ImClone stock trading case
Encyclopedia
A U.S. Securities and Exchange Commission and U.S. Attorney probe of trading in the shares of ImClone Systems
resulted in a widely publicized criminal case, which resulted in prison terms for media celebrity Martha Stewart
, ImClone chief executive officer Samuel D. Waksal
and Stewart's broker at Merrill Lynch
, Peter Bacanovic.
(FDA) approval. It was later revealed by the U.S. Securities and Exchange Commission that prior to the announcement (after the close of trading on December 28) of the FDA's decision numerous executives sold their stock.
Its founder, Samuel D. Waksal
, was arrested in 2002 on insider trading
charges for informing friends and family to sell their stock, and attempting to sell his own. His daughter, Aliza Waksal, sold $2.5 million in shares on December 27. His father, Jack Waksal, sold $8.1 million in shares over the 27th and 28th. Company executives followed suit too. John B. Landes, the general counsel, sold $2.5 million in shares on December 6. Ronald A. Martell, the vice president for marketing and sales, sold $2.1 million in shares on December 11. Four other executives sold shares in the following weeks as well. Later, founder Waksal pleaded guilty to various charges, including securities fraud
, and on June 10, 2003, was sentenced to seven years and three months in prison.
Martha Stewart
, the founder of Martha Stewart Living Omnimedia
, also became embroiled in the scandal after it emerged that she sold about $230,000 in ImClone shares on December 27, 2001 just a day before the announcement of FDA decision. Although Stewart maintained her innocence, she was found guilty and sentenced on July 16, 2004 to five months in prison, five months of home confinement, and two years probation for lying about a stock sale, conspiracy, and obstruction of justice.
Ultimately a new clinical trial and FDA filing prepared by Imclone's partner Merck KGaA
("German Merck" not to be confused with the US company of similar name) resulted in an FDA approval of Erbitux in 2004 for use in colon cancer.
A Congressional hearing on improprieties at ImClone, held in October 2002, unveiled a culture of corruption dating back to 1986. This was the year that ImClone CEO Waksal first forged the signature of the company's general counsel John Landes (one of the three original employees of the company) for financial gain. Nonetheless, Landes defended Waksal's illegal actions at the hearings before the Subcommittee on Oversight and Investigations, portraying the forgery as "a good-faith misunderstanding," to which Representative James Greenwood replied "My children know better than that, Mr. Landes." Further questioning about this and subsequent forgeries on Waksal's part revealed that neither Landes, the chief legal officer of the company, or the company's outside directors reported Waksal's actions to proper authorities or made any moves to have Waksal removed as CEO. Instead, testimony revealed that they initiated their own internal investigation, which was never concluded. The decades-long tolerance for Waksal's fraud, starting from the company's earliest days, provoked Representative Peter Deutsch to refer to the ongoing misconduct as "wacky."
The FDA's February 2004 announcement of approval for use of Erbitux for treatment of colorectal cancer reported that conclusions were drawn from a trial involving 329 patients, of which 10.8% responded when Erbitux was used by itself, delaying tumor growth by 1.5 months. When used in conjunction with a standard treatment irinotecan, 22.9% of patients responded and tumor growth was delayed by approximately 4.1 months.
In September 2001, Bristol-Meyers Squibb committed $2 billion (including a $1 billion up-front cash payment) for less than 20% of ImClone due to what was called at the time the drug's "blockbuster" potential.
In January 2006, the company was put up for sale but failed to find any buyers, likely because Erbitux by that time faced significant competition in the medical marketplace. ImClone directors withdrew the sale of the company in mid-2006.
In April 2009, The Wall Street Journal reported that Eli Lilly & Co. purchased ImClone Systems Inc. for an estimated $6.8 Billion USD.
. On October 15, he pleaded guilty to charges of securities fraud
, bank fraud
, obstruction of justice
, and perjury
.
On March 3, 2003 he pleaded guilty to charges of conspiracy
and wire fraud
for avoiding $1.2 million in sales taxes on $15 million in artwork. The art included works by Mark Rothko
, Richard Serra
, Roy Lichtenstein
, and Willem de Kooning
, purchased between June 2000 and October 2001. He did not pay the necessary taxes at the time of purchase, but did pay the taxes in fall 2002.
On June 10, 2003, Waksal was sentenced to seven years and three months in prison and ordered to pay more than $4 million in fines and back taxes, all the maximum punishments allowable under law. Waksal was released in 2009.
