If Martha Stewart pleads guilty, what sentence might she receive?
Mark H. Allenbaugh
(FindLaw) -- Last week, domestic doyenne Martha Stewart finally was indicted. She now faces one count of conspiracy, two counts of making false statements to government investigators, one count of obstruction of justice, and, most seriously of all, one count of securities fraud.
All of the charges relate to her controversial 2001 sale of stock in ImClone, the company then run by her friend Sam Waksal. Waksal has pleaded guilty to insider trading during the same time period and is scheduled to be sentenced tomorrow.
Not since the O.J. Simpson murder trial has a prominent, influential, A-list celebrity been charged with a serious felony. Moreover, unlike Simpson, Stewart faces federal, not state, prosecution. At the federal level, celebrity prosecutions for serious criminal offenses are quite rare, and sentencings for such offenses are unheard of.
Stewart has vowed to fight the charges, and declared her innocence. But given the amount of jail time she is facing, she may well change her mind about insisting on going to trial.
If Stewart agrees to a plea, or is convicted after trial, how -- if at all -- might her celebrity status be relevant to the sentence she receives? And, more fundamentally, under the Federal Sentencing Guidelines, what is that sentence likely to look like?
The majority of fraud defendants plead guilty
Combined, the charges against Stewart carry a 30-year statutory maximum term of imprisonment, and a $2 million fine. Moreover, if Stewart's case follows the overwhelming trend in recent federal fraud cases, she is almost certain to either plead guilty or be found guilty after a trial.
According to the latest available data from the Bureau of Justice Statistics, 8,061 federal fraud cases were tried in 2000. Of these, 7,976 (or 98.9 percent) resulted in convictions -- and 95.5 percent of those convictions were the result of guilty pleas, rather than guilty verdicts. Thus, your average fraud defendant is overwhelmingly likely to plead guilty, in order to receive a lesser sentence.
But what if Stewart defies the odds, and refuses to plead guilty? Could she win at trial? Again, looking to the statistics does not inspire confidence.
In 2000, 447 federal criminal fraud trials were held. Of these, 362 (or 81 percent) resulted in guilty verdicts. Meanwhile, the remaining 85 (19 percent) resulted in either a mistrial or a not-guilty verdict. In short, the odds of winning at trial are still very poor -- especially since a mistrial does not preclude the government from bringing the case again.
Of course, Stewart may have a few advantages that other defendants do not have: huge resources and terrific lawyers. Yet it's worth remembering that federal fraud is generally a white-collar crime, and retention of excellent private counsel in such cases is not unusual.
The federal system: 'Real offense' sentencing based on all 'relevant conduct'
If Stewart pleads guilty, or is convicted, her sentencing will occur pursuant to the Federal Sentencing Guidelines. The guidelines, which became effective in 1987, transformed federal sentencing by diminishing the discretion of federal judges, and abolishing parole. Now the judge's task is to choose a sentence among the possibilities that lie within the narrow range set by the guidelines.
How does the judge calculate the sentencing range? Criminal history matters. Stewart apparently has none, so she would fall into the lowest criminal history category. Offense level also matters. To determine it, the judge looks to the nature of the offense -- as defined by the defendant's actual conduct, not the conduct charged in the indictment.
It does not matter how many counts the indictment contains (five, in Stewart's case). If the counts are "connected by a common criminal objective or constitut[e] part of a common scheme or plan," as is alleged to have been the case here, then they are "grouped" together for purposes of sentencing as if they were one single offense.
Thus, there is no longer any incentive, under the Guidelines, for prosecutors to engage in "charge-stacking" in a bid for a longer sentence. Hundred-count indictments might impress the jury, but they will not matter at sentencing.
In defining the offense conduct, all "relevant conduct" can be considered by the judge — not just what the government proved at trial, or chose to charge. Even conduct of which the defendant is acquitted at trial can be taken into account.
Thus, the only way for a defendant, like Stewart, who faces a set of serious charges, to avoid having all of the underlying relevant conduct considered at sentencing, is to be acquitted on every one of the charges. A partial win, in other words, is no win at all. While this might seem disturbing and unfair, it is the law; the U.S. Supreme Court upheld sentencing based on acquitted conduct in United States v. Watts.
What a sentence based on the insider trading offense might be
I will assume that Stewart pleads to, or is found guilty of, the most serious of the offenses -- the securities fraud offense -- or that this offense, at a minimum, is counted as "relevant conduct" by the judge. This offense carries a ten-year statutory maximum penalty; the rest carry only five years.
Pursuant to the guidelines, securities fraud can be sentenced either as a fraud or insider trading. Given the facts set forth in the indictment, it is most likely the judge will sentence Stewart pursuant to the insider trading sentencing guidelines. The sentence for insider trading is determined largely by how much money the offender gained—or conversely, did not lose—as a result of the illicit activity. According to the government, Stewart's stock sale allowed her to avoid losing between $45,673 and $51,222.
For defendants such as Stewart who have no criminal history, this initially translates into a sentencing range of 15-21 months. But in this case, there is a wrinkle: Stewart also has been charged with obstruction of justice. If she pleads guilty to this offense, or if it is brought in as "relevant conduct," her sentencing range increases to 21-27 months.
