The Five Dumbest Things on Wall Street This Week

1. Martha Stewart's Jail Bond

Pretend for a moment that you're a reporter covering the Martha Stewart case, and you're looking for someone to comment on what prison life could be like for the domestic goddess.

Well, if you're ABC, CNN, CNBC, Fox, USA Today, MSNBC, The Washington Post, People or The Times of London, you've decided on the same person: Karen Bond.

Unfortunately, if you're any one of those news outlets, you've glossed over a key piece of Bond's particular story.

For several reasons, Bond seems like the perfect source to discuss the conditions faced by the now-former-officer of Martha Stewart Living Omnimedia (MSO): possible incarceration. Bond, who now lives in Columbus, Ohio, spent about three years in federal prison herself.

Like Martha, the former attorney was an upwardly mobile professional -- a woman whose white-collar offense didn't match the stereotype of federal inmates serving time for messy crimes like robbery, assault or drug-smuggling.

What makes Bond even more appropriate is that she too apparently committed a stock market crime. Martha was convicted of lying to investigators about suspected but unproven securities fraud; Bond, as all these news outlets have noted, did hard time for "interstate securities fraud," or just plain securities fraud.

The reality is more vivid than that. What Bond did, according to press accounts, was steal the life savings of a pair of elderly sisters, one of whom had been judged incompetent because of Alzheimer's disease. Bond, who had represented the pair in a legal proceeding, emptied their accounts of $879,000. Bond used the money to buy at least five cars, including a 1995 Jaguar XJS and a Firebird convertible; a $125,000 house; and $24,000 in jewelry, according to a 1998 report in The Columbus Dispatch. Travel records indicated she also vacationed in such places as Grand Cayman, Puerto Rico and Cancun, Mexico.

Before heading off to jail, Bond pleaded guilty to one federal count: transporting stolen goods across state lines -- in her case, taking money out of a California bank account and sending it to Ohio. Formally, it is known as 18 U.S. Code Section 2314 - "Transportations of stolen goods, securities, moneys, fraudulent State tax stamps, or articles used in counterfeiting."

That crime doesn't fall in the category of offenses either formally or popularly known as securities fraud, says Dominic Amorosa, a New York attorney with three decades of experience in securities fraud law. "That's your common-variety lawyer theft against the client," he says. Even if Bond had taken the money from a brokerage account, she wouldn't have qualified, Amorosa says. "That's not securities fraud," he says. "That's theft."

Miss Moneypenney? Karen Bond's 'stock' swindles

No, it isn't, says Bond. "Interstate securities fraud" is what she was guilty of. "That's what the charge read," she said this week.

In fact, she's right. On a Judgment and Commitment Order dated May 11, 1999, the "Nature of Offense" is listed as "Interstate Securities Fraud." But the Title & Section is that same old 18 U.S.C. 2314 -- which Amorosa and a former S.E.C. prosecutor we contacted insisted wasn't securities fraud.

And Bond's crime of "interstate securities fraud" apparently puts her in very rarefied company. We searched the Internet and the Factiva publication database to find other people who had committed such a crime. Of the 9 mentions that we found in the media of a person guilty of "interstate securities fraud," all 9 were Karen Bond. Of the 12 mentions we found on Google, all 12 were Karen Bond.

So why would Bond be so insistent on calling her crime "interstate securities fraud" when other characterizations might be more fitting? (Bond, for example, was found guilty of embezzlement in state court, though she didn't serve time for that. And to Bond's credit, she openly discussed the specifics of her crime with The Columbus Dispatch in January.) Maybe it has something to do with all these media appearances, and Bond's desire to be a presentable spokeswoman for her cause. Last year, Bond co-founded the Federal Prison Policy Project, a group devoted to educating the public about problems in federal prisons -- terrible medical care, a shortage of rehabilitation opportunities, and outrageously long sentences for nonviolent drug offenders. Talking about Martha Stewart, says Bond, is a way to discuss what's wrong with the federal prison system.

And that's a good thing. We just never thought we'd run into someone who would use "Interstate Securities Fraud" to jazz up her resume.

