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   Martha indicted

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Topic: Martha indicted (Read 191 times)

Rhune
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Martha indicted
« on: Jun 4^th, 2003, 12:44pm »

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Martha indicted

Grand jury returns nine-count indictment; Stewart charged along with former broker.
June 4, 2003: 1:21 PM EDT

NEW YORK (CNN/Money) - Martha Stewart, who built a media and entertainment empire around her homemaking image, was indicted Wednesday on charges related to her sale of ImClone Systems stock.

Martha Stewart arrives at federal court in New York.
A federal grand jury in New York handed up a nine-count indictment that included charges of securities fraud and obstruction of justice and also named Stewart's former broker at Merrill Lynch, Peter Bacanovic.

Stewart, 61, entered federal court in Manhattan where she surrendered to federal authorities ahead of the formal accusations.

Stewart's troubles began a year ago this month when it was revealed she sold ImClone shares a day before a regulatory setback sent the stock tumbling. Investigators have been trying to determine if Stewart, who knew ImClone's CEO, had illegal inside information ahead of a sale that netted her about $229,000.

Wednesday's indictment appeared to sidestep that question, focusing instead on her statements and dealings with investigators over the past year.

Stewart was charged with two counts of making false statements, while one false statement charge was made against Bacanovic. Both of them face two counts of obstructing justice, while Bacanovic was charged with perjury and making and using false documents.

The lone charge of securities fraud was leveled against Stewart.

Stewart has denied the accusations against here and her lawyer has said she would plead innocent to any criminal charges.

Wednesday's indictment included counts of making false statements by both Stewart and Bacanovic. The two were also charged with obstruction of justice and Stewart was charged with securities fraud.

Stewart became one of the nation's wealthiest people by taking Martha Stewart Living Omnimedia Inc. public in October 1999 during the last gasp of the 1990s bull market. But the company whose identity is so tied to Stewart's became unprofitable this year and has lost millions in market value as costumers defected and legal fees climbed.

Shares of Martha Stewart Living Omnimedia (MSO: Research, Estimates) edged higher Wednesday but are off sharply since her problems arose.

Through Bacanovic, Stewart sold nearly 4,000 ImClone shares on Dec. 27, 2001. A day later ImClone, a New York-based biotechnology company, said the Food and Drug Administration rejected its application for Erbitux, sending ImClone shares tumbling.

Wednesday's indictment raised questions about whether Stewart will resign as CEO and chairman of Martha Stewart Living. It also could bring a plea deal between Stewart and prosecutors, thereby avoiding a trial that would draw tremendous publicity

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Rhune
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Re: Martha indicted
« Reply #1 on: Jun 4^th, 2003, 5:49pm »

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Stewart Pleads Innocent to Stock-Fraud Charges
Wed, Jun 4, 2003 05:42 PM PDT

LOS ANGELES (Zap2it.com) - Martha Stewart has pleaded innocent to a list of charges stemming from her sale of a biotechnology stock that went in the tank shortly after she unloaded her shares.

Stewart, 61, entered the not-guilty plea Wednesday (June 4) in a New York federal courtroom. The good-life doyenne and head of Martha Stewart Living Omnimedia was indicted earlier in the day on charges that include securities fraud, obstruction of justice and making false statements, the AP reports.

She was not charged with insider trading, which is typically much tougher to prove than the other charges.

The charges carry penalties of up to 30 years in prison and $2 million in fines. If Stewart is eventually convicted, it's unlikely she would serve the maximum sentence.

In addition to the criminal indictment, Stewart faces a civil suit by the Securities and Exchange Commission that seeks to bar her from leading a publicly traded company, including the one that bears her name.

The case stems from Stewart's December 2001 sale of 4,000 shares of stock in ImClone, a biotech firm that was developing a cancer-fighting drug. The day after Stewart sold the stock, the Food and Drug Administration rejected the drug, sending the stock into freefall.

Prosecutors allege that Stewart was tipped off in advance of the FDA ruling that the family of Dr. Sam Waksal, ImClone's founder and a friend of Stewart's, was preparing to sell its shares. She then used that knowledge to unload her stock before it plummeted, prosecutors say.

Since the investigation began, Stewart has claimed she had a standing order to sell her ImClone stock if its share price dropped below $60.

Stewart's broker, Peter Bacanovic, was charged with perjury and obstruction of justice in the case. He also pleaded innocent.

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Rhune
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Re: Martha indicted
« Reply #2 on: Jun 5^th, 2003, 1:23am »

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NEW YORK (CNN/Money) - Martha Stewart resigned Wednesday as chairman and CEO of the company she founded, just hours after a federal indictment accused her and her former stockbroker of lying to investigators who were probing her profitable sale of ImClone Systems stock.

Stewart will no longer run the media and homemaking empire Martha Stewart Living Omnimedia, according to a statement from the company that said the CEO and chairman jobs will be split between two individuals, effective immediately.

But Stewart, 61, will remain on the board and continue to serve as what the company called its "chief creative officer."

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