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Martha Stewart faces dilemma over when to start prison term

Jails and PrisonsCompanies and CorporationsJustice SystemMartha Stewart Living Omnimedia Inc.TelevisionManagement Change

NEW YORK - Sentenced to prison but free for now, Martha Stewart faces a wrenching choice - whether to start serving her time immediately or stay out on appeal.

The celebrity homemaker has said her "belief in the judicial system and fairness" suggests she should put off going to prison, as a judge has allowed her to do, and hope an appeals court overturns her conviction.

But experts on corporate branding and securities analysts say Stewart - or, more accurately, the company she loves - may be better served if she does the time right away.

"The faster you can get this behind you, the better," said Eric Dezenhall, who runs a Washington public relations firm that specializes in damage control.

Stewart was sentenced this month to five months in prison and five months of house arrest - the minimum penalty under federal guidelines - after she was convicted of lying to authorities about a 2001 stock sale.

The federal judge who oversaw her case, noting confusion over a recent Supreme Court ruling about criminal sentencings, allowed her to stay out of prison while she appeals - a process that could last well into next year.

Walter Dellinger, the appeals specialist lawyer now handling Stewart's case, said yesterday that Stewart is considering whether to "sacrifice herself" for the good of her company, Martha Stewart Living Omnimedia Inc.

"She's willing to think about this because of the company," Dellinger told ABC's Good Morning America. "It is a complicated issue because there's very valuable time she can spend right now for the company."

He said Stewart would make a decision "fairly soon" about whether to begin serving her time.

It should come as no surprise that the fate of the company, from which Stewart resigned as chief executive but remains as founding editorial director, weighs heavily on her decision.

On July 16, minutes after her criminal sentencing, Stewart stood in front of the courthouse urging people to show support by subscribing to her magazines and buying the company's products.

Stewart remains the largest shareholder in Martha Stewart Living Omnimedia and has hundreds of millions of dollars tied up in its stock.

Shares in the company, which had been trading about $9 earlier in the summer, shot up past $11 when Stewart was sentenced - and rose above $12 while her lawyer talked about the appeal on live television outside court. Yesterday, they closed up 15 cents at $11 on the New York Stock Exchange.

But some Wall Street analysts believe investors would rather see Stewart serve her time and put the matter behind her.

"As long as she goes to appeal and stays out, and this whole thing goes on, the advertisers have an excuse for not coming back," said Dennis B. McAlpine, an analyst with McAlpine Associates, a firm that covers the company.

The Martha Stewart Living Omnimedia reported a bigger-than-expected loss of more than $20 million for the first quarter of this year, saying advertisers were wary of returning to the company. Second-quarter earnings are to be reported Aug. 3.

U.S. District Judge Miriam Goldman Cedarbaum has granted Stewart's request to recommend to federal prison officials her assignment to a facility in Danbury, Conn., near her home. If Stewart decides to begin serving soon, she could be released from prison early in 2005, and finish her five months of home confinement by next summer.

Dellinger said Stewart would still pursue her appeal if she serves time, in an effort to clear her name.

Copyright © 2014, The Baltimore Sun
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