Socialist analysis of the Martha Stewart case

http://www.wsws.org/articles/2004/mar2004/stew-m12.shtml

The thinking and humane observer of American life will take no particular glee in the downfall of Martha Stewart, the American businesswoman and multi-media advisor on everything for the home and garden. Her conviction March 5 on four charges of lying to the government, conspiracy and obstruction of justice over a stock transaction in December 2001 will probably earn her a short prison term and may very well bring about the dismantling of her media empire (books, television program, magazines), once worth more than one billion dollars.

Stewart’s crime itself, by American corporate standards, was a petty one. Informed by a stockbroker that her friend Samuel Waksal was dumping stock in his own company, ImClone Systems (because the Food and Drug Administration was refusing to approve the company’s cancer drug, Erbitux), Stewart apparently ordered the sale of her own ImClone stock. The government claimed that she then lied to federal prosecutors about the circumstances of the trade, which had saved her some $50,000.

It is difficult to see how social progress has been served or the world made a better place by her prosecution and conviction. Government officials are boasting that the case has proven that “no one is above the law,” while the media suggest, in the pious words of a New York Times editorial, that the case will help ensure “the transparency of financial markets.”

One is obliged to laugh out loud sometimes. As the Times itself reported on its news pages, Stewart was convicted on the basis of “a little-known law that has become a crucial weapon for prosecutors.” The law, known as “1001” (due to the pertinent section of the US code) prohibits lying to any federal agent, even by a person not under oath and accused of any other crime. Stewart allegedly lied to FBI agents and investigators from the Securities and Exchange Commission. Commentators note that had she admitted knowing about Waksal’s decision to sell, she might very well have gotten off with only a fine.

<edit>

In his brilliant The Soul of Man Under Socialism, Oscar Wilde took note of the fact that the system of “Private Property” had a crushing effect on those it financially rewarded. He observed that “The industry necessary for the making of money is also very demoralising.” Wilde continued: “One’s regret is that society should be constructed on such a basis that man has been forced into a groove in which he cannot freely develop what is wonderful, and fascinating, and delightful in him—in which, in fact, he misses the true pleasure and joy of living. He is also, under existing conditions, very insecure. An enormously wealthy merchant may be—often is—at every moment of his life at the mercy of things that are not under his control. If the wind blows an extra point or so, or the weather suddenly changes, or some trivial thing happens, his ship may go down, his speculations may go wrong, and he finds himself a poor man, with his social position quite gone.”

more...

While I was never a Martha Stewart follower, and in fact, always found her a little annoying. But there is something very strange about this "show" they are putting on prosecuting her.

Did you ever hear a man criticized for being "Mr. Perfect"?

Bush pulled off a deal that looks exactly like Martha's, back in 1991, an insider sale to the tune of $835,000, making her pathetic 50k look like lunch money.

But he is "strong, steady, leadership."

http://www.wgoeshome.com

...gain and socializing the risk in the stock market in a way in which we all complain about (some schmo who didn't have insider information and friends and connections bought the shares she dumped). She felt that was entitled to guaranteed outcomes.

Just because she may not be as culpable as others doesn't mean she should get off. It means that others should be punished more.

Somehow, I doubt it. And, while I know the saying "Ignorance of the law is no excuse," how many people know it's illegal to lie to a federal agent?

As I understand it, Stewart was not convicted of insider trading or fraud, but of lying -- which means trying to cover her ass -- to the Feds.

It was made out to be a big thing that she started to erase a message or messages and then told her secretary to change the message back to the original. To me, that showed she panicked and did something wrong and then corrected it. But it was played as "She tried to deceive." ignoring the fact that the message was restored. So she was punished for thinking about withholding evidence? Isn't that thought crime?

Martha Stewart got convicted of X and got Y. Ken Lay needs to get convicted for 100X and get 100Y."

Stewart wasn't convicted of insider trading because the government chose not to persue the charge, (and the charge of fraud was dropped because they didn't present enough evidence to prove it, although the judge thought it was a interesting claim).

Of course, the prosecutors might have thought those were week claims, and that's why they were dropped.

Or maybe they were doing her a favor. Or maybe she got lucky. Maybe they could have convinced a jury she was guilty. Waksal is in jail for insider trading. And her whole drive was to unload those shares before the rest of the market found out what she knew Waksal knew about the company. It would probably be interesting to see where a jury would have drawn the line (and it would have been interesting to see if there were evidence of WHAT exactly it was that she knew -- but we never heard that information because it wasn't part of the charge).

