Stewart, Martha (1941–)

MARTHA KOSTYRA was born and reared in a working-class family in New Jersey. Her mother, a schoolteacher, and her father, a pharmaceutical salesman, held high standards and expectations for their children: ambition, achievement, and perfection were instilled at an early age. Martha, who married and eventually divorced Andrew Stewart, began her successful career as a model and then stockbroker. After leaving Wall Street, Stewart moved to Westport, Connecticut, and began restoration of an 1805 farmhouse that later served as the backdrop for her television appearances and programs.

Within 10 years, her catering business and specialty retail shop became a $1 million enterprise. Her first book, Entertaining, was published in 1982 and her merchandising collaboration with Kmart made Martha Stewart a household name that represented the American Dream and the embodiment of a prosperous homemaker-entrepreneur. She was chief executive officer of Martha Stewart Living Omnimedia, and in 1999, when the company became public, she was worth over $1 billion.

Her stalwart image was scorched, however, when accusations of insider-trading emerged. The investigation focused on Stewart's sale of ImClone stock. In 2001, two days after Christmas while on a Mexican vacation, Stewart called her Merrill Lynch[Page 767] stockbroker, Peter Bacanovic, and requested that he sell her 3,928 shares—a move that made her less than $230,000. Samuel Waksal, chief executive of the biotechnology company and friend of Stewart, had just dumped millions of dollars of shares based on information that the Food and Drug Administration (FDA) would deny approval of the company's highly anticipated cancer drug.

After his arrest, Waksal pleaded guilty to insider trading and was sentenced to seven years in prison and $4 million in fines and restitution. After a year-long investigation, Stewart was indicted, not for the alleged crime, but for the cover-up. The U.S. attorney admitted being unable to prove that she knew of the pending FDA announcement and thus had engaged in insider trading. The 40-page, nine-count indictment accused her and Bacanovic of obstruction of justice, conspiracy, making false statements to the government, and securities fraud. In her defense, Stewart maintained that she had prearranged a stop-loss order to sell the ImClone stock if the price dropped below $60 a share.

Stewart was found guilty of lying to cover up the stock deal but not guilty of the securities fraud charge. In a remarkable turn of life events, the “doyenne of domesticity” who had reached such heights, was now looking at possible jail time.