Originally created 07/17/04

Martha Stewart gets 5 months in prison; appeal expected

NEW YORK -- Domestic icon Martha Stewart was handed a prison term of just five months Friday for lying about a stock sale. After asking the judge for leniency, she emerged defiant from the courthouse to say she was being persecuted and declared, "I'll be back."

"I'm not afraid. Not afraid whatsoever. I'm very sorry it had to come to this," she told a crowd of media and supporters afterward, speaking in a strong voice on the courthouse steps.

Stewart, who was also ordered to serve five months of home confinement and fined $30,000, did win a key victory when U.S. District Court Judge Miriam Goldman Cedarbaum stayed her sentence pending appeal, a process that could last many months.

The sentence was also far less than it could have been. Experts had predicted she would receive 10 to 16 months for her conviction on charges she lied to federal prosecutors about the reason and circumstances surrounding her well-timed sale of stock in ImClone Systems Inc.

In the courtroom, Stewart, 62, projected a much less confident image, appealing in a shaky voice for a reduced sentence and asking the judge to "remember all the good I have done."

"Today is a shameful day. It's shameful for me, for my family and for my company," she said. As she was sentenced, she stood and faced the judge, her jaw tight but otherwise showing little emotion.

But outside the courthouse, Stewart was confident and upbeat. She smiled broadly to the cheers of supporters as she complained that a "small personal matter" had been blown out of proportion.

She even plugged her company's magazine and products, while joking that she didn't mean to make a sales pitch.

"Our magazines are great," she said. "They deserve your support, and whatever happened to me personally shouldn't have any effect whatsoever on the great company Martha Stewart Living Omnimedia."

Shares in the company shot up after the sentence was announced. The stock was up $2.52, or nearly 30 percent, at $11.16 in late-morning trading on the New York Stock Exchange.

Cedarbaum granted a defense request to recommend to prison officials that Stewart be assigned to a minimum-security federal prison in Danbury, Conn., close to her home in Westport.

During home confinement, which Stewart said she plans to serve at her home in Bedford, N.Y., the judge said she would consider waiving a typical provision that the detainee wear an electronic monitoring bracelet.

Cedarbaum did reject a defense request to send Stewart to a halfway house rather than prison, noting that "lying to government agencies during the course of an investigation is a very serious matter."

But the judge said she was imposing the lowest sentence she could under federal sentencing guidelines. "I believe that you have suffered, and will continue to suffer, enough," Cedarbaum said.

Prosecutor Karen Patton Seymour had argued for a heavier sentence.

"Ms. Stewart is asking for leniency far beyond what ordinary people who are convicted of these crimes would receive under the sentencing guidelines," she said.

The jail term was the latest blow for Stewart, once the CEO of a $1 billion media empire. After her 2003 indictment, she resigned as head of Martha Stewart Living Omnimedia Inc. And following her conviction, she surrendered her seat on its board.

Yet her fall from grace did little to hurt her standing among her fans. In the final weeks before Stewart's sentencing, hundreds of well-wishers sent letters to the judge asking for mercy.

Former Merrill Lynch & Co. stockbroker Peter Bacanovic, who was convicted along with Stewart of lying about the 2001 stock sale, was scheduled to be sentenced later Friday.

It was Dec. 27, 2001, when Stewart, in a brief phone call from a Texas tarmac on her way to a Mexican vacation, sold 3,928 shares of ImClone, a biotechnology company run by her longtime friend Sam Waksal.

Prosecutors alleged that Bacanovic, 42, ordered his assistant to tip Stewart that Waksal was trying to sell his shares. ImClone announced negative news the next day that sent the stock plunging. Stewart saved $51,000.

Stewart and Bacanovic always maintained she sold because of a preset plan to unload the stock when it fell to $60. ImClone now trades around $80.

The star witness against Stewart was Douglas Faneuil, a young former brokerage assistant who vividly described Bacanovic's order when he learned Waksal was trying to sell: "Oh my God. Get Martha on the phone."

Ann Armstrong, a veteran Stewart assistant, also testified Stewart had altered a computer log of a message Bacanovic left earlier that day about ImClone.

But the verdict on March 5 - guilty on four counts apiece for Stewart and Bacanovic - set off a string of events as dramatic as the trial itself.

In April, lawyers for both defendants accused one juror of lying about an arrest record in order to get on the trial. Cedarbaum denied a request for a new trial, saying there was no proof the juror lied or was biased.

And in May, federal prosecutors accused Larry F. Stewart, a Secret Service ink expert, of lying repeatedly in his testimony at the trial - mostly about the role he played in ink-analysis testing of a stock worksheet.

Just last week, Cedarbaum again denied new trials for Stewart and Bacanovic, this time saying there was "overwhelming independent evidence" to support the guilty verdicts.

Both the juror issue and the Larry Stewart perjury charges are expected to form the basis of the appeal.

Text of Martha Stewart statement in court

Text of the statement read by Martha Stewart in court Friday before U.S. District Judge Miriam Goldman Cedarbaum sentenced her to five months in prison, as transcribed by Southern District Reporters, P.C.:

Judge Cedarbaum, the letter I sent to you yesterday afternoon privately addressed my feelings and concerns about today's sentencing, yet I would like to say a few words, if I may.

Today is a shameful day. 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 during that time. And while I am more concerned about the well-being of others than for myself, more hurt for them and for their losses than for my own, more worried for their futures than for the future of Martha Stewart the person, you are faced with a conundrum, a problem of monumental, to me, proportions.

What to do? I ask that, in judging me, you remember all the good that I have done, all the contributions I have made through the company I founded, as well as personally over the past decades of my life that have been devoted almost entirely to productive, creative, and useful activities. I ask, too, that you consider all the intense suffering that I and so many dear others have endured every single moment of the past two and a half years.

I seek the opportunity to continue serving my country and my community in the same positive manner I always have. I seek the opportunity to repair the damage wrought by the situation, to get on with what I have always thought was a good, worthwhile, and exemplary life. My heart goes out to you and to everyone in this courtroom, and my prayers are with you. My hopes that my life will not be completely destroyed lie entirely in your competent and experienced and merciful hands. Thank you and peace be with you.


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