17 Corporate Crime Reporter 43(1), November 10, 2003

MARTHA STEWART: IT HURTS A LOT

"I would like to say that I have done nothing wrong," Martha Stewart told Barbara Walters on ABC News� 20/20 program last week. "I am innocent and I think that the judicial system and the upcoming trial will prove that."

The interview is her first since being indicted and the only interview Stewart will do before going to trial in January 2004 on charges of conspiracy, securities fraud, obstruction of justice, and making false statements.

If convicted of all charges, Stewart faces up to 30 years in prison.

Stewart addresses the comments that Sam Waksal made during an interview before he went to prison that prosecutors would be "happy campers" if they "could have Martha".

To that she says: "Well, to me that's a pretty unfortunate look at American justice, I don't think prosecutors should be happy campers. I don't think that the object of an investigation is to make one a happy camper."

Stewart tells Walters that "the last year and a half have been the most difficult part of my life" and that the most painful part is ". . .a delay in a good life. A hiatus in a really fine existence. At my age, there's no time for an unexpected, undesirable, unwanted hiatus. None. One that you can't really control. It's difficult. . .Well especially for a lady who has lots more to do."

Stewart also addressed her infamous appearance on the CBS Early Show in June of 2002 when the scandal first broke.

Stewart was chopping a cabbage for a salad when she was asked about the case and continued chopping vigorously.

Regarding the incident, she tells Walters "To tell you the truth I have not been able to chop a cabbage since. No more coleslaw for me."

And did she realize how it looked? "No, absolutely not. . .I'm task oriented. I was making a salad and it got out of hand."

On what she would have done differently, Stewart says: "I don't think I would have gone on vacation on December 27th."

Walters: "And return the phone call?"

Stewart: "And been a diligent business person and called my office."

On the way to her vacation, Stewart stopped at a Texas airport and called her office.

There was a message from Peter Bacanovic, her stockbroker, that read: "Peter Bacanovic thinks ImClone is going to start trading downward." The government claims that Stewart returned the call but spoke to Bacanovic's assistant, Douglas Faneuil, who told her that Sam Waksal was trying to sell off his shares.)

Waksal's attempted ImClone sell off set off alarms sparking several investigations into others who had sold that day, like Martha Stewart.

Over the next year, the Congress, the SEC, the FBI, and the U.S. Attorney's Office all started asking questions.

"It seemed like a tremendous amount of attention focused on one particular person when indeed on December 27th more than seven million shares of ImClone were traded," Stewart said. "I sold 3,900 shares."

Walters asks Stewart if she ever thought that she would be thought of as a corporate criminal, lumped in with such companies as Enron and World Com. "Absolutely not," Stewart said. "And I certainly don't belong in that category."

Was she scared to go to prison?

"Who wouldn't be scared? Of course I'm scared. The last place I would ever want to go is to prison. And I don't think I will be going to prison though."

Has she already been punished enough, Walters asks.

"I think the last year and a half has been the most difficult part of my life. It has been maligning, and, horrible. But I'll get through it. . .I would like to pick up where I left off, get on with my good life, and do good things and good works.

Is she is being made an example of because she is a celebrity and a powerful woman in a man's world?

"Well, I certainly have become a well-known and visible symbol of a successful woman," Stewart said. "That I am being persecuted, prosecuted for being such, I don't know if I could really say that. . .but I think that we are in a difficult time in corporate America where. . .the business is under a great scrutiny. . .and that something involving my personal life has become a focus of my corporate life is wrong and unfair and hurtful."

On how what happened might seem all the more difficult for someone who achieved the height of success:

Stewart: "It hurts a lot, Barbara. I'm ... I'm hurting."

Walters: "It's such a bungee jump. Down."

Stewart: "Well I am not a bungee jumper I did not jump."

On her relationship to ImClone CEO and now convict Sam Waksal: "Well, my daughter met him and dated him for about two years. He became a friend of the family's, and I would attend events with him but only on a friendship basis. . .he's never dated Martha. Martha has never dated Sam."

On investing in ImClone:: "Well, at the time, I was very interested in what that company was doing. And it was just one of many, many many stocks that I owned."

Walters: "Do you actively monitor and manage your own stocks?"

Stewart: "Haphazardly."

People have asked how Stewart could have worked all of those years on Wall Street and still gotten into the jam she is. Did she know the rules?

Stewart: "What I did was not against the rules, Barbara."

Walters: "So the fact that you worked in Wall Street, was nothing that would have prepared you for what happened today?"

Stewart: "Not at all."

Was it wise to put her name on everything, including her company?

Stewart: "One doesn't anticipate a disaster like this. . .But Martha Stewart has become a brand name... that Martha Stewart is also a person that's me, Barbara, Martha is the complication. But other people have done the same kind of thing � Walt Disney, Ralph Lauren, Calvin Klein, these are all people who had become well known, well respected brands."

On how Stewart on how she felt the day she took her company public in � and rang the opening bell at the New York Stock Exchange:

Stewart: "Quite euphoric. . .for all of us at Martha Stewart Living.

And for me in particular it was extraordinary because my dreams of building a company that had the respect of the business world, was very important.

Walters: "The stock went through the roof."

Stewart: "Yes, it did that first day."

Walters: "At that time, at the height, what were you worth?"

Stewart: "Well, over a billion dollars. . .I remember riding up Madison Avenue thinking, gosh, you know, I actually could buy pretty much anything in these shops. But I didn't. I didn't. I continued to concentrate on building a company.

Stewart says that the amount of money she saved by selling her ImClone stock "amounted to approximately $40,000, about .006 percent of my net worth."

How much money she has personally lost since the scandal broke?

Stewart: "Well most of my net worth is in company stock... And as a result of the decline in the price of the stock, my net worth has been cut at least in half."

Walters: "I hear the figure that you have lost $400 to $700 million."

Stewart: "Something like that. . .It's a very big amount indeed."

Why do people hate her?

Stewart: "Well, I like to think that each and every one of us have people that love us and people that hate us. I think that's just human nature."