New York Times June 12, 2003
Fight It, Martha
By WILLIAM SAFIRE
W ASHINGTON
I hope Martha Stewart beats this bum rap.
Not for the reason some feminists are advancing that she is being
brought down because she is a strong woman succeeding in a man's
business world, while so many male corporate predators go scot-free.
The seven-year jail sentence given to her friend Samuel Waksal, former
chief executive of ImClone, belies that.
Nor do I join the millions clucking sympathetically at her Web site
who believe she was blameless in trying to call her friend Samuel. She
may well have been improperly seeking news of impending events that
might cause the value of her investment in his company to drop.
I hope she beats the rap because I don't like the idea of a prosecutor
eager to deter others from doing wrong twisting the law to make an
example out of a celebrity. In doing justice, righteous ends don't
justify unscrupulous means.
The U.S. attorney has not accused her of the crime of insider trading.
After a yearlong investigation, that central matter is nowhere in his
indictment.
Why not? Because he decided that would be too difficult a charge to
persuade a jury to believe. (In the Hillary Clinton Travelgate case,
the independent counsel Robert Ray concluded that her sworn testimony
was "factually false," but he declined to prosecute because he didn't
think a jury would convict the first lady of perjury. Prosecutors hate
to spoil their records.)
Rather than drop the weak case and his chance at national fame, the
prosecutor James Comey handed off the insider-trading charge to the
S.E.C., which seeks civil damages, not criminal penalties, and must
meet a much lower standard of proof.
Instead of focusing on what the case is about, Comey told a rapt press
conference: "This case is about lying" to investigators and to
investors.
"Lying" is a harsh word; I used it myself about Mrs. Clinton's
congenital falsification. But "perjury" is a much harsher word,
meaning "lying under oath." Martha Stewart has not been accused of
perjury.
Why not? Because when she voluntarily answered the questions of
investigators, she was not under oath and could never have perjured
herself. To make a case, the prosecution stooped to the use of Section
1001 of the criminal code, which makes it a crime to knowingly and
materially mislead federal investigators. Prosecutors use it to beef
up weak indictments, and judges often dismiss that count first.
The most troubling and radical charge of all came, almost as an
afterthought, at the end of a 41-page indictment. It twists a
protestation of innocence into "lying to investors."
Last summer, a week after Waksal had been arrested for fraud, Stewart
who had been subject to a series of gleeful leaks about her impending
doom dared to tell an investors' conference that her sale of stock was
perfectly legal and that she was cooperating with investigators. She
also proclaimed her innocence in some detail to The Wall Street
Journal.
That, charges the government, was a crime. Although common sense
suggests that mounting a public defense was the natural thing to do
for a person being anonymously smeared, the prosecutor reads a
sinister motive into her speaking out: she was not trying to salvage
her personal reputation, but was instead pumping up the price of the
stock of the company that bears her name.
Why such a stretch? The purpose of attributing a nefarious intent to
the accused executive's public self-defense is to create victims for a
jury. When investors saw her display a certain gutsiness in the face
of adversity, her stock rose $2; the prosecution calls that securities
fraud, suckering investors, and worthy of jail time.
Hold on; is Martha Stewart a person or a walking corporation? Even a
world-famous "domestic diva" has a right to speak out in personal
defense of her reputation. Even a wealthy woman who created a company
that employs thousands and generates taxable profits is entitled to
act like a jerk on occasion without risking a charge of being a
criminal conspirator.
The message this selective prosecution is sending executives is not
"don't lie"; rather, it is: Don't explain your side to investors or
the press lest it land you in court for manipulating your stock. Wrong
message. Fight it, Martha.
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