LAW PUNDIT Monday, February 02, 2004 2/02/2004 04:45:00 PM [Home]
The Martha Stewart Case and the Erroneous Standard in Brogan
The Martha Stewart Case and the Erroneous Standard in Brogan
Professors Yin and Bainbridge have been keeping us up regularly on legal issues involved in the Martha Stewart trial and Bainbridge particularly has been aghast at the government's prosecution of this case, writing:
"[I]t is unfair to let the government fling allegations, which they end up deciding not to charge somebody with, and then let the government prosecute that person for having denied the allegations the government decided it couldn't prove. Why isn't that just whacked?
As written by the Associated Press:
The government says [Martha Stewart] was tipped that ImClone founder Sam Waksal was trying to sell his shares [of ImClone]. Waksal has admitted getting advance word of the government decision [that it would not review ImClone's application for its colon cancer drug, Erbitux] and pleaded guilty to insider trading. But Stewart was never accused by the government of personally knowing about the government report.[THAT would be insider trading.]
As Bainbridge noted above, none of the charges brought against Stewart relate to insider trading. The actual charges against Martha Stewart (five of the nine counts apply to her) are:
(1) conspiracy to obstruct justice, make false statements, and commit perjury in violation of 18 U.S.C. § 371 (Count 1); (2) making false statements in violation of 18 U.S.C. § 1001 (Counts 3 and 4); (3) obstruction of justice in violation of 18 U.S.C. § 1505 (Count 8); and securities fraud (Count 9).
Jack Kemp in "Congress should rein in rogue federal prosecutors" writes:
"Using a little-known federal statute (Title 18, Section 1001 of the U.S. Code), federal prosecutors are threatening to send Martha Stewart to jail for [allegedly] lying to government officials and for publicly declaring her innocence of insider trading even though the government refuses to charge her with the actual crime of insider trading. That's outrageous....
...Section 1001 makes it a crime to 'knowingly and willfully make any materially false, fictitious or fraudulent statement or representation in any matter within the jurisdiction of the executive, legislative or judicial branch of the United States,' even if you are not under oath.[emphasis added by Law Pundit] The sweep of Section 1001 and the unchecked discretion it gives to federal prosecutors are awesome....
The practice of intimidating and harassing individuals into violating Section 1001 should be stopped. The only way a person should be charged under Section 1001 is if he or she is also charged with the underlying crime that triggered the original investigation during which the alleged false statement or representation was made."
Furthermore, one of the prosecution charges leveled against Martha Stewart is that her public assertion of innocence of "insider trading" - a charge which has not even been formally brought - constitutes securities fraud because that assertion – according to the government prosecutors – was made with the intention of keeping the price of stock shares in her company from falling, as written here:
"But the big concern is the securities fraud charge ... the charge hinges on the claim that Stewart lied to the press and the public in an attempt to prop up the value of her stock, Martha Stewart Living Omnimedia (MSLO).”
Just imagine what possibilities such a novel charge opens for US government prosecutors in going after corporate executives, whose ANY statement could fall victim to a similar charge. Beware my friends, this is tyranny. The flagrant abuse of power by government prosecutors in this case is a very black eye for democracy, but the problem was already clearly recognized by some of the judges in the Brogan case, e.g. in the Ginsberg opinion concurring in judgment as well as in the Stevens dissent - Stevens being the ONLY justice who would have decided Brogan "correctly" - so our opinion - by maintaining the "exculpatory no" standard as it had been applied previously by the courts.
Does the law anywhere help us against this odious, undemocratic, freedom-threatening and tyrannical legislative provision?
Maybe, but it is a longshot, and a considerable stretch of a Constitutional provision.
Ex Post Facto Laws are Prohibited by the Constitution
Let us ask a simple question to which everyone knows the answer. When Martha Stewart publicly asserted her innocence of the publicly rumored charge of insider trading, did she know that her "assertion" - and not the possible "insider trading" charge - might put her in prison? Of course not. No one knew this. It is a novel charge.
As written by Solomon L. Wisenberg of Ross, Dixon & Bell, L.L.P. for FindLaw:
"Did you know that it is a crime to tell a lie to the federal government? Even if your lie is oral and not under oath? Even if you have received no warnings of any kind? Even if you are not trying to cheat the government out of money? Even if the government is not actually misled by your falsehood? Well it is."
This is part of the larger legal and societal problem in the Martha Stewart case. The government is threatening to put Stewart into prison for a number of actions which neither Stewart nor anyone else for that matter would have foreseen as being subject to criminal penalties. This is law at its worst - unpredictable and serendipity. It is injustice personified.
The Law Pundit sees a possible legal remedy in the prohibition of ex post facto laws found in the US Constitution.
Article I Section 9 (federal law) and Section 10 (state law) of the Constitution of the United States prohibit the passage of ex post facto laws. Ex post facto is a Latin phrase meaning "after the fact". The Constitutional prohibition against ex post facto laws prohibits laws which have the effect of RETROACTIVELY punishing any behavior as a criminal offense. Obviously, we must as citizens know in advance of our actions what is prohibited by the criminal law – not afterwards, whereas it is quite clear that Title 18, Section 1001 of the U.S. Code is being used to "nab" persons unknowing of this law and to put them behind bars - mostly because the government thinks that these persons have committed OTHER white-collar crimes which the government either can not prove or has more trouble proving.
As written by Steve Selinger at "The Case Against Civil Ex Post Facto Laws"
"In The Constitution of Liberty, F. A. Hayek (1960: 205-20) notes that some coercion, while unavoidable in a civil society, can be minimized by requiring that coercive actions comply with general rules that are known in advance by individuals. If individuals know the law, they can base their actions upon established rules and minimize the ill effects of coercion. Hayek states that not all legislative enactments will satisfy the three criteria of what he calls "true law''--generality, certainty, and equality. He argues that true law provides the general rules which minimize coercion and that legislative enactments which do not satisfy these criteria are objectionable. He writes that the law must be general, that it must be known and certain, and that it should apply equally to all. A necessary condition for the law to be known and certain is a prohibition on ex post facto laws. After all, the law can hardly be known and certain if new laws can be made to apply retroactively to actions already performed."
