Five monthsPhoto: David Shankbone · CC BY 3.0
Mr.Scandal
Episode 04CelebrityThe Stock Tip
Martha Stewart and ImClone, 2001. You built a home-and-kitchen empire on getting every detail right. Your broker's office is on the phone with a detail you were not supposed to hear.WealthYour money. Hit zero and you are broke.
PR ShieldWhat the public still believes. Hit zero and you are cancelled.
ItemsOne-time aces. Play one when it fits and it is gone.
Martha Stewart and ImClone: what actually happened
Scandal Run plays 10 decisions inside Martha Stewart and ImClone, 2001. Your choices are invented; the record below is not. Each line quotes the MrScandal story and names its source, in the order it happened.
Show the real record (10 moments, spoilers)
- December 27, 2001 The SEC alleges broker Peter Bacanovic told his assistant, Douglas Faneuil, to tell Stewart that ImClone's chief executive and his daughter were selling all their shares, and that she then ordered her own 3,928 shares sold. The next day ImClone announced the FDA would not accept its Erbitux application. The SEC says the sale avoided losses of $45,673.
- Early 2002 Stewart said she had arranged earlier to sell if the price fell below $60, the BBC reported. The SEC alleges that explanation was a fabricated alibi.
- October 2002 Stewart resigned from the New York Stock Exchange board less than four months after taking the post. The BBC reported it came after Faneuil pleaded guilty to a misdemeanor and agreed to testify against her, and that her company's shares had fallen 65% since the scandal broke.
- June 4, 2003 On June 4, 2003 the SEC filed civil securities fraud charges against Stewart and Bacanovic, and the U.S. attorney in Manhattan obtained an indictment over their statements about the trades. Stewart then quit as chairman and chief executive of her company but stayed on as chief creative officer.
- January 27, 2004 The trial began Jan. 27, 2004 and ran five weeks. A week before the verdict, Judge Miriam Goldman Cedarbaum threw out the securities fraud count. Neither Stewart nor Bacanovic testified.
- March 5, 2004 The jury found Stewart guilty on all four counts of obstructing justice and lying to investigators. Her company's stock rallied early that day and then plunged 22.6 percent. In a statement she said she took "comfort in knowing that I have done nothing wrong."
- July 2004 The judge sentenced Stewart to five months in prison, two years of supervised release and a $30,000 fine. She could have received 16 months. Shares of her company rose 20 per cent that day. She chose to start serving before her appeal was heard.
- October 8, 2004 The Bureau of Prisons assigned her to the Federal Prison Camp in Alderson, West Virginia. A Justice Department spokesman said Danbury, Connecticut was ruled out because the press could stake it out too easily. She arrived at about 6:15 a.m. on Oct. 8, 2004.
- March 4, 2005 Stewart was released at 12:30 a.m. on March 4, 2005, to two years of supervised release, five months of it in home confinement. Her company provided a flatbed truck so images of her boarding a plane could be broadcast. She called the experience "life altering and life affirming."
- August 7, 2006 Stewart agreed to pay $45,673 in disgorgement plus $12,389 in interest, and a civil penalty of $137,019, three times the loss the SEC says she avoided. She accepted a five-year bar as a public-company director, without admitting or denying the allegations.