News Article

Bad Stewart-ship?

Martha Stewart indicted for securities fraud. The better-living entrepreneur also faces obstruction of justice and conspiracy charges

Martha Stewart | WHEN IT RAINS Stewart arrives at the courthouse
Image credit: Martha Stewart: Jeff Christensen/REUTERS/NewsCom
WHEN IT RAINS Stewart arrives at the courthouse

Homemaking mogul Martha Stewart was indicted Wednesday on federal charges of securities fraud, conspiracy, and obstruction of justice, all stemming from a December 2001 stock trade. Stewart is accused of selling 4,000 shares of ImClone Systems stock based on an insider tip, and then lying about it to investigators, according to the nine-count indictment (posted on thesmokinggun.com). Stewart's lawyer, Robert Morvillo, reportedly has said that she denies wrongdoing, and would fight any charges in court. It's not yet clear how the indictment will affect Stewart's role as CEO of Martha Stewart Living Omnimedia, though the company said Tuesday that it was weighing its options.

Stewart ditched the ImClone stock just before the company announced that the FDA hadn't approved Erbitux, its new cancer drug. But she has said that her broker sold it based on a pre-existing agreement, not on any information from her friend Sam Waksal, ImClone's then-CEO. Waksal pleaded guilty to six insider-trading-related counts (he admitted to tipping off his daughter, though not Stewart), and faces sentencing next week, according to the Associated Press.

Shares of Stewart's company have plunged in the wake of the scandal, and the mogul told the New Yorker that she has personally lost $400 million since it began. Ironically, Erbitux was recently shown to be effective in a European study, according to the Associated Press.

Originally posted Jun 04, 2003
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