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Martha: I cheated no one
Lifestyle diva invokes Mandela as she, ex-broker prepare to appeal 5-month sentences.
July 20, 2004: 6:21 AM EDT
By Krysten Crawford, CNN/Money staff writer

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Stewart speaks outside the courthouse after her sentencing, saying she'll be back.

NEW YORK (CNN/Money) - As she faces possible jail time, Martha Stewart invoked the name of Nelson Mandela, South Africa's persecuted anti-apartheid hero, saying "many, many good people have gone to prison."

Her declaration came in a TV interview taped hours after the homemaking diva was sentenced to five months in prison and two years' probation Friday for lying to investigators about her sale of ImClone Systems stock in late 2001.

Federal Judge Miriam Goldman Cedarbaum also ordered Stewart to serve five months of home confinement after her release and fined the lifestyle expert $30,000.

The sentence was the minimum the judge could impose under federal sentencing guidelines. The fine, while relatively small given Stewart's wealth, was the maximum allowed under federal rules.

Hours later, Peter Bacanovic, Stewart's former broker at Merrill Lynch, also was sentenced to five months in prison and two years' probation; he was fined $4,000.

Neither Stewart nor Bacanovic will be headed to prison anytime soon, however. The judge issued a stay delaying their sentences until a court rules on their expected appeals, a process that could take nine months or longer.

Stewart, in a pre-recorded interview aired Friday night on ABC's 20/20, was asked by Barbara Walters how she would cope with prison life, including strip searches, if she loses her appeal.

"I could do it," Stewart said. "I'm a really good camper. I can sleep on the ground. ... There are many, many good people who have gone to prison ... look at Nelson Mandela."

Mandela was imprisoned for 27 years before emerging to lead the African National Congress, the liberation party he led to victory in South Africa's first all-race elections in 1994.

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Stewart, who has been steadfast in proclaiming her innocence, told Walters, "I didn't cheat the little people. ... We're all little people. I didn't cheat anybody out of anything."

Bacanovic was accused of ordering his assistant to tell Stewart that the CEO of ImClone Systems was selling all his company stock ahead of the Food and Drug Administration's rejection of the firm's new cancer drug, causing the stock price to plunge.

Stewart sold nearly 4,000 shares, and later argued she and Bacanovic had an agreement that he would sell her shares once the price dipped below $60 a share.

Stewart said she was sorely disappointed at her sentence, but felt Cedarbaum was fair.

She wrote Cedarbaum a four-page letter before her sentencing in which she asked the judge to "consider all the good that I have done, all the contributions I have made and all the intense suffering that has accompanied every single moment of the past two and a half years."

"I had hoped for, at the most, some confinement, community service," Stewart told Walters. "And instead I have five months of incarceration, and five months of house arrest that's monitored. ... But it could have been worse. ... Five months versus 10 months or 16 months ... That's a good thing."

Stewart said she's angry over the two-year-long legal drama that forced her to give up her self-made, multimedia empire. "Many, many people have suffered. People have lost jobs. I am very saddened and very, very sorry for that."

"There are certain people who I wish I'd never met. I have lost my job. I have lost my position in my company. I am no longer the CEO of Martha Stewart Omnimedia. ... That makes me angry and sad."

Stewart appeared outside the courthouse after she was sentenced and expressed regret, but she also pledged, "I'll be back."

In her first live interview, Stewart will appear on Larry King Live Monday.

Stewart's attorneys have 10 days to file their motion to overturn her conviction last March on obstructing justice, conspiracy and making false statements during an insider trading investigation into her sale of $228,000 worth of ImClone Systems (IMCL: Research, Estimates) stock in December 2001.

During the sentencing Robert Morvillo, Stewart's lead trial attorney, asked that if Stewart eventually does go to prison, she be sent to a federal facility in Danbury, Conn. Judge Cedarbaum said she would refer the matter to the Federal Bureau of Prisons.

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The Stewart case is one of a number of criminal indictments that prosecutors have brought against corporate executives in recent years.

