Martha Stewart's Insider Trading Scandal Essay

When Stewart was questioned by investigators, she denied that there was any fraud activity that she was engaged in. She claimed that when she called her office to check her messages, Bacanovic had left her a message advising her to sell her stock because the stock had feel below $60 a share and supposedly that was their prior agreement of doing so (Leite, 2012). Stewart claimed that she filed something called a stoploss order, which was meant to say that if the shares had fell below $60, she would pull out of the company. Yet, Stewarts justification that she gave to investigators about why she sold her shares and the stoploss order did not match the testimony that Bacanovics assistant (Donald Faneuil) gave (Leite, 2012). According to the assistant, who personally handled selling Stewarts shares, he claimed that Bacanovic wanted him to lie about a stoploss order and that he received money bribes for doing so. Now this information was taken with a grain of salt the second time around because initially he lied to investigators about how Stewart did indeed have a stoploss order. He stated to prosecutors that he told Stewart this when Waskal and his family were backing out of their shares and Waskal advised that she do the same. During questioning, Stewart claimed that the allegations of her knowing about Waskal selling his shares, were false accusations (United States of America vs Martha Stewart and Peter Bacanovic, 2004).

There was a jury trial that lasted six weeks and they found Stewart guilty on four accounts of obstructing justice and lying to investigators. Stewart received two counts of falsifying statements (The Associated Press, 2004). Based on statements from Bacanovics assistant and phone records, Stewart lied to investigators about having an established agreement with Bacanovic for the stoploss order and about her knowledge that Waskal and his family were pulling out of the company, too. It can be inferred that Stewart purposely and knowingly stated untruthful claims to investigators about her involvement in the scandal, when there were direct witnesses to the crime she engaged in. The next charge she faced was a one count of conspiracy (The Associated Press, 2004). Based on evidence from emails and phone records that investigators found, Stewart and Bacanovic intentionally and knowingly worked together to break the law and fed investigators false claims. Lastly, she was charged with one count of obstruction of justice (The Associated Press, 2004). For several months of the investigation, she purposely and knowingly lied and made false claims in order to deter the investigation. A judge sentenced Stewart to five months in a federal prison and two years of probation. In addition to her prison sentence and probation, she was fined $30,000. Stewart resigned from her board membership of the New York Stock Exchange and stepped down of CEO of her Martha Stewart Living Omnimedia, but the company issued a statement saying that she would remain as the creative director (Stewart sentenced to five months in