Martha’s fall from grace

She’s Delia Smith, Alan Titchmarsh, Laurence Llewelyn-Bowen and Dr Spock – all rolled into one. But now Martha Stewart is being investigated for alleged insider trading. Matthew Engel on what went wrong for the millionaire goddess of the American household.

The first item in Martha Stewart Living, one of the US’s best-selling monthly magazines, is called Martha’s Calendar. This includes little titbits and tips for each day from the desk of the magazine’s celebrated and eponymous editorial director, chairman and chief executive officer. Next month’s calendar begins as follows:

July 1: Zuzu and Mozart’s Birthday [that's her chow and cat]. Weed all gardens.

July 2: Pick, bundle and hang lavender out to dry.

July 3: 8.36am. CBS Early Show appearance*.

*Subject to last-minute postponement for breaking news stories.

It had presumably not occurred to the editorial director that the breaking news story might be the fact that one of the country’s most recognisable faces and richest businesswomen would be helping the authorities with their inquiries into Wall Street corruption.

It is difficult to overstate Stewart’s place in contemporary American life. Imagine Delia Smith, perhaps, combined with Alan Titchmarsh, Laurence Llewelyn-Bowen and a touch of Dr Spock. Add a ton of cold steel. And multiply by vast quantities of dollars.

Over the past 20 years, she has turned her self into the country’s leading expert on every aspect of home-making and lifestyle: cooking, gardening, decorating, flower arranging, babycare, the lot. The domestic diva, she has been called. Or the household high priestess.

Stewart is now under investigation for alleged insider dealing in a biotech company which plummeted the day after she pocketed more than $200,000 for selling her holding. Since the Enron collapse, the business pages have been full of stories about greed and graft on Wall Street. Americans have suddenly become reluctant to buy shares, which is one reason for the continuing stodginess of the markets.

But nothing quite hits home like the news of Stewart’s involvement. In Omaha, Oklahoma and Oshkosh, the notion that even Martha can’t be trusted is a bombshell. For those who know her well, on the other hand, it appears to be no surprise whatever. She may be the country’s leading apostle of gracious living, but there are dozens of people willing to testify that grace has never been her strong point.

Her rise to fame has been an astonishing American success story. Martha Stewart Living sells more than two million copies a month; her quarterly Martha Stewart Weddings sells 650,000 and Martha Stewart Baby has just been born. She has TV programmes (on which, at 60, she looks fetchingly 40), radio programmes and syndicated newspaper columns. Her 24 books have all been thumping best-sellers. Her company – the modestly entitled Martha Stewart Living Omnimedia Inc. – was at one stage valued at more than $1bn on the New York stock exchange. She has all but patented her Christian name: “Martha” is as instantly recognisable as “Oprah”or “Cher”.

Her website, marthastewart.com, encapsulates the whole Martha phenomenon. The home page shows a perfect white clapboard house beneath a cloudless sky, decked out for the Fourth of July in patriotic red, white and blue. “When America wants to learn how to make the perfect piecrust,” says the blurb, “grow a herb garden, create a beautiful flower arrangement or fix a broken window pane, it turns to Martha Stewart.” No one would argue with that: the site has nearly two million registered users.

“What she sells is pure fantasy,” says California-based journalist Carole Rafferty. “People pick up the books because they look really nice, and they want to make the recipes because they’re quite good. But no one in America’s got the time for this kind of thing. I tried one of her Quick Cook recipes, which are supposed to take an hour. It took me 12. Six of them were spent trying to find some chervil.”

But the greatest fantasy of all seems to be the Martha Stewart myth. And suddenly that myth is crumbling. What is known is that on December 27 last year, she sold 4,000 shares in ImClone at $58. That was the day before the federal food and drug administration announced that the company’s star product, the cancer drug Erbitux, would not get official approval. ImClone shares are now worth less than $10.

The company’s chief executive at the time, Samuel Waksal, was charged last week by federal prosecutors with tipping off his relatives so that they could bail out. It is not illegal to have inside information about a company’s prospects; but it is illegal to do anything about it. Waksal pleaded the fifth amendment before a congressional committee, though he has denied wrongdoing.