On June 4, 2003, a federal grand jury in Manhattan
indicted Stewart and her former broker, Peter Bacanovic on nine criminal counts. The government alleged that, by selling when she did, Stewart avoided losses of $45,673. The charges included securities fraud, obstruction of justice
, and conspiracy
. Stewart plead not guilty, saying she had a standing order with Bacanovic to sell her shares if ImClone stock fell below $60. Stewart resigned as CEO and chairman of Martha Stewart Living Omnimedia on the same day she was indicted, but remained on the company's board.
The day after her indictment
, Stewart took out a full-page advertisement in USA Today
and launched a website with an open letter of defense "to my friends and loyal supporters." She said, "I want you to know that I am innocent — and that I will fight to clear my name... The government's attempt to criminalize these actions makes no sense to me... I am confident I will be exonerated of these baseless charges."
On the day she was indicted, the U.S. Securities and Exchange Commission filed a civil complaint against Stewart with charges of insider trading (for violating § 17(a) of the Securities Act of 1933
, § 10(b) of the Securities Exchange Act of 1934
, and SEC Rule 10b-5
). The civil charges were stayed pending the criminal proceeding.
. During the trial, Stewart maintained her innocence.
On February 27, 2004, Judge Cederbaum threw out the charge of securities fraud which could have led to up to 10 years in prison and a million dollar fine. The judge found that "no reasonable juror can find beyond a reasonable doubt that the defendant lied for the purpose of influencing the market for the securities of her own company."
of eight women and four men on all four remaining counts against her: conspiracy, obstruction of justice, and two counts of making false statements to a federal investigator. She was not found guilty of one of the most publicized charges: having falsely claimed that there was an agreement to sell her shares when they fell to $60.00. The jury did find that Stewart lied and obstructed justice on other grounds, including her claim that she was reminded of the prior $60.00 agreement and urged to sell on that basis.
Following Stewart's conviction, a message was posted on her website, reading, in part, "I am obviously distressed by the jury's verdict but I continue to take comfort in knowing that I have the confidence and enduring support of my family and friends. I will appeal the verdict and continue to fight to clear my name. I believe in the fairness of the judicial system and remain confident that I will ultimately prevail."
On September 15, 2004, accompanied by her lawyers and members of the board of directors of Martha Stewart Living Omnimedia, Stewart held a press conference to announce her decision to begin serving her sentence as soon as possible while vowing to continue ahead with her appeal. The event was featured live on national television. On September 21, she was ordered by US District Judge Miriam Cedarbaum to surrender by October 8 to begin her sentence. On September 29, the Federal Bureau of Prisons
announced that Stewart would serve her sentence at the federal prison camp near Alderson, West Virginia
, denying her request to serve it at the federal prison
in Danbury, Connecticut
. She reported to Alderson Federal Prison Camp
early in the morning on October 8. Alderson is a minimum security prison, the lowest level of security in the Bureau of Prisons. There are no fences, and inmates are generally free to walk around the compound unescorted. Stewart, who said her prison nickname was "M. Diddy", reportedly got along quite well with her fellow inmates and kept herself busy with assigned cleaning tasks. She was released on March 4, 2005 at 12:30 AM.
After being released from Alderson, Stewart began to serve her home confinement at her estate in Bedford, New York
. During the confinement she was permitted to leave her property for up to 48 hours a week to conduct business, but was required to wear an electronic ankle monitor
to monitor her location at all times. On January 6, 2006, a Federal Appeals court denied Stewart's appeal and upheld the jury's verdict.
pulled Martha Stewart Living
from its CBS
and UPN
affiliates, after having moved the show during Stewart's trial from prime daytime timeslots into less desirable early-morning slots (e.g., 2:05am in New York); the show was distributed by another Viacom division, King World Productions
. On March 15, Stewart resigned from the board of Martha Stewart Living Omnimedia. Stewart had already resigned from the boards of The New York Stock Exchange and Revlon Cosmetics
. On May 18, MSO announced that Martha Stewart Living, was going into hiatus, with no announced date of return.
On May 21, 2004 , Larry Stewart (no relation), a United States Secret Service
lab director who testified for the government against Martha Stewart, was charged with two counts of perjury
. Stock in Martha Stewart Living Omnimedia
jumped as much as 23 percent on the news. Larry Stewart was an expert witness about the ink on a broker's worksheet, testifying that the note about selling ImClone shares when it dropped below $60 was different from the rest of the ink on the document. The charges arose when Susan Fortunato, a Secret Service co-worker, complained that she had in fact done the analysis and that it had never been examined by Stewart. Although the jury at the perjury trial felt that Larry Stewart had taken unfair credit for the work done, it did not amount to perjury and he was found not guilty on October 5, 2004. The jury had trouble believing Fortunato, feeling that she had an axe to grind with Stewart.