Also, why do people presume Stewart was so unsophisticated? Because she's a woman. I guarantee you she wasn't ignorant of the law generally. She worked on Wall St before she started her own business. She's was a CEO of a huge business. She was on the board of the NYSE!!! She knew what she was doing was wrong.

As for the evidence you cite, I believe that was evidence of intent and that there were other things she did that she didnt' go back and correct, and she was convicted for doing those things.

her crime fit the punishment -- they are talking prison time. Do most cases like this result in a prison sentence?

I don't think she's at all unsophisticated or didn't know it was wrong to sell the stock. But, if one stockbroker is to be believed (someone I know), what she did is illegal but fairly commonly done. I know that doesn't excuse her doing it, but it raises the question of why they went after her so eagerly.

And I don't know that she knew it was illegal to lie to a fed. Maybe she should have known, having been a stockbroker and on the NYSE board. If she knew, it was really a stupid mistake on her part.

Since she wasn't charged with insider trading, I'd think they knew they couldn't make it stick, same as the fraud charge they dropped.

That's not to say she didn't do anything wrong, though.

a punishment that falls within a range that has set by legislation that was passed democratically. If you disagree with the punishment, take it up with the legislature. Insofar as we trust our legislatures to pass laws with reasonable periods of confinement, I think you have to say the punishment probably will fit the crime. (I've never heard of a legislature passing laws which sentence white collar criminals TOO harshly.)

By the way, have you ever thought that this sort of thing is common because these people think they'll never be caught and punished? It's not OK that most people get away with it.

Do you concur that this is a good law? That refusing to answer honestly, while not under oath, regarding an event for which there is insufficient evidence to declare a crime, is in itself a crime? This seems like a dangerous precedent.

While i actually don't believe this was inside trading, since it came directly from a broker tip (which is not inside trading, except on HIS part). As soon as he made that phone call to her, it became public information. (You can look this up in Mann & Roberts.)

He committed the crime of divulging inside information. But, once he did that, it WAS NOT inside information anymore. Had she gottent this information directly from someone at ImClone, it would be different. But, her info came from a 3rd party. That doesn't meet the definition of insider trading. (Again, per Mann & Roberts.)

So, she's convicted for lying about a non-crime and for obstructing justice into a crime that she didn't commit, and wasn't a crime until the perpetrator told her. In other words, she's being convicted for being involved ex post facto and lying about a crime she didn't commit.

And you think that's acceptable? (BTW: I'm no fan of Martha's. Her existence is of zero consequence to me. I just don't like the situation under which she was pursued and convicted.)
The Professor

...she was charged with positive acts, and not omissions. She actually told lies, and told people to do things, which they did, and made up excuses. I heard someone on the radio saying that the government only had convincing evidence because they audiotaped their interviews with her, which they never do. That's supposed to be something bad?

I remember a debate here over whether the government should VIDEOTAPE every witness interview they do now that the technology means that this is possible. Guess what DUers' consensus opinion was? It was yes.

Also, we don't know if this was inside trading or not because it wasn't part of the charge. There isn't any way to know. For all we know, there was evidence that it was, and the government was doing a courtesy to a rich, white person by not charging them with the most serious offense.

Also, your first paragraph is misleading. There IS a statute covering her activities.
"Insufficient evidence to constitute a crime"??? I know you're focused on insider trading, but, psst, there was sufficient evidence of the crime she DID committ, which was lying to federal investigators, and altering evidence they requested for their investigation.

Imagine what it'd be like in America if this weren't a crime? It would be license to alter evidence, so long as you weren't under oath when you did it. it would make criminal investigations impossible unless you were right there on the spot seconds after the acts took place.

By the way, I do appreciate the distinction between insider and outsider, and that she may not have been covered by that because she wasnt' inside ImClone. However, at least with respect to the insider trading statute, this was a loophole which still allowed her to rip off the public markets with information which she knew was only available to Waksal and his friends.

I'm under the impression, but could be wrong, that although there is no criminal statute explicitly covering that activity, there are SEC regulations that forbid it, and she would have been subject to huge fines if she had done that, and possibly ethics charges and other shit which would have jeopardized her SEC board membership.

So, she may have been trying to hide evidence of insider traiding, of which she might not have been convicted. However, she was almost definitely trying to hide evidence of activity that is forbidden by FEDERAL SEC regs, which might not have confinement as a punishment, but would have incurred huge fines and other ramifications jeopardizing her access to the markets and to the inner sanctum of American enterprise. (And it's right kick people out who use access to rip people off, and it's right to fine them so that they compensate society for the damages they do.)

