washingtonpost.com  > Business > Special Reports > Martha Stewart Scandal

Quick Quotes

Stewart Wants Firm to Help Pay Lawyers

By Brooke A. Masters
Washington Post Staff Writer
Wednesday, November 10, 2004; Page E04

NEW YORK, Nov. 9 -- Martha Stewart wants the company she founded to pay $3.7 million toward her legal bills, Martha Stewart Living Omnimedia Inc. said Tuesday.

Stewart, 62, was convicted in March of obstruction, conspiracy and lying to federal investigators about a personal sale of shares in a biotechnology company. Her defense included some of the leading lights of the New York white-collar bar, who charge as much as $600 an hour.

Martha Stewart wants $3.7 million from her company. (File Photo)

_____Martha Stewart Coverage_____
Stewart Adjusts With Chef's Touch (The Washington Post, Oct 22, 2004)
Stewart's Ex-Broker Files Appeal (The Washington Post, Oct 21, 2004)
Stewart Begins Prison Term (The Washington Post, Oct 9, 2004)
Complete Trial Background
_____Biotech Headlines_____
CDC Announces Plan To Ration Flu Vaccine (The Washington Post, Nov 10, 2004)
Terrorism Defense Lab Ahead For GMU (The Washington Post, Nov 10, 2004)
U.S. Genetically Modified Corn Is Assailed (The Washington Post, Nov 10, 2004)
More Biotech News

The reimbursement request, which was disclosed in a Securities and Exchange Commission filing, covers only a small part of the case, a charge of securities fraud that never made it to the jury.

U.S. District Judge Miriam Goldman Cedarbaum ruled before the trial ended that the government had failed to prove that Stewart lied about her ImClone Systems Inc., stock sale in order to prop up the stock price of her namesake company.

Now Stewart, who is serving a five-month prison sentence while also appealing her conviction, is arguing that her company should "indemnify" her -- pay for her defense of that count -- because the charges pertained to her role at the time as chief executive and chairman of the multimedia company, and she was acquitted. Stewart stepped down from those positions after she was indicted.

The company said in its filing that both sides have agreed to submit the claim to "an independent expert on Delaware law," which governs the case because the company is incorporated there. If the expert rules for Stewart, the company said, it expects the fees would be covered by the company's directors' and officers' insurance policy.

Stewart's spokesman declined to comment, and a company spokeswoman did not return phone calls.

Fights over whether companies must help dethroned executives defend themselves from criminal charges have become more common in recent years. Adelphia Communications Corp. has battled several times with its founding Rigas family over paying their criminal defense bills.

© 2004 The Washington Post Company