The sentence was mild compared to what some legal experts had predicted; Martha-watchers had thought one year in prison would be the penalty. But Martha Stewart was sentenced Friday to serve five months in prison, five months of house arrest and two years of probation, and given a $30,000 fine.
We’ve always thought the government’s case was flimsy and that Stewart’s infractions were never in the same league as the fraud and misdeeds of the deposed leaders of the Enrons, Tycos and Adelphias of the world, even as the accusations against her were uttered with the same heat and urgency.
We were glad to see she was still somewhat defiant at the sentencing pronouncement, in a thoroughly courteous and civil fashion, rather than “repentant,” as most legal experts had advised. She said it was a “shameful day” for the criminal justice system — and urged people who agreed to go buy her products.
The stock price of her company, Martha Stewart Living Omnimedia, jumped 37 percent Friday, suggesting that more than a few people agree with us that this prosecution was unwarranted from the get-go.
Just to review: Martha Stewart was never charged with insider trading for selling her stock in ImClone. In the course of being investigated, however, she told some untruths and perhaps acted arrogantly. She was charged with lying to investigators and the jury agreed. In short, the government didn’t have enough evidence to charge her with insider trading, but wanted to charge something, and send the message that the high-and-mighty are vulnerable.
There’s another irony. Recall that the price of ImClone stock was falling as Martha was unloading it. Why? Because the Food and Drug Administration denied the company’s application to approve a new colon cancer drug called Erbitux, mainly because of administrative concerns about the research study’s design. ImClone resubmitted an application in August 2003 and got final FDA approval in February 2004.
So the drug turned out to be safe and efficacious. But the FDA rejected it essentially for paperwork problems, sent the stock price tumbling and denied it to cancer patients for about two years.
And Stewart is going to jail?