The "Cover Up," Part 6: More Lies From Martha?
Reports on the antitrust suit.
Dec. 12 2003 10:58 AM

VIEW ALL ENTRIES

Covering up old wallpaper was never so problematic
Covering up old wallpaper was never so problematic

On Feb. 14, Valentine's Day, Merrill Lynch handed over a batch of documents to the SEC, including the allegedly altered worksheet. Three weeks later, on Mar. 7, Douglas Faneuil was again interviewed by SEC attorneys, and, again, he allegedly didn't "truthfully reveal all he knew." Six months later, when Faneuil changed his story, perhaps in exchange for a lesser charge (a misdemeanor, despite having allegedly lied and/or withheld information twice), he would say that he was unaware of any $60 agreement (he reportedly didn't say such an agreement didn't exist—just that he was unaware of it; because he was reportedly on vacation when Bacanovic and Stewart arrived at the agreement, it is not clear why his being unaware of it would reduce the likelihood that it existed). Faneuil would also say that, sometime in January, Bacanovic had encouraged him to "refrain from disclosing" that Stewart had been informed about the Waksal sales. Third, he would say that, in exchange for keeping his mouth shut, Bacanovic had offered to arrange an extra week of vacation for him and to pay for his plane ticket. (In Faneuil's indictment, it is not alleged that he actually received these bribes; it is instead alleged that Bacanovic "continued to pay" Faneuil an incentive bonus based on Bacanovic's commissions, the same way Bacanovic had always paid him; it is not explained why Bacanovic's continuing to pay him the way he always had would make this hush money.)

On April 10, 2002, Martha Stewart had her second, and final, interview with the SEC, FBI, and U.S. attorney, this time by telephone. As in the first interview, Stewart was not placed under oath, and no formal record or transcript was made. In this interview, Stewart allegedly made the following false statements (Count 4: "False Statements By Martha Stewart"):

Advertisement

  1. She did not recall whether she and Bacanovic discussed Sam Waksal on Dec. 27, nor did she recall being told (by Bacanovic, according to the FBI agent's notes) that any of the Waksals were selling stock.
  2. Sometime in November or December, she and Bacanovic decided that she would sell if ImClone went to $60.
  3. On Dec. 27, at approximately 1:30, she spoke to Bacanovic who told her that ImClone was trading below $60 and recommended she sell.

The first statement is, again, of the "do not recall" species (and it would have been really hard for Stewart to recall discussing Waksal or the Waksal sales with Bacanovic on Dec. 27, seeing as how she apparently didn't speak to him). In Stewart's motion to dismiss, in fact, Stewart's attorneys argued that this specification should be stricken from the indictment on the grounds that, according to the government's theory (she spoke to Faneuil), it was literally true. Judge Miriam Cedarbaum denied the motion. The two other statements are consistent with the statements Stewart made in her first interview. They are also consistent with Bacanovic's version of events, with the exception of the assertion that she spoke directly to him on the 27th (which, again, in my mind, suggests that the two weren't conspiring—or, at least, had long since stopped).

Thus endeth the alleged private cover-up and obstruction of justice portion of the saga (Counts 7 and 8: "Obstruction of Justice By Peter Bacanovic" and "Obstruction of Justice By Martha Stewart"). From this layperson's perspective, the allegation that seems most problematic for Stewart is that she stated on three occasions (first verbally, in the U.S. attorney interviews, and later, through her first attorneys, in writing, to Congressmen Jim Greenwood and Peter Deutsch of the House Committee on Energy and Commerce) that she had given her sell order to Bacanovic on the 27th. It is possible, of course, that she simply made a mistake and then either didn't realize it or, having made it, decided (stubbornly and shortsightedly) to stick with it until the House committee challenged her attorneys about it that summer (at which point, apparently, they refused to confirm it—probably because, for the first time, they asked Stewart if she was certain she spoke to Bacanovic). In any case, it is a cliché in legal circles that, in white-collar cases, the cover-up is always worse than the crime. The irony here, of course, is that the alleged cover-up may be the only crime.

Henry Blodget is the founder, editor, and CEO of Business Insider. Follow him on Twitter.

TODAY IN SLATE

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

What Charles Barkley Gets Wrong About Corporal Punishment and Black Culture

Why Greenland’s “Dark Snow” Should Worry You

Three Talented Actresses in Three Terrible New Shows

Why Do Some People See the Virgin Mary in Grilled Cheese?

The science that explains the human need to find meaning in coincidences.

Jurisprudence

Happy Constitution Day!

Too bad it’s almost certainly unconstitutional.

Is It Worth Paying Full Price for the iPhone 6 to Keep Your Unlimited Data Plan? We Crunch the Numbers.

What to Do if You Literally Get a Bug in Your Ear

  News & Politics
Weigel
Sept. 16 2014 7:03 PM Kansas Secretary of State Loses Battle to Protect Senator From Tough Race
  Business
Moneybox
Sept. 16 2014 4:16 PM The iPhone 6 Marks a Fresh Chance for Wireless Carriers to Kill Your Unlimited Data
  Life
The Eye
Sept. 16 2014 12:20 PM These Outdoor Cat Shelters Have More Style Than the Average Home
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Slate Plus Video
Sept. 16 2014 2:06 PM A Farewell From Emily Bazelon The former senior editor talks about her very first Slate pitch and says goodbye to the magazine.
  Arts
Brow Beat
Sept. 16 2014 8:43 PM This 17-Minute Tribute to David Fincher Is the Perfect Preparation for Gone Girl
  Technology
Future Tense
Sept. 16 2014 6:40 PM This iPhone 6 Feature Will Change Weather Forecasting
  Health & Science
Medical Examiner
Sept. 16 2014 11:46 PM The Scariest Campfire Story More horrifying than bears, snakes, or hook-handed killers.
  Sports
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.