The Legal Standard regarding Ex Post Facto Laws
The standard regarding ex post facto laws was declared in 1798 in Calder v. Bull, 3 U.S. 386 (Dall.) (1798) in an opinion written by Chief Justice Chase:
“I will state what laws I consider ex post facto laws, within the words and the intent of the prohibition. 1st. Every law that makes an action, done before the passing of the law, and which was innocent when done, criminal; and punishes such action. 2nd. Every law that aggravates a crime, or makes it greater than it was, when committed. 3rd. Every law that changes the punishment, and inflicts a greater punishment, than the law annexed to the crime, when committed. 4th. Every law that alters the legal rules of evidence, and receives less, or different, testimony, than the law required at the time of the commission of the offence, in order to convict the offender. [3 U.S. 386, 391] All these, and similar laws, are manifestly unjust and oppressive….There is a great and apparent difference between making an UNLAWFUL act LAWFUL; and the making an innocent action criminal, and punishing it as a CRIME.”
Can a Public Assertion of Innocence be Punishable as a Crime? – Application of Justice Chase's ex post facto Test
In the Martha Stewart case, Stewart is being charged with a specific crime FOR asserting her innocence.
As written by Eugene Volokh regarding Brogan v. United States, 522 U.S. 398 (1998):
"[T]he Supreme Court held that 18 USC sec. 1001, the federal statute generally bars false statements to federal officials, punishes false assertions of innocence as well as other false statements."[emphasis added]
In the view of LawPundit, the right to publicly assert innocence of the commission of a crime is one of the bullwarks of the "presumption of innocence" which is at the root of American criminal law.
The attachment of yet another crime – ANY other crime - to the public assertion of innocence has a chilling effect on this presumption since it means in every case that a finding of guilt by the court – in the eyes of the law – means that the accused has lied and that his sentence is thus made greater, i.e. the punishment is increased by the new charge of the "obstruction of justice" for "making a false statement" or – as here – also "piled-on" by a charge such as “securities fraud”. This result violates the principles set out by Justice Chase.
The standard in Brogan makes an accused's sincere public assertion of innocence [as opposed to the formal legal plea of not guilty as made in court] a "potential" criminal act. It punishes such an action if a guilty verdict is issued. This violates point Nr. 1 above in Chase's opinion.
For any and every criminal charge, a person asserting innocence is opening himself or herself up to the additional charge of the obstruction of justice – for making a false statement - if a finding of guilty is brought in by the jury. This violates Nr. 2 above.
In asserting innocence, the accused may be subjected to a greater penalty for an obstruction of justice charge - or as here a securities fraud charge - than the penalty which might have been issued for the original crime charged. This violates Nr. 3 above.
The mere fact that conviction of a crime serves as the sole material element for finding "a false assertion of innocence" reduces the normal standards of proof for criminal offences, which requires the prosecution to prove the material elements of a case – elements which existed PRIOR to the verdict - and not occurring TIME-COINCIDENT with the issuance of the verdict.
As written by Paul Thomasch and Gail Appleson at Reuters in
"Martha Stewart Lawyers Say Jurors Are Confused":
"Prosecutors never obtained an insider trading indictment against Stewart. Instead they left those accusations to securities regulators who brought a civil suit that requires less proof. That suit is pending."
As related in that article, even the trial judge in the Stewart case has referred to the Stewart case IN FRONT OF PROSPECTIVE JURORS as being a "securities fraud" case. If the judge is already confused, the jury will be moreso.
In the case of the "assertion of innocence", nothing must be proven except the fact of the statement itself. The only "true" material element for the crime is the verdict determining guilt. This violates Nr. 4 above.
The Erroneous Decision in Brogan
The Law Pundit maintains that the US Supreme Court standard in Brogan in interpreting 18 U.S.C. § 1001 to permit prosecution of a "false assertion of innocence" – i.e. by not permitting an "exculpatory no" - is clearly erroneous as a matter of law insofar as it permits the determination of the commission of a crime ex post facto, which is explicitly forbidden by the US Constitution. This interpretation by Brogan clearly makes 18 U.S.C. § 1001 OPERATE continuously as an ex post facto law in permitting the punishment of assertions of innocence retroactively, and hence it is unconstitutional.
Findings of Fact and Findings of Guilt
Brogan held that a false assertion of innocence falls under "making of false statements" in violation of 18 U.S.C. § 1001. But this holding is simply false - the Supreme Court Justices did not think the matter through carefully and the short majority opinion shows they took it too lightly - always a grave mistake at this level of decisionmaking. The finding of guilt or innocence is NOT an objective "finding of fact" in the criminal law. Rather, the jury verdict is a "finding of guilt". This is an important legal difference. See e.g. RCM 921(c)(4), Manual for Courts-Martial, United States (2000 ed.), cited in United States v. Martin where this difference is clearly identified. Brogan effectively sets the two as equal and that is simply LEGALLY wrong.
First the Act, Then the Crime ?
Hence, in the eyes of the law, an assertion of innocence is not a "criminal act" at the time it is made, but is only made a criminal act by a later determination of guilt - which, however, is not a finding of fact in the legal sense.
This distinguishes a punishment for the assertion of innocence from every other crime for which the actual verdict is NOT an element of the crime, but only a determination of whether a criminal act was committed by the accused. For example, in a murder case, the criminal act has been committed, about this there is no doubt. The law then tries to find out who did it and to apply the proper penalty to the perpetrator of the act based on the material elements present, which determine e.g. whether a charge of first or second degree murder, manslaughter, etc. will be brought.
In the case of the assertion of innocence, things are exactly reversed: there is no doubt as to who did it, but there is no clear answer as to whether a criminal act has been committed, which is only determined retroactively by the jury's finding of guilt.
Perjury Distinguished
Note that this analysis applies only to the "assertion of innocence" and not to a specific lie about some point of fact – as in the case of perjury which is a false statement made under oath - which has nothing to do with the assertion of innocence, but lying about some factual item when one is testifying in court. If it can be proven that the actual fact is different than presented by a witness, then perjury has been committed. This must be clearly distinguished from an assertion of innocence by an accused - or in the Stewart case, potential accused - which relates to the subsequent outcome of a criminal prosecution and not to a factual inquiry.
