On June 5, 2003, the millionaire mogul of home furnishings, Martha Stewart, was indicted by a federal grand jury on criminal charges of securities fraud, making false statements, and obstruction of justice (Gilpin, 2003). The charges stemmed from the way that Stewart had handled a trade of her IMClone Systems personal stock, essentially amounting to an alleged unlawful trading practice of betraying the duties she had as a client of Merrill Lynch and as a former broker in securities transactions (Gilpin, 2003). However, following two years worth of investigations and a trial that spanned well over a month in duration, the only crime that Martha Stewart was found guilty of committing was the obstruction of justice (Ackman, 2004).
Although the jurors who reached this guilty verdict discussed how hard it was from the perspective of its human emotive impacts, they also indicated that their decision to convict her on the obstruction of justice charge was really not even a close call (Ackman, 2004). This decision was made so easy for the jury due to the fact that at the end of the trial, the U.S. District Court judge dismissed the other, more serious charges Stewart was facing, making the obstruction of justice charge the only one the jurors had to consider (Ackman, 2004). On this charge, the evidence that the jury appeared to have found the most convincing were the testimonies given by Stewart’s assistant, Ann Armstrong, and by Armstrong’s friend, Mrs. Pasternak (Abrams, 2004). Armstrong testified that Stewart had attempted to delete a message, which essentially would have amounted to direct evidence that the statements she gave to federal investigators were knowingly untrue (Abrams, 2004). Pasternak then testified that Stewart had informed her that Stewart’s co-defendant was trying to sell his stock and that she had sold hers as well (Abrams, 2004). The jury used this evidence to corroborate the testimony of the prosecution’s star witness, who was originally a defendant in the matter himself, but cut a deal with prosecutors in exchange for his testimony implicating Stewart and her stockbroker co-defendant (Abrams, 2004; Ackman, 2004). When taken together and accepted as truth by the jurors, this evidence clearly demonstrated that Stewart had lied while being investigated, which was the only real critical element required for the jury to find her guilty on the obstruction of justice charge (Abrams, 2004).
In July of 2004, the District Court judge sentenced Stewart to five months in prison, five months of post-release home confinement as part of two years worth of probation, and a $30,000 fine (Crawford, 2004). Regardless of how the judge truly felt about issuing these terms of sentencing, she was required by federal sentencing guidelines to issue at least the five months of incarceration that she did, and was restricted to $30,000 as the limit for the maximum fine that could be imposed (Crawford, 2004). While Stewart should have received prison time had she been convicted of the charges she was originally indicted of, using obstruction of justice as a legal catchall provision and attaching a mandatory minimum jail sentence to it seems improper in the United States justice system. Since the prosecution bears the burden of proving defendants’ guilt, they should not be allowed to throw people in prison just because they cannot overcome that burden, but can prove that the defendant lied. Instead, Stewart should have received the probation sentence that she did, been forced to pay a substantially higher fine than the federal sentencing guidelines allowed, and also been issued to perform a large amount of community service work. This would have been more appropriate since it would have allowed Stewart’s punishment to go towards the taxpaying public, who pay the salaries of the federal investigators that were lied to, and who are the ones ultimately harmed by improper securities dealings. Again, had Stewart actually been convicted of any insider trading then a prison term would have been an appropriate punishment to send a message to her and other wealthy individuals that they are not above the law, yet that was not the case here.
- Abrams, D. (2004, March 6). Juror speaks out on the Martha Stewart conviction. NBC News: The Abrams Report. Retrieved from http://www.nbcnews.com/id/4466939/#.UV9Cc8jfRqM
- Ackman, D. (2004, March 5). Martha Stewart found guilty. Forbes: Legal. Retrieved from http://www.forbes.com/2004/03/05/cx_da_0305marthafinal.html
- Crawford, K. (2004, July 20). Special report: The verdict on Martha. CNNMoney. Retrieved from http://money.cnn.com/2004/07/16/news/newsmakers/martha_sentencing/
- Gilpin, K.N. (2003, June 5). Martha Stewart indicted on criminal charges. The New York Times. Retrieved from http://www.nytimes.com/learning/teachers/featured_articles/20030605thursday.html