08/10/2026
This Day in True Crime — October 8, 2004
Martha Stewart Reported to Prison — But Not for Insider Trading
The Stock Sale That Started It
On December 27, 2001, Martha Stewart sold all 3,928 of her shares in ImClone Systems, founded by her friend Samuel Waksal. The next day, the FDA announced it had rejected an application for ImClone’s cancer drug Erbitux, and the company’s stock price fell sharply. Investigators later learned that Stewart had been told Waksal’s family was selling its shares before she ordered her own stock sold.
A Story Investigators Didn’t Believe
When federal investigators questioned Stewart and her broker, Peter Bacanovic, they said they had previously agreed to sell her ImClone shares if the price fell below $60. Prosecutors argued that the agreement was a cover story created after the sale. Their case included testimony from Bacanovic’s assistant, Douglas Faneuil, phone records and a handwritten “@60” notation that forensic analysis indicated had been added separately from other notes on the document.
What She Was Actually Convicted Of
Despite the case becoming widely associated with insider trading, Stewart was never criminally convicted of insider trading. In March 2004, a jury instead found her guilty on four felony counts involving conspiracy, obstruction of an agency proceeding and making false statements to federal investigators. The judge had already dismissed a securities fraud charge during the trial. Stewart was sentenced to five months in federal prison, five months of home confinement, a $30,000 fine and two years of supervised release.
Martha Goes to Prison
On October 8, 2004, Stewart surrendered to the minimum-security Federal Prison Camp in Alderson, West Virginia, to begin serving her sentence. She remained there until March 4, 2005, when she was released to begin five months of home confinement at her Bedford, New York estate. Rather than ending her public career, the case became another chapter in it. Stewart returned to television and business after her release and rebuilt the lifestyle brand that had made her famous.