Corporate Scandals

Martha's Reign of Terror Over the Little Guy Is Over!

Media-mad juror champions The Common Man in post-trial palaver

|

These are Elizabeth Koch's notes on the Martha Stewart trial.

By 2 p.m., the end of lunch hour, cameramen flood the bottom of the courthouse and security lines the stairs. In the courtroom, the defense and family sit in choked silence, waiting for Judge Mirium Cedarbaum to return from chambers. When the clerk finally knocks—"All rise"—an hour has vanished.

Cedarbaum walks in swiftly, her face stiff and gray, and says without pause, "The jury has reached a verdict."

The jurors take their places, each and every one looking at their shoes, their faces cast in shadows. Cedarbaum reads off Martha's counts with rapid-fire force, "Count one: Guilty. Count three: Guilty. Count four: Guilty. Count eight: Guilty." Guilty on all counts. Stewart's daughter, Alexis, who sat directly behind her every day of the six week trial, drops her head in her hands and shakes. Her estranged husband, John Cuti, Martha's number three defense lawyer, does the same. But Martha—she hardly flinches.

Martha Stewart's convictions are as follows: conspiracy (specifically obstructing an agency proceeding, false statements, and perjury); false statements (two counts); and obstruction of justice. Peter Bacanovic is found guilty of conspiracy, false statement, perjury, and obstruction of justice—he's not charged with making and using false documents. I could not see his face, nor that of his parents. For a moment there is only silence, a thunderous sort of stillness. Cedarbaum thanks the jury and when they stand, reporters rush out. "I must have missed something," says Slate reporter Henry Blodget. I nod. Our blind spot will soon become embarrassingly evident.

When I reach the hallway, I hear someone yelling. Wailing, really. It is Peter Bacanovic's tiny, shrunken mother, jabbing her finger at the New York Post's gossipy opinion writer, Andrea Peyser. "You wanted this all along. He might look good in an orange jumpsuit, but he lost his career and his job and he had no motive." That should be grist for Andrea's mill for months to come.

In the press room, juror number eight, Chappell Hartridge, a computer technician from the Bronx, is kind enough to stick around and clarify their decision.

"Maybe this is a victory for the little guys who lose money thanks to these kinds of transactions. Maybe it's a message to the big wigs." Frankly—and stupidly—this kind of emotion surprises me. Yes, on day one the jury seemed to buy into prosecuting attorney Karen Seymour's Disney movie good vs. evil opening argument, but in the days that followed its members appeared genuinely conscientious and attentive. At this point, one thing's for certain—they took each witness's testimony, and every piece of evidence the prosecution put forth, at its surface value, without bothering to look a little deeper. By that I mean the statements of Douglas Faneuil, Ann Armstrong, and even the befuddled Mariana Pasternak.

In response to whether Faneuil's testimony was the defining factor, Chappell says, "We did not take Faneuil's testimony for gospel. I kept an open mind because he had an agreement with the government, but I didn't think he was slick on the stand. I felt bad for Doug [my italics] because he got pulled into this from the start and he felt like he had not choice [but to follow his boss's orders]." As for Mariana Pasternak, it came down to the misleading statement the judge allowed the jury to sleep on before cross. Chappell continues, "The fact that she said, 'Isn't it nice to have brokers who tell you those things?' That's pretty persuasive."

"But what about when she said she wasn't sure about that?" a reporter shouts. "She said it could have been a thought."

Chappell blinks at her for a minute. "Well, that wasn't the only thing. It was also other evidence."

"Like what?" we all shout in unison.

"Ann Armstrong's testimony was probably the strongest. There had to be a reason Martha was trying to delete that message [that ImClone was selling downward]. I mean, if the message had said, 'the stock is @60, now it's time to sell as per our agreement,' then that would have been okay." I guess so. These guys are rather, uh, literal.

It was easiest to convict Martha, Chappell said, especially on the false statement charge. "We convicted her by early on in the second day of deliberations."

"Did anyone think she was innocent?" By evening, he will tell MSNBC's Dan Abrams that there was no dissent among the jurors.

Pause. "No comment," Chappell says, looking the opposite direction from the questioner.

Someone asks if Martha's background as a broker was a factor. "Absolutely," Chappell nods. "She was a stockbroker so she should have known the rules. Some of those things she did once she felt the heat show that she should have known better. Especially the omissions."

"How'd you think Morvillo did defending her?"

"He did the best he could with what he had to work with. It bothered me that they only put one witness on the stand. It's like they were saying, 'I don't need to defend myself. I don't need to persuade the jury. We know we'll get off.' It was kind of."

"Arrogant?" Andrea Peyser asks hopefully.

"Yeah," he says. "Judging by some of the things they did, I'd say they thought they were special. I wasn't comfortable with the tone of [Peter Bacanovic's taped SEC testimony]. He sounded kind of."

"Arrogant?" Andrea asks, nodding emphatically. "What about the fact that Martha charges her vacations to the company? Did that play into your decision?" What, Andrea, do you want him to admit the conviction was motivated less by evidence than character assassination and vengeance?

"Yeah. She takes vacations and doesn't pay for them—it's like she thinks she's better than everyone else. But, I mean…the vacations didn't factor into our decision."

"What are you thinking of in terms of insider trading?" someone asks.

"Well, as I understood it we weren't supposed to consider insider trading. But as far as not talking to the authorities and not cooperating, yes, she sounded like she thought she was better than everyone else."

In spite of all that, Chappell says he believes the conviction a tragedy of sorts. "We took our job very seriously. I don't care if it's Martha Stewart or John Doe, these are two people's lives we're dealing with. The decision will affect a lot of people—[Martha Stewart Living Omnimedia] employees, stockholders… But maybe this conviction will give the little guy more confident feelings that he can invest in the market and get in on the up and up."

"I—we all—came to this decision with an open mind," he promises.

Sentencing will take place on Thursday, June 17, 2004. Both defendants must report to a probation officer within a week of proceedings.