In her Tuesday column (“Martha Stewart does not deserve our derision,” 2/3), Helen Vera argues that the prosecution of Martha Stewart on charges stemming from Stewart’s alleged insider trading of ImClone stock is “more for the sake of putting Martha Stewart on trial than for the sake of the eternal preservation of truth and justice.” The facts, however, indicate that Stewart knowingly engaged in illegal activity and should be prosecuted to the full extent of the law.
On Dec. 27, 2001, Stewart directed her stockbroker to sell all of her shares of ImClone — an investment valued at $228,000. On the following day, ImClone announced that federal regulators had responded unfavorably to one of their most promising (and potentially profitable) new drugs. As soon as the news was released, the price of the stock plummeted. Stewart avoided the loss of forty to fifty thousand dollars by selling her shares a day early.
The story is as follows: early on the morning of Dec. 27, ImClone CEO Sam Waskal received early notice of the FDA’s unfavorable ruling on the new drug. In violation of federal laws against insider trading, Waksal sold his shares in the company and urged his family to do the same (Waksal confessed to this crime and is currently serving a seven year prison term). According to his testimony in Stewart’s trial, Douglas Faneuil — the assistant to Stewart’s broker — noticed that the Waksals were dumping their shares and called his boss, Peter Bacanovic, to tell him what was happening. Following the instructions of his boss, Faneuil then called Stewart and urged her to sell her ImClone shares — an action that Faneuil, Bacanovic and Stewart (a former broker herself) all knew was illegal. Shortly after talking with Faneuil, Stewart sold all her shares in ImClone.
Both the evidence and Faneuil’s damning testimony indicate that Martha Stewart knowingly engaged in insider trading. Why, then, has she not been charged with insider trading? Vera would have us believe that the “picky and convoluted” charges against Stewart “prove” that she is the victim of unjust prosecution. In reality, the U.S. Attorney could not meet the rigorous burden of proof that charges of insider trading required and decided to charge Stewart with crimes that were easier to prove (namely, conspiracy, obstruction of justice, and securities fraud stemming from the lies she told federal investigators about the ImClone transaction). Stewart’s trial is similar to that of Al Capone, who the feds were able to convict on tax evasion but not for the more obvious crimes of murder, racketeering and the illegal sale of alcohol.
Vera claims that Martha Stewart’s trial is a hypocritical attack on success, a manifestation of collective American envy for the privileged few who make it big. Many people, like Vera, celebrate the virtues of individual competition and personal success. Yet Martha Stewart broke the rules of fair competition. She used her privileged status to gain an illegal advantage over the other owners of ImClone’s stock. Indeed, her illegal use of insider information is equivalent to theft — she deliberately and unethically salvaged her own investment at the direct expense of other shareholders (who were forced to sell their shares at a price that had been driven down by Martha’s sale). Do not be deceived by the technical nature of her crime: just as we don’t celebrate a high school student who cheats on his SATs, neither should we celebrate a woman who cheats in the stock market.
Perhaps most disturbing, however, is Vera’s assertion that Martha Stewart has been ridiculed for “living out the dream we all aspire to.” Thankfully, not all people in America aspire to wealth and fame. As hard as it is to believe, many people sacrifice their personal well-being for the common good, whether they are government lawyers locking up crooks like Martha Stewart, employees at nonprofits, or volunteers in their local communities. Indeed, the continued willingness of the American people to selflessly help others is one of the most redeeming features of our society. Fortunately, the fact that the “rags to riches story” is a part of the American tradition does not obligate all Americans to worship conventional notions of fame and success.