So they convicted Martha Stewart. That’s a shame. The case should never have been brought. We are supposed to believe that a woman who is worth hundreds of millions risked everything to avoid fifty grand in stock losses. It’s simply unbelievable, and it begs the question of what fiduciary duty she had to Imclone shareholders (none). The judge earlier threw out the serious fraud charge, so Stewart was convicted mainly of making false statements to investigators when she was not under oath.

The prosecutors got lucky here. They had a weak case, were essentially making up law, and the jury bought it. I hope that other prosecutors won’t be emboldened to engage in more of these persecutions.

One of the likely problems here was the quality of the jurors. What kind of person was so ignorant that he didn’t already know a lot about this highly publicized case before he was called? This is a systematic problem. It’s difficult to find intelligent people who are willing to put their lives on hold during what’s likely to be a long trial.

I was once called for jury duty and assigned to a notorious criminal case for which everyone expected a lengthy trial. I can tell you that once the prospective jurors learned which case they were on, almost every one of them wanted to be excused. To my relief, I was excused (after waiting two days to be interviewed) because I had a strong opinion about the case. The prospective jurors who had not been excused by the time I left did not strike me as the kinds of people I would want to have on my jury if I were a defendant.

Yes, jury service is important, but how many able people are willing to take a several-week forced vacation in exchange for fifteen dollars a day? We effectively force jurors to subsidize our legal system, and the more a juror’s time is worth the more he pays to serve. Perhaps it would be better to pay jurors an amount that comes closer to compensating them for their time — if they are intelligent people, maybe $200 a day as a start. It would be expensive, and there are many individuals for whom such an amount wouldn’t be nearly enough, but it might improve the quality of jury decisions, particularly in complex and white-collar cases.

There is no way, under the current system, for someone like Martha Stewart to be tried by a jury of her peers. Would such a jury, or at least a jury of people who are somewhat sophisticated about business and financial matters, have convicted her? I doubt it. And even if they might have done so, she still deserved better than to have the facts of her case evaluated by people who probably lack significant experience in these areas.

19 thoughts on “Injustice”

  1. Jonathan, our aldermen go for cheaper than that!

    And it’s the nickle&dime stuff they usually get caught on.

    Everyone has his/her price, Martha’s was $40K.

  2. And note that neither Stewart nor Bacanovic were charged with “Conspiracy”, “False Statements”, and straight-up perjury, not to, you know, real crimes of a financial nature.

    Convicted for lying to the government about a crime they were never actually charged with. We don’t need jurists with any particular financial or business knowledge, just common sense, a passing familiarity with the phrase “innocent until proven” or at least the capability to keep their raging class envy under control.

    Or basic causality. Yeah, understanding that would be good.

    But, it was a “victory for the little guy”, after all. I’m sure the Munchkinland victory parade is preparing to sally forth amid great pomp and circumstance.

  3. I like the idea of paying jurors more than the pittance they get now. Perhaps it should be a percentage of their actual salaries so that the people who have rational decision-making skills aren’t rationally calculating that they should find a way to be excused because their jury service is going to cost them many thousands of dollars.

    Of course, now taxes have to go up.

    You know, in Singapore, they pay the top politicians and bureaucrats at a level that puts them in the 95th percentile of wages. Their intent is to draw capable people to gov’t and they recognize that you have to pay for talent. Otherwise, those people who would serve, simply won’t, because the markets will reward them in the private sector. Same principle for jurors.

    How do you value justice?

  4. Shame indeed. I was telling a friend last night that essentially, her crime was to refuse to admit she committed a crime she was not charged or convicted with.

    And the media are reaching a new low. The Pathetic Award this morning goes to Slate where her conviction is covered by….Henry Blodget.

  5. I expect at the least she’ll get a retrial; From what little I’ve followed of the case, the judge essentially prevented her from mounting a defense.

  6. Although I have not seen them, I strongly suspect the jury instructions are what sealed Ms. Stewart’s fate. In cases where you’re dealing with vague, non-objective laws, the instructions often tip (or confuse) the jury towards a conviction. I’ve seen it happen in antitrust cases, those few that actually make it to trial.

  7. From WSJ article:

    “Maybe it’s a victory for the little guys who lose money in the market because of these kinds of transactions,” said juror Chappell Hartridge.

    What does he mean by “these kinds of transaction”? The govt didn’t charge Stewart with insider trading, nor would it have been easy to do so given that she had no fiduciary responsibility to Imclone or its shareholders. By this juror’s muddled thinking, which is also typical of prosecutors, journalists and other ignoramuses who comment on insider-trading cases (as well as judges, apparently), anyone who makes a winning trade is guilty of defrauding the parties who took the trade’s other side.

    The juror’s statement, if it’s representative, suggests that Stewart’s lawyers bungled her defense by basing it mainly on her public image, rather than by refuting in detail the govt’s overreaching accusations. Of course, a detailed refutation would have required the defense to spend some time educating the jury on basic concepts related to trading and fiduciary responsibility, and the judge might not have allowed that.

    Given the jury the defense had to work with, maybe I shouldn’t be too harsh on Stewart’s lawyers for making a personality-based defense. The big risk of such a defense was that the jury would respond by teaching the rich defendant a lesson, and that may have been what happened.

