Prison term for defiant Stewart

America's domestic icon will remain free pending an appeal against her conviction for lying to federal authorities, writes Conor O'Clery, North America Editor, in New York.

Martha Stewart was yesterday sentenced to five months in prison in a minimum security prison, plus five months of home detention and a $30,000 fine, for lying to US federal authorities about her sale of stock in a company owned by a friend.

However America's domestic icon will not be wearing prison garb anytime soon. Ms Stewart, 62, will remain free, possibly for several months, pending an appeal against her conviction.

Ms Stewart, wearing a black pant suit, was contrite in the dock but defiant as she emerged from the Lower Manhattan courthouse, declaring, "I'll be back, I will be back."

News of the relatively lenient sentence - the minimum under federal guidelines - sent shares soaring by 36 per cent in Stewart's company Martha Stewart Living Omnimedia Inc.

Ms Stewart's stockbroker Peter Bacanovic, 42, was sentenced to five months in prison, two years of supervised confinement, and a fine of $4,000.

In the courtroom a downbeat Ms Stewart told US District Judge Miriam Cedarbaum, "Today is a shameful day. It is shameful for me, for my family, and for my beloved company and all of its employees and partners.

"What was a small personal matter became over the last two and a half years an almost fatal circus event of unprecedented proportions spreading like oil over a vast landscape."

Speaking in a faltering voice, she asked the judge to remember all the good that she had done through her company and concluded: "My hopes that my life will not be completely destroyed lie entirely in your competent and experienced and merciful hands. Thank you and peace be with you."

Judge Cedarbaum rejected a defence request to allow Stewart to stay in a halfway house rather than prison, noting that "lying to government agencies during the course of an investigation is a very serious matter."

However she took into account 15,000 letters of support and said she would impose the lowest sentence and recommended that it be served at Danbury open prison near Ms Stewart's Connecticut home. She also said she would consider waiving the normal requirement that Ms Stewart wear an electronic monitoring bracelet.

Ms Stewart emerged almost choking with emotion from the court but composed herself to make a defiant statement as supporters called her name.

"I'm not afraid. Not afraid whatsoever. I'm very sorry it had to come to this," she said, and she was "very, very sorry" for the 200 people in her company Martha Stewart Living Omnimedia who had lost their jobs as its fortunes sagged over the scandal.

Ms Stewart then launched into a commercial for the company which she built from a small catering business to a multi-million empire with a range of homeware sold through K-mart stores.

"Our magazines are great," she said. "They deserve your support, and whatever happened to me personally shouldn't have any effect whatsoever on the great company Martha Stewart Living Omnimedia."

The company has however suffered badly from the scandal. It was worth $2.52 billion on the day in 1999 when it listed on the New York Stock Exchange, making Ms Stewart's share worth $1.77 billion but before her sentence yesterday was worth some $400 million.

After being charged last year, Ms Stewart resigned as head of Martha Stewart Living Omnimedia and following her conviction surrendered her seat on its board.

Ms Stewart had faced a maximum of 16 months imprisonment for lying to officials investigating her December 27th sale of nearly 4,000 shares in biotechnology company ImClone Systems, run by her longtime friend Sam Waksal.

According to US prosecutors this saved her $51,222 when the company's shares fell the next day on news that its cancer drug Erbitux had been rejected by the US Food and Drug Administration.

In a supreme irony for Stewart, the drug has since been approved and ImClone shares have rallied to the point where her stake would have been worth $80,000 more today than when she sold it.

Prosecutors charged that Bacanovic, who worked for Merrill Lynch, ordered his assistant Douglas Faneuil to inform Stewart that Waksal was trying to sell his shares in ImClone. Ms Stewart and the stockbroker maintained she sold because of an order to sell the stock when it fell below $60. (It now trades around $80).

Faneuil howsever said that when Bacanovic learned Waksal was selling he told him: "Oh my God. Get Martha on the phone." Ms Stewart's appeal is based on federal charges subsequently made against Larry Stewart, a Secret Service ink expert, of lying repeatedly in his testimony and on the fact that one juror lied about an arrest record in order to get on the jury.

Shares in Stewart's company were up $2.52 at $11.16 in late-morning trading on the New York Stock Exchange.

Ms Stewart last night told Barbara Walters on ABC News that many people hated her. "I don't know why people don't like me," she said.

"I'm not perfect. The perception that I am perfect I think got kind of mixed up with the idea that what we're trying to teach is the best possible standard out there. So, if we're going to make a cake, Barbara, my cake can't be a flop. People won't watch my show if I make a flop. I'm not a comedy show. I'm a how-to show."