The act of the assertion of innocence is thus only a "conditional crime", dependent upon a LATER event – the verdict. This makes section 1001 as discussed above an ex post facto law in the extended sense.
Brogan makes 18 U.S.C. § 1001 ex post facto for assertions of innocence made in criminal convictions
The standard in Brogan thus is clearly false as a matter of law because it elevates 18 U.S.C. § 1001 to the status of an ex post facto statute - and, if it can be so elevated by court interpretation, then the statute is unconstitutional on its face.
Pursuant to that § 1001, in the case of the assertion of innocence, and contrary to all other crimes - the verdict itself becomes ONE material element of the crime charged – indeed, the ONLY operative element, i.e. the truth or falsity of the assertion of innocence depends SOLELY on the verdict – not on some other objective standard of factual measure of truth. It is a material element which the accused can never know in advance. This is clearly a blanket ex post facto situation which arises anew for EVERY criminal case – as also in the Martha Stewart case – wherever an assertion of innocence is made.
In fact, if we apply the Supreme Court's application of 18 U.S.C. § 1001 in Brogan strictly, anyone continuing to assert their innocence AFTER conviction would be committing a criminal offense every time that such an assertion of innocence was made because the conviction would – in the eyes of that statute – make such an assertion a false statement. There, however, it would not be ex post facto – and there such a prosecution, paradoxically, would be constitutional since there would be prior knowledge of the truth or falsity of the assertion of innocence.
The Risk of Prosecutorial Abuse
Lacking in legal foresight is Justice Scalia's majority opinion in Brogan, where the „theoretical risk“ of "prosecutorial abuse" resulting from the standard applied in Brogan has in fact become an absolute reality in the Martha Stewart case.
In Brogan, Justice Scalia in his majority opinion casually downplayed this substantial risk, even though he mentioned it:
"The supposed danger is that overzealous prosecutors will use this provision as a means of “piling on” offenses–sometimes punishing the denial of wrongdoing more severely than the wrongdoing itself."
But as Professor Bainbridge, an expert on this field of law, writes:
The government did not indict Martha for insider trading, because the Justice department didn't think they could get a conviction on such a novel theory. The securities fraud claim against Martha is a novel - and, IMHO, unsupportable - extension of the securities laws.
Hence, in the Stewart case, the alleged original wrongdoing is not even provable as a matter of criminal law so that only the remaining "piled-on offenses" are being prosecuted. It is this likelihood of an abomination of justice which the Supreme Court has created through injudicious decisionmaking on this issue in the Brogan case.
Official Spin writes:
"U.S. government makes [Martha Stewart] the subject of a criminal test case designed to further expand the already unrecognisable boundaries of the U.S. federal securities laws."
The fact is that the obstruction of justice provision has become a catch-all crime to put anyone behind bars who the government wants to put there. Indeed, most of the celebrity "white-collar crime" cases of recent note have all put the accused corporate executives behind bars using the "obstruction of justice" provision of the criminal law. When that is the case - there is something seriously wrong with the system of justice.
The 5th Amendment
In the view of the LawPundit, part of the problem is that the Supreme Court does not give proper credence to the sound legal rationale behind the 5th amendment. See The Paradox of Auxiliary Rights: The Privilege against Self-Incrimination and the Right to Keep and Bear Arms by Michael Steven Green.
Justice Scalia writes condescendingly of judges who have previously embraced the "exculpatory no" doctrine – i.e. who have not seen an assertion of innocence as a crime if the accused is found guilty. Scalia writes:
"In sum, we find nothing to support the "exculpatory no" doctrine except the many Court of Appeals decisions that have embraced it."
Justice Scalia is notorious for finding "nothing" where many other brilliant judges before him have found "something". In fact, the 5th amendment "exculpatory no" doctrine developed to prohibit just the kinds of prosecutions which we are seeing in the Stewart case. As noted in The Right To Silence, prior to the development of the privilege against self-incrimination:
"[J]udges [had ]the power to interrogate an accused person on oath. This meant that an accused person could be compelled by threat of punishment to swear an oath to tell the truth, and could then be interrogated by the court in order to determine whether or not he or she had committed an offence. This exposed the accused to what the High Court has described as 'the "cruel trilemma" of punishment for refusal to testify, punishment for truthful testimony or perjury (and the consequential possibility of punishment)'."
That exactly is what has happened to Stewart. We hope that she is not put into prison for this kind of legal nonsense.
Keeping up to Date on the Stewart Case
A contraposition of arguments in the case is found at CourtTV.com
Timelines of developments are found at
CourtTV.com
slate.msn.com
money.cnn.com and
Newsday.com
The best places we have found to keep up to date on breaking news in the Martha Stewart trial is at
CourtTV.com
and
the Washington Post - click the "interactive primer" on Martha Stewart in the right column.
A Fair Trial for Martha ?
What is the Martha Stewart trial really all about? The web is full of interesting information on this inquiry.
Jennie Bristow writes in "Michael Jackson: Get real" concerning the child abuse trial of that celebrity:
" The circus surrounding this allegation is as nasty as it is naff".
The same can be said for the Martha Stewart case. It is all an improbable circus.
At one extreme we have opinions such as the following by Alan Reynolds of the Cato Institute, in an article which appeared in the Washington Times, January 18, 2004, where Reynolds writes extremely critically of the prosecution in this case:
"The real liars in this case have always been federal investigators, starting with the House Energy and Commerce Committee.
On June 6, 2002, claims Martha Stewart was strongly suspected of selling her shares because of inside information from Mr. Waksal were quite deliberately leaked to the press by "people close to a congressional investigation"....
The same committee that spread this vicious lie later wrote to U.S. Attorney General Ashcroft on Sept. 10, 2002, requesting that Martha Stewart be prosecuted ... because she "repeatedly has refused to be interviewed by committee staff -- and her attorneys have stated that she would invoke her Fifth Amendment right." This frightening campaign of vengeful, selective prosecution has continued ever since.
The only fair trial for Martha Stewart would be no trial at all, and no settlement, either. But this lady has a lot of courage, so it looks as though a trial will really occur. Prosecutors surely expected her to agree to some plea bargain long before now, making her look bad and them look good. A trial will have the opposite effect."
