Nat King Cole was unquestionably one of the best, if not the best, crooners of his day. The unique record shape of the Capitol Records Building in Hollywood, has been called, the "House that Cole Built." He was financially successful, ranking with the richest in Hollywood.
His complicated financial affairs, as might be expected, caught the attention of the federal government at times. His attorney instructed him to tell the feds, if they contacted him: "I will sing for you, but if you want to talk, you will have to talk with my attorney." This lawyer, who passed away many years ago, told all his clients that they must never talk to a government agent under any circumstances, and if they did, he would withdraw from the case and they would have to find other counsel to represent them. This was not an idle threat; I know of one case where he did just that. Martha could have told the feds, "I will bake you a pie."
It is hard to believe that Martha Stewart had not, in her long career in big business dealings, been similarly advised by the many high-powered, and high-priced, attorneys she must have dealt with over the years. Not just once, but maybe many times. On the same score, she must have been told that to act as your own attorney, is to have a fool for a client, and a legal quack for an attorney. Martha certainly must have heard those pieces of horse sense.
Aggressive prosecutors, police, investigators, in all walks of government have a long history of making false charges, arrests, manufacturing evidence, and even convicting the innocent, especially when they can bring down the rich and famous. The most aggressive prosecutors are known in the profession as head-hunters, wanting to have the head of some celebrity, like Martha's, mounted over their fireplace, or in some place they can crow about. Like it or not, we have to protect ourselves from over-zealous governments. And this is not a disease of our government, or of our age, but of all governments everywhere. As Thomas Paine stated at the founding of America, "Government is a necessary evil, at best; at worst, an intolerable one." If Martha Stewart didn't know that, she does now.
Insider trading has got to be the easiest statutory wrong for the government to solve to get their man, so to speak; but in this case to get their woman. It is, to use a common legal term, res ipsa loquitur it speaks for itself. When it happens, it is self-evident to the SEC, and most anybody, the insider trader, "got the word," somewhere.
The first thing competent legal counsel does, is to dispel any plans for his client to concoct a reasonable explanation for what happened; what I like to call, a somewhat believable, cock-and-bull story. It won't hold water and it only compounds the mishap from a manageable misdeed, to a pile of crimes. Next, he has to let his client know the profits are most likely going to have to be disgorged, and maybe a civil fine. But that is all. In Martha's case, her stock sale based on the information she received may not have been covered by the statute against insider trading. If she fought the SEC on this, she may have won by telling the truth in a court of law. It certainly would not have been insider trading at Common Law. The current law is fuzzy when people in Martha's non-insider position act on a stock-tip.
Finally, when the victorious prosecutor spoke to the media on the courthouse steps, he said the case was all about lies. He was only half right; the other half of the case was about stupidity.
March 12, 2004