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In a sweeping victory for the government, a federal jury Friday found Martha Stewart guilty of conspiracy, obstruction of justice and two counts of lying to investigators, a verdict that means the media entrepreneur almost certainly will serve prison time.
Stewart, 62, who built a business empire on her sense of style in food, decorating and entertaining, is the first major figure convicted by a jury in the wave of corporate scandals involving such now-notorious names as Enron Corp., WorldCom Inc., Tyco International Ltd. and Adelphia Communications Corp.
"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 of the Bronx.
On its third day of deliberating, the jury of eight women and four men found that Stewart and her ex-stockbroker, Peter E. Bacanovic, hatched a plan to cover up a stock trade that Stewart made after getting an insider tip, then lied to investigators about it. Stewart was not charged with insider trading itself.
Bacanovic, 41, was convicted of conspiracy, perjury, obstruction and lying to investigators. He was acquitted of making a false document.
Both defendants vowed to appeal the verdicts. Sentencing was set for June 17.
Stewart's crimes each carry penalties of as much as five years in prison and $250,000 in fines. However, legal experts said that under federal sentencing guidelines, Stewart probably faces 10 to 16 months in prison, half of which could possibly be served in a halfway house or other non-prison setting.
The trial centered on Stewart's Dec. 27, 2001, sale of her 3,928 shares of ImClone Systems Inc., founded by Stewart's friend Samuel D. Waksal. Waksal, a man about town who once dated Stewart's daughter, is serving seven years in prison for insider trading, based on his and his family's attempts to dump their own ImClone holdings that day.
The stock sales by Stewart and the Waksals came one day before the Food and Drug Administration failed to approve ImClone's key cancer drug, a decision that sent the stock plummeting. Stewart's well-timed sale saved her around $50,000, authorities say.
At trial, Douglas Faneuil, Bacanovic's assistant, testified about how he was holding the fort at Merrill Lynch's Rockefeller Center office on Dec. 27 while...