Why did Martha Stewart go to jail? Her charges explained

Martha Stewart was on top of the world in the late 90s: she headed a multibillion-dollar company and was the star of Martha Stewart Living, a program focusing on domestic arts and lifestyle content. However, four years after the turn of the century, Stewart’s life turned upside down: she faced a lengthy prison sentence if found guilty of various felony charges. 

Stewart did go to prison, but only for a fraction of the time she potentially faced. Martha spent five months at a minimum security facility in West Virginia and endured five months of home confinement. She was also fined $30,000 and ordered to spend two years on probation. 

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In December 2001, Stewart sold shares of ImClone Systems, a company that developed cancer-therapy drugs. ImClone had developed a drug named Erbitux and presented it to the Food and Drug Administration for approval. The drug failed the FDA’s tests. 

When the FDA rejects a drug, the manufacturer’s stocks plummet as the drug loses its money-making potential. Stewart dumped ImClone stocks a day before the FDA’s published its results, suggesting she knew ImClone’s share price would tank. 

Steward avoided losing around $45,000 by selling her shares. The timing of the sale raised suspicion that Stewart was guilty of insider trading – the selling and buying of shares using information that hasn’t been publicized. 

Sam Waksal, one of ImClone’s executives and Stewart’s friend, was arrested for advising family and friends to dump the stock before the FDA announced its findings. He was later sentenced to more than seven years for insider trading. 

Stewart claimed she had no knowledge of the looming FDA announcement and sold the shares based on an agreement between her and Peter Bacanovic, a stock broker. Nevertheless, Martha was indicted on charges of obstruction of justice and securities fraud. 

A jury found Martha guilty of conspiring with Peter Bacanovic to make false statements and obstruct justice. She was also found guilty of hampering the investigation against her by misleading the SEC. Furthermore, she was convicted of making false statements as she lied about pre-arranging the sale of her ImClone shares. 

Martha avoided conviction on securities fraud and insider trading charges. However, she paid $195,000 in settlement of a civil suit brought by the SEC.

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Martha requested the judge that she serve her prison sentence as soon as possible. She preferred incarceration in Danbury, Connecticut, or Coleman, Florida, so her then-90-year-old mother could visit her in prison. Instead, she was sent to a remote facility in West Virginia. 

The famous inmate took a job and became a go-between between the administration and prisoners. In December 2021, she showed a Christmas nativity set she crafted while incarcerated. She said via TikTok:

“If you’d like to give a really beautiful and special gift this Christmas with a little street cred, they’re all inspired by — guess what — a set I made when I was confined. They still have my number on the bottom.”

Aside from the nativity set, Stewart said nothing positive came out of her incarceration. In 2004, Martha made the following note about her prison life (per CNN)

“There is no real help, no real program to rehabilitate, no programs to educate, no way to be prepared for life ‘out there’ where each person will ultimately find herself, many with no skills and no preparation for living.”

In a 2017 interview with Katie Couric on her podcast, Martha rubbished the idea that prison life made her stronger. She insisted there was nothing good about prison life and described her imprisonment as a ‘horrible experience.’ Stewart continued:

“It was horrifying, and no one — no one — should have to go through that kind of indignity, really, except for murderers, and there are a few other categories. But no one should have to go through that. It’s a very, very awful thing.”

People expected Martha’s company, Martha Stewart Living Omnimedia, would struggle due to her incarceration. However, the opposite happened – the company’s share price doubled. Stewart regained control of the company and sold it in 2015 at $353 million. By then, Martha Stewart Living Omnimedia was a loss-making entity. 

Stewart had two television opportunities – The Martha Stewart Show and The Apprentice: Martha Stewart – waiting for her after her release, showing jail time hadn’t altered the public’s perception of her. Martha also signed deals with Michaels, Home Depot, and PetSmart. 

Unfortunately, she missed an opportunity to host Saturday Night Live due to probation rules. Martha told Harper’s Bazaar:

“My only big regret is that Saturday Night Live asked me to host. My probation officer wouldn’t give me time. That really pissed me off, because I would have loved to have hosted Saturday Night Live. I’d like that on my resume.”

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Over recent years, Martha Stewart and rapper Snoop Dogg have formed the unlikeliest of friendships. The basis of their relationship was that Martha refused to assist the prosecution in exchange for a lighter sentence. Snoop was incarcerated in the early 90s. 

“Yes, that [conviction] helped because people knew how crazy and unfair … all of that was,” Martha said on CBS’s Sunday Morning. “And in Snoop’s world, it gave me the street cred I was lacking.”

In 2019, Snoop contrasted Martha’s conduct to that of disgraced rapper Tekashi 6ix9ine, who gave up the names of fellow gang members for a shorter sentence. Snoop wrote on Instagram:

“As we watch Tekashi 69 (or whatever his name is) snitch on EVERYBODY, I invite you all to remember Martha Stewart snitched on NOT ONE soul during her trial. Baby girl kept it 10 toes down and ate that prison sentence by herself, like the true baddie she is.”