Although the label "liars" is unnecessary in this context, the article is symptomatic of the emotions which have been unleashed by a prosecution that many people hold to be seriously unjust and contrary to the American system of law.
On the gender front we have opinions such as those of Nina Willdorf at the Houston Chronicle:
"What Martha Stewart did or didn't do is not really why she is about to stand trial. Martha Stewart is standing trial for the serious crime of being a successful woman, for taking a retro 1950s role of the housewife and turning it into a modern moneymaking enterprise. And then telling us it was a good thing. A very good thing."
At the other extreme we have articles such as that by Robin Givhan pointing a finger at the envy of wealth and success which is always at the undercurrent of this kind of injudicious celebrity headhunting by prosecutorial bodies:
"Martha Stewart arrived in federal court ... carrying two handbags....
The second bag ... an Hermes Birkin ... the handbag equivalent of a Rolls-Royce.... It is a bag that announces that one has achieved a breathtaking level of success. It can declare its owner's wealth and status from a distance of 50 paces.
The opening price for a Birkin is $6,000, according to a spokeswoman for the company. The most expensive version is $85,000. It is made of crocodile and has solid gold closures that are adorned with diamonds....
.... Stewart's Birkin was a hand-stitched symbol of the underlying issues -- the privileges of success -- that have so agitated her detractors.
[T]he Birkin has become a cultural emblem of elitism, privilege and celebrity. It is the bag that money alone cannot buy. And it is a reminder to everyone else that those who are famous always seem to have the advantage."
The Liberty Blog replies to this issue as follows:
"The Washington Post finds Martha Stewart... guilty of carrying a handbag some other women can't afford. Ridiculous."
Is the Martha Stewart Trial a Celebrity-Bashing Career-Stepping Witch Hunt for Prosecutors?
"This is a witch hunt," said Linda Smith, as quoted by Erin McClam of the AP.
Such prosecutions may be career stepping stones for ambitious prosecutors, as noted at the Right Coast blawg, but such cases extract a very high price on the legal system, since they engender tremendous disrespect in the populace for the law and its institutions as being "partial" rather than - what they should be - "impartial" bodies.
Government procedure here is the same as in the Clinton impeachment process. If you can't get someone for the crime you wanted to get him for in the first place, get that person behind bars for not cooperating in your investigation of that very same alleged unproven viz. unprovable crime.
Has the Justice Department Nothing Better to DO ?
The US Justice Department, rather than spending its limited time and resources tracking down terrorists and putting truly dangerous people out of action, in this case is "celebrity bashing" and throwing away the taxpayers money bringing an absolutely unnecessary CRIMINAL action against a prominent US citizen who simply has refused to cooperate with them and who has claimed all along that she was NOT guilty of "insider trading" - a claim which is surely true.
Overzealous Government Prosecution Tries to do away with Attorney-Client Privilege
Witch hunts are a Pandora's Box with no end in sight. A chief witch-hunter might exclaim "Give us a chance and we will get everybody." Indeed, the zeal with which the trial against Stewart is proceeding can be surmised from a government application in the Martha Stewart case for the issuance of two subpoenas duces tecum pursuant to Federal Rule of Criminal Procedure 17(c).
[Duces tecum means Latin: bring with you. Used most frequently for a species of subpoena (as in "subpoena duces tecum") which seeks not so much the appearance of a person before a court of law, but the surrender of a thing (e.g. a document or some other evidence) by its holder, to the court, to serve as evidence in a trial. ]
The government asked for eleven documents, of which the court denied nine. As Judge Miriam Goldman Cedarbaum, United States District Judge writes:
"Apart from the fact that the Government has not made the showing required by [United States v. Nixon, 418 U.S. 683 (1974)], nine of the eleven categories of documents sought from Wachtell, Lipton are on their face either protected as work product or attorney-client privileged."
If the government - in this case - had its way, the attorney-client privilege would be nullified any time the government charged anyone with making false statements. It is a perfidious view of law.
As Judge Cedarbaum writes:
"The Government's argument that the existence of the Indictment in this case eliminates attorney-client privilege or work product protection with regard to evidence relating to statements charged in the Indictment is not persuasive. The crime-fraud exception does not provide the broad elimination of attorney-client privilege and work product protection that the Government seeks.... If the law were otherwise, every defendant accused of a crime involving the making of false statements to a government agency would lose the protection of the attorney-client privilege with respect to prior statements to his lawyer concerning the same subject matter...."
The things that the government wanted to obtain show that there is very little understanding in the Justice Department for the freedoms which are the hallmarks of the American legal system.
Other Martha Stewart Trial Links
Martha Stewart WNBC/Marist Poll
Findarticles.com quoting an article in the Advocate by Jeremy Quittner - "Martha's fall guy: how did this 27-year-old gay man from Massachusetts become the first to fall in the Martha Stewart scandal? (Business)"
The bull in Martha Stewart's china shop
"Christopher Byron explains why his unauthorized biography has ruffled the 'queen of whitebread living'" by Katharine Mieszkowski
Salon.com - Brilliant Careers - she's martha and you're not - Martha Stewart by Mary Elizabeth Williams
Andy Rooney - CBS News - Why Do People Hate Martha?
Gawker on jury selection
Forgotten Fronts - "Martha Stewart Jury Selection Nonsense"
Jerry Heaster - Kansas City Star - "Other Voices: Stewart case is a specious undertaking"
Belinda Halter and her Martha Stewart Guide picks
The Morning News - Martha's Big Day - by Danny Gregory
David Veksler at rationalmind.net
Welcome to FreeMartha.Org - The Martha Stewart Portal from HELL
Martha Stewart.com
Martha Talks
The Detroit Free Press has an article "Lawyers ask: How do you see Martha?" taken from an article in the Houston Chronicle by Andrew Guy Jr. and Daniel J. Vargas - Try this juror questionnaire
Howard Bashman at How Appealing refers to ScrappleFace's
"Martha Stewart Lawyers File for 'Change of Veneer', a tongue-in-cheek commentary.
