Martha's Merry Men Still In Stir
As Martha Stewart reconnects with her horses, sips hot lemonade and gets used to the home-cooked meals created by former Le Cirque chef Pierre Schaedelin, the men enmeshed in the scheme that landed her in prison aren't so comfortable.
Stewart's former Merrill Lynch broker, Peter Bacanovic, is still behind bars. Midway through his five-month sentence, Bacanovic is laboring seven hours a day in a military base prison camp outside Las Vegas. Bacanovic's nights are spent in dorm-style living quarters with three to seven other convicts – mostly white-collar and drug-sentence criminals.
He is serving a sentence virtually identical to Stewart's, but because he entered jail in mid-January, Bacanovic has more than two months to go until his release.
Sam Waksal, ImClone founder and Stewart friend, won't see the comforts of home – a cushy SoHo pad – so soon. He reported to a federal prison nestled in the mountains of Schuylkill County, Pa., July 23, 2003, to serve his seven-year and three-month sentence. That means the earliest Waksal would be released from federal custody - pending good behavior - is September 2009.
Waksal was convicted of dumping his ImClone shares prior to the release of a negative federal report about a company drug, Erbitux. The drug won government approval the following year.
To top off his sentence, the court slapped Waksal with a $5 million fine. Bacanovic owes $4,000 plus a $400 court fee – a light fine compared to that of Stewart, whom Judge Miriam Cedarbaum fined $30,000.
The fine discrepancy between Stewart and her broker may reflect the move by Bacanovic's lawyer to demand a separate sentencing hearing for his client. Animosity had been brewing from Bacanovic's legal front lines toward Stewart, whose trial he shared. Once in front of Judge Cedarbaum, Bacanovic's lawyer pleaded that his 42-year-old ex-broker client, pre-prison, was already in financial ruins: unemployed, in debt, and with no career in finance to which he could return.
Cedarbaum took little pity. His sentence was virtually the same as Stewart's, and he's banned from dealing the markets.
ImClone shareholders were also amongst the punished, but are recovering since the drug Waksal thought he foresaw failure of won FDA approval. Stock shares have taken a roller-coaster plummet from a high of $70 down to $6 in 2002. Now shares are back above $40 each.
Bacanovic, like Stewart, is challenging his conviction.
"We intend to continue vigorously pursuing the appeal," said Richard M. Strassberg, Bacanovic's lawyer.
Strassberg told CBS News.com he is in touch with his client, but wouldn't comment on Bacanovic's prison experience.
Waksal, however, seems to have gone from noshing on delicacies from Balduccis and Citarella during his going-away party to cleaning toilets, according to The New York Post.
One of Waksal's fellow inmates wrote a letter to the New York Post in September 2003, to share with readers "a bit of inside information on the daily routine of our institution's new celebrity inmate."
"The best part of Mr. Waksal's day, [is] his job. He works as a housing orderly ... a janitor. He mops, sweeps and waxes the floors," Robert C. Lawrence, 39, wrote. "He spends his time putzing around ... 'making nice' if you know what I mean."
Meanwhile, Stewart is "making nice" with her media clientele, from viewers to magazine advertisers to investors. While she is still technically federal inmate No. 55170-054, Stewart says she is using lessons learned in prison to grow her company.
She won't be doing business without constraints. Part of Judge Cedarbaum's order denies Stewart access to paging or answering services and bars her from use of the Internet. This boundary might be flexible: Stewart is allowed to conduct business away from her home for 48 hours per week.
Stewart told media and clients Monday that fellow inmates advised her to not only instruct on the technicalities of housekeeping and entertaining, but to make consumers aware of why it is important to take care of others.
Some observers said the new strategy is brilliant for turning around Stewarts gradually sinking multi-media empire.
"Her prison experience can be used as a new and powerful brand asset," said John Barker, president of DZP Marketing Communications, based in New York. "What prison has done is to make her more fallible. There is this opportunity to make Martha more approachable, more empathetic."
Company officials declined to comment on the details of the new approach.
Her stock price has dropped at least 17 percent since her release and sales plunged 24 percent Monday alone.
By Christine Lagorio