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The Martha Stewart Scandal: A Tempest in a Cuisinart...
Martha Is Guilty!
SaveMartha Exclusive: Martha Stewart is guilty of the following charges:
--Aggravated assault on male egos by becoming one of only three female American self-made billionaires: Guilty
--Conspiracy to help millions to improve their lives: Guilty
--Insider trading of decorating secrets by reinventing the art of homemaking: Guilty
--Knowingly causing the pain and suffering of misogynists, wife beaters and men who don't like women who make more money than they do: Guilty
--Aiding and abetting comedians by being the subject of more Leno and Letterman one-liners in a single week than either Monica or OJ: Guilty
--Loitering in the media by becoming the #2 most searched-for news story on AOL, second only to 9/11: Guilty
Martha Stewart is guilty of many things, unfortunately none of the things she has been alleged in the media to have done have resulted in a single charge. It may be that there is no insider trading case at all. If there were a solid case, which was alleged in a WNBC story over two months ago, why have charges not been announced? Investigators were even said to be digging around HealthSouth, asking former CEO Scrushy if he had given Martha information on his company. We thought the investigation was about ImClone? Maybe it's really not about that after all. What we do know is that the legal fees are piling up, $1.2 million in the last quarter alone. That amount would bankrupt most people, and hurt many small companies. It is only Martha's success and loyal fan base that keeps her afloat though this tragedy. The main problem is the cloud that hangs over the company from the investigation to nowhere. Advertisers are waiting out the uncertainty, but will likely return if this can be resolved quickly. Let's make sure that they do.
What You can do to help Save Martha:
ImClone shares tank, company faces delisting
Company gets an "E" from the exchange
It sure is a good thing Martha sold all her ImClone shares. ImClone was battered Friday, down 12% as investors said no mas in the wake of a potential $60 million unpaid tax bills, and the firms failure to file its 2002 10-K form with the SEC. According to CBS Marketwatch, as a result of the failure to file its annual report on a timely basis, the company's ticker symbol has been changed by Nasdaq from "IMCL" to "IMCLE." It won't go back to IMCL until New York City-based ImClone files its report. In ImClones case, the E is not for Effort. Meanwhile, founder Sam Waksal is awaiting sentencing next month. Already facing 7-10 years in jail, additional charges of tax evasion could add another 7-15 years.
It's the merchandising, stupid!
Kmarts newly redesigned stores are proving to be a hit with consumers, and especially with style-conscious Martha Stewart fans. According to The Oakland Press, the improved merchandising has led to significantly higher average gross margin rates for Martha Stewart product lines. The new stores are decked in lime green, with new store fixtures and a reconfigured format with wider aisles. Save Kmart at Kmart Forever!
Martha Stewart will launch a new brand, "Petkeeping with Marc Morrone", with a website, PetKeeping.com, and a new TV show with our favorite pet expert. Marc is the guy with all the pets jumping around the set, with bunnies and birds and puppies and ferrets all seeming to get along on his very crowded table. This is the next phase of MSOs strategy to diversify and bring consumers new products and personalities under their own brand name.
Martha Stewart vs. Westport Redux
The battle royale between Martha Stewart and the residents of Westport, Connecticut is revived this month in the cover story of Westport Magazine by Timothy Dumas. Martha, Victim or Villain? (That's a rhetorical question.)
It's hard to tell from what little is on the website if this is going to be a good thing or a not so good thing. We'll just have to find a copy somehow. If any readers manage to see one, drop us a note and let us know. Here's a snippet:The Dirt on Martha--Westport Magazine
"Sure, she strikes fear in the hearts of her employees, is facing allegations of insider trading and has managed to alienate herself from the better part of Westport, but is she really all that bad?
Martha coyly tugs black sweatshirt over an exposed hip bone as she and trainer prepare to demonstrate squats. Trainer: Squeeze a lottery ticket in your buttocks. Martha, attractively flustered: This is what I have to listen to every morning!
