Why Did Martha Stewart Go to Prison? A Look Back at Her 2004 Fraud Case

Mar. 15, 2025

Martha Stewart exits court after the sentencing phase of her conviction on a stock-trading scandal on July 16, 2004 in New York City.Photo:Spencer Platt/Getty

Spencer Platt/Getty

Martha Stewarthas been many things inher lifetime: A best-selling author, a successful entrepreneur, an Emmy-award-winning television host — but in 2004,she spent five months behind barsfor lying about a stock trade.

Stewart’s legal troubles began more than two decades ago when her career was at its peak. Her media empire, Martha Stewart Living Omnimedia, had gone public in 1999, making Stewartthe first female self-made billionaire in the U.S. A few years later, however, Stewart found herself wrapped up in an insider trading scandal that would eventually send her to prison.

Stewart landed in hot water after selling her stake in ImClone Systems, a biopharmaceutical company, in December 2001. When investigators questioned her on the trade in early 2002, she and her stockbroker, Peter Bacanovic, maintained that they had no insider info that prompted the sale. However, federal prosecutors later accused Stewart (who was once a stockbroker herself) and Bacanovic of acting on non-public knowledge when they made the trade — and then lying about it to the feds.

A highly publicized trial ensued in early 2004, and Stewart was found guilty on charges including conspiracy and obstruction of justice. She was sentenced to five months in prison and two years of probation — leaving the future of her company and her reputation uncertain.

But despite the negative press andher stint behind bars, Stewart rebounded. She kept her company intact, wrote a book and debuted two new television shows within less than a year of her release from prison in March 2005 — and hasn’t slowed down since. (She’s stillposting Instagram thirst trapsat 82 years old.)

So, how did Stewart survive the stockbroking scandal and come out stronger on the other side? The global icon attributes her post-prison success to her refusal to let her time in jail define her.

“One thing I do not ever want is to be identified or I don’t want that to be the major thing of my life,” she toldKatie Couricin 2017. “I was a strong person to start with and thank heavens I was and I can still hold my head up high and know that I’m fine.”

Stewart’s resiliency throughout the highs and lows of her life is the subject of a new CNN miniseries,The Many Lives of Martha Stewart, which premieres on Jan. 28. The four hour-long episodes will chronicle her “explosive rise to success, her staggering fall from grace, and her momentous comeback to the limelight,” according to a release, and feature interviews with Stewart’s past employees, former inmates, fellow chefs and loved ones.

But first, here’s a look back at all the details of Martha Stewart’s fraud case — from the trade that caused all the trouble to her epic post-prison comeback.

What was Martha Stewart accused of?

Martha Stewart at Manhattan Federal Court on March 1, 2004. ; Peter Bacanovic exits Manhattan Federal Court on March 5, 2004 in New York after the verdict was announced in the Martha Stewart trial.Peter Foley/EPA/Shutterstock

Peter Foley/EPA/Shutterstock

In June 2003, Stewart faced both criminal and civil charges related to her December 2001 sale of nearly 4,000 ImClone shares.

Faneuil left Stewart a phone message (which Stewart allegedly later tried to erase) that stated, “Peter Bacanovic thinks ImClone is going to start trading downward,” perThe New York Times. After speaking with Faneuil, Stewart allegedly requested that he sell her stake in ImClone, which was just under 4,000 shares.

In the months following the questionable trade, Stewart and Bacanovic claimed that they had made a prior agreement to sell her ImClone shares if the stock price ever fell below $60. However, congressional investigators found no record of a stop-loss order between Stewart and Bacanovic, according toNewsweek.

“This criminal case is about lying — lying to the F.B.I., lying to the SEC, lying to investors,” James Comey, then the United States attorney for the Southern District of New York, said at a news conference when announcing the charges, perThe New York Times. “Martha Stewart is being prosecuted not for who she is, but because of what she did.”

How much did Martha Stewart make from selling her ImClone shares?

Martha Stewart in New York City on June 2, 2004.James Devaney/WireImage

James Devaney/WireImage

Stewart had 3,928 shares in ImClone, according to the SEC’s complaint. When she sold her stake on Dec. 27, 2001, the shares cashed out at approximately $227,000,The New York Timesreported — netting Stewart a profit of about $51,000 from the sale, according toABC News.

What was Martha Stewart convicted of?

Martha Stewart speaks outside the Manhattan Federal Court after sentencing on July 16, 2004.Andrew Gombert/EPA/Shutterstock

Andrew Gombert/EPA/Shutterstock

Prosecutors had alleged that Stewart committed securities fraud when she lied about why she sold her ImClone stock. They claimed that her false statements were made in an effort to maintain her innocence and bolster the stock price of her own company, Martha Stewart Living Omnimedia,The New York Timesreported. The securities fraud charge would have carried a maximum penalty of 10 years in prison and a $1 million fine, according toCNN Money.

Two years after her criminal trial, in August 2006, Stewart also settled with the SEC over the civil insider trading charges against her — bringing her legal saga to an end. Stewart agreed to pay $195,000 in fines and penalties, according toThe New York Times, and was barred from serving as a director or chief executive officer of any public company for five years.

How long was Martha Stewart in prison?

