< PREVIOUS ] [ 2004 Index ] [ Ed Quillen HOME ] [ SEARCH ] [ NEXT >
Do not count me among the fans of Martha Stewart. My idea of interior decorating consists of trying to find places to put computer cables where they're unlikely to be tripped over, and when Martha Quillen says that a room needs new paint or wallpaper, I look desperately for some work that will take me out of town for the duration.
But in the general scheme of things, the Martha Stewart phenomenon seemed harmless. If people want to pay $50 a gallon for paint of a certain hue, or spend too many hours contriving fancy food for a dinner party, how is that hurting anybody? It isn't as though she was promoting the more destructive aspects of conspicuous consumption, like tank-sized spewts or 5,000-square-foot mountain mansions that are occupied only three weeks a year.
However, she is now on trial. Stewart owned stock in ImClone, a pharmaceutical company founded by a friend of hers, Samuel Waksal. ImClone was developing a cancer drug, Erbitux, which was under review by the Food and Drug Administration.
If the FDA had approved Erbitux, then presumably ImClone
stock would go up in price. And without approval, ImClone
would go down. Some advance knowledge would allow for some
profitable insider trading
on the stock market.
In late December of 2001, Stewart sold 3,928 shares of ImClone. A day later, the adverse FDA ruling became public. By selling when she did, Stewart avoided a loss of $51,000. That was the basis for an investigation: Did she act on insider knowledge -- a tip from her friend Waksal -- when she sold the stock.
Or was it just a routine transaction? She has contended that she had a standing order with her broker, Peter Bacanovic of Merrill Lynch, to sell ImClone if the stock price dropped below $60, which it had before the FDA announcement.
In Stewart's financial league, $51,000 is chump change, and the costs of the investigation and trial must greatly exceed that. But she's not on trial for insider trading.
Instead, she is charged with obstructing the investigation into whether she engaged in insider trading. She is also charged with securities fraud -- by maintaining that she was innocent, she was propping up the stock price of the company she controls, Martha Stewart Living Omnimedia, Inc.
This has got to be one of the more preposterous prosecutions this side of the Lisl Auman case.
Consider the charge of securities fraud, which arose
because she claimed she was innocent. Traditionally, at
least in all the years before John Ashcroft became attorney
general of the United States, people charged with a crime
enjoyed the presumption of innocence,
the basis for
innocent until proven guilty.
So how can it be a crime to state that you believe that you're innocent?
Further, everyone who is convicted at every criminal
trial is someone who proclaimed that he was innocent -- or
at least, not guilty
-- at the start of the trial.
When the jury finds otherwise, the convicted person is not
put on trial for perjury for claiming to be innocent before
the trial -- even if the plea was a flat-out lie to the
court.
Our system allows people to proclaim that they're innocent -- except for Martha Stewart, it appears. She is charged with securities fraud if she claims that she is innocent.
As for the obstruction charge, at heart it's a claim that she lied to the government during an investigation.
Now, I don't want to make a case for lying. But it hardly seems fair that it's perfectly legal for government investigators to lie to you, and yet it's a crime if you lie to them.
The courts have held that the police, when questioning you, can tell any tall tales that suit them: that they've found non-existent evidence against you, that your companions have confessed, that there are witnesses who put you at the scene, etc.
All that is legally acceptable. But if you lie to them, you're obstructing justice, and you're committing a crime.
This points to the need for a revision of our laws to make them more fair. It should be just as illegal for the government, or its agents, to lie to citizens, as it is for citizens to lie to the government.
The benefits would be enormous. For one thing, the next time some candidate got elected by promising a smaller, less-intrusive government, and then supported the Patriot Act and the War on Drugs -- there could be a trial, and a conviction, and people more deserving than Martha Stewart would be behind bars.
< PREVIOUS ] [ 2004 Index ] [ Ed Quillen HOME ] [ SEARCH ] [ NEXT >