One more thing, tampering with evidence is a crime because, if you destroy the evidence, it makes conviction of that cirme impossible. It has never been the logic of these laws that you FIRST had to be convicted of (much less charged with) the uderlying crime in order to be guilty of destroying evidence. In fact, it's logically the case that if you're convicted of that crime (because you did it successfully) there's no way you'd ever get convicted of the original crime. That's also why the punishment for that crime has to be just about as serious as the underlying crime.

I thought I'd get a reply to this post.

They DID NOT even charge her with insider trading. They couldn't! As soon as the information came from a broker, it was not inside information. HE broke the law, by violating fiduciary confidentiality regs, but she didn't even get inside information.

The part i'm more concerned about is the notion that you can be convicted of lying about a noncrime, of which you aren't accused, nor are culpable. And, obstruction of justice in a crime in which you weren't involved.

This seems like a gross overreach of governmental authority that is iatotropic. (Cure worse than the disease.)

Like i said, i have no sympathy for billionaire cheaters. But, let's convict the ones who actually committed fraud and not those who lied about knowing about one.
The Professor

...and I vaguely remember that THE insider trading statute is actually very short, and has definitions, and that it looked like she didn't fall with the statute, but I'm not entirely sure that a legal argument couldn't have been made.

Nonetheless, I think it was the case that there were a whole host of OTHER sanctions -- including the violation of federal SEC regulations which could have resulted in serious fines and other ramifications -- of which she was still potentially in violation. (In fact, I beleive there is still an outstanding SEC indictment and she may still have address that -- ie, settle or go to trial -- and the fine could be pretty heavy.)

So it's not like she was covering up acts that couldn't have been punished by any law at all.

And, I'll repeat again, lying to federal investigators about an investigation, logically, doesn't depend on the original crime. Lots of people who are merely witnesses to crimes -- who committed no underlying crime at all, but cover up evidence of someone else's crime -- are often convicted of that separate crime. That's called "aiding and abetting", for example.

These aren't outlandish legal arguments. And, if fact, they make a lot of sense too, in terms of creating deterrants and ensuring that investigating complicated financial transactions can be reasonably achieved.

My biggest issue is with the gov't having a law that says it's aiding and abetting to lie about not doing anything wrong.

If i haven't committed a crime, i find it objectionable that the gov't has the right to threaten me with prosecution if i don't tell them what they want to hear. If i've committed a crime, charge me. If i haven't get away from me.

It's not my job to enforce the law. It's their job. A law that makes me do their job for them is nonsense, prima facie.

No amount of logic will change my stance.

You end by saying "And, if fact, they make a lot of sense too, in terms of creating deterrants and ensuring that investigating complicated financial transactions can be reasonably achieved." Sorry, i don't buy it.

There are plenty of laws extant that make certain financial activities illegal, and transactions traceable (and laws that make lack of traceability a crime). Making a recipient of an illegal tip culpable and responsible for participating in the investigation is a preposterous overreach on the part of gov't. If they can't do their job without prosecuting someone who didn't want to help, they need better prosecutors, not silly laws.

Last point: (I have to leave for the day, so you can answer by PM, if you wish) Why is this any different than Starr putting Susan McDougal behind bars because she wouldn't tell him what he wanted to hear? I doubt anyone here on DU thinks that they was justice. How does this differ in principle? (Not in the details, but in principle.)
The Professor

...sentence?

I'll start with the simplest: Stewart can still be prosecuted for what she did do with regard to the sale. I believe the SEC has already filed charges. There was potential illegalities that she was trying to cover-up.

She was also a witness to Waksal's actions, and she wasn't only falsifying evidence with relation to charges against her, but she was falsifying evidence in relation to the investigation of the entire transaction, which implicated Waksal and employees of the brokerage. Witnesses can't tamper with evidence, just as potential defendants to the underlying transaction can't. Nobody can.

I can't remember all the details of McDougals conviction, but I believe she chose to accept a contempt of court conviction rather than give evidence that she felt didn't exist. Contempt of court is a doctrine as old as the hills. I was going to talk about before, but didn't want to get into it. However, since you brought it up, the logic of the contempt of court is the same as the logic of Stewart's conviction. Because it might have been unfairly applied to McDougal doesn't condemn the entire principle.

What cotempt of court does is it makes people take seriously their duty to cooperate with the court and give honest evidence. It's the implied threat that keeps the entire system of justice moving foreward.