Martha Stewart leaves the Manhattan Federal Court after being sentenced on July 16, 2004.DON EMMERT/AFP/Getty

DON EMMERT/AFP/Getty

Stewart was sentenced to five months in prison, in addition to five months of home confinement and two years of supervised probation.

“I’ll be back. I will be back,” she said outside of the courthouse following her sentencing, perThe New York Times. “I’m used to all kinds of hard work, as you know, and I’m not afraid. I’m not afraid whatsoever.”

The chef and entertainer checked into a minimum-security federal correctional facility in Alderson, West Virginia, on Oct. 8, 2004. She served the full five months and was released on March 4, 2005, perCNN. Stewart then returned to her home in Bedford, New York, where she completed her five months of house arrest.

“The experience of the last five months in Alderson, West Virginia, has been life altering and life affirming,” Stewart said in a statement on her website on the date of her release. “Someday, I hope to have the chance to talk more about all that has happened, the extraordinary people I have met here and all that I have learned.”

She continued, “Right now, as you can imagine, I am thrilled to be returning to my more familiar life. My heart is filled with joy at the prospect of the warm embraces of my family, friends and colleagues. Certainly, there is no place like home.”

What has Martha Stewart said about her time in prison?

Martha Stewart during a press conference on March 7, 2005.Carvalho/FilmMagic

Carvalho/FilmMagic

Stewart was able to share her initial thoughts on prison life shortly after she was first incarcerated. On Oct. 18, 2004, shereleased a statement on her websiteabout how she was settling in — and likened the prison to a “college campus.”

“The camp is fine; it is pretty much what I anticipated,” she wrote. “The best news – everyone is nice – both the officials and my fellow inmates. I have adjusted and am very busy. The camp is like an old-fashioned college campus – without the freedom, of course.”

In the years since her release from prison, Stewart has opened up more about the highs and lows she experienced while serving her five-month sentence.

Stewart revealed to PEOPLE in November 2020 that she spent her time in prison revisiting old hobbies, like ceramics, and cultivating new ones, including crocheting.

“Even when I went away [to Alderson Federal Prison Camp in West Virginia] for five months, I got through it,” she shared. “I learned how to crochet. I still have the gorgeous crocheted poncho [that I wore leaving prison]. It’s in the attic. And I re-upped my ceramics there. I had done a lot of ceramics as a child, and we had this fabulous ceramics studio in West Virginia, and I made anentire crèche scene. That’s my best memory.”

Not all of Stewart’s memories from prison are fond, however. She opened up on Couric’s self-titled podcast in 2017 about her time spent behind bars, calling it “a horrible experience.”

“It was horrifying and no one, no one, should have to go through that kind of indignity really except for murderers, and there are a few other categories, but no one should have to go through that,” she told Couric about prison. “It’s a very, very awful thing.”

Stewart continued, “There are lots and lots of disturbing things that go on in an incarceration like that.”

The experience is one that made the lifestyle media guru “stronger,” though, Stewart revealed toHarper’s Bazaarin November 2021.

“I knew I was strong going in and I was certainly stronger coming out,” she said. “It was a very serious happening in my life. I take it very seriously. I’m not bitter about it.”

Stewart kept a journal while incarcerated. The entries detailing the living conditions and “severe” punishments were shared in Netflix’s documentaryMartha.

On camera, she added: “I was dragged into solitaryfor touching an officer. No food or water for a day. This was Camp Cupcake, remember? That was the nickname. Camp Cupcake. It was not a cupcake.”

What has Martha Stewart done in the 20 years since her release?

Martha Stewart at the 2023 ‘Sports Illustrated Swimsuit’ issue launch in New York City.Gotham/FilmMagic

Gotham/FilmMagic

Stewart staged her comeback almost immediately following her release from prison in March 2005.

She returned to television in September 2005 with two shows:The Martha Stewart Show, a daytime talk show, and a spin-off ofDonald Trump’s reality show calledThe Apprentice: Martha Stewart.Though her iteration ofThe Apprenticewas short-lived (it was canceled after one season, according toForbes), her talk show was much more successful — it ran from 2005 to 2012 and won Stewart three Daytime Emmy Awards.

Stewart also developed a friendship with rapperSnoop Doggin her post-prison life. The “odd couple,” as Stewart has described them, first met when he appeared on her daytime talk show in 2008. From there, the two formed an unlikely bond that was both personal and professional, with Stewart and Snoop even hosting two celebrity cooking shows for VH1:Martha & Snoop’s Dinner PartyandMartha & Snoop’s Potluck Party Challenge.

Stewart’s post-prison success hasn’t just been limited to television, however: She’s sincepublished 43 more books,developed a line of CBD productsand sold her multimedia empire, Martha Stewart Living Omnimedia, for $353 million in 2015,Forbesreported. She also made history in May 2023 when, at 81 years old, she becamethe oldest woman to appear on the cover ofSports Illustrated Swimsuitissue.

“There’s no reason to retire,” Stewart told PEOPLE in May 2023. She also squashed the idea of slowing down or taking time off.

“That’s not what my life is about,” she said. “My life is about doing things and learning things and teaching things.”

source: people.com