Martha Stewart: Punishing the Innocent, Excusing the Guilty

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Martha Stewart has been sentenced to 5 months in prison and two years of supervised release for not telling the truth about a legal stock tip. The only thing she has been found guilty of is lying about a noncrime.

Mrs. Stewart was neither charged with, nor found guilty of, insider trading. Neither she nor her broker had inside information that ImClone’s anti-cancer drug was turned down by federal regulators. They only knew that ImClone’s founder was selling stock.

Savvy investors often sell when executives sell, because they see stock sales by a company’s management as signs of management’s lack of confidence in the company’s future. If the company’s founder didn’t want ImClone’s stock, Martha Stewart didn’t want it herself. She sold.

Neither Mrs. Stewart nor her broker knew ImClone’s founder was selling on the basis of inside information. When news of an investigation came to light, Mrs. Stewart and her broker were unsure of how her sale would be interpreted by prosecutors. The Securities and Exchange Commission has refused to define "insider trading" on the grounds that a vague offense surrounded by uncertainty makes it easier to convict defendants who are accused.

Faced with the possibility of being accused of a vague and undefined crime, Mrs. Stewart and her broker stated that they had an agreement to sell when an agreed price was reached. The statement was not made under oath and if false does not constitute perjury.

Prosecutors claim the statement was a stratagem to cover up a stock tip, the legality of which was unclear to Stewart and her broker, and constituted a false statement that "obstructed" the investigation. Thus, even though prosecutors uncovered no evidence that Mrs. Stewart had committed a crime, they indicted her for "obstructing justice" by not telling them what they say is the truth about the stock sale — even though what the prosecutors say is the truth about the sale does not constitute a crime.

No one knows whether Martha Stewart and her broker told the truth or not, but jurors navely believed the prosecutors. No one — not jury, judge, nor prosecutor — had enough sense or decency to know that it made no difference one way or the other. No one can be guilty of covering up a noncrime.

Meanwhile the Senate Select Committee on Intelligence has released its report, which states that the information used by President Bush, Vice President Cheney, Defense Secretary Rumsfeld, and Secretary of State Powell to justify the invasion of Iraq was incorrect. Everything Powell told the UN and Bush told the American people was wrong. A war with tens of thousands of casualties was started, if not on the basis of massive outright lies, on the basis of massive orchestrated misinformation.

The deception was so successful that 45% of Americans purport to still believe that Saddam Hussein had weapons of mass destruction and links to Osama bin Laden.

The senators say the invasion was unjustified, but no person is to blame — only "the process." The intelligence information was not correctly collected, analyzed, processed, or reported. Thus, everything got fuddled up and our incompetent government confused myth with reality.

The buck stops nowhere. No one is to be held accountable for a disastrous blunder that has destroyed tens of thousands of people and a half century of US foreign policy, wasted $200 billion dollars, and made Americans unsafe for decades to come.

If we apply the "process is guilty" standard to Mrs. Stewart that is applied to our government leaders, even if she told a lie the fault lies in the vagueness of the insider trading offense. Not knowing what the offense is, people try to defend against being accused of it. Mrs. Stewart is not guilty. The process of the law is guilty for not defining the offense known as insider trading. Judges and jurors are guilty for allowing prosecutors to use vague laws and regulations to indict people.

Meanwhile, the Bush administration refuses to allow contracts that it handed out to cronies to be audited, while imprisoning corporate executives for far less accounting sins.

Meanwhile, the Bush administration has ordered Japan to detain and extradite former world chess champion Bobby Fischer for playing in a 1992 chess match in Yugoslavia. By playing a chess match, the US government claims that Mr. Fischer violated UN sanctions against Yugoslavia, a country charged with provoking warfare because it tried to prevent secession just as Abe Lincoln did.

Are the American people going to reelect a government that prosecutes citizens for noncrimes while excusing itself of war crimes?

Dr. Roberts [send him mail] is John M. Olin Fellow at the Institute for Political Economy and Research Fellow at the Independent Institute. He is a former associate editor of the Wall Street Journal and a former assistant secretary of the U.S. Treasury. He is the co-author of The Tyranny of Good Intentions.

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