Surprise over jail time but not court's leniency

Crackdown: Baltimoreans say they never expected Martha Stewart to draw a jail term, but legal experts call sentence justified.

Stewart Case Reaction

July 17, 2004|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Given Martha Stewart's celebrity status, deep pockets and fancy lifestyle, paralegal Buffy Pyle was all but certain the home-decorating entrepreneur would never net jail time for lying about a stock sale.

"I thought she wouldn't get jail time because she was probably spending so much money on her defense," Pyle said as she walked in downtown Baltimore yesterday.

But Pyle, 32, and others who couldn't foresee Stewart ever having to trade her posh living quarters for a jail bunk after the scandal broke 19 months ago were surprised at yesterday's turn of events. Stewart was sentenced in federal court in Lower Manhattan to five months in prison and five months of house arrest. She was also ordered to pay a $30,000 fine.

FOR THE RECORD - An article Saturday on reaction to the Martha Stewart verdict misidentified Professor John Coffee. He is the Adolf A. Berle Professor of Law at the Columbia Law School and director of its Center on Corporate Governance.
The Sun regrets the error.

Stewart, 62, was convicted in March of lying, conspiracy and obstructing an investigation into her sale of 3,928 shares of ImClone Systems Inc., a biotechnology company run by longtime friend Samuel D. Waksal. Prosecutors said Stewart sold the stock because she was tipped that Waksal was trying to sell his shares. Waksal later pleaded guilty to insider trading and is serving a seven-year prison sentence in Pennsylvania.

The sentence for Stewart was the minimum possible under federal guidelines. She could have gotten up to 16 months in jail. U.S. District Judge Miriam Goldman Cedarbaum said Stewart wouldn't have to serve while her appeal is pending, meaning it could be months before she sets foot in a jail.

Stewart's former stockbroker, Peter E. Bacanovic, 42, also was sentenced yesterday by Cedarbaum to five months in prison and five months of home confinement, and a $4,000 fine.

Many people interviewed in the Baltimore area yesterday said that while they were surprised that Stewart received jail time, they nevertheless saw the sentence as lenient. And they believed that her status and ability to pay a top-notch defense team helped her avoid more time.

Standing outside the Bank of America building on Calvert Street with co-workers, Joan Olshinksy, 53, laughed at the $30,000 fine. "That's like $2 to us," she said.

Martin Bodenciano, a 50-year-old management analyst, snickered at Stewart being restricted to one of her posh homes in Bedford, N.Y., where she can throw dinner parties.

"That's real punishment, being confined to a mansion," he said.

At the Wabash Avenue Kmart - the chain widely identified with Stewart's line of housewares - Vanessa Palmer of Northwest Baltimore said Stewart's punishment was more like a child getting punished for disobeying her parents than a criminal paying the price for breaking the law.

"She got her fingers caught in the cookie jar and they're spanking her for it," Palmer said. "She isn't exempt from the law. She isn't above it, she isn't below it."

Kmart Holding Corp., which has exclusive rights to the Martha Stewart Everyday brand of housewares, reiterated its support of the domestic style maven yesterday.

"Martha Stewart Living Omnimedia is a valued brand partner of Kmart," the Troy, Mich.-based retailer said. "We look forward to continuing our mutually beneficial and successful relationship with MSLO."

But others felt Stewart was being made into an example by prosecutors bent on showing that they were getting tougher on white-collar crime after a spate of scandals that hurt investors.

"Just the fact of her being a woman, that's why they're making a big deal out of it," said Jeanine Kelly of Baltimore as she left the Wabash Avenue Kmart yesterday. "The men have been doing it for so long. It's the same game that's been going on. ... I don't think she should be hung out to dry."

Several legal experts thought that the sentence was justified.

"Whether you sentence Martha Stewart to five months, six months or seven months, the message to the public is the same," said John Coffee, a professor at New York University School of Law.

"Nobody is above the law, not even a celebrity, and you will serve the time if you lie to the government."

Still, Coffee surmised, the judge may have been lenient because Stewart has suffered humiliation as well as financial loss at her company.

Doug Colbert, a professor at University of Maryland School of Law, said that the sentence was fair but that Stewart definitely benefited from her riches.

"The crime was worthy of a jail sentence, but I think it was an appropriate sentence," Colbert said. "I think a person without resources, a lower-income person convicted of a similar crime, would have received a harsher punishment."

Byron Warnken, a University of Baltimore School of Law professor, said the sentencing is part of the broader movement to crack down on corporate crimes that scandalized Enron Corp., Adelphia Communications Corp., WorldCom Inc. and Tyco International Ltd.

"Once upon a time we really didn't prosecute corporations. ... Everyone is taking white-collar crime and corporate crime much more seriously," Warnken said.

"This case is symbolic of the fact that we don't care who you are, you're not going to get away with this stuff."

Sun staff writer Tamara El-Khoury contributed to this article.

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