Martha Stewart Gets 5 Months in Prison
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By ERIN McCLAM, AP
NEW YORK (July 16) -- Domestic icon Martha Stewart was handed a prison term of
just five months Friday for lying about a stock sale. After asking the judge
for leniency, she emerged defiant from the courthouse to say she was being
persecuted and declared, ''I'll be back.''
''I'm not afraid. Not afraid whatsoever. I'm very sorry it had to come to
this,'' she told a crowd of media and supporters afterward, speaking in a
strong voice on the courthouse steps.
Stewart, who was also ordered to serve five months of home confinement and
fined $30,000, did win a key victory when U.S. District Court Judge Miriam
Goldman Cedarbaum stayed her sentence pending appeal, a process that could last
many months.
The sentence was also far less than it could have been. Experts had predicted
she would receive 10 to 16 months for her conviction on charges she lied to
federal prosecutors about the reason and circumstances surrounding her
well-timed sale of stock in ImClone Systems Inc.
In the courtroom, Stewart, 62, projected a much less confident image, appealing
in a shaky voice for a reduced sentence and asking the judge to ''remember all
the good I have done.''
''Today is a shameful day. It's shameful for me, for my family and for my
company,'' she said. As she was sentenced, she stood and faced the judge, her
jaw tight but otherwise showing little emotion.
But outside the courthouse, Stewart was confident and upbeat. She smiled
broadly to the cheers of supporters as she complained that a ''small personal
matter'' had been blown out of proportion.
She even plugged her company's magazine and products, while joking that she
didn't mean to make a sales pitch.
''Our magazines are great,'' she said. ''They deserve your support, and
whatever happened to me personally shouldn't have any effect whatsoever on the
great company Martha Stewart Living Omnimedia.''
Shares in the company shot up after the sentence was announced. The stock was
up $2.52, or nearly 30 percent, at $11.16 in late-morning trading on the New
York Stock Exchange.
Cedarbaum granted a defense request to recommend to prison officials that
Stewart be assigned to a minimum-security federal prison in Danbury, Conn.,
close to her home in Westport.
During home confinement, which Stewart said she plans to serve at her home in
Bedford, N.Y., the judge said she would consider waiving a typical provision
that the detainee wear an electronic monitoring bracelet.
Cedarbaum did reject a defense request to send Stewart to a halfway house
rather than prison, noting that ''lying to government agencies during the
course of an investigation is a very serious matter.''
But the judge said she was imposing the lowest sentence she could under federal
sentencing guidelines. ''I believe that you have suffered, and will continue to
suffer, enough,'' Cedarbaum said.
Prosecutor Karen Patton Seymour had argued for a heavier sentence.
''Ms. Stewart is asking for leniency far beyond what ordinary people who are
convicted of these crimes would receive under the sentencing guidelines,'' she
said.
The jail term was the latest blow for Stewart, once the CEO of a $1 billion
media empire. After her 2003 indictment, she resigned as head of Martha Stewart
Living Omnimedia Inc. And following her conviction, she surrendered her seat on
its board.
Yet her fall from grace did little to hurt her standing among her fans. In the
final weeks before Stewart's sentencing, hundreds of well-wishers sent letters
to the judge asking for mercy.
Former Merrill Lynch & Co. stockbroker Peter Bacanovic, who was convicted along
with Stewart of lying about the 2001 stock sale, was scheduled to be sentenced
later Friday.
It was Dec. 27, 2001, when Stewart, in a brief phone call from a Texas tarmac
on her way to a Mexican vacation, sold 3,928 shares of ImClone, a biotechnology
company run by her longtime friend Sam Waksal.
Prosecutors alleged that Bacanovic, 42, ordered his assistant to tip Stewart
that Waksal was trying to sell his shares. ImClone announced negative news the
next day that sent the stock plunging. Stewart saved $51,000.
Stewart and Bacanovic always maintained she sold because of a preset plan to
unload the stock when it fell to $60. ImClone now trades around $80.
The star witness against Stewart was Douglas Faneuil, a young former brokerage
assistant who vividly described Bacanovic's order when he learned Waksal was
trying to sell: ''Oh my God. Get Martha on the phone.''
Ann Armstrong, a veteran Stewart assistant, also testified Stewart had altered
a computer log of a message Bacanovic left earlier that day about ImClone.
But the verdict on March 5 - guilty on four counts apiece for Stewart and
Bacanovic - set off a string of events as dramatic as the trial itself.
In April, lawyers for both defendants accused one juror of lying about an
arrest record in order to get on the trial. Cedarbaum denied a request for a
new trial, saying there was no proof the juror lied or was biased.
And in May, federal prosecutors accused Larry F. Stewart, a Secret Service ink
expert, of lying repeatedly in his testimony at the trial - mostly about the
role he played in ink-analysis testing of a stock worksheet.
Just last week, Cedarbaum again denied new trials for Stewart and Bacanovic,
this time saying there was ''overwhelming independent evidence'' to support the
guilty verdicts.
Both the juror issue and the Larry Stewart perjury charges are expected to form
the basis of the appeal.
07/16/04 12:27 EDT
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