Meanwhile, there is another factor that could increase Stewart's sentencing range. According to the government, Stewart was part of an "unlawful conspiracy to obstruct the investigations." If the sentencing judge finds her to have been an "organizer, leader, manager or supervisor in any criminal activity" -- for instance, the alleged conspiracy -- then her sentencing range would increase to at least 27-33 months.
Ways in which Stewart could seek to reduce her sentencing range
Stewart, however, could try to lower this range in several ways.
First, accepting full responsibility for her offense conduct and cooperating with the government would reduce the sentencing range back down to 21-27 months even if she had received the organizer/leader upward adjustment in her sentencing range. Indeed, if she did this before -- not after -- trial, and the government agreed, the range could be reduced further, to 18-24 months. (These "acceptance of responsibility" adjustments may explain, in part, why so many defendants choose to plead guilty, rather than face the time, expense, and public humiliation of a trial that in all likelihood will result in a more onerous sentence.)
Second, Stewart can seek a "downward departure" from the Guideline sentencing range -- though this may be far harder to achieve.
The guidelines, of course, cannot take into account every possible factor in kind or degree that may be relevant to sentencing in an individual case. Thus, they allow for departures both below and above the Guideline sentencing range when "there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described."
Unfortunately for Stewart, congressional legislation has directed the U.S. Sentencing Commission to revise the guidelines in order to further restrict the availability of downward departures. Nevertheless, the guidelines still list several grounds for downward departures for which Stewart might qualify.
These grounds include, in extraordinary circumstances, "aberrant behavior" and "record of prior good works." Both of these might help Stewart. She could argue that her alleged illicit sale of the ImClone stock "was committed without significant planning, was of limited duration, and represented a marked deviation ... from an otherwise law-abiding life." She also could point to her support for charities such as the March of Dimes and the Lupus Foundation, and civic activities in which she engages.
However, the government probably would vigorously contest any departures based on these grounds. In a letter to the U.S. Sentencing Commission last October, the Department of Justice stated that it was "concerned" about the frequency these grounds for downward departures had been "successfully invoked by white collar criminal defendants." According to the Department, such departures "are fodder in virtually every fraud sentencing given the community standing and background of most white collar defendants."
The celebrity factor: Susceptibility to abuse in prison can be relevant
There is another downward departure Stewart might successfully seek. If she received it, she might not have to serve any time in prison at all, but rather to pay fines, do community service, or be subject to home confinement or other prison alternatives instead. And she has an infamous L.A. cop to thank for this departure.
Stacey Koon was one of the officers convicted of violating Rodney King's civil rights by taking part in the videotaped beating of King that eventually led to the L.A. riots. At Koon's sentencing, the judge decided to depart below the Guidelines' range, in part because of Koon's "susceptibility to abuse in prison" due to "the extraordinary notoriety and national media coverage of [his] case."
The decision was highly controversial, and the U.S. Court of Appeals for the 9th Circuit reversed the departure. However, the Supreme Court overruled the appellate court, holding that it had applied the wrong standard of review: Downward departures, the Court held in Koon v. United States, could only be reversed based on "abuse of discretion," and there was no abuse of discretion in this case.
That "abuse of discretion" standard recently was changed by Congressional legislation to a far less deferential one: "de novo" review in which the appellate court, in effect, decides the issue anew.
Obviously, Stewart is no Stacey Koon -- not remotely so. But she is hardly likely to simply blend in with other inmates, either. Given her celebrity, she may be far more susceptible to abuse in prison than the average female inmate. Celebrities can be victimized simply because fellow prisoners wish to gain notoriety. And Stewart's prior image of untouchable, "I can do everything better than you" perfectionism, may not have endeared her to fellow inmates.
Another possible ground for a downward departure is selective prosecution. Some have suggested that Stewart was targeted because she is a powerful woman. While the government pursues her for avoiding $50,000 in losses, it has yet to indict former Enron CEO Ken Lay and former WorldCom CEO Bernard Ebbers -- each of who is alleged to have made millions in profits from fraudulent schemes and caused significant losses to millions of investors. This departure, too, if granted, might spare Stewart from serving any prison time at all.
Finally, if Stewart can provide to the government information helpful "in the investigation or prosecution of another person who has committed an offense," she may also be eligible for a "substantial assistance" downward departure. Information regarding her broker and co-defendant Peter Bacanovic may qualify, but she will have to act fast before Bacanovic gives up the goods first.
In the end, Stewart's case raises a provocative question. The Federal Sentencing Guidelines sought to more or less equalize sentences for all defendants who committed similar crimes, with similar criminal histories. But should celebrities have to serve equal prison time if their very notoriety makes it more likely that they will be prosecuted in the first place, and face abuse once imprisoned? After all, selective prosecution is unfair, and abuse in prison certainly is not part of the punishment a defendant is supposed to suffer.
Statistics suggest that the average defendant who committed offenses similar to Stewart's, and similarly had no prior criminal history, might serve somewhat less than two years in prison. Should Stewart, because of her celebrity, serve less than that?
Mark Allenbaugh, a FindLaw columnist, is an Associate at Montedonico, Belcuore & Tazzara, P.C. in Washington, D.C., and is an adjunct professor in the Philosophy Department at George Washington University. Prior to entering private practice, he served as a Staff Attorney for the United States Sentencing Commission. Mr. Allenbaugh has published numerous articles on sentencing and criminal justice, and is a co-editor of "Sentencing, Sanctions, and Corrections: Law, Policy, and Practice."