Not A Good Thing For Martha

The Martha Stewart jokes didn't seem as funny on Friday. You know, the ones about how black-and-white stripes are in this year and how a little lemon and seltzer can remove those pesky ink stains after you've been fingerprinted. As much as we revel in the failings of the famous, many folks figured she would never face prison. Such jests have the ring of tragedy now that she has been found guilty of obstructing justice and other crimes that all but guarantee she will end up behind bars.

Stewart was caught in a simple lie, the evidence so compelling and her attorney's 20-minute defense testimony so curt--Martha's too smart to do this--that after five weeks of testimony, a jury of eight women and four men needed less than three days to deliberate. And much of that time was spent weighing the case against her co-defendant and former Merrill Lynch stockbroker, Peter Bacanovic. He was found guilty as well on four of five counts and almost certainly will see prison time too.

U.S. Attorney David Kelley insisted that the government was not singling out Martha Stewart for prosecution to make an example of her in an era of spectacular corporate corruption. Take him at his word. But Stewart was no ordinary Jane who traded on inside information to make a quick buck. Her tabloid celebrity, her status as a walking, talking brand name, and her role as CEO of a publicly held corporation turned what would otherwise have been a simple case into a treacherous web of legal and corporate issues. And at almost every turn, she and her advisers made the wrong move, getting her deeper and deeper in trouble.

In the world of criminal defense, where the first three rules are shut up, shut up, shut up, she talked to federal investigators twice. In the world of corporate public relations, where appearance is everything, she disappeared for too long. At trial, the jury seemed to resent her celebrity cheering section--sorry, Rosie--and the fact that her attorney, Robert Morvillo, never let her testify. That might have been proper legal strategy, but the jury had spent all that time in court with her and had never been properly introduced. That's not very Martha.

At the heart of the case was a stock tip that, the government alleged, allowed Stewart, once worth $1 billion, to net a measly $45,000. Prosecutors never filed criminal insider-trading charges, though, and Stewart handed her tormentors a comparatively easy obstruction case when, as the jury decided last week, she lied to cover up why she had sold 3,928 shares of ImClone Systems on the eve of an adverse ruling for its cancer drug Erbitux. Stewart could probably have come clean immediately and received a slap on the wrist from the Securities and Exchange Commission (sec). But by sticking to a bogus story, she turned a civil case into a criminal one. "When we first indicted this case, we said it was about lies, all about lies," says Kelley. "And as you saw in the evidence, that's what it was. Lies to the FBI, lies to [the sec] about very important matters."