If you have small claims action for $100 in civil court, what's going to stop you from lying? Contempt of court. If you're a witness and your testimony (in any kind of trial, no matter how large or small) is needed, but you don't want to have anything to do with it, what compels you to go to court to help people you might not even like get justice? Contempt of court.

If your Martha Stewart and you have participated in something that you know might result in fines by the SEC and might cost you your seat on NYSE, and you know was part of illegal behaviour on the part of your friends and your stock brokers, what's going to compel you to provide honest evidence of a complicated financial transaction? The precise laws of which Stewart has been convicted in this trial.

A good read. More quotes:

"These were the Reagan years. Sections of the middle class, having discarded their social activism of the previous decades, settled comfortably into self-involvement. Stewart’s audience came less from these layers, however, than from those immediately beneath them, lower middle class and working class women, who “picked up a copy of Entertaining and were instantly transported into the make-believe world where they’d always wanted to be—where the sun shone brightly through the panes of streak-free windows ... where fresh fruits and flowers sat next to pitchers of iced tea ... where men came to lawn parties dressed in suits and ties, and the women could prepare a lobster dinner for fifty and never break a sweat.” (Martha Inc.)"

<snip>

"Without stretching the point, perhaps economic realities took their toll in another fashion. The sharp increase in social inequality and the general harshening of life in America may have meant that the Stewart persona and social role—always quasi-fictitious at any rate—as the interpreter, the mediator of gracious living for the masses, had run their course. She was a leftover in many ways from the Clinton years."



Get the message? No more gracious living, folks. Time for the rabble to hunker down and work, work, work, with no time for gardening, entertaining, baking, and all the niceties of life. How dare the masses think they should be entitled to fine linens, handmade soaps, fresh flowers in crystal vases, herb potagers, handsewn sachets, and such?

...criminal investigation?

The woman committed a crime and we're trying to invent reasons to let her off the hook because she gave money to Democrats?

Isn't that part of the problem that we're trying to solve?

Maybe I'm not totally unbiased. It seems she was convicted of resisting arrest. I give her what little support I can. She is a good friend of the Democrats. It is not easy being a strong woman in any age. As for the selling of the stock. Everyone knew the stock was going down. Many people sold their stocks before martha did.

I have a friend -- a doctor -- who lives outside the power corridor, is an immigrant, knows nobody rich and powerful, and has worked her ass off for 25 years. She lost 600K in her Merryl Lynch account since 2001.

Merryl Lynch knew that Waksal was sellling on information the public DIDN'T have. Waksal's broker walked across the hall to Stewart's broker and told him the news. They told Stewart the news and Stewart ordered her shares sold.

Who did they sell the shares to? My friend, the doctor, with no connection to power. Merryl Lynch was robbing their Peter customers to pay their Paul customers. It's a crime.

You must educate yourself and keep abreast of current events. That is your responsibility if you want to invest in stocks. If not pay a stockbroker...if not...you might as well just put it in a Roth IRA

...protecting clients like Stewart from having any risks at all to their wealth (thanks to inside information from other clients) and then passing the risk on to all the unconnected doctors and lawyers from middle America who not only didn't get the same treatment, but actually might have been the purchasers of some of the shares Stewart was selling.

The upper middle class and middle class were the insurers of risk for the super-wealthy insiders.

It's a crime.

made an example of? And why Martha, instead of Ken Lay? Because she's a woman?

Because she's a woman who became rich and successful without a man's money to back her up?

Martha is resented for being an intelligent and capable woman, for being rich and successful, and for being an attractive blonde. There is a lot of envy in the world, and I've heard people rail against Martha for years. I might not like her at all if I ever met her but it amazes me how much people resent her, how they're sure that she is the biggest bitch in the world.

I've never heard that sort of resentment expressed against any man just because he made a success of himself. We admire men like John Edwards and Dennis Kucinich for coming up from the working class poor but Martha did the smae thing.

convict the people we don't like of the crimes they commit.

donate to the right party and you'll never get convicted of anything.

Which is exactly why Lay isn't being charged with anything, right?

So how can we complain about Lay when we say we wish that same rule applied to people on our team? That'd be hypocrisy if we did that.

and Martha's didn't (due DIRECTLY from her actions). Whatever his affiliation, he deserves to go down for his willful destruction of the lives of those employed by him.

That was her victim. If she had taken the money out of the person's pocket, she would have been arrested for robbery.

I am not saying she isn't wrong, but acting on insider knowledge is rampant among those in similar positions. When they start going after ALL investors who trade on inside info, then I will feel that justice has been done.