Permalink : Andis Kaulins : 2/02/2004 04:45:00 PM
The Martha Stewart Case and the Erroneous Standard in Brogan
The Martha Stewart Case and the Erroneous Standard in Brogan
Prison-Possessed Prosecutor Witch-Hunting Martha Stewart ?
Professors Yin and Bainbridge have been keeping us up regularly on legal issues involved in the Martha Stewart trial and Bainbridge particularly has been aghast at the government's prosecution of this case, writing:
"[I]t is unfair to let the government fling allegations, which they end up deciding not to charge somebody with, and then let the government prosecute that person for having denied the allegations the government decided it couldn't prove. Why isn't that just whacked?
As written by the Associated Press:
The government says [Martha Stewart] was tipped that ImClone founder Sam Waksal was trying to sell his shares [of ImClone]. Waksal has admitted getting advance word of the government decision [that it would not review ImClone's application for its colon cancer drug, Erbitux] and pleaded guilty to insider trading. But Stewart was never accused by the government of personally knowing about the government report.[THAT would be insider trading.]
As Bainbridge noted above, none of the charges brought against Stewart relate to insider trading. The actual charges against Martha Stewart (five of the nine counts apply to her) are:
(1) conspiracy to obstruct justice, make false statements, and commit perjury in violation of 18 U.S.C. § 371 (Count 1); (2) making false statements in violation of 18 U.S.C. § 1001 (Counts 3 and 4); (3) obstruction of justice in violation of 18 U.S.C. § 1505 (Count 8); and securities fraud (Count 9).
Jack Kemp in "Congress should rein in rogue federal prosecutors" writes:
"Using a little-known federal statute (Title 18, Section 1001 of the U.S. Code), federal prosecutors are threatening to send Martha Stewart to jail for [allegedly] lying to government officials and for publicly declaring her innocence of insider trading even though the government refuses to charge her with the actual crime of insider trading. That's outrageous....
...Section 1001 makes it a crime to 'knowingly and willfully make any materially false, fictitious or fraudulent statement or representation in any matter within the jurisdiction of the executive, legislative or judicial branch of the United States,' even if you are not under oath.[emphasis added by Law Pundit] The sweep of Section 1001 and the unchecked discretion it gives to federal prosecutors are awesome....
The practice of intimidating and harassing individuals into violating Section 1001 should be stopped. The only way a person should be charged under Section 1001 is if he or she is also charged with the underlying crime that triggered the original investigation during which the alleged false statement or representation was made."
Furthermore, one of the prosecution charges leveled against Martha Stewart is that her public assertion of innocence of "insider trading" - a charge which has not even been formally brought - constitutes securities fraud because that assertion – according to the government prosecutors – was made with the intention of keeping the price of stock shares in her company from falling, as written here:
"But the big concern is the securities fraud charge ... the charge hinges on the claim that Stewart lied to the press and the public in an attempt to prop up the value of her stock, Martha Stewart Living Omnimedia (MSLO).”
Just imagine what possibilities such a novel charge opens for US government prosecutors in going after corporate executives, whose ANY statement could fall victim to a similar charge. Beware my friends, this is tyranny. The flagrant abuse of power by government prosecutors in this case is a very black eye for democracy, but the problem was already clearly recognized by some of the judges in the Brogan case, e.g. in the Ginsberg opinion concurring in judgment as well as in the Stevens dissent - Stevens being the ONLY justice who would have decided Brogan "correctly" - so our opinion - by maintaining the "exculpatory no" standard as it had been applied previously by the courts.
Does the law anywhere help us against this odious, undemocratic, freedom-threatening and tyrannical legislative provision?
Maybe, but it is a longshot, and a considerable stretch of a Constitutional provision.
Ex Post Facto Laws are Prohibited by the Constitution
Let us ask a simple question to which everyone knows the answer. When Martha Stewart publicly asserted her innocence of the publicly rumored charge of insider trading, did she know that her "assertion" - and not the possible "insider trading" charge - might put her in prison? Of course not. No one knew this. It is a novel charge.
As written by Solomon L. Wisenberg of Ross, Dixon & Bell, L.L.P. for FindLaw:
"Did you know that it is a crime to tell a lie to the federal government? Even if your lie is oral and not under oath? Even if you have received no warnings of any kind? Even if you are not trying to cheat the government out of money? Even if the government is not actually misled by your falsehood? Well it is."
This is part of the larger legal and societal problem in the Martha Stewart case. The government is threatening to put Stewart into prison for a number of actions which neither Stewart nor anyone else for that matter would have foreseen as being subject to criminal penalties. This is law at its worst - unpredictable and serendipity. It is injustice personified.
The Law Pundit sees a possible legal remedy in the prohibition of ex post facto laws found in the US Constitution.
Article I Section 9 (federal law) and Section 10 (state law) of the Constitution of the United States prohibit the passage of ex post facto laws. Ex post facto is a Latin phrase meaning "after the fact". The Constitutional prohibition against ex post facto laws prohibits laws which have the effect of RETROACTIVELY punishing any behavior as a criminal offense. Obviously, we must as citizens know in advance of our actions what is prohibited by the criminal law – not afterwards, whereas it is quite clear that Title 18, Section 1001 of the U.S. Code is being used to "nab" persons unknowing of this law and to put them behind bars - mostly because the government thinks that these persons have committed OTHER white-collar crimes which the government either can not prove or has more trouble proving.
As written by Steve Selinger at "The Case Against Civil Ex Post Facto Laws"
"In The Constitution of Liberty, F. A. Hayek (1960: 205-20) notes that some coercion, while unavoidable in a civil society, can be minimized by requiring that coercive actions comply with general rules that are known in advance by individuals. If individuals know the law, they can base their actions upon established rules and minimize the ill effects of coercion. Hayek states that not all legislative enactments will satisfy the three criteria of what he calls "true law''--generality, certainty, and equality. He argues that true law provides the general rules which minimize coercion and that legislative enactments which do not satisfy these criteria are objectionable. He writes that the law must be general, that it must be known and certain, and that it should apply equally to all. A necessary condition for the law to be known and certain is a prohibition on ex post facto laws. After all, the law can hardly be known and certain if new laws can be made to apply retroactively to actions already performed."
