United States v. Martha Stewart

On June 4, 2003, the United State Attorney's office filed a nine count indictment against Martha Stewart and Peter Bacanovic, Stewart's registered securities broker at Merrill Lynch. Five of the counts apply directly to Stewart. This paper reviews the legal issues raised in the indictment as they relate to Stewart and surveys current case law and the legal climate in the country to conclude that Stewart's conviction of the charges, should the case proceed to trial, is not at all ensured.

Stewart sold all her shares of ImClone stock - 3,928 shares at a profit of approximately $228,000 - on December 27, 2001 after receiving a telephone message from Bacanovic that ImClone was about to start "trading downward" (Indictment, 7). In a conversation later that day with Douglas Faneuil, another Merrill Lynch broker, Faneuil told Stewart that Samuel Waksal, the president and CEO of ImClone, was selling all of his ImClone stock. Stewart then directed Faneuil to sell all of her ImClone stock as well.

The first count of the indictment charges Stewart with conspiring with Bacanovic to obstruct justice, make false statements and commit perjury regarding her sale of ImClone stock (Indictment, 1). Bacanovic, prosecutors allege, based his message to Stewart that ImClone would begin trading downward on the "confidential, nonpublic information" he acquired that Waksal had ordered a sale of all of his own ImClone stock (Indictment, 6). Prosecutors contend that Stew

Related Essays

Legal Memorandum .... In the present case, Baines has been told by Martha Endicott ("Endicott"), the local welfare .... United States Department of Agriculture v. Moreno, 413 .... (3811 15 )

GAINES' RIGHTS AGAINST CARMI WELFARE DEPT. .... In the present case, Baines has been told by Martha Endicott ("Endicott"), the local welfare .... United States Department of Agriculture v. Moreno, 413 .... (3811 15 )

Issue of Women's Reproductive Rights .... Even after the Roe v. Wade decision made abortion .... "United States: New Efforts, but still Not Enough." In Bernard .... Friendly, Fred W. and Martha JH Elliott, The .... (3920 16 )

01 of the U.S. Code. That section states that "Whoever . . . makes any false, fictitious or fraudulent statements or representations . . . [to federal officials] shall be fined not more than $10,000 or imprisoned not more than five years, or both." The United States Supreme Court has defined a "material" statement under the statute as any statement that has "a natural tendency to influence, or [be] capable of influencing, the decision of the decisionmaking body to which it was addressed" (Kungys v. United States, 485 U.S. 759, 770 (1988)). Criminal defense lawyers have long argued that section 1001 is overly broad. For example, Kevin Marino maintains that section 1001 is "dangerous because it gives the government enormous latitude to engage in what might be categorized as a vengeful prosecution. When you look more closely at the [Stewart] indictment, you realize she's being indicted for the temerity for not shooting straight at the government in an attempt to protect her image" (Berenson, 4.5). It is true as Marino states that a close reading of the indictment lends itself to a reading that Stewart's charges are based on her unwillingness to be forthcoming with prosecutors. However, as another securities attorney, Lee Sorkin, s

Category: Government - U