    This jury no more decided the case fairly than did the OJ jury, or the civil jury that awarded a BMW buyer $4 million because his new car’s paint was chipped in transit to the dealer.

    The “little people” who really got hurt here are the shareholders in Stewart’s company, whose shares have lost about one-half of their value since Stewart first became the govt’s target.

  8. Since I didn’t follow the case-in-chief, I would be curious to learn more about the defense’s thinking on not putting Ms. Stewart on the stand. I wonder if she wanted to testify and the lawyers talked her out of it, or vice versa.

  9. How does a woman worth so much money get to be tried by a jury of her peers? Why so dismissive? she has been shown to be a cheapskate and thus for her to risk so much for so little seems natural…first understand what sh3e was before she became what she has become and then you will understand why even small change matters to her.

  10. Stewart’s hubris brought her to this. She didn’t have to talk to the feds. But, hey, she’s The Great Martha Stewart, and she’ll just dazzle them with her brilliance, and it will be over.

    Then she didn’t have to lie and antagonize the little people. “What, me make an error? I did something wrong? I am THE Martha Stewart. Let me lay some of my awsome bullshit on you little feds.”

    Then she could have made a deal. “There is no way they will convice the great ME. Besides, I’ll have likable Bill Cosby sit right behind me.”

    Overarching greed caused her to break the law. Fifty grand is everything to a person like this. And no one can seriously believe she didn’t get an insider tip and act on it. And she’s a former broker and should have known better. Her hubris overruled her better judgment at every stage in this investigation and prosecution. And I’ll bet real money she overrode her lawyers’ advice. Hey, The Martha knows better.

    And what do you situational Rule of Law types think the feds would do with you over lies about such a “small” amount of money? They would barbeque your ass. Why should Stewart get any better treatment? Because you like her?

    I would add that, in addition to the hubris, there is a deep, old anger there that causes her not to back away when prudent.

  11. From a practical standpoint she may have mishandled her interaction with investigators. And perhaps she is indeed capable of being motivated to dishonest behavior by $50k. I still fail to see why she should be punished when her sale of Imclone stock was not illegal. Prosecuting her for lying to investigators seems to be an attempt to get her on something, to forestall embarrassment on the part of prosecutors who might otherwise have to drop their hyped case.

  12. Switching to the other side for a moment, there’s good reason why actions to obstruct criminal investigations should be a crime, and prosecuted, even if the prosecutor can’t find enough evidence to bring the underlying offense being investigated to trial: Otherwise you reward successful obstruction of justice.

    My problems with this case relate mainly to the judge apparently being very biased against the defendant in her rulings.

  13. Brett, I think it depends on what “obstruction of justice” means. If it means that I knowingly commit a crime and then shred the incriminating documents, then sure, it’s a serious matter.

    But it might mean something like the following hypothetical example. Investigators suspect me of insider trading but don’t have enough evidence to prove it. They surreptitiously audit my trading records and determine that I made a trade that violates some rule — maybe I violated the rule against wash sales. Maybe it was just a small trade and I only did it once, inadvertently, doesn’t matter. Next, a pair of FBI agents shows up at my home or office and wants to ask me some questions. I am unaccustomed to handling such situations and agree to speak with them.

    One of their questions is whether I have made any illegal wash sales. Now, if I deny that I have made any such sales, I have just lied to a federal agent, which is illegal even though I am not under oath. The next thing I know, I am invited for an interview with prosecutors who point out the difficult situation I am in and offer me a deal in exchange for my cooperation.

    And sure, I shouldn’t have lied to the investigators. But consider how many people who lack criminal intent, and who haven’t done what investigators suspect them of having done, could be manipulated into a conviction by such means. That’s why it’s dangerous when prosecutors abuse their discretion by bringing weak or legally speculative cases. For the subject of such an investigation, merely receiving prosecutorial scrutiny is guaranteed to increase the risk of ending up in jail whether or not he is guilty of the acts of which he is suspected. Bringing “obstruction of justice” charges in weak cases like that of Martha Stewart is excessively coercive.

  14. Not knowing much about the legal aspects of the trual, it seems to me that Martha was led astray by poor representation. Why did her attorney let her answer those questions in the first place?

    And let’s not forget, Martha was at one time a member of the NASD as a stock broker. She should have known better. There were 1001 different ways that this whole fiasco ended, and most of them would not have included a trial. I don’t know what went through her mind… Personally I think that she is guilty of insider trading, there just seems to be too many coincidences.

    If she had taken the familiar investment bank line and paid a fine (say $500k) and did not admit to anything this could have blown over a long time ago.

  15. The federal regulation about lying to govement officals is 1001. But govement officals can lie to us anytime anyhow and nothing can be done. That means any govement offical from the President on down. What most people forget or don’t know is that you do NOT have to talk to any govement official. Also what are perjury laws about? Swear in a person and then ask any question under the threat of perjury but our boys in Washington love to sneak in laws like 1001 so that we can make sure we catch the criminals. Ask the families of the 500 plus U.S. service men who have died in Iraq on how they feel about govement officials lying. Is that a crime.

  16. It’s a crime for federal officials to lie to federal investigators, just as much as it is for people who aren’t federal officials.

    As for politicians, what they do is classed as “free speech.”

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