Martha Stewart’s insider trading charges have been dismissed, but the evidence used against her could affect the practices of others. Early in the trial, Martha’s personal assistant testified that Ms. Stewart had gone back to old phone message records and altered a suspicious message from "Peter Bacanovic thinks ImClone is going to start trading downward" to "Peter Bacanovic: re ImClone," and then told the assistant to change it back. Martha had allegedly just talked to a defense lawyer about the status of the federal investigation. The assistant testified that she recovered the original message from a "trash" file a few days later. Now, Martha’s remaining charges are obstruction of justice, making false statements, and conspiracy. Obviously, the government could have recovered the initial document without the help of the assistant. Short a dramatic hard drive purging far beyond a clean install, which would have required the tech support at Martha Stewart Living Omnimedia (and could be conspiracy and/or obstruction also), Martha could not have hidden the changes. Businesspeople around the country are watching how electronic data recovery may betray Martha and could be changing their behavior accordingly.
So how would a future businesswoman 'M' avoid such nasty charges in the future? M could avoid investigations by not trading stock suspiciously or stop taking suspicious stock tips. If M found all this law-abiding activity to be too invasive, she could change over to paper. Martha's phone record log in question was over a month old, and the feds had not gotten to it yet. If it had been in paper analogue, it might have been destroyed in normal course of business. A fastidious M might choose to file every day’s phone log, but if one day were missing neither the government nor the assistant would be able to recover it.
A crafty M with plenty to hide could also try to find a way to keep electronic records from tattling, electronic shedding if you will. A quick hard drive swap after the start of the investigation and corresponding trip to the Hudson are suspicious. Maybe she could regularly change storage devices to regularly "upgrade" by, say, changing hard drives every month by copying "every" file to the new one. She could also consider investing in sophisticated cryptography. Data could be protected with two keys, one to get to the real data, and one for plausible but incomplete data; M could also construct a steganographic filing system, which would allow M to deny the existence of files and entire directories when compelled to decrypt. Of course, these options are illegal and very incriminating. If discovered, a guilty M faces not only the documents she tried to hide but the crime of hiding them. Still, law enforcement needs to be aware that Martha’s high profile recovery might lead to increased data hiding/destruction efforts.
Correlated question: Would Martha, as leader of Martha Stewart Living Omnimedia, have to follow the EU’s Communications Data Retention Directive in her private records?