Tuesday, March 9, 2004

Stewart says 'thanks,' as board meets


Probation huddle first step

By Erin McClam
The Associated Press

NEW YORK - Martha Stewart met for about an hour Monday with federal probation officials who will recommend the length of her prison sentence for lying about a stock sale, then emerged from the courthouse to thank her supporters.

Stock in Stewart's namesake empire slid another 8 percent and the board of Martha Stewart Living Omnimedia gathered in Manhattan to discuss life without the domestic entrepreneur.

The probation meeting is the first step toward sentencing. While lawyers did not comment on what took place at the meeting, newly convicted defendants typically give basic information about themselves.

Stewart, who wore a black overcoat and carried a Martha Stewart Living umbrella in the heavy rain, was convicted Friday along with stockbroker Peter Bacanovic. Both are expected to get 10 to 16 months in prison when they are sentenced on June 17.

"I want to thank my readers, my viewers and the Internet users," Stewart said as she stepped into a sport utility vehicle outside. "I just want to thank everyone for their support."

Stewart was convicted Friday of conspiracy, making false statements and obstruction of justice in connection with her sale of nearly 4,000 shares of ImClone Systems stock shortly before the biotechnology company announced bad news and the shares plummeted.

The remarks were her second since being convicted. As Stewart left the courthouse Friday after the verdict, the Daily News asked her to comment on the fairness of the trial. "The unfairness of the trial, that's the right comment," she replied.

The board of directors of Martha Stewart Living met Monday to discuss her fate, according to a source close to the company who spoke on condition of anonymity. Company officials declined to comment, and it was unclear late Monday whether the board took any action.

Stewart stepped down as chief executive and chairman of the board last June after being indicted but remains as chief creative officer and a member of the board.

With her conviction, the government will likely press to have Stewart removed from the board, but the big question is how involved in the company she will be. Her name, now tainted by the conviction, is stamped on products from TV shows to magazines and merchandise.

Stewart did step down from the board of cosmetics giant Revlon Inc. on Monday, Revlon spokeswoman Catherine Fisher confirmed. She would not comment further. Stewart had served on Revlon's board since 1996.

Stewart's syndicated television show, "Martha Stewart Living," was taken off the air Monday on Viacom-owned CBS and UPN stations.

There was no immediate word about the show's future from King World, the show's syndicator, but the Viacom-owned stations in major media markets were considered its most important customers, said Bill Carroll, an expert on syndication for Katz Television. A spokesman for King World, Arthur Sandow, did not immediately return a call for comment.

Shares of Stewart's namesake company, Martha Stewart Living Omnimedia Inc., fell 96 cents to close at $9.90 Monday on the New York Stock Exchange adding to a nearly 23 percent tumble on Friday after the verdicts.

The stock had traded at about $19 a share before Stewart's name surfaced in the ImClone investigation. Stewart owns about 30 million shares of the company, an approximate 61 percent stake, meaning she has lost millions as the stock has fallen.

Dennis McAlpine, a managing director of the research firm McAlpine Associates, said Martha Stewart Living has a number of options as the company digests the verdict, from Stewart taking the company private to a complete name change.

Stewart, 62, and Bacanovic, 41, were found guilty of lying to investigators about why Stewart sold 3,928 shares of ImClone Systems stock on Dec. 27, 2001. The day after Stewart sold, the government announced it would not review ImClone's application for approval of a cancer drug, Erbitux. The drug was eventually approved - during Stewart's trial.

Stewart told investigators in 2002 that she had no memory of being tipped that ImClone CEO Sam Waksal was trying to sell his shares. Her attorney, Robert Morvillo, later admitted in court that Stewart was tipped.

After a series of meetings, probation officials will give a report to U.S. District Judge Miriam Goldman Cedarbaum recommending a range of prison time for Stewart.

Probation officials will also recommend a fine for Stewart. The law calls for up to $1 million for the four counts on which she was convicted - conspiracy, obstructing justice and two counts of making false statements.

Bacanovic also met briefly with probation officials Monday at the courthouse. He did not address reporters as he entered or left.

Before the sentencing, prosecutors and defense lawyers will submit papers to Cedarbaum arguing for tougher or lighter sentences. The judge can allow Stewart and Bacanovic to spend part of their sentences in halfway houses or in home confinement.

Both Stewart and Bacanovic have vowed to appeal, but legal experts say they will have a difficult time convincing the 2nd U.S. Circuit Court of Appeals to overturn their convictions.

Immediately after the verdict, her Web site featured a statement in which Stewart vowed to clear her name. In an initial version, Stewart said she knew that "I have done nothing wrong" - but that part of the statement was quickly pulled off the Web site.

Under federal guidelines, defendants can receive lighter sentences if they show remorse for their crimes.




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