ImClone Scandal takes a toll as MSO loses $7.5 million in last quarter. Martha's Statement:
"Our business results reflect considerable pressure associated with the continuing governmental investigations of my sale of non-Company stock. In the face of these pressures, the Company nonetheless remains focused on creating and producing the original how-to content and quality products that fuel our Company and define our brand, thus ensuring our core customer following. These recent ideas and products include the new digest-sized Everyday Food magazine and our recently launched Martha Stewart Signature furniture collection, both of which are experiencing early strong consumer response," said Martha Stewart, Chairman and Chief Executive Officer.
Martha Stewart won't predict end to legal trouble--Reuters
"During our last earnings teleconference this past March, I expressed that I was increasingly hopeful that my personal legal situation regarding the ongoing governmental investigation of my sale of noncompany stock would be resolved in the near future," she said. "Obviously that has not happened and I can make no predictions as to when it will."
It's time to end the uncertainty
Martha Stewart Omnimedia announced quarterly results today, and the results are not a good thing. Even though Martha Stewart has still not been charged with any crime, the continued uncertainty and negative publicity have taken a serious toll. Advertising and magazine sales are down, not due to anything Martha did but rather to the uncertainty created by the 475 day old dark cloud hanging over her and her company. We have heard various reports of movement in the case over the past few weeks, but US Attorney James Comeys Easter deadline passed without any news. Now even Martha is not predicting a speedy end. Something has changed. It is time for Mr. Comey to show his cards and end this uncertainty. Investors and employees are being hurt by an investigation that's taking longer to finish than one of those shaggy hook rugs.
Martha pays bigger fine than Citigroup
The largest fine the government has collected in the year of corporate scandals is $400 million form Citigroup. Martha Stewart has personally lost $400 million in net worth from the never-ending investigation and all ridiculous headlines, including the infamous NY Times story last year that Martha's company was searching for a new CEO. We have yet to see a follow-up. Martha's reputation has taken a serious beating, with journalists like Eric Burns of FOX News calling for a media jihad to dig up more dirt. That's the same FOX News that revealed secret troop locations in Iraq (we now call revealing state secrets on live TV "Pulling a Geraldo") and had to fire an employee for lifting pieces of Uday Husseins bad art collection. The price Martha has paid is much greater than all the monetary losses, both in reputation and opportunities lost. As New Yorkers like to say, Enough Already. Let's wrap this mess up and move on.
Dear Attorney Comey and John Ashcroft, It seems to me that Ms. Stewart is guilty of is being a good business woman and getting rid of stocks before she got hammered with a hugh loss. It's not like she profited a great deal, compared with what she already is worth.I think that you should look long and hard at all of Wall Street and you'll really see who the crooks are. David
Pigs at the trough
Feds put a leash on Citigroup's Sandy Weill, but has this doggie really learned his lesson?
In one of the biggest Wall Street fraud settlements yet, Citigroup was forced to pay a $400 million fine; that's the same amount Martha Stewart has personally lost due to coverage of the ImClone scandal! For a huge corporation like Citigroup, $400 million is like lunch in midtown. As part of his "punishment" the government told CEO Sandy Weill the only way he can speak to some of his own analysts is with a lawyer present. Sounds like telling Winona Ryder she can only go shoplifting if she lets a crew from Extra follow her around the store. Who forgot that it was Sandy Weill that OK'd the $1 million donation to the 92nd St. Y so that Jack Grubmans kids could get into nursery school, in exchange for which Jack told investors that AT&T was a good investment (it wasn't.) Rather than removing the perpetrator from he premises, the feds have allowed the sweet-toothed Sandy Weill to stay in the candy store. If the feds let Sandy Weill stay at Citigroup, then they should give Martha a medal of honor for taking the brunt of the punishment for the real corporate crooks. Somebody needs to go read Arianna Huffingtons book Pigs at the Trough: How Corporate Greed and Political Corruption Are Undermining America. Pass the barbecue sauce.
