Justice fails – Again

[Earlier on the Martha Stewart case:

Martha Stewart Prosecution–A Comedy of Injustice


View from Lodi, CA: Masticating Martha

The Kafkaesque

indictment, trial and conviction
of Martha Stewart
is a devastating blow both to the US legal system and to
belief in the American socio-economic system.

As Lawrence Stratton and I have

in our book,

The Tyranny of Good Intentions
, very little
remains of the legal protections that once defined the
Anglo-American legal system. Today hapless defendants
are convicted not only in the absence of criminal intent
but also in the absence of

statutory felonies.

Martha Stewart was indicted for

lying and obstructing justice
. For these offenses to
have any meaning, there must be a crime that she lied
about and obstructed. The prosecutors presented no such
crime. Stewart was indicted and convicted for lying and
obstructing a crime when

no crime happened.

Many Americans believe that Stewart
committed “insider trading,” because that is the
disinformation her

used their media pimps to disseminate.
The prosecutors would have liked to charge Stewart with
insider trading, but could not. Stewart learned from

her broker
, not from a company insider, that a top
executive was selling shares.

Since time immemorial, many people
have sold shares for the same reason. Brokers call and
report that a stock is being sold when the overall
market is not. That is an indication that there is bad
news in the market about that stock. It is a broker`s
job to advise when to hold and when to fold.

Whenever a company announces good
or bad news,

SEC regulators and prosecutors
look to see who sold
or bought stock in the period immediately preceding the
news. If they find company executives, or anyone whom
they can

to company executives, buying or selling
prior to news, they bring a case of

insider trading

Insider trading is a creation of
regulatory bureaucrats, not of statutory law. It is an
undefined crime. Bureaucrats have refused to define the
crime on the grounds that it is easier to convict people
of undefined crimes. Many

legal scholars
maintain that there is no rational
reason for making insider trading into an offense.

Prosecutors knew that Stewart was
friends with ImClone`s president and jumped to the
conclusion that she was tipped off by him. When it
became clear that Stewart had the information from her
broker, the prosecutors were reluctant to let go of
their celebrity target whose demise would boost their
careers. The prosecutors decided to make a crime out of
a noncrime.

Stewart recognized that they were
after her with an undefined crime. Like most people in
such a situation, Stewart gave them a story that they
would have a hard time twisting into insider trading.

This is the basis for her
indictment for lying and obstructing justice.

The Stewart case reminds me of the
Ben Lacy case during the 1990s. Lacy was an apple juice
producer who made a few mistakes filling out
environmental forms over the course of several years.
Federal prosecutors chose to interpret the

few mistakes
as comprising a conspiracy to hide the
pollution of a stream behind his plant. As the stream
tested pristine, the prosecutors did not accuse him of
polluting the stream.

If they had accused him of
polluting, evidence of the lack of pollution would have
collapsed their case. By

accusing him of conspiracy
, they were able to keep
out of court evidence that the stream was not polluted.

Eventually the prosecutors had to
let go of Ben Lacy, but only after they had ruined him

The Martha Stewart jurors should
have realized that the case was bogus when the judge
threw out the main charge–that she had committed fraud
by declaring her innocence. A prosecutor who would bring
such a ridiculous charge obviously had no case

It appears the jury convicted
Stewart largely on the basis that she was white and
successful. In their public statements, it is apparent
that some of the jurors have the impression that Stewart
is part of the corporate fraud that is believed to have
caused widespread losses to shareholders who are “little

By failing to recognize the
political persecution in front of their noses, the
Stewart jury demonstrated the extreme risks of a jury
trial. The prosecutors only wanted a symbolic scalp and
had offered Stewart a plea bargain deal–a probation
sentence in exchange for a plea that she made a false
statement. Stewart, who has naively declared her belief
in the integrity of the justice system, went to trial

Stewart`s conviction has made it
even less likely that an innocent defendant will place
trust in a jury. Already 95% of felony cases are settled
with a coerced plea bargain, because judges and juries
routinely fail in their function of protecting
defendants from prosecutorial abuse. Time after time,
innocent defendants are convicted on fabricated evidence
while exculpatory evidence is withheld. Based on the new
DNA evidence, a large percentage of convicted murderers
and rapists has been found innocent.

Stewart`s conviction is a defeat
for justice and the American way. Prosecutors have
undermined the socio-economic system by sending the
Marxist message that Americans become successful and
rich by evading the rules and engaging in criminal

Some message for a conservative
Republican administration to send.


Craig Roberts was Associate Editor of the WSJ editorial
page, 1978-80, and columnist for “Political Economy.”
During 1981-82 he was Assistant Secretary of the
Treasury for Economic Policy. He is the author of

Supply-Side Revolution: An Insider`s Account of
Policymaking in Washington