Home decorating tycoon Martha Stewart has been convicted of conspiracy, obstruction of justice and lying to investigators about her sale of a biotechnology stock.
After three days of deliberations, the jury handed down a guilty verdict against Martha Stewart. The media and decorating magnate now faces twenty years in prison, although she is expected to receive a much lighter sentence.
Stewart's former stock broker, Peter Bacanovic, was also convicted of conspiracy, obstruction of justice and lying to investigators. He was found not guilty on one count, making a false statement.
The trial, which made national and international headlines, involved Stewart's sale two years ago of about $200,000 in shares of a biotechnology stock called ImClone, just before the government rejected the company's cancer drug. Ironically, the drug was recently approved.
Stewart and her stock broker said they had agreed to sell the stock when the price fell below $60. Stewart was a long-time friend of ImClone's former chief executive Sam Waksal, who is now serving a seven year prison sentence in an insider trading scandal. Stewart was not charged with insider trading.
U.S. Attorney David Kelly told reporters the case centered on false statements to investigators. "When we first indicted this case, we said it was all about lies. It was all about lies. And as you saw in the evidence, that is what it was," he said. "The victims in this case [are] the entire American public who rely on the integrity of this system to make sure that justice is done and they can invest their money safely and securely and know that it has been handled honestly."
Stewart's attorney, Robert Morvillo, says he is confident that the conviction will be overturned. "We are disappointed with the outcome. We look at this as having lost the first round," he said. "We look at this as an opportunity for us to go for the next rounds and to explain to the Court of Appeals what we think went wrong in the case and why the case came out the way it did."
Fordham University Business Ethics Professor Kevin Jackson says he does not believe the Martha Stewart case will restore U.S. investor confidence following a string of corporate scandals.
"People know, or at least they now should know that insider trading is extremely prevalent on Wall Street," he said. "They know it is practiced in much greater magnitude than what was going on in Martha Stewart's transactions, and they are going to see that underlying motive in going after her was to get the high profile, high visibility."
After the conviction was announced, the stock of Stewart's company, Martha Stewart Living Omnimedia, plummeted, dropping more than 22 percent in value by the time the market closed.