In October, 2005, Stewart was informed that due to her status as a convicted felon in the United States, she was inadmissible for entry into Canada under the Immigration and Refugee Protection Act
. Stewart had planned to attend the Windsor Pumpkin Regatta
in Nova Scotia
. Within two days of the story's breaking, then Canadian Minister of Citizenship and Immigration
Joe Volpe
granted Stewart a temporary resident permit, thereby allowing her to temporarily enter Canada. However, bad weather prevented her from attending.
In June, 2008, the UK Border Agency
, operational since 1 April 2008 with new rules to safeguard British borders, refused to grant her a visa to enter Great Britain
, because of her criminal conviction for obstructing justice. She had been planning to speak at the Royal Academy
on fashion and leisure industry matters.
In August, 2006, the Securities and Exchange Commission announced that it had agreed to settle the related civil case against Stewart. Under the settlement, Stewart agreed to a five-year bar from serving as a director, or as the CEO, CFO (or other officer roles in which she would be responsible for preparing, auditing, or disclosing financial results), of any public company.
She also agreed to pay the maximum penalty of three times the losses she avoided, or $195,000. Bacanovic agreed to pay penalties totaling about $75,000, and was barred associating with a broker, dealer or investment adviser.
, based on her time in prison, starred Cybill Shepherd
as Stewart and was aired by CBS
in September 2005. A previous movie, Martha, Inc.: The Story of Martha Stewart
, also starring Shepherd, had been aired by NBC
in 2003.
ImClone Systems
ImClone Systems Incorporated is a biopharmaceutical company dedicated to developing biologic medicines in the area of oncology. It was founded in 1984 and is headquartered in New York City. On October 6, 2008, it accepted a $6.5 billion acquisition offer from Eli Lilly and Company, and became a...
resulted in a widely publicized criminal case, which resulted in prison terms for media celebrity Martha Stewart
Martha Stewart
Martha Stewart is an American business magnate, author, magazine publisher, and television personality. As founder of Martha Stewart Living Omnimedia, she has gained success through a variety of business ventures, encompassing publishing, broadcasting, and merchandising...
, ImClone chief executive officer Samuel D. Waksal
Samuel D. Waksal
Samuel D. Waksal is the founder and former CEO of the biopharmaceutical company ImClone Systems, which developed the drug Erbitux...
and Stewart's broker at Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
, Peter Bacanovic.
History
ImClone's stock price dropped sharply at the end of 2001 when its drug Erbitux, an experimental monoclonal antibody, failed to get the expected Food and Drug AdministrationFood and Drug Administration
The Food and Drug Administration is an agency of the United States Department of Health and Human Services, one of the United States federal executive departments...
(FDA) approval. It was later revealed by the U.S. Securities and Exchange Commission that prior to the announcement (after the close of trading on December 28) of the FDA's decision numerous executives sold their stock.
Its founder, Samuel D. Waksal
Samuel D. Waksal
Samuel D. Waksal is the founder and former CEO of the biopharmaceutical company ImClone Systems, which developed the drug Erbitux...
, was arrested in 2002 on insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
charges for informing friends and family to sell their stock, and attempting to sell his own. His daughter, Aliza Waksal, sold $2.5 million in shares on December 27. His father, Jack Waksal, sold $8.1 million in shares over the 27th and 28th. Company executives followed suit too. John B. Landes, the general counsel, sold $2.5 million in shares on December 6. Ronald A. Martell, the vice president for marketing and sales, sold $2.1 million in shares on December 11. Four other executives sold shares in the following weeks as well. Later, founder Waksal pleaded guilty to various charges, including securities fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
, and on June 10, 2003, was sentenced to seven years and three months in prison.
Martha Stewart
Martha Stewart
Martha Stewart is an American business magnate, author, magazine publisher, and television personality. As founder of Martha Stewart Living Omnimedia, she has gained success through a variety of business ventures, encompassing publishing, broadcasting, and merchandising...