The Legal Standard regarding Ex Post Facto Laws
The standard regarding ex post facto laws was declared in 1798 in Calder v. Bull, 3 U.S. 386 (Dall.) (1798) in an opinion written by Chief Justice Chase:
“I will state what laws I consider ex post facto laws, within the words and the intent of the prohibition. 1st. Every law that makes an action, done before the passing of the law, and which was innocent when done, criminal; and punishes such action. 2nd. Every law that aggravates a crime, or makes it greater than it was, when committed. 3rd. Every law that changes the punishment, and inflicts a greater punishment, than the law annexed to the crime, when committed. 4th. Every law that alters the legal rules of evidence, and receives less, or different, testimony, than the law required at the time of the commission of the offence, in order to convict the offender. [3 U.S. 386, 391] All these, and similar laws, are manifestly unjust and oppressive….There is a great and apparent difference between making an UNLAWFUL act LAWFUL; and the making an innocent action criminal, and punishing it as a CRIME.”
Can a Public Assertion of Innocence be Punishable as a Crime? – Application of Justice Chase's ex post facto Test
In the Martha Stewart case, Stewart is being charged with a specific crime FOR asserting her innocence.
As written by Eugene Volokh regarding Brogan v. United States, 522 U.S. 398 (1998):
"[T]he Supreme Court held that 18 USC sec. 1001, the federal statute generally bars false statements to federal officials, punishes false assertions of innocence as well as other false statements."[emphasis added]
In the view of LawPundit, the right to publicly assert innocence of the commission of a crime is one of the bullwarks of the "presumption of innocence" which is at the root of American criminal law.
The attachment of yet another crime – ANY other crime - to the public assertion of innocence has a chilling effect on this presumption since it means in every case that a finding of guilt by the court – in the eyes of the law – means that the accused has lied and that his sentence is thus made greater, i.e. the punishment is increased by the new charge of the "obstruction of justice" for "making a false statement" or – as here – also "piled-on" by a charge such as “securities fraud”. This result violates the principles set out by Justice Chase.
The standard in Brogan makes an accused's sincere public assertion of innocence [as opposed to the formal legal plea of not guilty as made in court] a "potential" criminal act. It punishes such an action if a guilty verdict is issued. This violates point Nr. 1 above in Chase's opinion.
For any and every criminal charge, a person asserting innocence is opening himself or herself up to the additional charge of the obstruction of justice – for making a false statement - if a finding of guilty is brought in by the jury. This violates Nr. 2 above.
In asserting innocence, the accused may be subjected to a greater penalty for an obstruction of justice charge - or as here a securities fraud charge - than the penalty which might have been issued for the original crime charged. This violates Nr. 3 above.
The mere fact that conviction of a crime serves as the sole material element for finding "a false assertion of innocence" reduces the normal standards of proof for criminal offences, which requires the prosecution to prove the material elements of a case – elements which existed PRIOR to the verdict - and not occurring TIME-COINCIDENT with the issuance of the verdict.
As written by Paul Thomasch and Gail Appleson at Reuters in
"Martha Stewart Lawyers Say Jurors Are Confused":
"Prosecutors never obtained an insider trading indictment against Stewart. Instead they left those accusations to securities regulators who brought a civil suit that requires less proof. That suit is pending."
As related in that article, even the trial judge in the Stewart case has referred to the Stewart case IN FRONT OF PROSPECTIVE JURORS as being a "securities fraud" case. If the judge is already confused, the jury will be moreso.
In the case of the "assertion of innocence", nothing must be proven except the fact of the statement itself. The only "true" material element for the crime is the verdict determining guilt. This violates Nr. 4 above.
The Erroneous Decision in Brogan
The Law Pundit maintains that the US Supreme Court standard in Brogan in interpreting 18 U.S.C. § 1001 to permit prosecution of a "false assertion of innocence" – i.e. by not permitting an "exculpatory no" - is clearly erroneous as a matter of law insofar as it permits the determination of the commission of a crime ex post facto, which is explicitly forbidden by the US Constitution. This interpretation by Brogan clearly makes 18 U.S.C. § 1001 OPERATE continuously as an ex post facto law in permitting the punishment of assertions of innocence retroactively, and hence it is unconstitutional.
Findings of Fact and Findings of Guilt
Brogan held that a false assertion of innocence falls under "making of false statements" in violation of 18 U.S.C. § 1001. But this holding is simply false - the Supreme Court Justices did not think the matter through carefully and the short majority opinion shows they took it too lightly - always a grave mistake at this level of decisionmaking. The finding of guilt or innocence is NOT an objective "finding of fact" in the criminal law. Rather, the jury verdict is a "finding of guilt". This is an important legal difference. See e.g. RCM 921(c)(4), Manual for Courts-Martial, United States (2000 ed.), cited in United States v. Martin where this difference is clearly identified. Brogan effectively sets the two as equal and that is simply LEGALLY wrong.
First the Act, Then the Crime ?
Hence, in the eyes of the law, an assertion of innocence is not a "criminal act" at the time it is made, but is only made a criminal act by a later determination of guilt - which, however, is not a finding of fact in the legal sense.
This distinguishes a punishment for the assertion of innocence from every other crime for which the actual verdict is NOT an element of the crime, but only a determination of whether a criminal act was committed by the accused. For example, in a murder case, the criminal act has been committed, about this there is no doubt. The law then tries to find out who did it and to apply the proper penalty to the perpetrator of the act based on the material elements present, which determine e.g. whether a charge of first or second degree murder, manslaughter, etc. will be brought.
In the case of the assertion of innocence, things are exactly reversed: there is no doubt as to who did it, but there is no clear answer as to whether a criminal act has been committed, which is only determined retroactively by the jury's finding of guilt.
Perjury Distinguished
Note that this analysis applies only to the "assertion of innocence" and not to a specific lie about some point of fact – as in the case of perjury which is a false statement made under oath - which has nothing to do with the assertion of innocence, but lying about some factual item when one is testifying in court. If it can be proven that the actual fact is different than presented by a witness, then perjury has been committed. This must be clearly distinguished from an assertion of innocence by an accused - or in the Stewart case, potential accused - which relates to the subsequent outcome of a criminal prosecution and not to a factual inquiry.
