Martha's great offence? Denying that she did it

Last week, the American lifestyle mogul Martha Stewart was charged with stock fraud and obstruction of justice [report, June 5]. Conviction could mean a prison sentence of up to 30 years on all counts.

Media speculation about the indictment's effect on her empire of books, magazines and home furnishings is feverish. Martha herself is facing the tumult as only she can: in stunning Martha-style.

Last Wednesday, she did her "perp" walk. The British method of arresting high-profile white-collar criminals is to knock on their door in the wee hours of the morning, causing maximum pain to family. The American method is to tip off the press and do it at the best time for the nightly television news.

This parade in front of the press is now known in the trade as the perp walk. According to columnist William Safire, it derives from the Latin, perpetrare - "to execute, to bring about", a verb usually connected with evil deeds and crimes.

It was raining in Manhattan on the day of her arraignment, so Martha chose to wear an off-white raincoat accessorised with a smashing oversized white umbrella. I had never thought of a white umbrella till now; black always seemed more chic.

But, once again, Martha has changed my view of life. As Martha would say, a pastel or white umbrella not only cheers up a gloomy day but bathes the face in a halo of light.

Next day, Martha had put up a website, Marthatalks.com, dedicated to her case. She reported two million hits and 20,000 emails of support. She placed an advertisement in USA Today -an open letter "To My Friends and Loyal Supporters" proclaiming her innocence.

This was a defiant response: the most severe charge she faces - that of stock fraud - is based on Martha's previous claims of innocence. Which brings me to the nub of this story.

For more than a year, Martha Stewart has been investigated for allegations of insider trading. She had sold shares in a medical biotech company, ImClone Systems, founded by her friend Dr Samuel Waksal, one day before the public announcement that the Food & Drug Administration had ruled unfavourably on its star cancer drug.

She claimed an understanding with her stockbroker to sell the stock at a low of $60. The government believed she had insider information. I cannot comment on Ms Stewart's guilt or innocence, only on the legal process. And that process is pretty awful.

On the day Martha Stewart and her stockbroker Peter Bacanovic were indicted, the prosecuting attorney James Comey held a press conference at which he solemnly made the following statements: "I exercised my discretion not to bring a criminal insider trading charge and instead, to defer to the Securities Exchange Commission… a criminal insider trading charge in these circumstances would be very nearly unprecedented. And Martha Stewart may be famous but that's no reason for treating her differently from any other defendant."

At this point Mr Comey stared into the battery of press cameras he had assembled for this important moment in his life: "This criminal case," he continued "is about lying, lying to the FBI, lying to the SEC, lying to investors. That is conduct that will not be tolerated by anyone. Martha Stewart is being prosecuted not because of who she is, but because of what she did."

No human failing irritates me quite as much as hypocrisy. When I see it I want to punch the television set. What, as Tom Stoppard would write, is wrong with this picture?

The government has been investigating Martha Stewart for more than a year on allegations of insider trading. They would leap to charge her if only they had the evidence. They clearly do not. The best they can do is have the SEC launch a civil suit where conviction rests on the lower standard of balance of probabilities.

Unable to make an insider trading charge stick, the prosecutors have fallen back on charging Ms Stewart with three counts of giving false statements to investigators and one conspiracy charge, with her stockbroker, of obstructing justice. In other words, they have charged her with a cover-up for a crime they cannot prove happened.

The bizarre nature of this pales beside count nine of the indictment which charges that, each time Martha claimed innocence, she committed a securities fraud. Those protests of innocence, say the prosecutors, were made in order to boost her stock price which, in turn, misled her investors.

People are rarely if ever charged for simply claiming innocence - even if falsely doing so. If you rob a bank, but claim you didn't, and give a false alibi, you may technically be guilty of obstruction of justice but I can't think when a suspect has been charged with obstruction of justice for that alone.

Even if you could be charged with a criminal offence for untruthfully exonerating yourself - which in itself is hair-raising - how much more appalling is the notion that you could be charged before being convicted of anything? This only makes sense if you throw out the presumption of innocence that is the basis of the Anglo-American system of law.

I have seen many American federal prosecutors like James Comey. They are little Robespierres desperate to enhance their powers and make names for themselves. Rudolph Giuliani, the former mayor of New York, was a federal prosecutor in whose office James Comey worked. Giuliani had quite a success with his use of the Draconian Rico statutes.

The Rico laws were originally drawn up to fight organised crime and drugs but Guiliani and others turned them against alleged white-collar criminals on Wall Street. Rico could potentially destroy a financial company and simply citing its use in an investigation was akin to the blackmail that mentioning child abuse has become in divorce and custody cases.

Mr Comey insists that nothing in the Martha Stewart case is affected by her high-profile status. One certainly would like all defendants to be treated the same, which would mean Mr Comey forgoing his 15 minutes of fame and not summoning press conferences when charging Ms Stewart or, if he does, then sticking to the facts of the case rather than using it for prosecutorial spin.

All charges that Ms Stewart "lied" arise out of conversations (some on the telephone) she had with investigators. These conversations were voluntary and not made under oath. There appears to be no transcript of them. Any evidence from them will depend, in the absence of a tape, on the recall of the prosecution. This puts the prosecutors in control of any claim of lying and is a dangerous basis for criminal charges.

What can we make of this? The best construction one could put on Comey's action is to ignore all his statements that Ms Stewart is being treated like any ordinary person and put his motives down to what Judge Louis Brandeis famously described as the role of the government as "omnipresent teacher".

If the authorities would admit to prosecuting Ms Stewart because, as "teacher", they have a duty deliberately to select famous people to illustrate the importance of justice proceeding unobstructed, then Mr Comey's actions would at least be honest. The authorities would not sound so ludicrous prosecuting her for "lying" while lying through their teeth themselves about their own motives.

As it is, lying to the media is not a criminal offence. If it were, the next grand jury might be investigating James Comey.