, the founder of Martha Stewart Living Omnimedia
Martha Stewart Living Omnimedia
Martha Stewart Living Omnimedia Inc. is a diversified media and merchandising company founded by Martha Stewart. It is organized into four business segments: Publishing, Internet, Broadcasting media platforms and Merchandising product lines....
, also became embroiled in the scandal after it emerged that she sold about $230,000 in ImClone shares on December 27, 2001 just a day before the announcement of FDA decision. Although Stewart maintained her innocence, she was found guilty and sentenced on July 16, 2004 to five months in prison, five months of home confinement, and two years probation for lying about a stock sale, conspiracy, and obstruction of justice.
Ultimately a new clinical trial and FDA filing prepared by Imclone's partner Merck KGaA
Merck KGaA
Merck KGaA is a German chemical and pharmaceutical company. Merck, also known as “German Merck” and “Merck Darmstadt”, was founded in Darmstadt, Germany, in 1668, making it the world's oldest operating chemical and pharmaceutical company. The company was privately owned until going public in 1995...
("German Merck" not to be confused with the US company of similar name) resulted in an FDA approval of Erbitux in 2004 for use in colon cancer.
A Congressional hearing on improprieties at ImClone, held in October 2002, unveiled a culture of corruption dating back to 1986. This was the year that ImClone CEO Waksal first forged the signature of the company's general counsel John Landes (one of the three original employees of the company) for financial gain. Nonetheless, Landes defended Waksal's illegal actions at the hearings before the Subcommittee on Oversight and Investigations, portraying the forgery as "a good-faith misunderstanding," to which Representative James Greenwood replied "My children know better than that, Mr. Landes." Further questioning about this and subsequent forgeries on Waksal's part revealed that neither Landes, the chief legal officer of the company, or the company's outside directors reported Waksal's actions to proper authorities or made any moves to have Waksal removed as CEO. Instead, testimony revealed that they initiated their own internal investigation, which was never concluded. The decades-long tolerance for Waksal's fraud, starting from the company's earliest days, provoked Representative Peter Deutsch to refer to the ongoing misconduct as "wacky."
The FDA's February 2004 announcement of approval for use of Erbitux for treatment of colorectal cancer reported that conclusions were drawn from a trial involving 329 patients, of which 10.8% responded when Erbitux was used by itself, delaying tumor growth by 1.5 months. When used in conjunction with a standard treatment irinotecan, 22.9% of patients responded and tumor growth was delayed by approximately 4.1 months.
In September 2001, Bristol-Meyers Squibb committed $2 billion (including a $1 billion up-front cash payment) for less than 20% of ImClone due to what was called at the time the drug's "blockbuster" potential.
In January 2006, the company was put up for sale but failed to find any buyers, likely because Erbitux by that time faced significant competition in the medical marketplace. ImClone directors withdrew the sale of the company in mid-2006.
In April 2009, The Wall Street Journal reported that Eli Lilly & Co. purchased ImClone Systems Inc. for an estimated $6.8 Billion USD.
Indictment and SEC charges
Waksal was arrested June 12, 2002 on charges of conspiring to commit insider tradingInsider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
. On October 15, he pleaded guilty to charges of securities fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
, bank fraud
Bank fraud
Bank fraud is the use of fraudulent means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently representing to be a bank or financial institution. In many instances, bank fraud is a criminal offense...
, obstruction of justice
Obstruction of justice
The crime of obstruction of justice, in United States jurisdictions, refers to the crime of interfering with the work of police, investigators, regulatory agencies, prosecutors, or other officials...
, and perjury
Perjury
Perjury, also known as forswearing, is the willful act of swearing a false oath or affirmation to tell the truth, whether spoken or in writing, concerning matters material to a judicial proceeding. That is, the witness falsely promises to tell the truth about matters which affect the outcome of the...
.
On March 3, 2003 he pleaded guilty to charges of conspiracy
Conspiracy (crime)
In the criminal law, a conspiracy is an agreement between two or more persons to break the law at some time in the future, and, in some cases, with at least one overt act in furtherance of that agreement...
and wire fraud
Wire fraud
Mail and wire fraud is a federal crime in the United States. Together, 18 U.S.C. §§ 1341, 1343, and 1346 reach any fraudulent scheme or artifice to intentionally deprive another of property or honest services with a nexus to mail or wire communication....
for avoiding $1.2 million in sales taxes on $15 million in artwork. The art included works by Mark Rothko
Mark Rothko
Mark Rothko, born Marcus Rothkowitz , was a Russian-born American painter. He is classified as an abstract expressionist, although he himself rejected this label, and even resisted classification as an "abstract painter".- Childhood :Mark Rothko was born in Dvinsk, Vitebsk Province, Russian...
