The SEC says Martha Stewart saved $45,673 by selling late on Dec. 27 rather than the Dec. 31. SEC attorney Wayne Carlin tells reporters it was "unfair" of Stewart to sell her remaining shares in ImClone so promptly (she had "unfairly" unloaded many more ImClone shares in October). But unfair is not illegal. The smart money had gotten out by Dec. 14, when ImClone was $70, and the smartest money was shorting 77 million shares by then.
It took the government a year to fabricate three new offenses, all of which amount to the same charge of giving a supposedly misleading explanation for a perfectly legal stock sale. This newly refabricated case is not about illegal lying at all: Martha Stewart has not been charged with perjury. Perjury is one of the fabled "nine counts" that is not hers, but her broker's.
In a more important sense, however, this case has always been about lying. There was congressional lying a year ago about Martha Stewart's alleged tip from Wacksal. And what little remains of that discarded case is now based entirely on the testimony of a proven liar, Douglas Faneuil. He says he was lying before (when he supported Stewart's recollection) but has converted to telling the truth now (when he supports the government's story). Yet this is a fellow who admits his past testimony has been for sale, and any gift Faneuil may have gotten from his boss was token change compared to being offered only a misdemeanor wrist slap and let off without even a dollar fine.
So what is Martha Stewart's crime? The New York Times, exemplifying its notoriously creative journalism, now editorializes that Stewart engaged in an "illegal stock trade" and " was tipped by insiders that the Food and Drug Administration was not going to approve" Erbitux. That is just more lying from the source that spread the same lie a year ago.
In reality, Stewart stands accused of saying she could not recall details of a two-minute phone conversation on Dec. 27, 2001, while the government claims to know precisely what she recalled. She also stands accused of sometimes confusing her broker with her broker's assistant. Her broker, in turn, is charged with using two different pens, quite possibly on the same day. And Martha Stewart herself stands accused of altering a computer record of a phone call, even though she immediately "directed her assistant to return the message to its original wording." Did the government ever really intend to ask a jury to send Martha Stewart to prison for such heinous "offenses against the United States"? Not likely.
Prosecutorial bullies are accustomed to trying such cases in the press and then intimidating their victims into "settling" (writing big checks) without bothersome due process. In this non-case, however, the government would be smarter to settle out of court by handing Martha Stewart a big check to compensate for a year of slanderous lies and leaks about her. If this sleazy mess ever goes to court, the architects of the fiasco will have to sneak out of court under umbrellas to avoid journalists' embarrassing questions.