An Icon’s Infamy Won’t Be Fleeting
Many of the corporate executives charged with crimes in recent years have been accused of looting their companies, perpetrating long-running scams that allowed them to reap tens of millions of dollars in personal profit.
Martha Stewart’s crime was the act of a moment, didn’t involve her business empire and saved her about $50,000 -- the equivalent of bus fare for a woman who at her peak was worth hundreds of millions of dollars.
Nevertheless, experts in the ways of history, popular culture and Wall Street agree that her offense is going to be the one that is remembered as defining an era in the decades to come.
“Martha Stewart’s legacy will be to become the spokesperson, the icon, for financial scandal in the early part of this century,” said Robert Thompson, director of the Center for the Study of Popular Television at Syracuse University. “It will be completely disproportionate to what she actually did.”
Before, Stewart was famous. Now, she’s infamous.
“Every time there is a new celebrity scandal, she will be compared to it,” Thompson said. “The only time people mention Charles Lindbergh now is when there’s a new ‘trial of the century.’ Martha Stewart will become a benchmark for celebrity scandals, and we always need those because we never have to wait long for the next scandal.”
Executives such as Andrew S. Fastow and Jeffrey K. Skilling of Enron Corp., L. Dennis Kozlowski of Tyco International Ltd. and John Rigas of Adelphia Communications Corp. became widely known only after they were indicted. Even then, they remained largely one-dimensional figures: bean counters turned bad boys.
But thanks to her magazine, books, Kmart home furnishings line and television appearances, Stewart always has been much more than that: a figure who represented the rise of women in business in some eyes, and the smugness of celebrity in others.
It is that latter category, of course, that has some delighting now in Stewart’s downfall.
“The richer the celebrity, the sweeter the schadenfreude,” said Edmund Morris, biographer of Theodore Roosevelt.
With Friday’s guilty verdict, he added, Stewart is probably doomed for posterity: “Once a cliche is established, it’s impossible to eradicate. It becomes history. Roosevelt is remembered as a trustbuster and the first imperialist president. But in fact he busted very few trusts and was an extremely sophisticated diplomat.”
Morris’ wife, Sylvia Morris, biographer of diplomat and dramatist Claire Booth Luce, pinpointed the moment Stewart made the transition from style impresario to symbol of financial scandal.
It came June 25, 2002, when the probe into Stewart’s sale of stock in biotech company ImClone Systems Inc. was first coming to light. Stewart appeared for her regular gig on CBS’ “The Early Show.”
“Hi,” said Stewart, chopping cabbage. “Well, we’re going to make salad, but ... “
Co-host Jane Clayson then came into the kitchen, asking Stewart about “the allegations.”
“I want to focus on my salad,” Stewart protested. “That’s why we’re here.”
Said Sylvia Morris: “That was the moment it turned. From that moment, people were not interested in her salads. Even people who admired her are rather titillated.”
Yes, part of the appeal here is as simple as watching the mighty fall, a crowd pleaser at least since David slew Goliath. But Stewart’s role as an arbiter of taste -- as someone who would instruct you on how to make homemade Christmas wreaths as well as homemade potato chips, who could discern the difference among six kinds of flower vases, who would spell out how the invitation for a second wedding should differ from that of a first union -- made the tale particularly appealing.
“The woman who told you how to be perfect failed to be perfect herself,” said Lou Mazzucchelli, a venture partner at Ridgewood Capital.
Insider trading probably happened all the time during the late-1990s boom, many market watchers believe. The money was too easy, the regulators too far away. Stewart, who was legendary for noticing when a detail was out of place on a television set or photo shoot, didn’t recognize the end of that era.
“If the economy had created 500,000 jobs in the last few months, this story wouldn’t be so juicy,” Mazzucchelli said. “But the American public was ready for raw meat.”
Her undoing, he said, was that “she felt she didn’t have to behave the way other people behave.”
That was the view inside the courtroom too. After the verdict, juror Chappell Hartridge said Stewart “thought she was above everything and didn’t have to do things other people have to do.”
There will be an appeal, there will be second thoughts, there will be articles that say Stewart’s punishment, whatever her sentence ultimately is, doesn’t fit the crime. Like just about every other celebrity who has gotten in trouble, she may well apologize for her mistakes in a very public forum.
Still, her fate in history is probably sealed.
“Appearance is reality here,” said David Horowitz of the Center for the Study of Popular Culture. “There is no way of ever correcting it.”
During the trial, Stewart’s friend Mariana Pasternak remembered the style maven saying, shortly after stockbroker Peter E. Bacanovic had tipped her to sell her shares, “Isn’t it nice to have brokers who tell you those things?”
That’s the sort of quote that will help cement Stewart’s place in financial history, even if it’s not quite as evocative as hotel magnate Leona Helmsley saying, “Only the little people pay taxes.”
Helmsley was convicted in 1989 of tax evasion and sentenced to four years in prison, becoming the icon of an earlier era’s crimes in high places. She is known today for virtually nothing else.
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Corporate scandals
A look at some recent high-profile corporate scandals:
Adelphia Communications Corp.: Founder John Rigas, his two sons and former director of internal reporting Michael Mulcahey are on trial in federal court, accused of stealing tens of millions of dollars from the cable television giant’s investors to support a lavish lifestyle and concealing $2 billion in debt.
Credit Suisse First Boston: Frank Quattrone, the company’s former investment banking star, is scheduled to be retried in April on federal charges of obstruction of justice, after a trial last year ended in a hung jury. Quattrone made a fortune taking Internet companies public during the dot-com stock craze. His banking tactics helped create the market mania of the late 1990s. The resulting crash of Nasdaq cost investors more than $5 trillion.
Enron Corp.: Former Chief Executive Jeffrey K. Skilling pleaded not guilty in February to fraud, conspiracy, insider trading and other federal counts related to the once-mighty energy giant’s collapse. Former Chief Financial Officer Andrew S. Fastow pleaded guilty to two counts of conspiracy and agreed to cooperate with prosecutors. The Houston-based energy giant listed $62 billion in assets and a whopping $32 billion in liabilities and lost its $68 billion market value in a matter of weeks.
HealthSouth Corp.: Fired CEO Richard Scrushy is scheduled to stand trial in August on federal charges of leading a $2.7-billion accounting fraud to overstate HealthSouth earnings to make it appear the company was meeting Wall Street forecasts.
Martha Stewart Living Omnimedia Inc.: A federal jury convicted company founder Martha Stewart of conspiracy, obstruction of justice and making false statements related to a personal sale of ImClone Systems Inc. stock.
Qwest Communications International Inc.: Four former executives -- Thomas Hall, Bryan Treadway, Grant Graham and John Walker -- are on trial in federal court, accused of plotting to help the company improperly book $34 million in revenue.
Tyco Corp.: Former CEO L. Dennis Kozlowski and former CFO Mark Swartz are on trial for allegedly stealing $600 million from the company. The jury is expected to begin deliberations next week.
WorldCom Inc.: Former CEO Bernard J. Ebbers pleaded not guilty Wednesday to federal fraud and conspiracy charges for allegedly directing a massive accounting fraud now estimated at $11 billion. Former CFO Scott D. Sullivan pleaded guilty a day earlier to conspiracy and securities fraud charges and agreed to testify against Ebbers.
Sources: Associated Press and Times research
Los Angeles Times
