Martha Stewart asks leniency, gets prison

NEW YORK – Despite a plaintive plea for lenience, Martha Stewart will serve five months in federal prison and five months of home confinement for lying to the government about her sale of stock in ImClone Systems Inc.

Stewart, 62, who did not testify during her trial, spoke in her defense before the sentencing yesterday. She asked for lenience and told Judge Miriam Goldman Cedarbaum that the trial and its accompanying publicity had all but killed her.

“I have been choked and almost suffocated to death during that time,” said Stewart, who built a fortune as head of Martha Stewart Living Omnimedia Inc., an empire of magazines, television shows and other businesses devoted to the domestic arts, only to see it shrink as the result of the ImClone investigation.

As she stood before the judge, Stewart said that despite her problems, she was more worried about her friends, family and employees at the company she founded. She resigned as chairman and chief executive officer as a result of the criminal charges but has continued to serve as an adviser to the company.

“Today is a shameful day, and it is shameful for me and my family and my company and for all its employees,” she said, sounding as if she were holding back tears. “I seek the opportunity to continue to serve my country and my community.”

She ended her speech with the words, “Peace to you.”

Cedarbaum, however, said federal sentencing guidelines clearly required some prison time in cases involving lying to the government.

In March, Stewart was convicted on four charges, including conspiracy and making false statements, resulting from the sale of almost 4,000 shares of ImClone stock in 2001. Her sale led to an investigation of whether she was acting on a tip from her Merrill Lynch broker, Peter Bacanovic, that ImClone founder Samuel D. Waksal was selling his shares in anticipation of bad news about its cancer drug. Bacanovic also was Waksal’s broker and Stewart’s friend.

The U.S. Attorney’s office was never able to prove that Stewart had acted on such a tip, but it charged her and Bacanovic with lying about the circumstances of the sale to avoid an insider trading accusation and to protect the stock of her own company. The value of Martha Stewart Living is directly linked to the reputation of its namesake. Friday, shares in her company rose 37 percent, or $3.17, to $11.81.

Cedarbaum said she had given Stewart a minimum sentence because she had no prior record and because her family, friends and supporters had sent more than 1,500 letters arguing for leniency. She also acknowledged that Stewart had suffered.

But Cedarbaum said she could not overlook the gravity of the crime.

“Lying to government agencies during the course of an investigation is a serious matter, regardless of the outcome of the investigation,” Cedarbaum said.

Stewart will not serve her sentence until her appeal is complete, which could take several years.

Cedarbaum said she would encourage the federal Bureau of Prisons to grant Stewart’s request to serve time at a minimum-security prison in Danbury, Conn., where hotel queen Leona Helmsley also stayed after being convicted of tax evasion.

The judge said Stewart could serve her home detention at only one of her several houses. Stewart chose her home in Bedford, N.Y. She will have to check in regularly with a probation officer and may leave the house for only 48 hours a week to work, shop, go to the doctor or to do other court-approved activities.

In a separate hearing, Bacanovic, a co-defendant in Stewart’s trial, also received five months of prison time and five months of home confinement.

Asked if she was surprised at the sentence, Stewart said, “No, not at all,” before leaving the courtroom with a coterie of lawyers and friends. Hundreds of reporters, photographers and cameramen awaited her on the federal courthouse steps, where she spoke briefly:

“I am not afraid whatsoever. I’m just very, very sorry that it has come to this, that a small personal matter has been able to be blown out of all proportion.”

In recent weeks, Stewart has been acting as if she expected prison time. After keeping a low profile before and during the trial, she returned to the social circuit, attending parties in the Hamptons, N.Y., where she has a home, and lunching at the Four Seasons. But she also sold $4.4 million of her company stock and a $7 million Penthouse in Manhattan’s West Village.

Her lawyer, Robert Morvillo, said he was disappointed at the sentence.

“I do not think she should be going to prison,” he said. “The punishment should fit the crime.”

He had asked Cedarbaum to sentence Stewart to community service so that she could help poor women who could look to her as a role model. His client, he said, inspired many women to success in business. He urged the judge to ignore “sensational coverage of her as cold, uncaring and shrill.”

“She is warm,” Morvillo said. “She is gracious. She’s generous. She’s caring. She’s attentive to the needs of others in an extraordinary way … That’s the real Martha Stewart.”

“Judge Cedarbaum is essentially in a box,” Hoeffner said. “There is a very narrow scope in terms of what the sentencing guidelines will permit. If she did not grant any sentence for jail time, I think she would have been severely criticized for treating Martha as a diva.”

The prison in Danbury where Stewart is likely to stay is “considered to be the country club of jails,” he added. “It’s probably the best place that a woman inmate could serve.

“That having been said,” he said. “Jail is jail, and Martha Stewart is going to be in for a shocking experience.”