The roles of Stewart, Waskal and Bacanovic in the ImClone scandal were similar to those executives at Enron. Enron was a giant energy company that depended on credit sources to finance the day-to-day running of the company. As is common knowledge, one’s ability to acquire new credit depends entirely on being trustworthy. For years, Enron’s executives submitted false documents in order to make the public and its auditors believe that it was a successful company.
The truth was that they were so heavily leveraged that when one credit source failed, the entire corporation failed. Former CEO Jeffrey Skilling was sentenced to more than 20 years in prison while mid-level executive Dan Boyle received just over 3 years in prison and a large fine. The sentences for Enron were quite similar to the sentences in the MSLO case. The players who were the most responsible were given the harsher sentences while the minor participants received lesser, though not insignificant sentences.
Unfortunately, scandals such as these are becoming more and more common. Tyco International was involved in duping its shareholders when, in 2002, the founders sold off a significant amount of stock in spite of stating that they rarely ever did so. Selling stock means that the price will drop and the shareholders will lose money. Kozlowski and Swartz, CEO and CFO respectively, only received eight and a half to twenty-five years in prison for their part in the Tyco mess. With good behavior, they could be out within the next couple of years.
The events at Martha Stewart Living Omnimedia were quite different than Enron or Tyco, though all of these events reduced confidence in publicly-held companies in general and greedy executives in particular. For example, Martha Stewart was a shareholder in ImClone, but not a significant enough participant for her stock sale to affect the overall price. Waskal’s part, however, was almost as bad as that of Skilling or Kozlowski – an executive sabotaging his own company in order to make personal gains at the expense of shareholders.
Had Stewart been a private citizen instead of a media icon, she probably would have gotten off with a lighter sentence. Her refusal to admit any part in the scandal was opposite from her gracious public image, and this is why she was convicted. The American public spends a great deal of money on her books and various products, and they don’t want to think that she is defrauding them with the very money she earned from them.