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Some Final Thoughts About Martha Stewart

I recently received the following email:

I have just read your article on the internet regarding Martha Stewart’s guilty verdict. While I do agree that this 5 month sentence may be unfair (it should have been more like a fine and community service), the law does say that insider trading is a crime. Her mistake was in lying about it, and that is wrong too. Haven’t all of us made a mistake and then lied to cover it up only to discover that the lie made things worse? That is what happened to her.

We all should remember what our parents told us, which is to fess up to our mistakes and take responsibility for ourselves. I too have made some mistakes worse with a lie, but I alone paid the consequence and learned from those experiences. Just because her offense didn’t harm anyone else does not mean that she should be off the hook. There are many instances where our mistakes do not affect anyone else, but we still get into trouble for them. I have always liked Martha, I watch her show and subscribed to her magazine, however I believe that she became too arrogant in continuing to deny her mistake. She should have just admitted what she did and took her lumps just like the rest of us do everyday. None of us is perfect, not even Martha.

Unfortunately, the news coverage has given many people the wrong impression of what happened in the Martha Stewart case.

In the first place, the law does not say that insider trading is a crime. And she wasn’t indicted for insider trading. She was convicted of lying (1) to federal investigators about insider trading and (2) to the shareholders of her own company when she announced that she was innocent of insider trading. She also was convicted of conspiracy to lie about insider trading by making up a lie with her broker, Peter Bacanovic. Thus she was convicted on three counts of lying about something that isn’t a crime and that she wasn’t charged with doing.

If the government can’t charge her with insider trading, what difference does it make whether she lied about insider trading?

And, incidentally, if simple lying were a crime, we’d all be in prison. Lying under oath is called perjury. Lying to a federal official when not under oath is certainly no worse than a federal official lying to you – which happens far more often.

All Martha Stewart’s alleged offenses were lumped together under the heading of "obstruction of justice." What justice – when no crime against anyone was being charged?

Even if you believe that Martha Stewart should go to prison for lying about something that wasn’t a crime, you don’t even know that she was lying. All you know is that a broker’s assistant, Douglas Faneuil, was originally charged with being part of the conspiracy – only to have the charges dropped when he agreed to testify that Martha Stewart lied. Why would you believe him and not Martha Stewart?

I have no idea whether Martha Stewart lied. Neither do you, and neither did the judge or the jury. But what difference does it make if she did?

You say, "She became too arrogant in continuing to deny her mistake." I hope you never get convicted for something you didn’t do – because the judge will probably increase your sentence for being so arrogant as to express no remorse over a crime you didn’t commit.

October 13, 2004