, Richard Serra
Richard Serra
Richard Serra is an American minimalist sculptor and video artist known for working with large-scale assemblies of sheet metal. Serra was involved in the Process Art Movement.-Early life and education:...
, Roy Lichtenstein
Roy Lichtenstein
Roy Lichtenstein was a prominent American pop artist. During the 1960s his paintings were exhibited at the Leo Castelli Gallery in New York City and along with Andy Warhol, Jasper Johns, James Rosenquist and others he became a leading figure in the new art movement...
, and Willem de Kooning
Willem de Kooning
Willem de Kooning was a Dutch American abstract expressionist artist who was born in Rotterdam, the Netherlands....
, purchased between June 2000 and October 2001. He did not pay the necessary taxes at the time of purchase, but did pay the taxes in fall 2002.
On June 10, 2003, Waksal was sentenced to seven years and three months in prison and ordered to pay more than $4 million in fines and back taxes, all the maximum punishments allowable under law. Waksal was released in 2009.
On June 4, 2003, a federal grand jury in Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
indicted Stewart and her former broker, Peter Bacanovic on nine criminal counts. The government alleged that, by selling when she did, Stewart avoided losses of $45,673. The charges included securities fraud, obstruction of justice
Obstruction of justice
The crime of obstruction of justice, in United States jurisdictions, refers to the crime of interfering with the work of police, investigators, regulatory agencies, prosecutors, or other officials...
, and conspiracy
Conspiracy (crime)
In the criminal law, a conspiracy is an agreement between two or more persons to break the law at some time in the future, and, in some cases, with at least one overt act in furtherance of that agreement...
. Stewart plead not guilty, saying she had a standing order with Bacanovic to sell her shares if ImClone stock fell below $60. Stewart resigned as CEO and chairman of Martha Stewart Living Omnimedia on the same day she was indicted, but remained on the company's board.
The day after her indictment
Indictment
An indictment , in the common-law legal system, is a formal accusation that a person has committed a crime. In jurisdictions that maintain the concept of felonies, the serious criminal offence is a felony; jurisdictions that lack the concept of felonies often use that of an indictable offence—an...
, Stewart took out a full-page advertisement in USA Today
USA Today
USA Today is a national American daily newspaper published by the Gannett Company. It was founded by Al Neuharth. The newspaper vies with The Wall Street Journal for the position of having the widest circulation of any newspaper in the United States, something it previously held since 2003...
and launched a website with an open letter of defense "to my friends and loyal supporters." She said, "I want you to know that I am innocent — and that I will fight to clear my name... The government's attempt to criminalize these actions makes no sense to me... I am confident I will be exonerated of these baseless charges."
On the day she was indicted, the U.S. Securities and Exchange Commission filed a civil complaint against Stewart with charges of insider trading (for violating § 17(a) of the Securities Act of 1933
Securities Act of 1933
Congress enacted the Securities Act of 1933 , in the aftermath of the stock market crash of 1929 and during the ensuing Great Depression...
, § 10(b) of the Securities Exchange Act of 1934
Securities Exchange Act of 1934
The Securities Exchange Act of 1934 , , codified at et seq., is a law governing the secondary trading of securities in the United States of America. It was a sweeping piece of legislation...
, and SEC Rule 10b-5
SEC Rule 10b-5
SEC Rule 10b-5, codified at 17 C.F.R. § 240.10b-5, is one of the most important rules promulgated by the U.S. Securities and Exchange Commission, pursuant to its authority granted under § 10 of the Securities Exchange Act of 1934...
). The civil charges were stayed pending the criminal proceeding.
Trial
Stewart's trial was initially set for January 12, 2004, at the request of her lawyers who said they needed plenty of time to analyze the evidence. The trial eventually began on January 20 in New York City presided over by U.S. District Judge Miriam Goldman CedarbaumMiriam Goldman Cedarbaum
Judge Miriam Goldman Cedarbaum is a senior judge on the United States District Court for the Southern District of New York...
. During the trial, Stewart maintained her innocence.
On February 27, 2004, Judge Cederbaum threw out the charge of securities fraud which could have led to up to 10 years in prison and a million dollar fine. The judge found that "no reasonable juror can find beyond a reasonable doubt that the defendant lied for the purpose of influencing the market for the securities of her own company."
