A Federal Court on Friday found Martha Stewart guilty on charges of obstruction of justice.
After an investigation of Stewart’s dealings in insider trading, a federal jury convicted her of conspiracy, obstructing justice, and lying to federal investigators. Such charges could subject her to $250,000 fines for each charge, and a maximum prison sentence of 20 years.
Stewart was initially investigated of insider trading when in 2001 she allegedly sold $228,000 worth of stock in the drug company ImClone Systems after her broker, Peter Bacanovic, told her that the Food and Drug Administration would be rejecting an ImClone drug.
In that investigation, Stewart claimed that she had no knowledge of that action and that it had not affected her decision to sell the stock.
Stewart’s guilty verdict will undoubtedly cloud the future of her multi-million dollar company, Martha Stewart Living Omnimedia. Since its conception, the company has become a major producer of household accessories and has developed books, television and radio programs and the magazine “Martha Stewart Living” that have contributed to Stewart’s worldwide fan-base.
On her Web site, marthatalks.com, Stewart remains optimistic despite the situation.
“I believe in the fairness of the judicial system and remain confident that I will ultimately prevail,” she said online.
The site has been bombarded with hundreds of letters from dedicated Stewart fans that have expressed their continued support for the home and garden mogul.
Harley Ryan, an assistant professor of finance, said that the outcome of the trial will greatly affect how Stewart’s company attracts advertisers and subscribers.
“What it interesting about this is that she had this nice, wholesome image, and now her image isn’t so wholesome anymore,” Ryan said.
Ryan said that Stewart was tried for lying to federal investigators, but that the real focus is on her financial misdoings.
“This has to do with investments with a broker,” he said. “You can’t trade on insider information. She lied about it to prop up her company. This underscores how reputation in the image of a key person can judge the future of a company.”
Amber Vlasnik, director of the LSU Women’s Center, said that this development is not representative of women in corporate America.
“She is one prominent [woman in corporate America], but not the only prominent one,” Vlasnik said.
While Stewart’s legal woes have not deterred her supporters, they have generated an unsympathetic reaction among LSU students.
Maureen Baldauf, a kinesiology junior, is not convinced that Stewart will serve hard time for her crimes.
“Most people who are famous don’t really get in trouble for what they do,” Baldauf said. “She’ll still go to some posh, minimum security prison with cable TV.”
Kathleen Mocklin, an anthropology sophomore, agrees with the notion that Stewart’s sentence will be light.
“She’s going to weasel her way out of it,” Mocklin said. “Famous people can always buy someone off.”
Additional reporting by the Associated Press.