Martha Stewart Faces Indictment 'In the near Future'; Her Sale of ImClone Stock at Issue

The Washington Times (Washington, DC), June 4, 2003 | Go to article overview

Martha Stewart Faces Indictment 'In the near Future'; Her Sale of ImClone Stock at Issue


Byline: Patrice Hill, THE WASHINGTON TIMES

Federal prosecutors will soon indict Martha Stewart, the style executive who created a home design and media empire from a catering business, on charges relating to her sale of ImClone Systems Inc. stock.

The U.S. Attorney's Office in New York intends to ask a grand jury to hand up an indictment "in the near future," Mrs. Stewart's company, Martha Stewart Living Omnimedia, said in a statement yesterday that sent the company's stock plummeting by 15 percent.

The statement prompted rumors that Mrs. Stewart will soon step down from the company that has made her name synonymous with style in millions of American households, but officials denied that yesterday. Mrs. Stewart resigned as a board member of the New York Stock Exchange in October.

"Martha remains chairman and CEO," Arthur Martinez, a company director, told reporters after a shareholders meeting in New York. "There were strong statements of support for Martha through this difficult time. She expressed her gratitude for that support."

Mrs. Stewart's attorney, Robert Morvillo, said she will maintain her innocence and fight the charges, if indicted. Mrs. Stewart, a top donor to the Democratic Party and devotee of liberal causes, has contended that the prosecution is politically motivated.

The Justice Department could pursue Mrs. Stewart on criminal charges involving insider trading, securities fraud and obstruction of justice, attorneys say. She also faces civil charges for the same violations by the Securities and Exchange Commission. Spokesmen for the SEC and U.S. attorney declined to comment.

At issue is Mrs. Stewart's sale of $228,000 of ImClone stock on Dec. 27, 2001, one day before the stock plunged on a company announcement that the government had rejected its application for the experimental cancer drug Erbitux.

Mrs. Stewart is a close friend of ImClone's founder, Sam Waksal, who last year pleaded guilty to charges he prompted members of his family to sell more than $10 million of stock before the Erbitux announcement. Waksal faces up to seven years in jail.

The federal indictment is expected to maintain that Mrs. Stewart got wind of the Erbitux announcement through a Merrill Lynch stockbroker who handled the Waksal stock sales, based on the testimony of the stockbroker's assistant.

Also at issue is whether Mrs. Stewart and her attorneys lied to congressional investigators by maintaining that she sold the stock under a previous agreement with her broker to sell if the stock dropped below $60. Mrs. Stewart's nearly 4,000 shares were sold at $58.

In another development, ImClone's stock soared this week as just-released studies showed that Erbitux may be effective, after all, in treating cancer. …

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Martha Stewart Faces Indictment 'In the near Future'; Her Sale of ImClone Stock at Issue
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