The act of the assertion of innocence is thus only a "conditional crime", dependent upon a LATER event – the verdict. This makes section 1001 as discussed above an ex post facto law in the extended sense.
Brogan makes 18 U.S.C. § 1001 ex post facto for assertions of innocence made in criminal convictions
The standard in Brogan thus is clearly false as a matter of law because it elevates 18 U.S.C. § 1001 to the status of an ex post facto statute - and, if it can be so elevated by court interpretation, then the statute is unconstitutional on its face.
Pursuant to that § 1001, in the case of the assertion of innocence, and contrary to all other crimes - the verdict itself becomes ONE material element of the crime charged – indeed, the ONLY operative element, i.e. the truth or falsity of the assertion of innocence depends SOLELY on the verdict – not on some other objective standard of factual measure of truth. It is a material element which the accused can never know in advance. This is clearly a blanket ex post facto situation which arises anew for EVERY criminal case – as also in the Martha Stewart case – wherever an assertion of innocence is made.
In fact, if we apply the Supreme Court's application of 18 U.S.C. § 1001 in Brogan strictly, anyone continuing to assert their innocence AFTER conviction would be committing a criminal offense every time that such an assertion of innocence was made because the conviction would – in the eyes of that statute – make such an assertion a false statement. There, however, it would not be ex post facto – and there such a prosecution, paradoxically, would be constitutional since there would be prior knowledge of the truth or falsity of the assertion of innocence.
The Risk of Prosecutorial Abuse
Lacking in legal foresight is Justice Scalia's majority opinion in Brogan, where the „theoretical risk“ of "prosecutorial abuse" resulting from the standard applied in Brogan has in fact become an absolute reality in the Martha Stewart case.
In Brogan, Justice Scalia in his majority opinion casually downplayed this substantial risk, even though he mentioned it:
"The supposed danger is that overzealous prosecutors will use this provision as a means of “piling on” offenses–sometimes punishing the denial of wrongdoing more severely than the wrongdoing itself."
But as Professor Bainbridge, an expert on this field of law, writes:
The government did not indict Martha for insider trading, because the Justice department didn't think they could get a conviction on such a novel theory. The securities fraud claim against Martha is a novel - and, IMHO, unsupportable - extension of the securities laws.
Hence, in the Stewart case, the alleged original wrongdoing is not even provable as a matter of criminal law so that only the remaining "piled-on offenses" are being prosecuted. It is this likelihood of an abomination of justice which the Supreme Court has created through injudicious decisionmaking on this issue in the Brogan case.
Official Spin writes:
"U.S. government makes [Martha Stewart] the subject of a criminal test case designed to further expand the already unrecognisable boundaries of the U.S. federal securities laws."
The fact is that the obstruction of justice provision has become a catch-all crime to put anyone behind bars who the government wants to put there. Indeed, most of the celebrity "white-collar crime" cases of recent note have all put the accused corporate executives behind bars using the "obstruction of justice" provision of the criminal law. When that is the case - there is something seriously wrong with the system of justice.
The 5th Amendment
In the view of the LawPundit, part of the problem is that the Supreme Court does not give proper credence to the sound legal rationale behind the 5th amendment. See The Paradox of Auxiliary Rights: The Privilege against Self-Incrimination and the Right to Keep and Bear Arms by Michael Steven Green.
Justice Scalia writes condescendingly of judges who have previously embraced the "exculpatory no" doctrine – i.e. who have not seen an assertion of innocence as a crime if the accused is found guilty. Scalia writes:
"In sum, we find nothing to support the "exculpatory no" doctrine except the many Court of Appeals decisions that have embraced it."
Justice Scalia is notorious for finding "nothing" where many other brilliant judges before him have found "something". In fact, the 5th amendment "exculpatory no" doctrine developed to prohibit just the kinds of prosecutions which we are seeing in the Stewart case. As noted in The Right To Silence, prior to the development of the privilege against self-incrimination:
"[J]udges [had ]the power to interrogate an accused person on oath. This meant that an accused person could be compelled by threat of punishment to swear an oath to tell the truth, and could then be interrogated by the court in order to determine whether or not he or she had committed an offence. This exposed the accused to what the High Court has described as 'the "cruel trilemma" of punishment for refusal to testify, punishment for truthful testimony or perjury (and the consequential possibility of punishment)'."
That exactly is what has happened to Stewart. We hope that she is not put into prison for this kind of legal nonsense.
Keeping up to Date on the Stewart Case
A contraposition of arguments in the case is found at CourtTV.com
Timelines of developments are found at
CourtTV.com
slate.msn.com
money.cnn.com and
Newsday.com
The best places we have found to keep up to date on breaking news in the Martha Stewart trial is at
CourtTV.com
and
the Washington Post - click the "interactive primer" on Martha Stewart in the right column.
A Fair Trial for Martha ?
What is the Martha Stewart trial really all about? The web is full of interesting information on this inquiry.
Jennie Bristow writes in "Michael Jackson: Get real" concerning the child abuse trial of that celebrity:
" The circus surrounding this allegation is as nasty as it is naff".
The same can be said for the Martha Stewart case. It is all an improbable circus.
At one extreme we have opinions such as the following by Alan Reynolds of the Cato Institute, in an article which appeared in the Washington Times, January 18, 2004, where Reynolds writes extremely critically of the prosecution in this case:
"The real liars in this case have always been federal investigators, starting with the House Energy and Commerce Committee.
On June 6, 2002, claims Martha Stewart was strongly suspected of selling her shares because of inside information from Mr. Waksal were quite deliberately leaked to the press by "people close to a congressional investigation"....
The same committee that spread this vicious lie later wrote to U.S. Attorney General Ashcroft on Sept. 10, 2002, requesting that Martha Stewart be prosecuted ... because she "repeatedly has refused to be interviewed by committee staff -- and her attorneys have stated that she would invoke her Fifth Amendment right." This frightening campaign of vengeful, selective prosecution has continued ever since.
The only fair trial for Martha Stewart would be no trial at all, and no settlement, either. But this lady has a lot of courage, so it looks as though a trial will really occur. Prosecutors surely expected her to agree to some plea bargain long before now, making her look bad and them look good. A trial will have the opposite effect."
