United States v. Martha Stewart - Case Study Example

United s v. Martha Stewart The defendants in this case were Martha Stewart and Peter Bacanovic. They both faced indictment on criminal charges emanating from Martha Stewarts December 27, 2001, sale of 3,928 shares of stock in ImClone Systems (FindLaw, 2012). Prior to and in course of the case proceedings, Martha Stewart was the chairperson of the board of directors and chief executive officer of Martha Stewart Living Omnimedia. Peter Bacanovic on the other hand was licensed by NASD to sell securities as a securities broker with the title "Financial Advisor" at Merrill Lynch & Co, Inc. ImClone systems is a biotechnology company in the US whose then-chief executive officer, Samuel Waksal, was Stewarts friend and a client of Stewarts stockbroker, defendant Peter Bacanovic. Subject to the cases on December 25, 2001, ImClone and Martha Stewart learned of the food and drug administration rejection of ImClone application for approval of Erbitux and announced the rejection of the application on December 28, 2001 after ImClone Chairperson December 27, 2001, sale of 3,928 shares of stock (FindLaw, 2012). This move and announcement prompted the Securities and Exchange Commission and the United States Attorneys Office for the Southern District of New York to start investigations into trading treads of ImClone especially the sale of the stock before the announcement of application rejection on Erbitux to the public. The investigations led to the indictment of Martha Stewart and Peter Bacanovic. Timeline of Key Trial Events The Securities and Exchange Commission, the FBI, and the United States Attorneys Office for the Southern District of New York started investigations in January 2002. On February 4, 2002, Martha Stewart took an interview at the office of the United States Attorney and on April 10, 2002 by telephone. On the other hand, Peter Bacanovic took a telephone interview on January 7, 2002, and later on February 13, 2002, testified under oath before the Securities and Exchange Commission. Between January 2002 and April 2002, Martha Stewart willfully, unlawfully, and knowingly, obstructed proper administration of the law pending a legal proceeding by providing false and misleading information to the investigators of the Stewarts sale of ImClone stock case (FindLaw, 2012). In July 2002, the FBI sent samples for analysis to the Secret Service Laboratory (Heminway, 2007). On May 21, 2004, the federal government announced against a secret witness, Lawrence Stewart on giving false statements. On June 9, 2004, Lawrence got an indictment on these charges. In 2004, Martha Stewart got a conviction of making false statements on February 4, 2002 and April 10, 2002 interviews. In 2004, the jury also convicted Peter Bacanovic guilty of making one false statement during his January 7 interview. Details on Appeals, Basis, and Holdings After the 2004 conviction of Martha Stewart and Peter Bacanovic, subsequent appeal followed. In March 2005, Martha Stewart launched an appeal to have her sentence overturned because of the trial courts failure to take perjury charges against a government ink expert Larry Stewart into account. However, the three-judge panel upheld the 2004 sentence on Martha Stewart saying that Stewart’s argument is weak, as Stewart’s conviction do not relate on the charges to which Larry Stewart testified. In April 2005, Stewart launched an appeal arguing that she should face a retrial because of the US Supreme Court decision in US v. Booker, which found federal sentencing guidelines were advisory and no longer mandatory in US. In addition, she also sought a relaxation of her detention, including the removal of an electronic monitoring device from her ankle. However, the presiding judge, US District Judge Miriam Goldman denied her appeal to modify or change her sentence. The jurist rejected to use the US Supreme Court decision in US v. Booker case, saying she would have imposed the same sentence even if the federal guidelines were advisory. As such, the judge held the 2004 conviction of Stewart. The appeal would have led to an early release of Stewart from house arrest. In addition, Martha Stewart launched another appeal in 2006 arguing that the use of co-defendant Peter Bacanovic testimony statements violated the confrontation clause. However, the Appeal upheld the 2004 ruling claiming that Martha Stewart’s appeal grounds do not provide a basis to disturb the 2004 ruling (Jurist, 2012). Details on Any Plea Bargaining, the Final Charges, and Verdict Subject to investigations by the Securities and Exchange Commission, FBI, and the United States Attorneys Office for the Southern District of New York and the preceding long trial, the judges gave a final verdict on the United States v. Martha Stewart case. The verdict came in 2004 where Martha Stewart got a five months prison sentence and five months house arrest (Jurist, 2012). The false statements by Stewart were telling the Government investigators that she spoke to Peter Bacanovic on December 27 instructing him to sell her ImClone shares after he informed her that ImClone was trading below $ 60 per share and that during the same telephone call, she and Peter Bacanovic discussed the performance of the stock of Stewart Living Omnimedia. In addition, she made a false statement that she decided to sell her ImClone shares at that time because she did not want to be bothered during her vacation. She also lied that that she had only spoken with Peter Bacanovic once regarding ImClo, that Peter Bacanovic did not tell her that he had been questioned by the SEC, and that she was not aware of any record of a telephone message left by Peter Bacanovic on December 27. The was however acquitted on the statement that she and Peter Bacanovic had agreed, at a time when ImClone was trading at $ 74 per share that she would sell her shares when ImClone started trading at $ 60 per share. The ruling relied on these findings. References FindLaw, (2012). United States of America - v. -Martha Stewart and Peter Bacanovic. Fidlaw. Retrieved from http://news.findlaw.com/wp/docs/mstewart/usmspb10504sind.html Heminway, J. (2007). Martha Stewarts legal troubles. London: Carolina Academic Press. Jurist, (2012). Martha Stewart Case. Jurist. Retrieved from http://jurist.org/currentawareness/martha.php Read More