Verdict
The jury deliberated for three days following the five-week trial before reaching its verdict. On March 5, 2004, Stewart was found guilty by a juryJury
A jury is a sworn body of people convened to render an impartial verdict officially submitted to them by a court, or to set a penalty or judgment. Modern juries tend to be found in courts to ascertain the guilt, or lack thereof, in a crime. In Anglophone jurisdictions, the verdict may be guilty,...
of eight women and four men on all four remaining counts against her: conspiracy, obstruction of justice, and two counts of making false statements to a federal investigator. She was not found guilty of one of the most publicized charges: having falsely claimed that there was an agreement to sell her shares when they fell to $60.00. The jury did find that Stewart lied and obstructed justice on other grounds, including her claim that she was reminded of the prior $60.00 agreement and urged to sell on that basis.
Following Stewart's conviction, a message was posted on her website, reading, in part, "I am obviously distressed by the jury's verdict but I continue to take comfort in knowing that I have the confidence and enduring support of my family and friends. I will appeal the verdict and continue to fight to clear my name. I believe in the fairness of the judicial system and remain confident that I will ultimately prevail."
Sentencing
On July 8, a motion for a new trial was denied and sentencing was set for July 16. Martha Stewart and Peter Bacanovic were each sentenced to five months in prison, five months of home confinement, and two years probation for lying about a stock sale, conspiracy, and obstruction of justice. Stewart was ordered to pay a $30,000 fine, while Bacanovic was fined $4,000. The judge stayed the sentence while they prepared their appeals.On September 15, 2004, accompanied by her lawyers and members of the board of directors of Martha Stewart Living Omnimedia, Stewart held a press conference to announce her decision to begin serving her sentence as soon as possible while vowing to continue ahead with her appeal. The event was featured live on national television. On September 21, she was ordered by US District Judge Miriam Cedarbaum to surrender by October 8 to begin her sentence. On September 29, the Federal Bureau of Prisons
Federal Bureau of Prisons
The Federal Bureau of Prisons is a federal law enforcement agency subdivision of the United States Department of Justice and is responsible for the administration of the federal prison system. The system also handles prisoners who committed acts considered felonies under the District of Columbia's...
announced that Stewart would serve her sentence at the federal prison camp near Alderson, West Virginia
Alderson, West Virginia
Alderson, a town in the US State of West Virginia, is split geographically by the Greenbrier River, with portions in both Greenbrier and Monroe Counties. Although split physically by the river, the town functions as one entity, including that of town government...
, denying her request to serve it at the federal prison
Federal Correctional Institution, Danbury
The Federal Correctional Institution Danbury is a federal prison in Danbury, Connecticut, north of downtown Danbury and from New York City...
in Danbury, Connecticut
Danbury, Connecticut
Danbury is a city in northern Fairfield County, Connecticut, United States. It had population at the 2010 census of 80,893. Danbury is the fourth largest city in Fairfield County and is the seventh largest city in Connecticut....
. She reported to Alderson Federal Prison Camp
Alderson Federal Prison Camp
Alderson Federal Prison Camp, also known as Federal Prison Camp, Alderson or FPC Alderson, is a Federal Bureau of Prisons minimum security prison for women in the United States in unincorporated Monroe County and Summers County in West Virginia...
early in the morning on October 8. Alderson is a minimum security prison, the lowest level of security in the Bureau of Prisons. There are no fences, and inmates are generally free to walk around the compound unescorted. Stewart, who said her prison nickname was "M. Diddy", reportedly got along quite well with her fellow inmates and kept herself busy with assigned cleaning tasks. She was released on March 4, 2005 at 12:30 AM.
After being released from Alderson, Stewart began to serve her home confinement at her estate in Bedford, New York
Bedford (town), New York
Bedford is a town in Westchester County, New York, USA. The population was 17,335 at the 2010 census.The Town of Bedford is located in the northeastern part of Westchester County, and contains the three hamlets of Bedford Hills, Bedford Village, and Katonah...
. During the confinement she was permitted to leave her property for up to 48 hours a week to conduct business, but was required to wear an electronic ankle monitor
Ankle monitor
An ankle monitor is a device that individuals under house arrest are often required to wear. At timed intervals, the ankle monitor sends a radio frequency signal containing location and other information to a receiver. If an offender moves outside of an allowed range, the police will be notified...
to monitor her location at all times. On January 6, 2006, a Federal Appeals court denied Stewart's appeal and upheld the jury's verdict.
