Diva Down

What the rest of us have to fear from the fall of Martha


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

"Maybe this is a victory for the little guys who lose money thanks to these kinds of transactions," Chappell Hartridge, a 47-year-old computer technician and jury spokesman, announced to the press, cocking his eyebrows and clasping his hands. "Maybe the conviction will give the little guy more confident feelings that I [sic] can invest in markets and get in on the up and up," Hartridge was speaking to reporters after finding Martha Stewart and Peter Bacanovic guilty—of everything. Lying, conspiracy, obstructing justice. And a hell of a lot more. If Judge Miriam Cedarbaum hadn't the foresight to throw out the securities fraud charge, the jury would've slammed that on her too.

If scoring one for the little guy was this jury's priority, the dispensers of justice should have thought a few steps ahead. Or just observed their surroundings. Because from the instant the government made Stewart its corporate fall gal—even without the help of insider trading laws—Martha Stewart Living Omnimedia (MSLO) shareholders have watched their fortunes evaporate. The assortment of charges the SEC stuck Stewart with, albeit flimsy and drifting as post-it notes, was enough to rattle investors and initiate a landslide of company layoffs. After the verdict was announced, MSLO stock dropped from $17 per share to $10.86 in a single afternoon. No doubt it's got a lot further to go. Martha Stewart isn't the one who's hurt the little guy. The government did that all by its lonesome.

I believe Hartridge's comments to the press last Friday were utterly honest. He spoke with assurance, with growing passion and confidence. I thank him for making it clear that the jury found Stewart and Bacanovic guilty of arrogance. "Judging from some of the things they did, I'd say they thought they were special, he said, "like they were better than everyone else." Arrogance is not a noble trait. But if we start convicting people for having crappy personalities, well—a prison complex that immense could only fit on the moon.

Chappell would have been wise to keep his mouth shut. But he couldn't. He was pissed. He had an ax to grind. While reporters stood on tables and chairs, their pens poised to record his every word, Hartridge rattled off a list of Martha Stewart's transgressions. Most had little to do with the actual charges.

Offense Number One: Stewart's stockbroker background. "She should have known better," Hartridge scolds. "The things she did once she felt the heat, not cooperating with the authorities—she should have known what was illegal." The obvious assumption is that she did know better, and didn't care. That she purposely thumbed her nose at the SEC in particular and the law in general, that she—in typical "big wig" fashion—ostentatiously ignored the rules everyone else had to follow. Perhaps Chappell's right to some degree. Martha could very well have rushed her SEC interviews, could easily have appeared huffy and irritable. But for the jurors to conclude beyond a shadow of a doubt that Stewart told boldfaced lies, they'd have to ignore attorney Robert Morvillo's persuasive argument that the government proceedings were shoddy and misleading.

Offense Number Two: The appearance of celebrity supporters, like Bill Cosby, Rosie O'Donnell, and Brian Dennehey. "What did she think, they're supposed to sway our opinion?" Chappell sneered when asked, admittedly insulted and outraged. He seemed to consider the celebrity appearances a deliberate scheme to impress, a cocky bribe to let Martha off easy. "Maybe [Stewart's conviction] will be a message to the big wigs," he says with assurance.

Offense Number Three: Stewart's defense calling one measly witness. "It seemed like they thought they could fool us by [making no effort] to defend her. Like her actions didn't need to be defended." It's true Robert Morvillo's decision was a gamble, one that came off as pompous and condescending. The jury's indignation is perfectly understandable. But to convict, even in part, on the grounds of a perceived slight? Bogus.

Offense Number Four: Stewart's allegedly writing off personal vacations as a business expense. "It's like she thinks she's better than everyone else, that she can do whatever she wants." Sure, if Martha's billing her company for what amounts to luxurious self-indulgence, that's slimy. But the accusation, as Judge Cedarbaum would say, "is neither here nor there"—it has nothing to do with this trial's charges. It's a red herring. Prosecution brought up the vacations as a distraction, as alleged proof of Martha's greedy overconfidence. In any other context, such a fault would be considered a character flaw, a charge we're all guilty of. Does it warrant jail-time? God help us.