Deconstructing Byron Vol. 14
Time Takes Martha, By Andrew Ritchie
In chapter 13 of Martha Inc. Byron makes short work of Marthas forays into magazine publishing. Nowhere is there reference to how she came up with the title for the magazine, how she conceived of the idea and how it all came together. Instead he presents readers with a hasty and dismissive retelling of the magazines launch in 1990, proving that without Marthas cooperation his biography is little more than a dog-eared notebook in the vast library of Marthas life. (Read More)
Chris Byron Redefines "Venus Envy"
Author Chris Byron, who has made a cottage industry and small fortune out of Martha-bashing, picks three more CEOs to pick on today (Where The Boys Are--NY Post). . Carly Fiorina (HP), Anne Mulcahy (Xerox), and Pat Russo (Lucent) receive the nickname "The Tricky Chicks" and Byron says they are "three lousy CEOS who have received a pass for no other apparent reason than they are women." We can now confirm that Newt Gingrich is not the only one who is off his meds and out of therapy. Actually, Carly Fiorina has done an amazing job pulling off the largest tech merger ever with Compaq, and has achieved her cost cutting goals over a year ahead of schedule. And Mulcahy and Russo are no different than their male counterparts. Soon Byron will be whining that Martha Stewart got away from the feds because of her masterful pie-making skills. Some people are envious of anyone who knows more about window treatments, and proper etiquette, than they ever will.
More trouble at ImClone: $60 million Tax probe forces Sam Waksals brother to resign as CEO
Harlan Waksal, who as Sam Waksal's brother has somehow so far avoided the glare of the ImClone scandal, is now center-stage. A government investigation has forced Harlan to quit his post as CEO of ImClone. The company failed to pay taxes due on options exercised by his brother Sam and other officers, and may owe as much as $60 million. When Sam stepped down as CEO last year, Harlan stepped up from his post as COO. Now he's stepping down, and into the role of Chief Scientist.
This is actually very bad timing for ImClone to "forget" to pay their taxes: the US Treasury announced today that while we were all distracted by Imclone and SARS and Iraq, the country has run out of money, and is now in so much debt and the US could face a default. Next they will be calling in Ken Starr to investigate, to see how much more money we can spend on Martha's little stock sale...Forbes.com: CHRONOLOGY-The rise and fall of ImClone
Confessions of a Martha Stewart Fan
Why they hate her. by Rod Dreher, National Review
This is National Dump on Martha Stewart Week. Even though we are, at last word, still at war with Islamofascism, the Palestinians are still massacring Jews, and nuclear war is still a possibility between India and Pakistan, the American media find Martha Stewart's $228,000 sale of ImClone stock to be "What's Happening Now." The New York tabs are getting their second wind, ABC's This Week decided to lead with Marthagate, and the Leona Helmsley of the 21st Century has made the cover of the Newsweek out today.
Can I ask one question? Who, aside from the media, cares? I have no idea if Martha Stewart is guilty of insider trading or not, but even if she is, I can't work up much outrage about it. After all, it's not like she blew herself up on a Jerusalem bus, dropped plutonium sachets into upstate reservoirs, or abused a child. And though it may be legal, the $1 million a year ex-Time-Warner honcho Gerald Levin is receiving to be a "consultant" to the company whose stock he piledrived into the ground is a more outrageous testimony to the financial rewards of insiderdom than Martha's dodgy $228K.
Save Martha To Do List
Here's a list of major investigations still unresolved and largely under-reported:
Ken Lay, Enron
Jeff Skilling, Enron
AOL/Time Warner inside trading
Richard Scrushy, HealthSouth
Bernie Ebbers, Worldcom
Scott Sullivan, Worldcom
Holly Becker, Lehman
Frank Quatrone, CSFB
Dennis Kozlowski, Tyco
Wall St. Hedge Fund scams
NYSE Specialst profiteering
Yahoo board bashers short selling
Financial Journalists with conflicts of interest ( you know who you are)
|Holly Becker Part II
Several months ago we pondered why investigators and the media seem to be spending so much time on Martha Stewart, while CEOs of Enron, Wordcom, Wall Street analysts and traders have been left alone. Everyone was whining about Martha and a few paltry shares of ImClone, while their 401ks were being turned into 101ks by these captains of industry. That's like complaining about the lint on your carpet while the house is burning down.
