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Monday, December 29, 2014
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Published: Saturday, 10/26/2002

Martha is in a stew as the sauce thickens

Don't tell anyone, but I've got the perfect Martha Stewart recipe for disaster. And you can take these ingredients to the bank. Start with an alleged standing order to sell ImClone stock if the shares drop below $60. Sprinkle in just a pinch of suspected insider trading. Add generous portions of denial and a dash of blame for the ultimate dessert that's so rich it's almost criminal.

Believe me it's to die for - or at least do time for in the clink. Picture Martha giving new meaning to jailhouse chic. A spoof on her company's flagship magazine, Martha Stewart Living (Behind Bars), teases readers with cover stories about decorating sheets for cozy cots, or creating wonderful faux finishes that brighten up drab cell blocks with color. There's jailhouse chili, or what to do when cooking for a crowd. So many super ideas, so much time.

OK, to be fair, the queen of domesticity is guiltless until proven otherwise. But the fact that she made a killing on biotech company stocks the day before the company was rocked with adverse news that sent its stocks plummeting is curious to say the least. Add to that curiosity the spectacle of the former chief of ImClone Systems Inc., pleading guilty to criminal securities fraud, obstruction of justice, perjury, and bank fraud, and the sauce thickens.

Sam Waksal, the jet-setting immunologist turned entrepreneur, moved in the same New York A-list, socialite circles as Martha and was a close, personal chum of the lifestyle maven. His phone logs on Dec. 27 - the day before ImClone announced the FDA had rejected its application for a promising new cancer drug - reportedly indicate the domestic diva tried to reach him before dumping her stocks in a hurry. It's unclear whether the two pals exchanged good bookkeeping tips. They deny it.

But the home and hearth heroine did chat with her broker on that fateful day and he may have spilled the beans about Waksal family members selling off big blocks of stock. That must have clinched it for the ever-meticulous Martha. Congressional investigators say she got rid of 3,928 shares of ImClone valued at roughly $230,000 on Dec. 27. The next day ImClone shares were already falling on rumors of the FDA's rejection of the company's principal product, Erbitux. When the news became official they took a dive.

The lifestyles guru maintains she had a standing agreement with her broker to sell ImClone stock if the shares dropped below $60, as they did on Dec, 27. But the story has its skeptics and people in the know say it ain't true. People like the assistant to her broker, who pleaded guilty to minor charges in the case and who said he was pressured by his boss to go along with the $60 sell fabrication. If the broker goes down, prosecutors hope Martha will as well.

But for now it's all just a pain in the recycled pinafore of a woman who rivals the universal loathing status of Leona Helmsley. Sure there's the matter of the pesky SEC and its intended pursuit of securities-fraud charges against Martha in connection with her ImClone stock sale, but until the other shoe drops - assuming it ever does - the poster girl for corporate greed is staying smugly serene. The gal who made a cool billion the day she rang the opening bell on her empire's IPO, isn't sweating the small stuff.

The public company she runs, Martha Stewart Living Omnimedia Inc., is weathering the ImClone unpleasantness reasonably well. And if Kmart Corp. can keep its doors open, it will continue to sell Martha's perfection products to poor saps with broken stoneware and mismatched glassware. How's that for a vote of confidence? Martha's devotees, a dedicated bunch out there making planting pots from discarded rubber tires, want to be just like Martha. She embodies the snooty well-to-do who have all the time in the world to make perfect place settings for perfect parfaits.

Hate to flatten your souffl , but if the government can reel in a fish as familiar as Martha and show she lived off the backs of her fans' 401(k)s, and defrauded investors who once actually believed in the marketplace, she could be going away for a while.

But even if she manages to skate around allegations of insider trading and shake the case coalescing against her, can you really trust Martha Stewart again?



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