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FRIDAY, MARCH 18, 2005
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EDITORIAL

Martha Stewart emerges from prison as a folk hero

In the old days, one might say that Martha Stewart took her punishment like a real man, meaning she did the time for the crime and without fanfare.

Unable to nail her on insider trading, the federal government said she obstructed justice and lied to the government about her timely sale of nearly 4,000 ImClone Systems Inc., shares in 2001 that saved her $51,000. Share prices fell dramatically when news broke that the company's new cancer drug received a bad government review.

Instead of waiting for the court system to decide if she deserved a new trial, Ms. Stewart headed to prison last fall in West Virginia, where she served five months, apparently as a model prisoner.

Out of prison and still partially confined to her palatial estate in Westchester County, New York, the diva of domesticity is back at work while seeking a new trial to clear her name.

Her fortune sagged after her conviction but bounced back from a 52-week low of $8.25 a share this time last year and was trading in the low $20s Thursday. Her financial empire is poised for further growth, largely on how well she came through the humbling experience.

At the time of her trial, Americans felt sympathy for her because she seemed to be the only business tycoon to suffer from corporate scandals while her male counterparts were not being tried.

Bernie Ebbers was recently convicted of Worldcom fraud, however, and Richard Scrushy is on trial in Birmingham for manipulating HealthSouth accounting to support falling stock prices. But Ken Lay is still winning delays in his Enron trial.

The rush to convict her of something may have been an attempt to lessen the mounting public pressure on the government to restore confidence in corporate America. Whatever the reason, indicting and trying Ms. Stewart only increased pressure for the federal prosecutors to prosecute the males accused in the billion-dollar frauds at Enron, Worldcom and HealthSouth.

Ironically, she never cost any stockholder a dime and prosecutors didn't charge her with fraud. Prosecutors easily could have overlooked her lack of candor during routine FBI questioning, as they do so often in gathering information.

Jurors, however, disregarded any thought that she might be the scapegoat for corporate fraud. From here it was a just verdict couched in the admiration that the woman kept her dignity and that she came out of prison a stronger and wiser person.

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