Perfection has its limits, even for Martha Stewart

You can almost hear the shiny saucepans clattering to the floor of Martha Stewart's Connecticut kitchen while the summer soufflé loses its puff and one of the prize chickens drizzles guano on the dining table centrepiece of cranberry blossoms and wheatgrass.

The news that Ms Stewart, the high priestess of domestic perfection, has been accused of possible insider trading sits very badly indeed with her immaculately groomed and perpetually smiling public image.

Ms Stewart is in trouble because she sold all her shares in the New York biotechnology company ImClone on 27 December, one day before the government's decision to withhold approval for a cancer drug that the firm had developed became public knowledge. Congress has since arrested ImClone's chairman, Samuel Waksal – one of Ms Stewart's oldest friends – and launched an investigation into the company's collapse.

It is hard to be indifferent about Ms Stewart. Since beginning a catering business from her home in Westport, Connecticut, 27 years ago, she has grown into the first guru of graceful living.

Her company, Martha Stewart Living Omnimedia, oversees television shows, a radio programme, a magazine, Martha Stewart Living, a syndicated newspaper column, an interactive website and more. And then there is the merchandising deal with K-Mart.

Ms Stewart, in other words, is everywhere. She is Delia Smith and Conran all in one. She has twigged that living the American Dream means creating the American dream home. If you are struggling for the right aesthetic, she will show you the way.

Born Martha Kostrya in 1942, one of six children of first generation Polish-American parents in New Jersey, she modelled in Manhattan, had a stint as a Wall Street broker and then moved to Connecticut with her husband, Andy Stewart. Today, she is among Fortune magazine's 400 wealthiest Americans, with an estimated worth of about $650m (£435m).

From her catering venture, launched in 1975, greater things quickly flowed. First came the books, with titles such as The Creation and Presentation of Fabulous Finger Foods, and then the magazine, which has 2 million subscribers.

In 1999, she took her lifestyle conglomerate to Wall Street. The opening was a stunning triumph. She started the day worth $250m, and by close of business, her fortune, on paper anyway, had topped $1.06bn.

But she has had her setbacks. The worst came in 1987 when her husband walked out, complaining she belittled him. Over time, her saccharin air has triggered a backlash. There are countless websites lampooning Ms Stewart and books alleging that the perfection of her brand is an illusion created by a person who is high-handed with her employees and suffers from obsessive ambition. In 1995, for example, she allegedly tried to run down her neighbour's landscape gardener because she didn't like the fence he was putting up.

These attacks are mostly tittle-tattle and none of it seems to have dented Ms Stewart's business fortunes. But the latest scandal is a different matter.

The trouble started on Wednesday last week, when news broke that Mr Waksal had been arrested on charges of insider trading. It was alleged that he heard on 27 December that the Food and Drug Administration would reveal the next day that it was withholding approval of a promising new cancer drug, Erbitux, which ImClone had been developing.

Allegedly, Mr Waksal had tipped off family members, who promptly sold ImClone shares before the news broke and the company's stock price fell 85 per cent. What titillated the US media, however, was this: Ms Stewart, whose daughter had once dated Mr Waksal, sold her remaining stake in the company – nearly 4,000 shares worth $227,824 – on the same day.

Was it just a coincidence that she sold hours before the company went over the edge? Or did she also get advance word from Mr Waksal?

News that she was being investigated sent shares in Omnimedia sliding by 25 per cent earlier this week, although they have recovered somewhat since.

She declared on Wednesday that there was no truth in the allegations, arguing that she had a prior agreement with her broker to sell the shares if they dipped below a certain level, which they did on 27 December. Telephone records and other information given by Ms Stewart to investigators seem to bear out her version of events. But questions remain over when she gave her broker the instructions to sell and whether by then she may have heard from Mr Waksal.

If she is brought down by the ImClone scandal, dining tables across America would once again be in disarray and Cool-Whip – fake whipped cream – would be released from custody in the fridge.

Wall Street, meanwhile, would get the answer to the question that has been nagging it for years. Can Martha Stewart Living Omnimedia continue to exist without the woman that made the brand?