Amid the buzz over the indictment of decor queen Martha Stewart for securities fraud, a government watchdog questions whether the Bush administration may have other “fish to fry” that it is intentionally overlooking.
Judicial Watch, the public-interest group that investigates government corruption and abuse, says the Justice Department and its United States attorneys appear to be engaging in a pattern of “selective prosecution” as they attempt to crack down on corporate corruption. The group sees scandals handled differently over the past three years and asserts laws were not applied equally in each case.
As WorldNetDaily reported, a federal grand jury seated in Manhattan handed down a nine-count indictment against Stewart for obstruction of justice, conspiracy, securities fraud and lying to investigators. She pleaded “not guilty” to all counts. If convicted, she faces up to 30 years in prison and a $2 million fine.
The charges surround Stewart’s sale of nearly 4,000 shares in biotech company ImClone Systems on Dec. 27, 2001, on the eve of an adverse ruling by the Food and Drug Administration that caused the stock price to plummet.
Peter Bacanovic, Stewart’s former broker at Merrill Lynch, also was indicted for allegedly tipping off Stewart that family members of ImClone founder Sam Waksal were planning to dump shares. Bacanovic also pleaded innocent.
The indictments follow the April 28 announcement by New York Attorney General Eliot Spitzer of a $1.4 billion settlement reached with 10 Wall Street firms in the investigation into Wall Street conflicts of interest. The Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange signed off on the deal.
Under the agreement, none of the figures involved in the scandals and subsequent investigations will serve jail time.
Noting it has no opinion over the merits of the Martha Stewart case, Judicial Watch questioned why Kenneth Lay, former chief executive of Enron, whose collapse marked the biggest bankruptcy in U.S. history, has thus far escaped any legal consequences. The group suspects the answer lies in Lay’s close personal friendship with, and campaign contributions to, President George W. Bush.
“A political federal prosecutor has indicted Martha Stewart for allegedly lying to the government about her alleged securities violations, for which she was not indicted. It’s time that other high-level persons, like Ken Lay, also are held accountable for their actual securities violations,” stated Judicial Watch Chairman and General Counsel Larry Klayman.
Klayman’s allegation echoes an argument made by Stewart’s defense attorneys.
Robert Morvillo and John Tigue question why the federal government chose to file charges after nearly a year and a half and accuse prosecutors of trying to “divert the public’s attention from its failure to charge the politically connected managers of Enron and WorldCom who may have fleeced the public out of billions of dollars.”
“Martha Stewart has done nothing wrong. The government is making her the subject of a criminal test case designed to further expand the already unrecognizable boundaries of the federal securities laws,” the attorneys assert in statements posted on a website launched yesterday to manage the “domestic diva’s” post-indictment public relations nightmare.
Stewart, herself, weighed in on the matter yesterday in an open letter published on the website and in a paid advertisement in USA Today.
“I simply returned a call from my stockbroker,” she maintains. “Based in large part on prior discussions with my broker about price, I authorized a sale of my remaining shares in a biotech company called ImClone. I later denied any wrongdoing in public statements and in voluntary interviews with prosecutors. The government’s attempt to criminalize these actions makes no sense to me.”
Manhattan U.S. Attorney James Comey deflected the accusations of selective prosecution.
“Martha Stewart is being prosecuted not because of who she is but because of what she did,” he told reporters at a news conference Wednesday, stressing the case was about Stewart’s “lies” to the SEC, the FBI and to her own investors.
Judicial Watch said it will continue to pursue several civil lawsuits against high corporate officials and politicians associated with Enron, Halliburton, Providian and others, “in part because the Bush administration has failed to take strong actions against these companies.”
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