Stewart saga ends with 5 months in prison

By DAR HADDIX, UPI Business Correspondent   |   July 16, 2004 at 7:13 PM   |   Comments

WASHINGTON, July 16 (UPI) -- Martha Stewart, who built a media empire on the concept of gracious living, was sentenced Friday by a U.S. District judge to five months in prison, five months of home confinement, and two years of supervised probation, and ordered to pay a $30,000 fine for lying about a 2001 stock sale.

Stewart will have to wear a monitoring device during her home confinement.

The sentence is being delayed pending an appeal of the court verdict, a process experts said could take up to one year. Lawyers plan to appeal the verdict based on perjury charges against a juror and an expert witness for the trial, reports said.

U.S. District Court Judge Miriam Goldman Cedarbaum said she gave Stewart the minimum recommended sentence, because of Stewart's lack of a prior criminal record and because of her suffering since the indictment. In sentencing, the judge also took into account the more than 1,000 letters of support from Stewart's fans.

Stewart could have been ordered to a term of 10 to 16 months in prison.

Stewart, though at times defiant in her post-sentencing statement on the steps of the courthouse, also acknowledged the toll her legal battle has taken on her. "Today is a shameful day. It's shameful for me, for my family and for my company," Stewart said.

Stewart's lawyers have twice unsuccessfully requested new trials -- once in April after it was revealed that a juror had made false statements during jury screening, and again in June after U.S. Secret Service ink expert Larry Stewart, who is not related to Martha Stewart, was charged with giving false testimony as an expert witness about ink on a document belonging to Martha Stewart's stockbroker.

Though where Stewart serves her sentence is ultimately up to the U.S. Bureau of Prisons, Cedarbaum made a recommendation that Stewart serve her sentence at a minimum security prison in Danbury, Conn., the state in which Stewart lives.

Stewart indicated that she wanted to spend her period of home confinement at her Bedford, N.Y. residence.

The 62-year-old Stewart, founder of lifestyle company Martha Stewart Living Omnimedia, was convicted in March on charges including obstruction of justice and lying to prosecutors. Her former stockbroker at Merrill Lynch, Peter Bacanovic, 42, was also convicted, and also received five months in prison, five months home confinement and two years' probation Friday afternoon. He was fined $4,000.

After she was indicted in 2003, Stewart resigned her post as chief executive of Omnimedia. She left the company's board after her conviction March 5. She currently holds the post of founding editorial director.

Martha Stewart Omnimedia shares had dipped sharply during the past two years in light of the scandal, but soared almost 35 percent to $11.80 in Friday morning trading on the New York Stock Exchange, still a far cry from the stock's 2001 high of $20.65. Friday's surge caused Stewart, who remains a primary shareholder in MSO, increased the value of her holdings about $63 million, CNN reported.

Despite the indictment and conviction, Stewart's fans have rallied to her cause, cheering for her as she entered the courthouse Friday. Stewart expressed gratitude for the letters and e-mail messages that supporters have sent to her Web site, marthatalks.com.

"I appreciate each and every one of those pieces of correspondence. I really feel good about it," she said.

Stewart, in an emotional statement, had requested leniency from the judge during her Friday court appearance. But afterwards, Stewart showed her more familiar flinty side and lashed out at prosecutors.

"I'm just very, very sorry that it's come to this, that a small personal matter has been able to be blown out of all proportion, and with such venom and such gore. I mean it's just terrible," she said.

"I'll be back. I will be back. Whatever I have to do in the next few months, I hope the months go by quickly. I'm used to all kinds of hard work, as you know, and I'm not afraid. I'm not afraid whatsoever," she said.

Stewart also asked people to buy MSO products and magazines, though she said she wasn't there to make a sales pitch for the company.

Some experts said that her post-sentencing comments would work against her, but others said they would not make any difference.

Prosecutors allege that in December 2001, Stewart sold almost 4,000 shares of stock from biotech company ImClone after receiving a tip from Bacanovic's assistant that ImClone Chief Executive Officer Sam Waksal was dumping his ImClone shares before federal regulators rejected the company's colon cancer drug Erbitux. The U.S. Food and Drug Administration later approved Erbitux. Waksal was sentenced to more than seven years in prison for his inside trading.

Stewart was en route to a vacation in Mexico with a friend when she gave the order to sell the shares. Stewart and Bacanovic claimed that they had an agreement to sell the ImClone shares if they fell below $60.

Imclone shares were trading at almost $80 mid-Friday.

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