Ken Lay's crimes are still much further reaching, not only did he screw investors without access to insider knowledge, his actions had far reaching negative repurcussions on millions of people.

let people do this, and that's why they have rules agaisnt it (and not just rules against insider trading, but a whole host of SEC regulations) and that's why Stewart tried to hide the facts from the investigators.

Ken Lay did the exact same thing on a far grander scale AND he was also in charge of the corporation which was lying to the publiic.

I shoudl note that, to protect her own company's stock value, Stewart tried to pump it by lying about her actions with regard to ImClone. The judge through out a charge based on that activity only because the prosecution didn't present enough evidence. The judge, however, thought that that was an interesting claim to make.

Martha shouldn't have been convicted. It's not what I'm saying.

I'm questioning whether prison time is fair for this conviction and whether she was singled out as a scapegoat in the first place.

.

probably comes to bear here too.

Everybody understands selling stock. Everybody understands the term "insider trading" There's not a thing complex or out there about about Martha's case.

Enron on the other hand, is almost prohibitively unintelligible to all but tax accountants, and that includes state prosecutors.

I do think that has as much to do with why Martha was tried and convicted first as being made an example of.

we have pills for that to help you get over it.

this paragraph is true:

“One’s regret is that society should be constructed on such a basis that man has been forced into a groove in which he cannot freely develop what is wonderful, and fascinating, and delightful in him—in which, in fact, he misses the true pleasure and joy of living. He is also, under existing conditions, very insecure."

If you meet the people that rely on the good ole boy networks or the elite social networks, you'll find people who are trapped into living a life which is based on a formula. They agree on the same topics in conversation and wouldn't dare disagree with the consensus because they fear being too different. So the people driving our society have no original thought, no attempt to be creative or to stand out. If they succeed, it's through inside information derived through the network and like drug addicts, they will do anything to sustain the status quo that feeds that network.

I say, American ingenuity is stifled when you have people like them running the show. They're the ones that rely on stealing other people's ideas, because they can't come up with any new ideas of their own.

BTW, I don't believe in pure socialism either, because it also stifles the kind of motivation that brings on creativity. Capitalism may create grooves, but socialism creates complicity.

It's true that Martha Stewart is an American success story. She found a niche that nobody else was interested in (upscale homemaking and decor) and started a business from scratch into a global multi-million dollar empire. She is smart, sophisticated, and hardworking. So what happened??

Martha seemed to take the attitude that she was above the law. She got her tail caught in a crack and instead of saying she did it and pay a $200,000 fine she decided to go to trial. This is not me talking, look at this week's issue of "Newsweek"; in September the federal government came to her on last time to work out a deal instead of going to trial. Her arrogance has cost her everything. A convicted felon cannot be an officer or director of a public company. I don't have a lot of sympathy for her when it comes to the SEC and its rules, she was a stockbroker on Wall Street for many years for godssake. The actor Brian Dennehy was one of her partners! She knew she was doing something wrong when she tried to change the phone message on her secretary's computer.

To all those who weep for Ms. Martha think of this; (1.) how about all the investors in Imclone that were stuck holding the bag when the stock price went down to almost 80 cents a share after the FDA didn't approve their application for a new cancer drug (which started this whole thing off in the first place); (2.) Sam Waksal has already been convicted of his part his this case, would it not have been fair to have brought Bacanovic and Stewart to trial for their part?

and while I do not admire MS personally, I think that this case was a clear example of the sexism that is still rampant in this society.

She went down because she was a rich, powerful woman. Under the same exact circumstances, had she been male, I doubt very much it would have even gone to trial.

this kind of shit.

She's not some little girl. She's in total control of herself, and she's responsible for her actions.

on federal investigations.

First, the jurors were OBVIOUSLY influenced by outside information, as many of them have commented that it was obvious Ms. Stewart had committed perjury, a crime for which she was never charged, that the case now made 401(k)s safe to invest in, that it was a victory for the little guy, or that it had something to do with insider trading. These are all tangential, but they may appear again in the appeal.

The nuts and bolts of this case, and the reason it is chilling, is this: her obstruction charge concerns changing a message on her computer for 20 seconds. She changed it back just as quickly as she altered it, but that was "obstruction of justice." While this may be technically (or hyper technically) true, it is a bad use of prosecutorial discretion.

