Before she was ever an icon or a punch line, a media mogul or an accused felon, Martha Stewart was a person who would stand her ground, no matter what. In 1987, when Stewart was negotiating with Kmart for the licensing deal that would turn her into, literally, a household name, she was just a popular cookbook author--"a nobody," says Paul Argenti, who worked on the project as a consultant to Kmart's CEO. Nevertheless, she stood up to Kmart's top executives, who wanted her to take an exclusive deal with the Lifetime cable channel to help promote the new line. "She's very passionate when she thinks she's right," says Argenti. "She said, 'I can do better than this.' They thought she was crazy." Stewart insisted and eventually landed a spot on NBC's Today show. "She fought tooth and nail for what her image would be like," Argenti says. "And she often won because she was right."
That same resolve--sometimes seen as arrogance--was on display when Stewart stepped into a federal courthouse last week to be fingerprinted, photographed and indicted for obstruction of justice and securities fraud by the U.S. Attorney's office in New York City. Settlement talks had failed, and her lawyers' efforts to win an audience with Justice Department officials in Washington had gone nowhere. In the end, the Financial Times reported, Stewart, 61, would not agree to any plea that required jail time. She walked into the downtown Manhattan courtroom to be charged, as her daughter Alexis, 37, waited quietly on a bench in the back. The nine-count indictment alleges that Stewart altered evidence that she traded on inside information about the biotech company ImClone Systems, conspired with her stockbroker to lie to federal officials investigating the trade and defrauded shareholders in her company, Martha Stewart Living Omnimedia, by misleading them about why she had sold the stock. Her perfunctory responses to Judge Miriam Cedarbaum's questions (Did she understand the charges? Did she need them read aloud?) were barely audible. But when Cedarbaum asked for a plea, Stewart's response--"Not. Guilty."--rang out like a bell, with the first t enunciated in the clipped diction familiar to anyone who has ever followed her instructions to plunge blanched green beans into a bowl of "ice water."
Once again, Stewart has chosen to fight, but this time more than her image is at stake. If she is found guilty of all the criminal charges, Stewart could face 25 years in prison, $2 million in fines and permanent damage to the company that bears her name and fortune. (She owns 61% of the stock, worth $310 million.) In addition to criminal charges, she faces a civil case brought by the Securities and Exchange Commission (SEC), alleging insider trading. Stewart's lawyers say she "has done nothing wrong" and has become a celebrity scapegoat for more egregious, if less glamorous, corporate criminals. And her many fans agree, including some who say she's being targeted as an uppity woman executive who has made it in a preserve dominated by men. Prosecutors see it differently. "Martha Stewart is being prosecuted not for who she is but what she did," said James Comey, U.S. Attorney for the Southern District of New York. The case against her, experts say, will be difficult to prove but could serve as a deterrent in the government's larger effort to curb abuses of corporate power.