Martha Stewart, the businesswoman who made millions instructing Americans on the minutiae of domestic living, faces prison after she was on Friday found guilty of lying to government investigators over a suspicious sale of shares.
The verdict stunned the hordes of fans and media crews who had attended the court in Manhattan for the past seven weeks.
Stewart, a household name in the United States, was found guilty on all four counts she faced. The charges carry a maximum sentence of 20 years in prison but legal experts said she was likely to face a far less severe penalty. Her co-defendant, Peter Bacanovic, her broker at the time of the sale, was found guilty on four of five counts.
They will be sentenced on June 17. Experts believe Stewart will be sentenced to less than five years in prison — possibly around 18 months.
Stewart and Bacanovic showed no emotion as the verdict was read. Supporters, including the defendant’s daughter, Alexis Stewart, wept.
Stewart (62) said she would appeal.
In a letter posted on her website, Stewart said: ”I am obviously distressed by the jury’s verdict but I continue to take comfort in knowing that I have done nothing wrong. I will continue to fight to clear my name.”
Her lawyer, Robert Morvillo, said ”we look at this as having lost the first round”.
Stewart’s celebrity has drawn immense attention to the case. Her supporters in the courtroom have included the comedian Bill Cosby, former chat-show host Rosie O’Donnell and the actor Brian Dennehy.
The verdict could spell ruin for her company, Martha Stewart Living Omnimedia, which she built from a catering firm into a hugely profitable empire spanning magazines, television production and the sale of everyday items such as towels and bed linen. She is arguably the best-known businesswoman in the US and the company is tied inextricably to her image as style guru and home-maker.
The trial stemmed from Stewart’s sale of $228 000 of shares in the drug company ImClone Systems in December 2001.
The government argued that she had sold the shares after being tipped off by her broker that ImClone’s founder, Sam Waksal, and members of his family were desperately trying to dump stock in the company. It later emerged that Waksal had learned that regulators were about to reject trials of a cancer drug it had in development. He is currently serving more than seven years in prison after admitting to insider dealing.
The prosecution said that when officials began to ask questions about Stewart’s suspicious sale, she and Bacanovic conspired to cover up the tip and lied to investigators.
After three days of deliberations, the jury of eight women and four men found her guilty of conspiracy, two counts of false statements and one count of obstruction.
”Maybe it’s a victory for the little guys who lose money in the market because of these kind of transactions,” said a juror, Chappell Hartridge.
The government’s star witness was Douglas Faneuil, Bacanovic’s former assistant, who testified that he had been ordered by his boss to pass the tip on to Stewart and later put under pressure to lie.
Stewart’s personal assistant told the court that she had watched her boss alter the record of a message from Bacanovic on her computer to make it look less incriminating.
Her best friend, Mariana Pasternak, said that while they were travelling in Mexico in late December 2001, Stewart had told her that Waksal had tried to sell his ImClone shares. She also recalled Stewart saying: ”Isn’t it nice to have brokers who tell you those things?”
The defence put up just a single witness, a lawyer who had been present during an interview Stewart gave to investigators. Stewart and Bacanovic maintained that they had an agreement to sell the stock when it fell below $60 a share and that the timing was just a coincidence.
It is uncertain whether her company can weather the storm. Last year it lost $6,4-million, compared with a profit of $20-million in 2002. Sales fell as advertisers turned their backs on Stewart’s magazines and viewers turned off from her shows. Shares in the company dropped 24% after the verdict. — Guardian Unlimited Â