Repercussions and aftermath
On March 8, 2004, ViacomViacom
Viacom Inc. , short for "Video & Audio Communications", is an American media conglomerate with interests primarily in, but not limited to, cinema and cable television...
pulled Martha Stewart Living
Martha Stewart Living
Martha Stewart Living is a magazine and a television show featuring entertaining and home decorating guru Martha Stewart. Both the magazine and the television program focus on the domestic arts. Martha Stewart Living began as a quarterly magazine in 1990, published by Time Inc..and is currently...
from its CBS
CBS
CBS Broadcasting Inc. is a major US commercial broadcasting television network, which started as a radio network. The name is derived from the initials of the network's former name, Columbia Broadcasting System. The network is sometimes referred to as the "Eye Network" in reference to the shape of...
and UPN
UPN
United Paramount Network was a television network that was broadcast in over 200 markets in the United States from 1995 to 2006. UPN was originally owned by Viacom/Paramount and Chris-Craft Industries, the former of which, through the Paramount Television Group, produced most of the network's...
affiliates, after having moved the show during Stewart's trial from prime daytime timeslots into less desirable early-morning slots (e.g., 2:05am in New York); the show was distributed by another Viacom division, King World Productions
King World Productions
King World Productions, Inc. was a production company and a syndicator of television programming in the United States until its eventual 2007 incorporation into CBS Television Distribution...
. On March 15, Stewart resigned from the board of Martha Stewart Living Omnimedia. Stewart had already resigned from the boards of The New York Stock Exchange and Revlon Cosmetics
Revlon
Revlon is an American cosmetics, skin care, fragrance, and personal care company founded in 1932.-History:Revlon was founded in the midst of the Great Depression, 1932, by Charles Revson and his brother Joseph, along with a chemist, Charles Lachman, who contributed the "L" in the Revlon name...
. On May 18, MSO announced that Martha Stewart Living, was going into hiatus, with no announced date of return.
On May 21, 2004 , Larry Stewart (no relation), a United States Secret Service
United States Secret Service
The United States Secret Service is a United States federal law enforcement agency that is part of the United States Department of Homeland Security. The sworn members are divided among the Special Agents and the Uniformed Division. Until March 1, 2003, the Service was part of the United States...
lab director who testified for the government against Martha Stewart, was charged with two counts of perjury
Perjury
Perjury, also known as forswearing, is the willful act of swearing a false oath or affirmation to tell the truth, whether spoken or in writing, concerning matters material to a judicial proceeding. That is, the witness falsely promises to tell the truth about matters which affect the outcome of the...
. Stock in Martha Stewart Living Omnimedia
Martha Stewart Living Omnimedia
Martha Stewart Living Omnimedia Inc. is a diversified media and merchandising company founded by Martha Stewart. It is organized into four business segments: Publishing, Internet, Broadcasting media platforms and Merchandising product lines....
jumped as much as 23 percent on the news. Larry Stewart was an expert witness about the ink on a broker's worksheet, testifying that the note about selling ImClone shares when it dropped below $60 was different from the rest of the ink on the document. The charges arose when Susan Fortunato, a Secret Service co-worker, complained that she had in fact done the analysis and that it had never been examined by Stewart. Although the jury at the perjury trial felt that Larry Stewart had taken unfair credit for the work done, it did not amount to perjury and he was found not guilty on October 5, 2004. The jury had trouble believing Fortunato, feeling that she had an axe to grind with Stewart.
In October, 2005, Stewart was informed that due to her status as a convicted felon in the United States, she was inadmissible for entry into Canada under the Immigration and Refugee Protection Act
Immigration and Refugee Protection Act
Immigration and Refugee Protection Act is an Act of the Parliament of Canada, passed in 2001 as Bill C-11, which replaced the Immigration Act of 1976 as the primary federal legislation regulating Immigration to Canada....
. Stewart had planned to attend the Windsor Pumpkin Regatta
Windsor Pumpkin Regatta
The Windsor Pumpkin Regatta is an annual water race held in October on Lake Pesaquid in Windsor, Nova Scotia. The course is a half mile from start to finish...
in Nova Scotia
Nova Scotia
Nova Scotia is one of Canada's three Maritime provinces and is the most populous province in Atlantic Canada. The name of the province is Latin for "New Scotland," but "Nova Scotia" is the recognized, English-language name of the province. The provincial capital is Halifax. Nova Scotia is the...
