"Greed is bustin' out all over "
Stewart had been the top salesman at a firm
described as having “little obvious purpose in life other than to peddle
whatever was hot at the moment.” The main job of the firm, according to
Christopher Byron’s “Martha Inc.,” was to “sell over-priced stocks to customers
during the final blow-out phase of the 60’s bull market.”
“The movie Wall Street had nothing on this firm.”
Stewart was selling what the book called “junk,”
like “wireless phone stocks before there was wireless telephony.” And Levitz
Furniture, dubbed by one firm principal “the worst investment decision of my
life.”
Just then the Mob was in the middle of
“busting-out” (illegally stripping assets) Levitz Furniture.
“Levitz Furniture was not only one of the most
spectacular and widely-chronicaled financial flops of the 1970’s, it was also a
huge scandal,” the book states, “with allegations of kickbacks, market rigging
and organized crime involvement.”

“Levitz operated a regional chain of discount
furniture outlets….and its stock soared to astronomical heights on nothing more
than a stampede of follow-the-money buying by late cycle speculators.”
“Late cycle speculators,” are what are otherwise
known as “ordinary investors.”
They are not ‘in on the joke.’ And by the time
they gobbled up Levitz, the smart money was already out. People who invested
their money with Martha Stewart lost it. Martha had been steering her clients
“into the market with a vengeance,” states “Martha Inc.”
“The hot stock of the day? Levitz Furniture.”
“The woman who would one day sell style and
elegance with charm and grace was now peddling the financial merits of Levitz
Furniture, who sold velour sofas to the masses,” wrote Jerry Oppenheimer in
“Just Desserts: An Unauthorized Biography of Martha Stewart.”
"An apparent conspiracy"
Friends to whom she’d recommended the stock began
taking “financial baths.” One witness said, “Nearly every person she called a
friend lost money—in some cases a lot of money—following her advice.”
After the SEC suspended all trading in the stock,
news shifted from the company’s fraudulent activates to the behavior of the
brokerages involved in pumping the stock, one of whose top salesman was Martha
Stewart.
Revelations began appearing in the New York Times
and the Wall Street Journal regarding “an apparent conspiracy on the part of
some brokerages and their clients to rig the market for the company’s shares.”
In February 1973 the news broke that the New York
State Attorney General’s Office was charging “unidentified stock brokerage firms
and institutional investors with having taken kickbacks from Levitz Furniture
for issuing favorable and bullish investment reports on the company.
Yet Martha Stewart was never indicted. On the
contrary…she prospered, and bought her later-to-become famous house in Westport,
though her lawyer husband was said to be making only $15,000 a year at the time.
Stewart’s flight to the suburbs, scene of her eventual fame, was prompted, said
one witness, because she was “fleeing a bad world she’d milked too well.”
“Martha was raking in enough in commissions to be
able to run out one lunchtime—presumably humming the “You’ll Love it at Levitz”
jingle—and buy a new Mercedes,” writes Oppenheimer.
While Levitz hit the skids, and the company was
already in dire straits, Martha and the rest of the brokerage’s sales force had
continued to push the stock.
“Trouble dogged the Levitz operation like a
shadow,” wrote Byron in “Martha Inc.” As Levitz collapsed into bankruptcy the
company’s president dropped dead of a ‘heart attack.’ One of the co-founders
dropped dead, also from a ‘heart attack.’
In the aftermath of the scandal, the ex-wife of
the founder was found dead in the ruins of her home, which had been set on fire,
police said. And the then-current wife of the company’s founder, the furniture
heiress Jacquie Levitz, disappeared in Vicksburg, Mississippi.
All police had to go on, said the local papers,
was an empty house—and blood.
Rosie O' & Six Pack Joe: Together at Last!
They say politics makes strange bedfellows. But
that didn’t prepare us for the spectacle of Joe ‘Six Pack’ Scarborough defending
Martha Stewart (underneath a graphic reading: Was Martha Treated Unfairly?) while
Rosie O’Donnell was professing, when asked about the verdict, to be outraged at
the federal government.
Joe Scarborough and Rosie O’Donnell are
an odd couple. Why were they being trotted out to defend a hugely-disliked woman with an
unmatched reputation for rudeness, arrogance, and bullying? And it wasn't just
them...Stewart's defenders were everywhere on cable news.
Martha Stewart was “a plucky gal, who came from
nowhere to build an American empire. Isn’t that what its supposed to be all
about?” asked Whitewater pinup Susan McDougal, who is herself a past master at
understanding “what its all about.”
“The juror said it was a victory for the ‘little
guy,’” she said. “Well, Martha Stewart was the ‘little guy.’
Was Martha Stewart just a “celebrity target”
offered to the crowds while the ‘big bad wolves” on Wall Street go free?
Stewart’s trial depicted a cozy world where
insiders routinely use their wealth and connections to benefit from insider
information. And her clumsy attempts to fabricate alternative explanations for
her stock sale were what did her in.
“Despite being a former stockbroker and director
of the New York Stock Exchange,” read one typical news account, “Ms. Stewart's
actions were openly contemptuous of the government's right to police the
integrity of the markets.”
Maybe they always have been. Martha Stewart was one of the “wolves.”
We were looking at
corruption—what sociologists call ‘elite deviance’—on a scale so massive that
the only rational response was a boogie board, some suntan oil, and an extra
large pitcher of margaritas.
Even if we were in the 'no-spin' zone, we needed
something to hold onto.
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