Although the label "liars" is unnecessary in this context, the article is symptomatic of the emotions which have been unleashed by a prosecution that many people hold to be seriously unjust and contrary to the American system of law.
On the gender front we have opinions such as those of Nina Willdorf at the Houston Chronicle:
"What Martha Stewart did or didn't do is not really why she is about to stand trial. Martha Stewart is standing trial for the serious crime of being a successful woman, for taking a retro 1950s role of the housewife and turning it into a modern moneymaking enterprise. And then telling us it was a good thing. A very good thing."
At the other extreme we have articles such as that by Robin Givhan pointing a finger at the envy of wealth and success which is always at the undercurrent of this kind of injudicious celebrity headhunting by prosecutorial bodies:
"Martha Stewart arrived in federal court ... carrying two handbags....
The second bag ... an Hermes Birkin ... the handbag equivalent of a Rolls-Royce.... It is a bag that announces that one has achieved a breathtaking level of success. It can declare its owner's wealth and status from a distance of 50 paces.
The opening price for a Birkin is $6,000, according to a spokeswoman for the company. The most expensive version is $85,000. It is made of crocodile and has solid gold closures that are adorned with diamonds....
.... Stewart's Birkin was a hand-stitched symbol of the underlying issues -- the privileges of success -- that have so agitated her detractors.
[T]he Birkin has become a cultural emblem of elitism, privilege and celebrity. It is the bag that money alone cannot buy. And it is a reminder to everyone else that those who are famous always seem to have the advantage."
The Liberty Blog replies to this issue as follows:
"The Washington Post finds Martha Stewart... guilty of carrying a handbag some other women can't afford. Ridiculous."
Is the Martha Stewart Trial a Celebrity-Bashing Career-Stepping Witch Hunt for Prosecutors?
"This is a witch hunt," said Linda Smith, as quoted by Erin McClam of the AP.
Such prosecutions may be career stepping stones for ambitious prosecutors, as noted at the Right Coast blawg, but such cases extract a very high price on the legal system, since they engender tremendous disrespect in the populace for the law and its institutions as being "partial" rather than - what they should be - "impartial" bodies.
Government procedure here is the same as in the Clinton impeachment process. If you can't get someone for the crime you wanted to get him for in the first place, get that person behind bars for not cooperating in your investigation of that very same alleged unproven viz. unprovable crime.
Has the Justice Department Nothing Better to DO ?
The US Justice Department, rather than spending its limited time and resources tracking down terrorists and putting truly dangerous people out of action, in this case is "celebrity bashing" and throwing away the taxpayers money bringing an absolutely unnecessary CRIMINAL action against a prominent US citizen who simply has refused to cooperate with them and who has claimed all along that she was NOT guilty of "insider trading" - a claim which is surely true.
Overzealous Government Prosecution Tries to do away with Attorney-Client Privilege
Witch hunts are a Pandora's Box with no end in sight. A chief witch-hunter might exclaim "Give us a chance and we will get everybody." Indeed, the zeal with which the trial against Stewart is proceeding can be surmised from a government application in the Martha Stewart case for the issuance of two subpoenas duces tecum pursuant to Federal Rule of Criminal Procedure 17(c).
[Duces tecum means Latin: bring with you. Used most frequently for a species of subpoena (as in "subpoena duces tecum") which seeks not so much the appearance of a person before a court of law, but the surrender of a thing (e.g. a document or some other evidence) by its holder, to the court, to serve as evidence in a trial. ]
The government asked for eleven documents, of which the court denied nine. As Judge Miriam Goldman Cedarbaum, United States District Judge writes:
"Apart from the fact that the Government has not made the showing required by [United States v. Nixon, 418 U.S. 683 (1974)], nine of the eleven categories of documents sought from Wachtell, Lipton are on their face either protected as work product or attorney-client privileged."
If the government - in this case - had its way, the attorney-client privilege would be nullified any time the government charged anyone with making false statements. It is a perfidious view of law.
As Judge Cedarbaum writes:
"The Government's argument that the existence of the Indictment in this case eliminates attorney-client privilege or work product protection with regard to evidence relating to statements charged in the Indictment is not persuasive. The crime-fraud exception does not provide the broad elimination of attorney-client privilege and work product protection that the Government seeks.... If the law were otherwise, every defendant accused of a crime involving the making of false statements to a government agency would lose the protection of the attorney-client privilege with respect to prior statements to his lawyer concerning the same subject matter...."
The things that the government wanted to obtain show that there is very little understanding in the Justice Department for the freedoms which are the hallmarks of the American legal system.
Other Martha Stewart Trial Links
Martha Stewart WNBC/Marist Poll
Findarticles.com quoting an article in the Advocate by Jeremy Quittner - "Martha's fall guy: how did this 27-year-old gay man from Massachusetts become the first to fall in the Martha Stewart scandal? (Business)"
The bull in Martha Stewart's china shop
"Christopher Byron explains why his unauthorized biography has ruffled the 'queen of whitebread living'" by Katharine Mieszkowski
Salon.com - Brilliant Careers - she's martha and you're not - Martha Stewart by Mary Elizabeth Williams
Andy Rooney - CBS News - Why Do People Hate Martha?
Gawker on jury selection
Forgotten Fronts - "Martha Stewart Jury Selection Nonsense"
Jerry Heaster - Kansas City Star - "Other Voices: Stewart case is a specious undertaking"
Belinda Halter and her Martha Stewart Guide picks
The Morning News - Martha's Big Day - by Danny Gregory
David Veksler at rationalmind.net
Welcome to FreeMartha.Org - The Martha Stewart Portal from HELL
Martha Stewart.com
Martha Talks
The Detroit Free Press has an article "Lawyers ask: How do you see Martha?" taken from an article in the Houston Chronicle by Andrew Guy Jr. and Daniel J. Vargas - Try this juror questionnaire
Howard Bashman at How Appealing refers to ScrappleFace's
"Martha Stewart Lawyers File for 'Change of Veneer', a tongue-in-cheek commentary.
Permalink : Andis Kaulins : 2/02/2004 04:45:00 PM
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