While comparatively small in terms of the dollars at stake and the gravity of the crime, Stewart's obstruction of justice case has been a powerful public relations vehicle for government officials to send the broad message that corporate malfeasance will not be tolerated.

From the start, Stewart's supporters have argued that prosecutors unfairly singled Stewart out because of her power and high public profile.

Some legal experts countered that Stewart has only herself to blame for trying to cover up her ImClone stock sale.

"Her greatest wounds have been self-inflicted," said Marvin Pickholz, who represented Douglas Faneuil, the former assistant to Stewart's broker and the government's star witness at trial.

'Shameful day'

Throughout the two-and-a-half-year ordeal, Stewart has been defiant and her lawyers have been criticized for pursuing red herrings in an effort to clear her name. Wearing a dark pant suit, she arrived at the courthouse early Friday accompanied by her daughter and son-in-law.

Before her sentencing, Stewart read Cedarbaum a statement saying, "I seek the opportunity to repair the damage wrought by the situation, to get on with what I have always thought was a good, worthwhile, and exemplary life.

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Martha Stewart comments on her sentencing, encourages supporters to continue buying her products, and promises to be back.

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"My hopes that my life will not be completely destroyed lie entirely in your competent and experienced and merciful hands. Thank you and peace be with you."

Soon after her 30-minute hearing ended, however, Stewart was back on the offensive. Appearing before television cameras outside the courthouse, Martha called it a "shameful day."

"What was a small personal matter became, over the last two years, an almost-fatal circus of unprecedented proportion," she said.

"I have been choked and almost suffocated to death," she said, adding she's "not afraid whatsoever" of what's to come.

"I'll be back," she declared. Standing next to her was Walter Dellinger, the former acting solicitor general in the Clinton Administration. Dellinger, considered a top-notch appellate lawyer, will now take over Stewart's defense.

Stewart also urged people to show their support by subscribing to her magazine, buying her products and telling advertisers to return. (For Stewart's full statement, click here).

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Martha supporters outside the courthouse Friday.

At Martha Stewart Living Omnimedia headquarters in midtown Manhattan, employees -- who said they were told not to speak to reporters -- told CNN they had a "surreal feeling" when they heard the sentence.

Since Stewart's indictment two years ago, the health of her company has deteriorated. Some 200 employees have lost their jobs as advertisers have fled the flagship magazine and paid circulation has dropped.

But investors cheered Friday thanks to her relatively light sentence, and shares of Martha Stewart Living (MSO: down $0.87 to $10.94, Research, Estimates) soared 36.7 percent. (For more on the stock and the outlook for the company, click here).

Jail time seemed certain

In response to the dual sentences, legal experts said Friday that they were not surprised by either their lengths or the fact that both Stewart and Bacanovic received similar punishments

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U.S. v Stewart, Bacanovic (PDF)

Experts described Cedarbaum as a level-headed judge not known to dole out harsh sentences.

Also weighing in their favor is the fact that this is their first real brush with the law. "I am sure there are lots of good things that people are saying about both of them," added Michael Proctor, a former federal public defender. "These are two first-time offenders, and there's very little chance of either of them being a repeat offender."

As for Stewart, "the judge probably felt that, given the loss of status and the impact on her business, that this punishment was fair and just," said Stanley Twardy Jr., a former Connecticut U.S. attorney.

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Legal experts said that, although the post-trial turmoil involving a juror and the government witness makes for a stronger appeal, Stewart's chances of convincing a court to overturn her conviction are slim. Appeals courts are typically reluctant to set aside jury verdicts.

Proctor estimated it could take nine months to two years before a higher court rules on Stewart's appeal.

He called Cedarbaum's decision to let her stay out of jail pending the appeal's outcome "a very big victory" for the defense, because it avoided the prospect of Stewart serving her time before an appeals court had a chance to rule.

"Without the stay, her appeal would have been meaningless," said Proctor, now a partner with Caldwell, Leslie, Newcombe & Pettit in Los Angeles.

If Stewart's appeal fails, the Federal Bureau of Prisons will assign her to a prison. For her home detention, Stewart will be confined to her sprawling Bedford, N.Y., estate.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.