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During the investigation each defendant was questioned twice. Martha Stewart was interviewed at the office of the United States Attorney on February 4, 2002 and by telephone on April 10, 2002. Among those present during Stewart's interviews were Special Agent Catherine Farmer of the FBI and Helene Glotzer, a lawyer with the SEC's Enforcement Division. Peter Bacanovic was interviewed by telephone on January 7, 2002. Present at that interview were Glotzer and another SEC attorney, Jill Slansky, as well as David Marcus, a Merrill Lynch attorney. On February 13, 2002, Peter Bacanovic testified under oath before the SEC. He was questioned by three SEC attorneys: Glotzer, Slansky, and Laurent Sacharoff. His testimony was tape recorded.
The jury convicted Stewart of making false statements to investigators during her February 4 interview, in violation of 18 U.S.C. § 1001. The jury found Stewart guilty of making the following false statements, each of which was a specification in Count Three of the Indictment. Martha Stewart told the Government investigators that she spoke to Peter Bacanovic on December 27 and instructed him to sell her ImClone shares after he informed her that ImClone was trading below $ 60 per share. Martha also stated that during the same telephone call, she and Peter Bacanovic discussed the performance of the stock of her own company, Martha Stewart Living Omnimedia ("MSLO"), and discussed K-Mart. She told investigators that she had decided to sell her ImClone shares at that time because she did not want to be bothered during her vacation. Stewart stated that she did not know if there was any record of a telephone message left by Peter Bacanovic on December 27 in her assistant's message log.
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The jury acquitted Stewart of one specification charged in Count Three: her statement that she and Peter Bacanovic had agreed, at a time when ImClone was trading at $ 74 per share that she would sell her shares when ImClone started trading at $ 60 per share.
The jury found Martha Stewart guilty of making the following false statements to investigators during her April 10 interview. Each of these statements was a specification in Count Four of the Indictment. Martha Stewart said that she did not recall if she and Peter Bacanovic had spoken about Sam Waksal on December 27 and that she did not recall being informed that any of the Waksals were selling their ImClone stock. Martha also reiterated that she spoke to Peter Bacanovic on December 27, that he told her the price of ImClone shares, and that he suggested that she sell her holdings.
The jury did not find Martha Stewart guilty of one false statement specification charged in Count Four: her statement that sometime in November or December of 2001, after she sold ImClone shares held in the Martha Stewart Defined Pension Trust, she and Peter Bacanovic decided she would sell her remaining ImClone shares when they started trading at $ 60 per share.
The jury found Peter Bacanovic guilty of making one false statement during his January 7 interview with the SEC, in violation of 18 U.S.C. § 1001. This was a specification in Count Two of the Indictment, which charged Peter Bacanovic with falsely stating that he had spoken to Stewart on December 27, that he told Martha Stewart during that conversation that ImClone's share price had dropped, and that Martha had instructed him to sell her shares.
The jury found Peter Bacanovic not guilty of the other false statement charged in Count Two: his statement that on December 20, 2001, he had a conversation with Stewart in which she decided to sell her ImClone stock at $ 60 per share.
The jury also convicted Peter Bacanovic of perjury in violation of 18 U.S.C. § 1621, for one statement he made during his February 13 testimony before the SEC. Perjury was the charge in Count Six of the Indictment. Peter Bacanovic stated that on the morning of December 27, he had left a message for Martha Stewart with her assistant, Ann Armstrong. He said that the message requested that Stewart return his call, and advised her of the price at which ImClone was then trading.
The jury acquitted Peter Bacanovic of five other perjury specifications charged in Count Six. These specifications related to conversations Peter Bacanovic had had with Martha Stewart subsequent to her December 27 trade, the circumstances of her decision on December 20 to sell ImClone at $ 60 per share, and a worksheet he had used during their December 20 conversation.
The jury acquitted Peter Bacanovic of a charge of making and using a false document, which was charged as a violation of 18 U.S.C. § 1001 in Count Five of the Indictment. This count was based on a worksheet that Peter Bacanovic gave the SEC in the course of their investigation. Peter Bacanovic claimed that he had used the worksheet during his December 20 conversation with Martha Stewart. The worksheet listed Martha's and contained numerous handwritten notations in blue ink. The bullet point before ImClone's entry on the worksheet was circled in blue ink, as were the bullet points preceding several other entries on the page. Beside ImClone's name was a notation, "at 60," also in blue ink. The "at 60" notation was the basis of the charge.
The jury also convicted defendants of conspiracy and obstruction of an agency proceeding in violation of 18 U.S.C. § 1505. With respect to the conspiracy charge, the jury found that the defendants conspired to carry out all three objects of the conspiracy: making false statements, perjury, and obstruction of an agency proceeding.
All in all Martha Stewart was indeed found guilty and was sent to jail, I have also stated the maximum dollar amount the defendants could be charged for each count in which they were found guilty.
The maximum penalty for each count is five years in prison and a $250,000 fine, though federal sentencing guidelines would likely lead to far lighter penalties.