Today we are making some progess, with the feds leaking information to the NY Times Gretchen Morgensen that Holly Becker and her husband may be charged with insider trading. Gretchen Morgensen seems to be one of the few financial reporters who actually understands how to distinguish between the wheat and the chaff.
We featured Holly months ago as a case that needed the kind of serious attention which the media was giving to Martha. The case is a classic: Holly Becker, a major Wall Street analyst, wrote influential research reports which everyone knew affected the price of stocks, from Amazon.com to AOL. The case against Holly alleges that she gave reports on Avon, eBay and Drugstore.com, before they were published, to her husband Michael Zimmerman. He then allegedly traded on this information, making millions in profits for his hedge fund.
What's amazing about this case is how simple it was to make great amounts of money with insider information. But we only hear about Martha's single stock sale while untold numbersof real insider trades go unnoticed. If Martha were a real player, she could have easily made millions herself, but she saved just $60 thousand on a minor investment. The question now is how many more Holly Beckers are out there? Unless they have their own magazine and line of egyptian cotton sheets, we may never know...
Kmart is Saved!
The beginning of Martha Stewart's amazing comeback is now in place. Kmart will emerge from bankruptcy on May 5th, debt-free and ready for action. One rumored possibility which we reported recently is a potential merger between Sears and Kmart, which would pave the way for a massive expansion of Martha Stewart Everyday into new prime locations. But even without a merger, Kmart is now ready to get back on track with a management team and board headed by major shareholder and Connecticut financier Edward Lampert, who also happens to own a big chunk of Sears. Many doubted, but few believed. Save Martha!
Home Decorating Faux-Pas of the Day
So you want to redecorate, and are thinking of trying out the new Arab-chic look that's all the rage in the houses of style...so on your way out of Iraq, you grab a few of Uday Husseins paintings, and tell customs that they are for your redecorating project, and one is even for your employer, Fox News. That's what a now fired Fox News technician Benjamin Johnson said, but somehow nobody believed him. Hint: when redecorating your home, it is quite rude to pillage and plunder somebody elses.
Is NBC Nuts?
To promote the NBC TV Movie Martha Inc, NBC sent a videotape, two nuts and a nutcracker to reviewers this week. It seems that Cybil Shepard, who plays Martha, wields the nutcracker as a symbol of who-knows-what in this nutty film based on the nuttier book by Chris Byron. The real nuts are the people at NBC who thought using a book that calls Martha more names than an adolescent potty-mouth would appeal to a female audience. Cybil instructs viewers how to do what most monkeys have no problem figuring out. According to the NY Post: "You know, nutcracking is not as difficult as it seems," says Shepherd in Stewart's calm but firm monotone. "Most people just don't know how to use the nutcracker. All you have to do is put it in, squeeze down and [crunching sound] crack! It's actually very simple." Next season, NBC will bring us a mini-series on the art of buttering toast.
Court Approves Kmart Reorganization Plan--AP
A federal court approved Kmart Corp.'s reorganization plan late Tuesday, paving the way for the giant retailer to emerge from bankruptcy in less than two weeks. U.S. Bankruptcy Judge Susan Pierson Sonderby signed the confirmation order after lengthy negotiations Monday and Tuesday cleared away scores of objections to the plan from creditors, competitors and others.
The company, based in Troy, Mich., now expects to emerge on May 5 from what has been the largest retail bankruptcy in U.S. history. "Let me say how jubilant I am, how jubilant everybody at Kmart is," Kmart CEO Julian Day said at the end of the four-day confirmation hearing.
The double-standard about which SaveMartha strives to educate our readers is becoming clearer as this case unfolds. Women are not allowed the same rights as men whether they are covered in a burka or an Armani suit. The game of keeping women in their place is simpler to play than most realize: People are easily fooled by what they see, and by what they read.