. Within two days of the story's breaking, then Canadian Minister of Citizenship and Immigration
Minister of Citizenship and Immigration (Canada)
The Minister of Citizenship and Immigration is the Minister of the Crown in the Canadian Cabinet who is responsible for overseeing the federal government department responsible for immigration, refugee and citizenship issues, Citizenship and Immigration Canada...
Joe Volpe
Joe Volpe
Giuseppe Joseph "Joe" Volpe, PC, was a Canadian politician. He was a Liberal member of the Canadian House of Commons from 1988 until the 2011 federal election, being surpassed by the conservative member Joe Oliver Joe Oliver, and held two senior positions in Prime Minister Paul Martin's Cabinet...
granted Stewart a temporary resident permit, thereby allowing her to temporarily enter Canada. However, bad weather prevented her from attending.
In June, 2008, the UK Border Agency
UK Border Agency
The UK Border Agency is the border control body of the United Kingdom government and part of the Home Office. It was formed on 1 April 2008 by a merger of the Border and Immigration Agency , UKvisas and the Detection functions of HM Revenue and Customs...
, operational since 1 April 2008 with new rules to safeguard British borders, refused to grant her a visa to enter Great Britain
Great Britain
Great Britain or Britain is an island situated to the northwest of Continental Europe. It is the ninth largest island in the world, and the largest European island, as well as the largest of the British Isles...
, because of her criminal conviction for obstructing justice. She had been planning to speak at the Royal Academy
Royal Academy
The Royal Academy of Arts is an art institution based in Burlington House on Piccadilly, London. The Royal Academy of Arts has a unique position in being an independent, privately funded institution led by eminent artists and architects whose purpose is to promote the creation, enjoyment and...
on fashion and leisure industry matters.
In August, 2006, the Securities and Exchange Commission announced that it had agreed to settle the related civil case against Stewart. Under the settlement, Stewart agreed to a five-year bar from serving as a director, or as the CEO, CFO (or other officer roles in which she would be responsible for preparing, auditing, or disclosing financial results), of any public company.
She also agreed to pay the maximum penalty of three times the losses she avoided, or $195,000. Bacanovic agreed to pay penalties totaling about $75,000, and was barred associating with a broker, dealer or investment adviser.
TV movies
Martha: Behind BarsMartha: Behind Bars
Martha: Behind Bars is a TV-movie that aired on September 25, 2005. It chronicled domestic diva Martha Stewart's court case regarding ImClone stocks, and subsequent time behind bars.While the first movie with Cybill Shepherd as Ms...
, based on her time in prison, starred Cybill Shepherd
Cybill Shepherd
Cybill Lynne Shepherd is an American actress, singer and former model. Her best known roles include starring as Jacy in The Last Picture Show, as Betsy in Taxi Driver, as Madeleine Spencer in Psych, as Maddie Hayes on Moonlighting, as Cybill Sheridan on Cybill, and as Phyllis Kroll on The L...
as Stewart and was aired by CBS
CBS
CBS Broadcasting Inc. is a major US commercial broadcasting television network, which started as a radio network. The name is derived from the initials of the network's former name, Columbia Broadcasting System. The network is sometimes referred to as the "Eye Network" in reference to the shape of...
in September 2005. A previous movie, Martha, Inc.: The Story of Martha Stewart
Martha, Inc.: The Story of Martha Stewart
Martha, Inc.: The Story of Martha Stewart is a 2003 NBC TV movie starring Cybill Shepherd as Martha Stewart in which the life of Martha Stewart is outlined starting from her life in New Jersey to the scandal behind her arrest. The film was shot in Nova Scotia.Shepherd also played Martha Stewart in...
, also starring Shepherd, had been aired by NBC
NBC
The National Broadcasting Company is an American commercial broadcasting television network and former radio network headquartered in the GE Building in New York City's Rockefeller Center with additional major offices near Los Angeles and in Chicago...
in 2003.
External links
- Grand Jury Indicts Martha Stewart — New York Times, June 4, 2003
- BBC News OnlineBBC News OnlineBBC News Online is the website of BBC News, the division of the BBC responsible for newsgathering and production. The website is the most popular news website in the United Kingdom and forms a major part of BBC Online ....
- Commentary of her jailing - BBC News OnlineBBC News OnlineBBC News Online is the website of BBC News, the division of the BBC responsible for newsgathering and production. The website is the most popular news website in the United Kingdom and forms a major part of BBC Online ....
- Martha Stewart lambastes jail food