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Stewart not sole top exec to face music

By ANDREW P. MOISAN, UPI Correspondent   |   April 5, 2004 at 8:46 PM   |   Comments

WASHINGTON, April 5 (UPI) -- Long before media empress Martha Stewart was convicted of conspiracy to cover up her sale of a stock, many of her supporters were ostensibly irked -- particularly at the news media.

"Now she is being attacked by some in the media with a level of attention and viciousness that is better reserved for ... the Enron execs, the corporate titans who scam their companies for millions, leaving investors and employees in the dust," John Small, editor of Savemartha.com, wrote while the trial was still underway.

Small and legions of other fans had grumbled that the media spotlight cast on Stewart was too hot and poorly aimed, allowing other cases concerning graver allegations of white-collar wrongdoing to hide in the shadows.

But the spotlight will roam.

A mistrial declared Friday in the case of two former top executives of Tyco International, in which the two were accused of cheating $600 million out of the corporation, could be seen as a vivid reminder of what has been true all along: Martha's not the only one who has felt the hot water or the intense scrutiny of the news media.

Once the Stewart trial was through the media spotlight fell full upon former Tyco chief executive Dennis Kozlowski and former chief financial officer Mark Swartz

With the media high beam particularly highlighting Kozlowski.

As yet unresolved are trials and investigations concerning Enron Corp., WorldCom Inc. and others that have, at one time or another, also been the subject of close scrutiny by news media.

While Stewart's lawyers move for a retrial -- something some legal experts have said is unlikely to happen -- based on their assertions that one of the jurors was biased when he helped convict her early in March, several other top executives are facing their own legal and moral demons.

In many cases, they are dealing with charges much more serious than Stewart saw.

First in the lineup is Samuel Waksal, former CEO of ImClone Systems -- the company whose stock Stewart sold under questionable circumstance -- was sentenced in June 2003 to more than seven years in prison and ordered to pay more than $4 million for insider trading and fraud charges, to which he had pleaded guilty the previous October.

Waskal admitted he sold his family's stocks in the company after learning that regulators would reject a renewal of the company's cancer drug, Erbitux, making the stock lose value. He was the first top executive to face jail time in the rash of corporate scandals that had unfolded by then.

Stewart was convicted on two counts of lying to investigators and separate counts of conspiracy and obstruction of justice, but avoided the securities fraud charge, which could have brought the stiffest penalties.

And this is what really angered Stewart fans, who complained that these more serious cases were being wrongly ignored in favor of a sensational, media-driven trial involving a famous, powerful female executive. They also charged sexual bias, meaning the other trials were being ignored because they involved white men.

Still, the other trials and investigations continue.

Former Enron Corp. chairman Kenneth L. Lay is still the subject of an investigation by the multi-agency Enron Task Force, which was formed in the weeks following the company's bankruptcy in December 2001 and is composed of federal prosecutors and agents from the FBI and IRS, according to the Department of Justice.

The task force has brought charges against 28 former Enron executives, including former CEO Jeffrey Skilling and former CFO Andrew Fastow, who has already pleaded guilty to two counts of wire and securities fraud.

In January, Fastow agreed to a 10-year prison term and said he would cooperate with authorities. His wife, Lea Fastow, who was an assistant treasurer at Enron, pleaded guilty to tax fraud and accepted a five-month sentence, according to published reports.

Early in March this year, Andrew Weissmann, who had been deputy director of the task force, replaced the task force's director, Leslie R. Cladwell. This change, along with the task force's hiring of several top fraud prosecutors, indicated that the investigation of Lay would not only continue, but likely intensify.

Donald C. Langevoort, a Georgetown University law professor, affirmed that the media would probably only ignore a case like Enron because there are more immediately compelling things going on that might be deemed newsworthy.

"I suspect if we ever went to a phase where there's a trial arising out of Enron ... that would be pretty compelling theater," Langevoort said

Stewart's fans have emphasized that, in Martha's case, no one lost their job or their retirement money, unlike in many of the other cases.

Bernard Ebbers, former CEO of WorldCom Inc., the subject of what has been called the biggest corporate accounting fraud in U.S. history, has been indicted on federal fraud and conspiracy charges and still faces a trial in which the company's former chief financial officer, Scott Sullivan, agreed to testify against Ebbers as part of a plea agreement.

The WorldCom scandal left 17,000 employees without jobs and resulted in the loss of $140 billion in shareholder value, according to published reports.

Another company whose top executives had been under legal scrutiny throughout the Stewart trial, and continues to be today, is Adelphia Communications.

John Rigas, his two sons Timothy and Michael Rigas, and former Adelphia executive Michael Mulcahey are accused of misleading creditors, investors and the public in a scheme to "loot" the cable company, according to published reports. All four have pleaded not guilty to charges of fraud and conspiracy.

Professor Langevoort said part of the reason the news media paid great attention to the Stewart trial rather than these other high-profile cases involving much more serious crimes is that the Stewart case was legally simpler.

"Tyco involves a complicated set of facts and a complicated set of legal issues," Langevoort said.

John Small, the editor of Savemartha.com, posted on the Web site's main page evidence of widespread outcry among Stewart supporters within an hour after the Tyco mistrial was reported. The headline: "Kozlowski walks as jurors are dismissed in $600 million fraud case."

It went on to add: "Anyone who still feels the little guy is winning please leave the planet now!"

Langevoort and other legal experts say that these larger trials -- including the Tyco trial which is six months old -- take longer because they are more complex.

He noted that in such cases as Enron and WorldCom the charges are indeed serious and people -- particularly those directly affected by the corporate crimes -- want to see justice done.

"So many investors still feel burned."

© 2004 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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