10 Apr How Martha Stewart Ended Up in Federal Prison for Insider Trading and Tax Evasion
You are probably well aware that sometimes, even celebrities end up in jail for trying to cheat the IRS. If others didn’t tell you, most likely you heard it from us.
On that note, one of the more famous cases is indeed Martha Stewart, who ended up in prison back in the early 2000s. She was committed to tax evasion and insider trading.
But how did all of this happen and why?
Martha Stewart Short Bio
For those who don’t know her, Martha Stewart is a very famous American television personality, writer, and businesswoman.
Those who know her, are aware of her two long-running television shows – ‘Martha’ and ‘Martha Stewart Living.’ Besides her show, she has written several successful books and is the founder of Martha Stewart Omnimedia, a diversified media and merchandising company. At its height, the company was worth some $2 billion. However, as of late 2015, Martha Stewart Omnimedia is owned by the Sequential Brands Group as a privately-held subsidiary.
One of her most significant achievements is probably her enormous wealth which turned her into America’s first female self-made billionaire.
However, sometimes it seems that such tremendous wealth doesn’t come without a lot of controversies, which is especially true in Martha’s case.
How Martha Steward Ended Up in Prison
Martha’s entire empire was threatened in 2001 when the now famous insider trading scandal was unveiled. Early in that year, she sold almost 4,000 shares of a biotech company called ImClone, for a total amount of $230,000. She did it because her friend Sam Waksal dumped his shares. However, he did it right before ImClone went public and after one of the drugs made by the company were rejected by the FDA.
As you can probably guess, the move was very controversial, especially for someone as famous as Martha Stewart, as it ended up saving her some $50,000. It is probably only pocket change for her, but it’s better used than wasted!
Martha still ended up convicted for four felony charges in 2004 – conspiracy to obstruct justice, obstruction of justice, committing perjury, and giving false statements. Her punishment was five months in federal prison and five months of home confinement. That seems easy, but she was also banned from serving as any high-ranking officer or director of her company for a total of five years.
The most exciting thing here is that she wasn’t convicted for insider trading even though the scandal was named after that.
If prison time weren’t enough, Martha risked it all later on in 2009. It seems that she liked pocketing a lot of her company’s money for her fitness expenses and vacations. Her company lost some $15 million, while at the same time Martha gained almost $10 million.
She wasn’t convicted or anything, but she still had more troubles in 2013, when she had to go to court for a contract dispute she had with Macy’s.
All in all, these law troubles seem to follow her from time to time, but the famous insider trading scandal is the one that ended up costing her a lot of time and money.