Tangled Webs (22 page)
Authors: James B. Stewart
Tags: #History, #United States, #General, #Law, #Ethics & Professional Responsibility
But what options did Morvillo have? He needed to plant a reasonable doubt in jurors’ minds and put Stewart in a sympathetic light.
“This has been a two-year ordeal for this good woman,” Morvillo concluded. “It’s an ordeal based on the fact that she trusted her financial adviser not to put her in a compromising position. It’s an ordeal based on the fact that she voluntarily submitted to a government interview. And it’s an ordeal that is in the process of wiping out all the good that she has done, all her contributions, all her accomplishments.”
K
aren Seymour had the last word before the case went to the jury, and her final words spoke to the cost of perjury. “The heart of this case is the fact that Peter Bacanovic caused Martha Stewart to be tipped about the Waksals selling. What flowed from that was a series of lies and deceptive acts, and part of this was the $60 cover story. . . . When I started this case and I spoke to you probably five weeks ago, I told you this case was about something larger than the lies that are at issue here. I told you it was about the truth. . . . From the moment that they were first asked about this stock sale, the evidence shows that they were not truthful. They did their best to hide and suppress the truth about the tip. And it’s that effort which brings us here. And the truth, if you think it’s not important, it is important. It is the foundation of how our law enforcement officers and our federal agencies do their jobs. It is incredibly important to them. . . . If you think about the victims in this case, I don’t want you to think about the government. Don’t think about the SEC. Don’t think about the FBI, though they certainly were victimized. It’s really our entire nation, our country, that is victimized. The laws that are being enforced in this case are designed to make sure that investigators can fairly evaluate facts based on the truth. That is the point. It is important. And those laws must be enforced to keep the integrity of government investigations.”
aren Seymour had the last word before the case went to the jury, and her final words spoke to the cost of perjury. “The heart of this case is the fact that Peter Bacanovic caused Martha Stewart to be tipped about the Waksals selling. What flowed from that was a series of lies and deceptive acts, and part of this was the $60 cover story. . . . When I started this case and I spoke to you probably five weeks ago, I told you this case was about something larger than the lies that are at issue here. I told you it was about the truth. . . . From the moment that they were first asked about this stock sale, the evidence shows that they were not truthful. They did their best to hide and suppress the truth about the tip. And it’s that effort which brings us here. And the truth, if you think it’s not important, it is important. It is the foundation of how our law enforcement officers and our federal agencies do their jobs. It is incredibly important to them. . . . If you think about the victims in this case, I don’t want you to think about the government. Don’t think about the SEC. Don’t think about the FBI, though they certainly were victimized. It’s really our entire nation, our country, that is victimized. The laws that are being enforced in this case are designed to make sure that investigators can fairly evaluate facts based on the truth. That is the point. It is important. And those laws must be enforced to keep the integrity of government investigations.”
O
n Friday at 2:49 p.m., Judge Cedarbaum announced to a packed and buzzing courtroom, “We have received a verdict,” and directed that the jurors be brought back. They filed in, stood in their places, and the foreman handed a paper to the judge. She glanced over it, then said, “Please be seated, members of the jury. I have received your verdict, and I will now read it.
n Friday at 2:49 p.m., Judge Cedarbaum announced to a packed and buzzing courtroom, “We have received a verdict,” and directed that the jurors be brought back. They filed in, stood in their places, and the foreman handed a paper to the judge. She glanced over it, then said, “Please be seated, members of the jury. I have received your verdict, and I will now read it.
“Defendant Martha Stewart:
“Count one, guilty.
“Count three, guilty.
“Count four, guilty.
“Count eight, guilty.
“Defendant Peter Bacanovic:
“Count one, guilty.
“Count two, guilty.”
Both Stewart and Bacanovic sat impassively, betraying no emotion. Stewart’s daughter, Alexis, seated directly behind her, started to sob, and murmurs swelled in the courtroom as several spectators rose. “Please be seated,” Judge Cedarbaum ordered. “This is a courtroom proceeding.” Then she continued:
“Count five, not guilty.
“Count six, guilty.
“Count seven, guilty.”
Stewart and Bacanovic were convicted on all counts save one, which was the charge that Bacanovic had concocted a false document by adding the “@ $60” notation in a different ink.
