exchange for not reporting a crime. At a sentencing hearing scheduled
for this summer, he faces up to a year in prison and a $100,000 fine. ImClone
founder Waksal pleaded guilty in 2002 to telling his daughter to sell shares
because he had advance word of the report. Waksal, a longtime friend of
Stewart's, is serving seven years in federal prison. While the prosecution
called an array of witnesses over several weeks, Stewart's attorneys presented a
minimalist hour-long defense, calling one witness and keeping their celebrity
client off the stand. The defense team had been buoyed a week ago when U.S.
District Judge Miriam Goldman Cedarbaum tossed out the most serious charge, a
count of securities fraud that accused Stewart of deceiving investors in her
company when she publicly declared her innocence. The jury acquitted Bacanovic
of making a false document. The government had accused him of doctoring a
worksheet to support claims that there was an agreement to sell ImClone when it
fell to $60 a share. The trial drew vast media attention, with dozens of
satellite news trucks lining the street and scores of reporters and TV crews
camped out near the courthouse under white
tents