So has Stewart. She is not related to Waksal, but he used to go out with her daughter, Alexis, and subsequently became close friends with the mother; they are often seen together at top-of-the-range Manhattan social events. Stewart says she gave a verbal instruction to her broker, Peter Bacanovic, to sell whenever the shares fell below $60. However, it seems a curiously haphazard instruction from such an orderly woman. Furthermore, the shares had dipped below $60 on occasions before December 27. And that day it is known that she called Waksal and left a message asking what was going on at Imclone. She says he never called back.

Various investigative bodies have been sniffing round the story ever since, and earlier this month Stewart’s involvement became known. Now her own company’s shares have been plunging, losing a quarter of their value in a fortnight. And some of the investigators have been getting rather tetchy about what they say is her refusal to co-operate. She has now turned over documents and issued a statement saying, “I had no insider information. My sale of ImClone stock was entirely proper and lawful. The sale was based on information that was available to the public that day.” Investigators were not immediately convinced, and it remains to be seen how it will play in Oshkosh. “She has a very, very clean image and now it’s associated with very dirty business,” as media analyst George Smith put it to Newsday.

However, readers of the impressively researched biography, Martha Inc by Christopher Byron, might have marked Martha’s reputation as a sell, well before the recent revelations. Much of her shtick derives from her poor but supposedly idyllic childhood in New Jersey, where she says she learned to live beautifully on a small income from her beloved Polish parents. Byron paints a portrait of a miserable household with a tyrannical father.

She escaped rapidly to New York to become a model and stockbroker, a bad-tempered wife, an inattentive once-and-never-again mother, and then the chatelaine of Turkey Hill, a run-down farm in Westport, Connecticut, which she and her then husband Andy Stewart bought because it was all they could afford. She turned it into a showpiece, and the centre of a small-scale catering business. Then, in 1982, she published Entertaining, one of the most successful cookery books in American history and began her rise to glory.

“It wasn’t actually a cookbook at all,” says Byron, “but a celebration of a certain kind of tinselly nouveau-grandeur that was seeping into American life as the 1980s began… Entertaining offered a fantasy world of grandiloquent leisure, a world of fresh-cut flowers on the table, with parsley and capers garnishing every dish.” Some of the recipes appear to have been stolen from elsewhere, which was a very 1980s kind of trick too.

Throughout her rise there were constant and well-attested stories of sharp practice, of broken promises, of lesser mortals being kicked as she climbed on their backs towards the stratosphere. And the charm she advocated was not the most obvious part of her own comportment: Stewart took to answering her mobile with a barked “What?” and ending the conversation without even a perfunctory goodbye. That last resort of a desperate celebrity, “Don’t you know who I am?”, appears to have become a catchphrase.

Most of her devotees never heard about this until recently, unless they met. Rafferty remembers having dinner with her in a restaurant, where she alienated a group of gushing admirers by being distant to the point of rudeness and saying little except grumping about the food. “I think she’s a very, very cold person,” says Rafferty.

But this is not a unanimous opinion. “I read a lot of things about her now that make her sound impossible and bitchy and terrible and difficult to get along with,” Andy Monness, her former stockbroking boss, told Fortune magazine last week. “I’m sure she has a few more teeth now than she had then, because she has six or seven hundred employees. But I would say her strongest attribute, other than being intelligent, was that everyone liked her.” He was also struck by her energy: “She did everything from raise dogs to breed hydrangeas to remodel a home, while she was leading the life of a full-time stockbroker. It was sort of amazing to watch.”

Stewart’s time with Monness in the 1960s and early 1970s was dominated by the affairs of a furnishing company, Levitz, which went bust spectacularly. She seems to have an affinity for bankruptcy. The greatest boost to her career came when she was signed as pitchwoman for Kmart, the huge chain of discount retailers. By 1990 she was raking off a cut from more than $1bn worth of Martha-branded goods that Kmart was selling each year. It did Kmart no good; it went bankrupt six months ago, done down by leaner rivals Wal-mart.

Stewart, however continued to sail onwards and upwards. She is still worth hundreds of millions. It seems strange that she would risk everything for a piffling $200,000. The fall in her own share price has already cost her at least $140m. But the circumstantial evidence is awfully compelling.

Meanwhile, Martha’s Calendar still offers a glimpse of serenity that appears to be as unattainable for her as the rest of us, but with a few added hints of irony:

July 4: Make icebox desserts …

July 8: Harvest peas. Meet with financial planner …

July 20: Clean out stable.

Not before time, by the sound of it.

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Tags: Fall, From, Grace, Martha's