What the Martha Stewart Case Tells Us About White Collar Crime

Abstract

The Martha Stewart case serves as a template for reviewing and analyzing federal white collar criminal laws and their enforcement. In addition to examining the investigation of her infamous trade, the essay covers the decision to indict, the ultimate charges, the non-charge of insider trading, typical and atypical aspects of her trial, and finally her sentence. The essay identifies and discusses problematic aspects of white collar criminal law such as the collateral consequences of investigation and indictment, the effect of converging civil and criminal fraud charges, the expansive scope of securities offenses, and continuing due process concerns about vague statutory language. Prosecutorial decisions, such as to use duplicative cover-up charges, reveal the depth and power of the federal criminal code. Stewart's case was atypical in that she went to trial. The essay examines the reasons why individual defendants often decide to plead guilty rather than risk a trial and the inconsistent sentencing patterns that result. In sum, the review illustrates issues faced by all federal defendants, even those who are not as well-off or as and well-represented as Martha Stewart.

Keywords: crime, criminal law, white collar crime, insider trading, securities fraud, punishment, sentencing, plea-bargaining