Martha Stewart Sentenced to 5 Months in Prison

Cedarbaum ruled that Stewart did not qualify for special treatment, but she then gave her the low end of the recommended sentence -- a 10 month sentence split evenly between prison and home confinement, a $30,000 fine and two years of supervision by the probation office.

During home confinement, Stewart will be allowed to go to work and other approved activities for up to 48 hours a week, although she must spend at least one entire day a week at home. The judge said she would consider Stewart's request that she not be required to wear an electronic monitoring bracelet.

At his hearing, Bacanovic told the judge, "I deeply regret the pain and sorrow this case has caused my family. . . . It has been a horrible ordeal." He then received the same terms of confinement and supervision but a smaller fine of $4,000.

"Lying to government agencies during the course of an investigation is a very serious matter," the judge said as she sentenced each defendant. "A term of incarceration is justified and appropriate in this case."

But Cedarbaum then explained that she was imposing the minimum sentence under the guidelines because neither defendant had a prior record and both had done much good for other people.

"The public-interest objective in this prosecution has been served by the jury verdict," the judge said. "You have suffered and will continue to suffer enough."

Although Cedarbaum has repeatedly refused to order a new trial, despite multiple requests from Stewart and Bacanovic, she said she would allow both to remain out of prison while their appeals are pending because of a U.S. Supreme Court ruling last month that cast into doubt the way the federal guidelines are applied to their cases and others.

Outside the courthouse, Stewart's appeals lawyer, Walter Dellinger of Washington, D.C., outlined what he said were five promising avenues for Stewart's appeal.

Among them: the allegation that one of the jurors lied on his jury questionnaire and was biased against Stewart, the recent arrest of a government ink expert on charges he lied during the trial, Cedarbaum's refusal to allow Morvillo to argue that Stewart was not guilty of insider trading and therefore had no reason to obstruct the investigation, and the claim that the jury's verdict was tainted by hearing the evidence connected to a securities fraud count that Cedarbaum dismissed right before closing arguments.

Bacanovic is also expected to argue on appeal that his right to a fair trial was tainted by being tried with Stewart.

Cedarbaum has heard and rejected these claims, but the U.S. Court of Appeals for the Second Circuit might take a different view, legal analysts said.

The appeal is not the only legal proceeding in Stewart's and Bacanovic's future. The Securities and Exchange Commission has filed civil insider trading charges against both, alleging that the tip about Waksal violated securities laws. The SEC is seeking to collect monetary damages and to prohibit Stewart from serving as a director of a public company.

Stewart's company has been severely wounded by her legal woes. While supporters continue to buy her magazines and retail products, advertisers have deserted her magazines, particularly the flagship Martha Stewart Living, in droves. Stewart, who resigned as chief executive when she was indicted and left the board after her conviction, still owns a controlling interest. The company's shares were up 40 percent at lunchtime and hit a three-month high. But the price of nearly $12 was well below its price before her indictment in June 2003.

The company issued a statement Friday saying that it "is saddened for Martha." The statement said, "As always she has our full support. . . . We see this as an important step toward closure."

Legal experts said Stewart was extremely lucky in her sentencing. In the wake of several high-profile corporate scandals that have cost investors and employees billions, most judges are reluctant to be seen as soft on white-collar criminals. In addition, Congress has been inveighing against judges who drop below minimum recommended sentences. As a result, Stewart's request for probation was always a long shot, they said, and she ran a considerable risk of getting up to 16 months in prison.

"I'm quite disappointed," said University of Texas law professor Henry Hu. "Breaking the law, lying to federal authorities is far from a 'small personal matter,'" as Stewart described the case.

"Such a light sentence . . . and her victory lap outside the courthouse send altogether the wrong message," Hu said.