Special Report

Tumbrel Rolling

Marie Antoinette probably got off easier than Martha Stewart.

By 3.7.04

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"Maybe it's a victory for the little guys who lose money in the market because of these kinds of transactions.." Clifford Odets, 1935? No, Chappell Hartridge, 2004.

By now the world knows it was Hartridge, the Martha Stewart trial juror, who stayed behind when the verdicts had been rendered to tell the world how it was that she had been brought down, convicted on four felony counts tangential to insider trading or stock fraud. Tangential but not the same. Ms. Stewart was not being tried for insider trading, only for being untruthful to federal investigators about her reasons for selling her stock in ImClone Systems in 2001.

She was friends with, had in fact dated, the chief of the ImClone pharmaceutical company who had gotten word of a government delay in approving a new drug and was busy dumping his and his family's shares before the delay became public. She and the ImClone chief, Sam Waksal, used the same broker, who was tried along with Ms Stewart, and also convicted.

Let us be clear. If you and the chief of General Motors have the same broker, and one day the G-M chief tells the broker to sell him out of G-M stock, and the broker does not bother to suggest to you that selling your G-M would be a good idea, there is another legal finding called "justifiable homicide." Stewart, Waksal, and the broker, Peter Bocanovic, traveled in the same social circles. Why do we suppose Stewart wound up owning 4,000 shares of ImClone in the first place?

AH, BUT THOSE circles. Not the same as traveled by a 47-year-old Medicare claims processor in the Bronx, Chappell Hartridge's pedigree, nor probably as traveled by any other member of the convicting jury. And there is the gravamen of the problem with the case. Since before the founding, it was decreed that a criminal defendant in America be tried by jurors of vicinage. Folks from the same approximate area and standing. For some reason, folks from the Martha Stewart neighborhoods in Connecticut and East Hampton didn't seem to be in the venire. Hartridge's mother is quoted as telling the New York Daily News her son "believes in equality for everybody, rich and poor. He's not an investor, but he's very outgoing and fair to all people."

In his solo recapitulation of the trial for reporters, Hartridge offered some other observations. That a parade of celebrated friends of Martha in and out of the courtroom were more an "insult" to the jury than a boon to Martha. And his wish that Martha had taken the stand, suggesting a certain arrogance in her silence and the brief, almost non-existent case put on by her defense counsel, Robert Morvillo. "I would have loved to have heard the other side of the story, but I didn't expect it," said Hartridge. As in all criminal trials, the judge had instructed the jury not to take into account whether the defendant had taken the stand.

On another part of the courthouse steps, the U. S. attorney David Kelly hailed the Stewart verdict as a warning. "Let this case send an important message: we will not tolerate any sort of corruption in an official proceeding," declared Kelly. "If you are John Q. Citizen or Martha Stewart or Peter Bocanovic, we are going to go after you."

But here is the problem with Kelly-Hartridge: the case has nothing -- nada -- to do with the "little guys who lose money in the market..." By selling ImClone at a fortuitous moment, Martha Stewart did not cost any other little guys anything, unlike the robber baron CEO's the feds and Hartridges would equate her with, who took tons of money out of their companies' coffers with the complicity of congenial board members and compliant accountants. The "little guys" are still getting hurt by the "kinds of transactions" that involve vast grants of options to captains of industry that do diminish the value of the little guy's holdings. But equating Martha Stewart with the guys who brought Enron, WorldCom, and the like to their knees is patently dishonest.

STEWART AND HER STOCKHOLDERS have been hurt by her insistence on her innocence and right to trial and the subsequent result. There is no assurance that copping a plea would have saved any of the millions lost. Remember that one of the government counts was fraud in that she publicly declared her innocence with a view to buoying the price of her company stock! The trial judge threw out that one.

For those who dislike the icy nature of Stewart, who believe she is not kind to servants, who prefer she'd stayed poor in Jersey rather than grown rich in Connecticut, consider the motives for fibbing to the feds, or fabricating a stop-loss agreement with the broker. Who needed protection most at the time? Stewart or the broker? Stewart or Sam Waksal? The unbidden recipient of the inside info, or the provider? My God, could she be one of the "little guys" after all?

There'll be more. Sentencing. Appeals. Civil lawsuits. Enough to provide country club memberships for battalions of attorneys.

Picture a foursome of them playing this weekend. At the end of the 9th, the score-keeper asks one: "Sam, what did you have on that hole?"

"A Morvillo," he says.

"A what?"

"Double bogey."

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About the Author

Reid Collins is a former CBS and CNN news correspondent.