The Sounds of Starbucks Tunes for your day-long latte

2. Face the Music and Drink Coffee

Starbucks (SBUX) announced Tuesday it would start selling music in some of its outlets.

Whoops! Scratch that! Actually, the java giant said it was launching "an innovative musical delivery experience."

Can't say we're shocked. What better place for bubble-economy ideas than a company well known for its foamy lattes?

Yet we at the Five Dumbest Things Research Lab aren't optimistic about Starbucks' chances for success.

For starters, the company doesn't have a great record as a media distributor. That effort a few years back to sell a print version of Microsoft's (MSFT) Slate sort of petered out.

Plus, despite the fact that Starbucks has persuaded folks that it's OK to spend $3 for a cup of coffee, we're not convinced that the company's patrons are in the mood to spend much more than that. After all, it appears that most customers believe that their $3 purchase also entitles them to a five-hour seat rental. We also wonder whether they even have jobs, given all the time they spend hanging around.

As far as we can figure out from our less-than-scientific survey of Starbucks, this company's customers are more likely to download music illegally than buy it.

3. The Veritas, the Whole Veritas and Nothing but the Veritas

On Monday, the software firm Veritas (VRTS) restated its results for the past three years, reducing net income a few percentage points in 2002 and 2003.

Which got us all giggly here at the research lab, considering that "veritas" -- as Latin scholars and Yale graduates already know -- is the Latin word for "truth."

It makes us nervous, too. The way things are going these days, we're wondering whether the company formally known as Shell Transport & Trading (SC) actually has any oil to transport and trade.

Eliot 'Mousse' Hair not untouch-up-able at Journal

4. Hair Yesterday, Gone Today

We know that The Wall Street Journal prides itself on its timely and accurate coverage of what's happening in the financial markets.

But as far as the paper's coverage of an important financial figure's, um, uncoverage, the Journal has fallen down on the job.

We're talking about the Journal's portrayal of New York State Attorney General Eliot Spitzer -- specifically, the pointillist drawing of Spitzer that runs occasionally alongside articles mentioning him.

See, we couldn't help noticing that the picture of Spitzer that ran this Tuesday didn't exactly match the Spitzer we saw on TV Wednesday.

Don't see the difference? Well, take a look at Spitzer's hairline, and decide for yourself whether the Journal's drawing is the graphic equivalent of a stale quote. Some pictorial correction and amplification is in order, we believe.

A WSJ spokeswoman emails to say that Spitzer's portrait was last updated in July 2003. "We work to ensure that the drawings adequately represent the people," she writes. "We don't receive many inquiries to change the drawings. But when asked, we review the request."

Maybe they're just trying to get on Spitzer's good side. When we asked Spitzer's spokesman whether the AG thought his WSJ portrait was full of Veritas, here's what the press officer reported that Spitzer Blackberried back: "It's positively flattering when compared to the way that I'm depicted on the editorial page."

Playing the Trump Card Who wants to be an apprentice?

5. Taking a Gamble on the Donald

Trump Hotels & Casino Resorts (DJT) may have proven to be a lousy investment. But Donald Trump's name still holds currency for business-world hopefuls.

That's what we learned when hundreds of folks lined up outside 40 Wall St. on Thursday, each hoping to become a contestant on next season's edition of The Apprentice. In case you haven't been watching, that's the reality TV show starring Trump in which the business world is portrayed as a snake pit like something out of Fear Factor.

When we asked some hopefuls about what was missing from The Apprentice this season, we got some interesting answers. There's no one on the show this year who's in Trump's age range, pointed out Ned Callan, a 55-year-old actor from Brooklyn. Such a contestant -- perhaps Ned -- "might present more of a challenge to him, or a different kind of challenge."

What's missing is "a little bit of a level of professionalism" -- people who have "a style and a polish to them," said the stylish and polished Marianne McGovern, formerly a director of sales for a now-defunct Internet company.

But our favorite answer came from Emanuel Mozes, who recently launched an online-gaming center called Adrenaline Cafe, in Cherry Hill, N.J.

What, we asked Mozes, is missing from The Apprentice this year?

"Me!" he announced gleefully.

Emanuel, you're hired! (Insert relevant hand motion here.)

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