D
oug Faneuil was working at the art gallery when one of his lawyers called with the news. From what his lawyers had told him, his sense was that it had been going badly for Stewart and Bacanovic. That evening, Karen Seymour left a message on his voice mail: “I just wanted to call after the verdict today to say this really is a vindication of everything that you did. It took a lot of integrity and the jury’s verdict clearly reflects that. So thanks so much for all that you’ve done.” But since getting off the stand, he’d felt more detached from the proceedings. He was thinking more about his own future. He still had to be sentenced.
oug Faneuil was working at the art gallery when one of his lawyers called with the news. From what his lawyers had told him, his sense was that it had been going badly for Stewart and Bacanovic. That evening, Karen Seymour left a message on his voice mail: “I just wanted to call after the verdict today to say this really is a vindication of everything that you did. It took a lot of integrity and the jury’s verdict clearly reflects that. So thanks so much for all that you’ve done.” But since getting off the stand, he’d felt more detached from the proceedings. He was thinking more about his own future. He still had to be sentenced.
Moments after the sentence was announced, a letter from Stewart appeared on her website, Martha Talks. It was singularly unrepentant. “I’m obviously distressed by the jury’s verdict, but I continue to take comfort in knowing I have done nothing wrong and I have the enduring support of my family and friends.” But evidently her lawyers intervened, since acknowledging guilt is a factor to be considered in sentencing. Within an hour, the statement “I have done nothing wrong” vanished.
Jurors in the case were avidly courted by the media, and several appeared on the
Today
show and
Good Morning America
on Monday morning, and later on
Dateline NBC
. Delivering the verdict had been an emotional moment, because they liked and sympathized with Stewart. In many ways they had wanted to acquit her and hoped the defense would raise doubts about the government’s case.
Today
show and
Good Morning America
on Monday morning, and later on
Dateline NBC
. Delivering the verdict had been an emotional moment, because they liked and sympathized with Stewart. In many ways they had wanted to acquit her and hoped the defense would raise doubts about the government’s case.
The jurors confirmed what was evident at trial: that the testimony of Ann Armstrong and Mariana Pasternak was devastating to Stewart and Bacanovic, and that Faneuil was credible.
Perhaps the greatest weakness in the defense was its failure to produce evidence supporting the $60 stop-loss order as well as evidence and testimony that Stewart and Bacanovic had been truthful. The jurors felt the defense never delivered the evidence to support the claims they’d made in the opening statements. No matter how the jurors had considered the evidence, they arrived at the guilty verdicts. “We just could not have done anything else,” said juror Meg Crane.
As the July 16 date for her sentencing approached, Stewart filed a letter with the judge arguing for leniency, also posted on Martha Talks.
It is very important for me to inform you that I never intended to harm anyone and I am dreadfully sorry that the perception of my conduct has caused my family, my friends and especially my beloved company so much damage.
In her view, it was the perception of her conduct, presumably by overzealous prosecutors, rather than the conduct itself, which had caused the damage. And she also made perfectly clear that in her own mind, she had done nothing wrong.
I sold my remaining shares of ImClone not because I had inside information, not because I was secretly tipped, but because I set a price, made a profit and knew I could always invest if I wanted to. To believe that I sold because Sam was trying to sell is so very, very wrong. To believe that I would sell, to avoid a loss of less than $45,000, and thus jeopardize my life, my career, and the well-being of hundreds of others, my cherished partners and colleagues, is so very, very wrong. [This paragraph was subsequently deleted from her letter, apparently again at the insistence of her lawyers.]
Judge Cedarbaum said she believed that Stewart had already suffered and would continue to suffer, and that the highly publicized case had already served the purpose of deterrence. Though she declined to waive the sentencing guidelines as requested by the defense, the judge gave Stewart the minimum sentence under the guidelines: five months in prison, five months of home detention at her Bedford estate, two years of probation, and a $40,000 fine. Still, Martha Stewart would have to spend time in jail.
Stewart emerged from the courthouse to cheers of “We love you, Martha” from two dozen supporters. “Today is a shameful day,” she said on the courthouse steps.
It is shameful for me, for my family, and for my beloved company and all of its employees and partners. What was a small personal matter became over the last two and a half years an almost fatal circus event of unprecedented proportions spreading like oil over a vast landscape, even around the world. I have been choked and almost suffocated to death.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. 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 with such gore. I mean, it’s just terrible.
Peter Bacanovic, nearly forgotten in the media frenzy over Stewart, was sentenced later that afternoon. He, too, acknowledged no wrongdoing and said that he regretted the “pain and suffering this has caused my family” rather than any conduct by him. Judge Cedarbaum gave him the same sentence–five months in prison and five months of home detention–but a smaller fine of $4,000.
That same night, Stewart appeared on
20/20
with Barbara Walters and compared her situation to that of South African president Nelson Mandela, who spent twenty-seven years in prison, much of it on South Africa’s notorious Robben Island.
20/20
with Barbara Walters and compared her situation to that of South African president Nelson Mandela, who spent twenty-seven years in prison, much of it on South Africa’s notorious Robben Island.