The lying to federal prosecutors case is best described here: http://volokh.com/2004_03_07_volokh_archive.html#107878324808964725

Martha Stewart and the anticooperative effect of law: Eric Rasmusen and Duncan Frissell make an interesting point about the false statements statute, 18 USC sec. 1001: Cases such as Martha Stewart's may discourage people (even innocent people) from talking to federal authorities at all, because they might fear that some error on their part may be characterized as a lie, and might thus mean criminal punishment. In some cases (though not in all), the person may conclude that the better course is just to say nothing. That may already often happen to witnesses who are themselves being investigated for a crime, since they are often advised to say nothing in any event. But 18 USC sec. 1001 risks also discouraging cooperation by people who are just seen as witnesses.

It's hard to tell just how serious a problem this might be, and 18 USC sec. 1001 does indeed have potentially beneficial effects, too, since it may often encourage witnesses to tell the truth. But it's worth recognizing that the law can also encourage witnesses to say as little as possible, an "anticooperative effect" that might undermine the law's beneficial effect. I discuss this general problem in my Duties to Rescue and the Anticooperative Effects of Law -- but as Rasmusen and Frissell point out, the problem extends far beyond just duties to rescue.

Let me post a bot from another site: http://php.indiana.edu/~erasmuse/w/04.03.08a.htm

First, this is not a law just against perjury. There is no requirement that you be under oath. The lie does not have to occur in a courtroom or a government office. As stated, it does not even have to be a lie to a federal official-- it could be a lie to a friend.

Second, your lie does not have to cover up any crime. As stated, you would have to go to jail if you deliberately told the census taker you were a Methodist when you were really a Catholic. Or, as in Martha Stewart's case, it might be that you hadn't committed any crime, but federal police came by thinking maybe you had, and you were afraid what you had done might have been criminal too (even though it turned out it was not), because federal regulations are so intricate, and so you lied. Bang, you go to jail, if the Justice Department decides it doesn't like you or wants the publicity.

Third, no Miranda warning is going to help you. The idea of the Miranda warning is to stop you from incriminating yourself of your previous crimes-- a bad idea, by the way, but there you have it. Here, however, there doesn't have to be any previous crime. So you don't get a warning. You will be committing a crime once you lie, and at that point I suppose the policeman must give you a Miranda warning if he wants to ask you "Did you just lie to me?" and use your answer as a confession. But by then it's too late.

Thus, this a powerful law. Can you escape its reach? Well, you could always tell the truth, which is a good thing to do. But I don't think 5-year federal prison sentences for lying are appropriate, particularly since we don't enforce the law uniformly. (Note, by the way, that a lot of politicians would be in prison if we did enforce it--- and that's not just a joke--- they do tell material lies a lot about matters of public policy.)

But the lie was about the order to sell at 60, which they did falsify documents.

To review:

The charges centered on why Stewart dumped about $228,000 worth of ImClone Systems stock on Dec. 27, 2001, just a day before it was announced that the Food and Drug Administration had rejected ImClone's application for approval of a cancer drug. The announcement sent ImClone's stock plummeting.

Stewart and Bacanovic claimed they had a standing agreement to sell when the price fell below $60. But the government contended that was a phony cover story and that Stewart sold because she was tipped by her broker that ImClone CEO Sam Waksal was frantically trying to dump his own holdings.

...


Stewart, who averted more than $51,000 in losses by selling when she did, was not charged with insider trading; instead, she and her broker were accused of lying about the transaction and altering records to support the alleged cover story.

...

The government's star witness was Douglas Faneuil, a former Merrill Lynch & Co. assistant who said he passed the tip about Waksal to Stewart on orders from his boss, Bacanovic. Faneuil said that when he told Bacanovic about a flurry of selling by the Waksal family that morning, Bacanovic blurted: "Oh my God, get Martha on the phone." He also said Bacanovic pressured him to lie about the transaction.

Prosecutors further contended Bacanovic doctored a worksheet of Stewart's portfolio after the fact by making the notation "(at)60" next to her ImClone stock. A forensics expert with the Secret Service testified that the mark was made in a different ink.

In addition, Stewart's personal assistant testified Stewart altered a computer log of a Dec. 27, 2001, message from Bacanovic, then immediately told her to restore the log to its original wording.

...

In closing arguments, prosecutor Michael Schachter said the story about the arrangement to sell ImClone at $60 was "phony," "silly" and "simply an after-the-fact cover story." He said Stewart and her broker "left behind a trail of evidence exposing the truth about Martha Stewart's sale and exposing the lies they would tell."

http://news.findlaw.com/ap_stories/f/1310/3-5-2004/20040305134501_15.html

was the obstruction charge. BTW, neither Ms. Stewart nor Mr. Bacanovic was found guilty of presenting false documents; in fact, it is the one charge of which Mr. Bacanovic was found not guilty.