The Martha Stewart scandal is a clasic case of media manipulation and class warfare, the search for the perfect scapegoat. The pattern is now quite familiar: Headlines proclaiming an imminent breakthrough in the case, anonymous sources leaking confidential information, sources saying "We have the goods, we are hot in pursuit of Martha Stewart , we will find weapons of Class Destruction, blonde female billionaires cannot be allowed to roam free while millions struggle to find the perfect creme brulee..." So far, not one of those headlines has proven to be true. But when all the sources are anonymous, it's hard to say who was wrong and who was lying.
Headlines or Head-lies?
The headlines tell the whole story: "Martha Begs for Mercy, Martha's Mess, DOJ has enough evidence to arrest Stewart." If you read no more, you would be convinced that Martha was already found guilty. People believed the headlines. As a result, many sold her company's stock. But one year and 100 days later, no charges have even been brought against her. An Easter deadline has come and gone. But not one deadline or threat of arrest has yet been leaked about Ken Lay, or Bernie Ebbers, or Sandy Weill, or Richard Scrushy, or any of the other male CEOs who have been involved in massive scandals involving their own companies. Why not?
Wife Beaters Unite!
We do not claim to know whether Martha did anything wrong (but we really, really, really doubt it.) What we do know is the way Martha has been treated is very wrong. We do know that in America you are innocent until proven otherwise. We also know that even if all these charges are in fact true, they are the corporate equivalent of jaywalking. So the people who think that jaywalking should be treated the same as capital murder have all been fooled, mainly because these simple people enjoy it when a Martha Stewart, or the little girl in the playground in the nice dress, falls down and scrapes her knee. That's called misogyny. And that is wrong.
Why Douglas Fanueil is the Weakest Link...
It seems now the entire case hinges on Martha's broker Peter Bacanovic. According to the WNBC story, the feds were attempting to charge and then flip Peter Bacanovic to get him to testify against Martha. That's odd, because his assistant Douglas Faneuil is already cooperating with investigators. Why then do they need more evidence, when the headline says they already had enough to make an arrest? Maybe it's because Faneuil has already admitted he changed his story, and as a witness he may lack credibility. Maybe it's because of the unfortunate Daily News cover story about Faneuil under the headline 'The Kid Did It." Headlines lie.
...and why Peter Bacanovic "cooperating" makes the case even weaker
The problem is that if Martha's friend and broker Peter Bacanovic also cooperates, he will have to change his story as well. So now you have two witnesses who have told at least two (and possibly four) different versions of the same story. And any difference between the versions they tell in court or deposition is enough to prove more than a reasonable level of doubt. It's a case of he said-she said-he said. It's a case that falls flat like a bad souffle. It's a case of Martha Stewart being singled out not for what she did, but for who she is.
Fact: 7,730,200 shares of ImClone were traded on the same day that Martha Stewart sold 3,923 shares. Where is the investigation into who sold the other 99.9% of shares traded that day?
Flashback: Exclusive: DOJ Has Enough Evidence To Arrest Stewart
Official Says They Have 'Solid Criminal Case'
NEW YORK -- NewsChannel 4 has learned officials at the Justice Department now believe they have enough evidence to arrest and charge Martha Stewart. "We have a solid criminal case against Martha Stewart," one Justice Department official tells NewsChannel 4's Jonathan Dienst.
We're told that case includes evidence of insider trading and obstruction of justice. James Comey is the federal prosecutor in charge of the overall ImClone investigation.
"In terms of what we're looking at or who we're looking at ... I just can't comment," he said. But sources tell NewsChannel 4 that a final decision is still two months away. We're told that Comey will make up his mind by Easter whether or not to file charges against Stewart.
Read carefully, and you will see that it is always "unnamed souces" that provide the information that is the entire basis of these stories. It's very hard to call an unnamed source to verify if the information is true, or to ask them later if they were wrong...
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