Martha Stewart Scandal Timeline

In 2002, Martha Stewart came under investigation of insider trading when she sold 3,928 shares of ImClone Systems in December, 2001

December 28, the FDA announced it would not review ImClone's application for Erbitux. ImClone's stock plunged over 70% in the months after the news. Martha Stewart had been a friend of ImClone founder Samuel Waksal, who has since pleaded guilty to six counts of wrongdoing related to insider trading before the announcement.

June 6, 2002, the U.S. House Energy and Commerce Committee, which was already investigating dubious ImClone trading, announced that it was probing MArtha Stewart's stock sale.

On October 3, 2002, Stewart resigned from the board of directors of the New York Stock Exchange, all the while downplaying the demand for answers about her participation in the Martha Stewart scandal.

On June 4, 2003, a federal grand jury indicted Stewart and her former broker Peter Bacanovic on nine criminal counts from the Securities and Exchange Commission (SEC). Charges ranged from securities fraud, to obstruction of justice, and conspiracy. Stewart maintained her innocence, pleading not guilty, saying she had a standing order with Bacanovic to sell her shares if ImClone stock fell below $60. Stewart resigned as CEO and chairman of Martha Stewart Living Omnimedia on the same day she was indicted, but remained on the company's board.

The SEC later filed a related civil suit against Stewart with charges of insider trading. Stewart's trial was initially set for January 12, 2004, at the request of her lawyers who said they needed plenty of time to analyze the evidence. The trial eventually began on January 20 In New York City presided over by U.S. District Judge Miriam Goldman Cedarbaum. During the trial, Stewart maintained her innocence.

On February 27, 2004, Judge Cederbaum threw out the charge of securities fraud against Stewart. This was the most serious charge; it could have led to up to 10 years in prison with a million dollar fine.

On March 5, 2004, MArtha Stewart was found guilty on all four remaining counts against her: conspiracy, obstruction of justice, and two counts of making false statements. The maximum sentence for these convictions combined was 20 years in prison.

July 8, a motion for a new trial was denied.

July 16. Martha Stewart and Peter Bacanovic were each sentenced to five months in prison, five months of home confinement, and two years probation. Stewart was ordered to pay a $30,000 fine, while Bacanovic was fined $4,000.