On edit: I don't know how anything you presented as a response actually responds to anything I wrote.

they created a notation which a forensic specialist said was added later.

They were convicted for making up the story about selling at 60.

You make it sound like she chanded an entry on a computer and changed it back and she's going to jail for that.

Not at all. That was corroborating evidence of the argument that she lied, which she and her broker did do.

was found guilty of doing.

http://news.findlaw.com/hdocs/docs/mstewart/usmspb10504sind.html

Stewart was convicted of all counts except count 9.

The charges are more complicated that "she changed a computer entry and changed it back."

Notice, this is about obstructing the SEC investigation (which is a separte proceding, not about insider trading, and for which there is a separate indictment).

COUNT EIGHT

(Obstruction of Justice by Martha Stewart)

                  The Grand Jury further charges:

                  54.        The allegations of paragraphs 1 through 36, 41 and 51 are repeated and realleged as though fully set forth herein.

                  55.        From in or about January 2002 through in or about April 2002, in the Southern District of New York and elsewhere, MARTHA STEWART unlawfully, willfully and knowingly, corruptly influenced, obstructed and impeded, and endeavored to influence, obstruct and impede the due and proper administration of the law under which a pending proceeding was being had before a department and agency of the United States, namely, the SEC, by providing and causing to be provided false and misleading information to the SEC relating to STEWART's sale of ImClone stock.

Ms. Stewart was found guilty of four counts; Mr. Bacanovic was found guilty of four counts and not guilty of one. One charge was dismissed by the judge.

So Ms. Stewart was not, in fact, "convicted of all counts except count 9."

Reasonable people can disagree about the merits of bringing this case to a jury and spending millions of dollars to do it, but we should try to be accurate on the facts.

9 counts in that indictment. One charge against stewart was dropped.

She was found guilty of all four remaining counts in that indictment (which, you may not have noticed is against bothh her and B. -- one indictment, but each count applies to only one person). If Bacovinic was found guilty of four, that's all he was charged with, so he was guilty of all the counts against him. (I'll take your word for the fact that he was convicted of all four counts).

Right?

I wasn't saying she was convicted on 8 charges. I was saying she was convicted of all remaining charges against her in that indictment, which I suspect people who knew about criminal law and who actually read the indictment would understand.

Now my question for you: was B. convicted on 4 charges (ie, all the ones againsst him) or not?

Ms. Stewart was not convicted of all counts except 9. Mr. Bacanovic was convicted of four of them.

But now you've contradicted yourself.

Apparently B was convicted for impeding justice when he changed that record.

The jury presumably believed the expert's testimony, eh?

falsifying documents. And Ms. Stewart was found guilty of four charges, not "all except count 9" as you said eariler.

And, lord, are you confused.

Look above. I know MS was only charged of 5 counts. I can read an indictment.

which did not even exist against her?

Clearly I was saying she was convicted of all the charges against her except count 9.

Do you know how weak your argument sounds if you're hanging on this issue?

I'm saying you are inaccurate to say Ms. Stewart was convicted on all but count 9. That's the kind of deplorable technicalities the federal government used to convict Ms. Stewart, after all.

For a list of the convictions, see here: http://www.kait8.com/Global/story.asp?S=1691968

I've discussed in other threads on this that she was convicted on all counts against her but one and that was a total of four counts.

So, if your argument is that I thought there were dozens and dozens of counts and count number nine is the only one she got off on, and that that means I'm "like the government" or whatever, then you have an extremely weak argument here.

I have no knowledge of them. Maybe if you were more precise it would not be untrue.

You've said he was convicted of all four and all a but one.

That's inconsistent.

Notice I don't care enought to check though because it has little weight in the argument.

Hint.

Ms. Stewart's charges were the first they agreed on, while Mr. Bacanovic's came last, according to one juror, Chappell Hartridge. Mr. Bacanovic was cleared of a charge of false documents, after jurors concluded they could not tell when a notation on a list of Ms. Stewart's stock holdings was made.
http://www.nytimes.com/2004/03/06/business/06MART.html

was convicted on four counts?

And if you don't know which count this is, how can you say that they didn't believe that he changed the records?

You'd realize that count nine was dropped..but that's why they have footnotes: "Footnote 1 In a written opinion issued February 27, 2004, U.S. District Court Judge Miriam Goldman Cedarbaum dropped the securities fraud charges against Stewart listed in Count Nine of the indictment"

You clearly have a problem with me and maybe it'd be better if you just put me on ignore.