H
is cooperation complete, Faneuil was finally sentenced on July 23, 2004. The government lawyers gave him a glowing recommendation:
is cooperation complete, Faneuil was finally sentenced on July 23, 2004. The government lawyers gave him a glowing recommendation:
“Faneuil faced the same choice that Stewart and Bacanovic had to make–hold firm to the lies he had told investigators or tell the truth, no matter the consequences. Perhaps the most extraordinary aspect of Faneuil’s decision to tell the truth is that he came forward for only one reason–because he knew it was the right thing to do. . . . Douglas Faneuil’s cooperation has been truly extraordinary. While Faneuil’s role in the conspiracy to obstruct justice cannot be condoned, Faneuil’s decision to come forward and admit his crimes and, most extraordinarily, to do so voluntarily, speaks volumes to his courage and integrity.”
In sharp contrast to Stewart and Bacanovic, Faneuil acknowledged his crimes and fought back tears as he apologized for initially lying to investigators. “This ordeal has been a tragic disappointment for too many people, including myself,” he told the judge. “If I were given the opportunity to prevent it happening again, I would choose to do so every single time.”
“You are in many ways a very lucky young man,” Cedarbaum said as she sentenced him to probation rather than the six months in prison indicated by the sentencing guidelines. “I am giving you enormous credit for your assistance.” She also sternly admonished him that if he ever appeared in court again as a result of any wrongdoing, she would personally see to it that he was punished to the full extent of the law.
When it was over, Karen Seymour smiled, shook his hand, and patted him on the shoulder. His lawyers were ecstatic that he’d gotten probation. His estranged parents attended and seemed relieved. Everyone seemed happy, except Faneuil. He felt depressed and looked miserable.
“What the hell is wrong with you?” Pickholz asked. “You should be happy!”
“This was three years of my life,” Faneuil responded.
“You got off scot-free!” Powers added.
“What are you talking about? I’ve been paying for this for three years!”
“We did the best we could,” Powers said. “It took some pretty good lawyering to get you here.”
“Then why didn’t you get me immunity?” Faneuil took a roll of mints Powers had given him and threw them at his lawyer.
M
artha Stewart never spoke to Mariana Pasternak again. Pasternak maintains that her high-profile real estate business in Westport collapsed under the notoriety of the trial. She had to sell her jewelry and eventually lost her house to foreclosure.
artha Stewart never spoke to Mariana Pasternak again. Pasternak maintains that her high-profile real estate business in Westport collapsed under the notoriety of the trial. She had to sell her jewelry and eventually lost her house to foreclosure.
After her testimony, Ann Armstrong took several weeks off to recover, and when she returned to the company, she moved to a position on a different floor from Stewart. One afternoon she went upstairs to see her replacement, and was startled to see Stewart herself sitting at her computer, her back turned. Stewart heard Armstrong’s voice and asked a brief question; Armstrong answered. Stewart kept her back turned and didn’t look at her. It was their only encounter after the trial, and Stewart never spoke to her again. Armstrong was dropped from Stewart’s holiday card and gift list, and she subsequently left the company.
Kevin Sharkey remains on the staff of Martha Stewart Living and, his blog suggests, he continues to be one of Stewart’s closest friends and traveling companions. He lives in a multimillion-dollar, 2,500-square-foot apartment in a Richard Meier–designed apartment building in Greenwich Village owned by Stewart. His decorating of the apartment has been the subject of ongoing coverage in
Martha Stewart Living.
Martha Stewart Living.
Martha Stewart reported to the federal prison camp for women in Alderson, West Virginia, cofounded by Eleanor Roosevelt in 1927. She was assigned to a cottage where she shared a room with a woman convicted of selling cocaine. She was by all accounts as perfectionist a prisoner as she was a chef, decorator, and media executive. Stewart worked on a cleanup crew, led yoga classes and sessions on weaving, arranged flowers, and lectured on starting a business.
Stewart was released to home confinement in March 2005. She resumed her syndicated daytime television program,
The Martha Stewart Show
, and launched a spin-off of the reality show
The Apprentice
, which lasted one season. She threw herself into public appearances, becoming a fixture of celebrity magazines, gossip columns, and television interview shows. By September 2006, when she was featured in
Harper’s Bazaar
, the entire affair had nearly been erased from Stewart’s memory, or so she claimed. “I honestly don’t remember exactly what I was prosecuted for,” she told the magazine.
The Martha Stewart Show
, and launched a spin-off of the reality show
The Apprentice
, which lasted one season. She threw herself into public appearances, becoming a fixture of celebrity magazines, gossip columns, and television interview shows. By September 2006, when she was featured in
Harper’s Bazaar
, the entire affair had nearly been erased from Stewart’s memory, or so she claimed. “I honestly don’t remember exactly what I was prosecuted for,” she told the magazine.
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