Offense Number Five: Mariana Pasternak's "best belief" testimony. If a witness and good friend of the defendant first boldly quotes the accused as saying "Isn't it nice to have brokers who tell you those things," then claims not to remember much about the context, then claims that what she thought was a comment may have been "a string of words in her own mind," how could such a testimony raise anything but doubt? Hartridge, as the jury's voice, says otherwise. He calls Pasternak's belief one of the "strongest pieces of evidence against her."

Offense Number Six: Tampering with Ann Armstrong's message log. "Why would Martha delete Peter's message [that 'ImClone is selling downward'] unless she was trying to hide something?" Hartridge asks. He's right about it being an idiotic move. He's right that something alarmed Stewart enough to edit the note then abruptly change it back. But he's wrong to assume that something was a crime. Consider the culture we're living in, its litigious environment of wildfire lawsuits. So she caught a touch of the paranoids moments after being warned by her lawyer about SEC investigations of December 27 ImClone trades. Who wouldn't? Martha's not stupid. It's possible she went looking for material the government might find suspect, came across that message, realized how it could be interpreted, and panicked. Who in her position wouldn't put on her prosecutor goggles and study every potential piece of evidence through its slanted eyes? It was a rash act, yes. Suspicious even. But does it prove she's guilty, or even that she believes she is? Hardly. Most senseless of all is that the note, the message Stewart temporarily altered, was perfectly legal broker-to-client information. Thoroughly, undeniably, maddeningly legal. Once again, she's not condemned for actual wrong-doing. She's condemned for behaving like a criminal.

Offense Number Seven: Douglas Faneuil's tax-loss agreement story. How the jury members failed to question Faneuil's farfetched accusation—especially in light of his past lies and government deal—is incredible. Were they even listening? "I feel bad for Faneuil because he got pulled into this. From the start he felt like he had no choice," Chappell says, buying the accomplice witness's deposition without so much as puzzling over incentives. Faneuil's tax-loss testimony, as both defense teams repeatedly proved, made no sense. First, Peter Bacanovic knew damn well ImClone sold at a profit and would never have pretended it belonged on Stewart's 2001 tax-loss plan. Second, Martha's business manager Heidi Deluca could not have accidentally alerted Faneuil to the absurdity of his boss's first so-called cover-up in early January. Why not? Because up until February, when she received Merrill Lynch's 1099 form, Deluca believed the ImClone sale went toward the 2002 tax plan. It wasn't until February that Heidi called Faneuil in a fury, weeks after both Bacanovic and Faneuil told compliance officers about the $60 sale agreement. Reasonable doubt smashed this testimony to pieces. The jury looked the other way.

And finally, Offense Number Eight, the truly damning one, the one that's informed all the others: Martha Stewart's reputation. Way before we ever heard the name Doug Faneuil, this woman was widely known: as a crocheting, pottery-throwing, wallpaper stenciling, eyelash-batting control freak bitch. As smug and obsessive and self-absorbed, a tyrant to work for and a pain to work with. As someone who freely dubs her employees "idiots" and "little shits," who hangs up on secretaries and assistants who fall short of her bidding. For decades Stewart's been accused of wanting things her way or the highway, for being dramatic and absurd and roaring like a lion, for making bizarre threats like pulling out of Merrill Lynch if they don't get better hold music. For acting entitled, as if she doesn't have to follow the "little people" rules. And this is precisely what the justice-keepers have charged her with: in short, being a diva.

No one's gonna feel sorry for a jet-setter. No one's about to consider a socialite with five homes, expensed limo service, and her own celebrity television show a victim. Especially if she's a bitch. No one likes arrogance. It's a shitty quality, one that makes employees quit and couples break up and friendships buckle like old tuxedo shirts. That a jury confronted with such a mix of bad personality traits would put the worst possible interpretation on all evidence and behavior is understandable.

But a precedent has been established, or reaffirmed—that the government can walk in and destroy your life; that if you get nervous while dealing with federal investigators on a fishing trip (one in which no criminal charges are ever filed), you'll go to jail; that punishing arrogance is worth demolishing one of the most successful American businesses of the last decade. It's unlikely any actual little guys were hurt by Martha Stewart's 3928-share trade, which earned her $51,000 dollars and her broker a $450 commission. It's inevitable that many Americans will be punished by the government's ever-expanding definitions of criminality and its ravaging of capitalism's most successful products. If you think you're little now, you ain't seen nothing yet.