If you're not going to do that than read carefully what I post.

And you might want to search the archives and see where I've discussed the fact that that charge was dropped before you start accusing me that I didn't know that.

and Mr. Bacanovic was found not guilty of that. Ms. Stewart was found guilty of obstruction for changing a message, as the government alleged: "In furtherance of the conspiracy, and knowing that BACANOVIC's message for STEWART was based on information regarding the sale and attempted sale of the Waksal Shares that BACANOVIC subsequently caused to be conveyed to her, STEWART deleted the substance of BACANOVIC's phone message, changing the message from "Peter Bacanovic thinks ImClone is going to start trading downward," to "Peter Bacanovic re imclone." After altering the message, STEWART directed her assistant to return the message to its original wording."

That's part of the obstruction charge, not the making and using false documents charge the government leveled against Ms. Bacanovic.

Do you have a cite for where you're getting the info which substantiates that claim.

One piece of evidence can support multiple charges. If MS was convicted of all charges but fraud, and Bucanovic of three of four or four of four, that evidence about the 60 limit could support several of those convictions.

bt it was dispuuted by the defense. And Mr. Bacanovic was not convicted of it.

And she did change an entry on a computer and changed it back. That is the SOLE reason for her obstruction charge. Did she make false statements about a crime she didn't commit? Sure. Big fucking deal. That's why I posted those commentaries about the problems with the law.

and in exchange for access to the public markets, the government passes laws to make SEC investigations supremely important, and you chose to lie during the investigation, and cover up your activities, and make statements that aren't true, then I don't think it's wrong that you should go to jail.

Don't say anything if you don't want to. But don't make up stories and think you're going to get away with it.

This is serious business. Investors rely on people they've never met to be honest. It's a very important trust. Violate it, and I don't know that I have all that much sympathy.

This problem of coronyism could possibly bring down our entire capitalist system.

"Martha Stewart was convicted last Friday on charges of obstruction of justice, making false statements, and conspiracy in connection with her sale of shares in ImClone Systems, an anticancer-drug maker. The weekend coverage was extensive, particulary on the cable-TV news-talk shows. One could easily conclude that every aspect of the verdict had been explored. But that would be a mistake."

The government did not prove to the jury’s satisfaction that Stewart lied when she said she and her stockbroker had a “sell at $60” arrangement.
-snip-
The jury's verdict form specifically excludes those two statements from the list of claims the jurors believed were lies.
-snip-
Moreover, Peter Bacanovic, Stewart's codefendant and former stockbroker, was acquitted of altering a worksheet after the fact to bolster the alleged false story.
The bottom line is that Stewart was charged with and has been convicted of lying about an action that was not a crime (she was not charged with insider trading) and that had no victims (she would have sold anyway, to willing buyers).
-snip-
Ms. Stewart is not charged with insider trading. The securities-fraud charge does not refer to her sale of ImClone shares, but rather to her public denials of wrongdoing, which, the government alleges, were issued to keep the price of her own company's stock from falling further due to bad publicity."

http://www.fee.org/vnews.php?nid=5420

From the same article

"There's an irony in all this. The day before word of the pending indictment circulated, a study was released showing that Erbitux, the drug at the center of the controversy, "produced statistically measurable benefits when used in treating colon-cancer patients whose disease was so advanced no other therapy had worked…. Erbitux , in combination with chemotherapy, reduced the size of deadly tumors by about half in about one-fifth of patients tested" (Michael Waldholz, "Cancer Isn't Cured, but Recent Studies Validate New Methods," Wall Street Journal, June 3, 2003)."

As the Journal editorialized the other day, "Results from the latest Erbitux study are virtually identical to the positive numbers ImClone originally gave the FDA, a study the agency said was so flawed that it wouldn't even review the application."

"In other words, if America were not saddled with the bureaucratic nightmare that is the FDA, not only would Martha Stewart not be facing prison, but cancer patients would also have a better chance of coping with their disease."

She was not an insider. To be guilty of insider trading one must be "in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information."

If she had not sold her shares, the buyers would have found others. No matter who sold them, the price would have fallen the next day.

I would follow Erbitux, not the stockholders, but the manufacturers.
Someone wanted control.

Let's make this easy. Ever see the movie "The Fugitive" with Harrison Ford?
Remember the end?

"You're only EVER one trade away from humility."

Now when they arrest bush for lying under 1001, lying about war to
federal agents.... then we'll have some justice.

Or was she open about it?