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American Morning

Interview With Michael Weisskopf

Aired August 12, 2002 - 07:52   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JACK CAFFERTY, CNN ANCHOR: So the question remains: What did Martha Stewart know, and when did she know it, and how much trouble might she be in? That's what congressional investigators are going to be asking face-to-face, if she is subpoenaed.
The head of a House committee looking into the ImClone scandal says a subpoena is likely, and speculation about whether Stewart profited from inside information is now running rampant.

Michael Weisskopf of "Time" magazine writes about Martha's ongoing problems in this week's issue, and he joins us this morning from Washington, D.C.

Mike, nice to see you -- thanks for being with us.

MICHAEL WEISSKOPF, "TIME" MAGAZINE: Sure, Jack.

CAFFERTY: You know, the sound byte everybody is waiting for is Martha sitting in front of that congressional committee going, on the advice of counsel, I have chosen to exercise my rights under the Fifth Amendment of the Constitution and not answer any questions. How likely is it we're going to see that sound byte?

WEISSKOPF: Depending on her cooperation in the next couple of weeks. She has been cooperative, somewhat at least, with the FBI, where we report for the first time that she has had a couple of interviews. The Justice Department, however, is now seeking, in any case, the cooperation of a good friend of hers who was with her on the day of the sale.

Then, at the committee level, she has increasing problems because of what committee members consider uncooperative and arrogant behavior. Her story keeps on being tweaked, they say. And interestingly, after its first iteration, lawyers for Martha asked the committee chairman, Billy Tauzin, to read her statement into the record and then issue his own exonerating her.

CAFFERTY: Can you spell chutzpah?

WEISSKOPF: For the princess of propriety.

CAFFERTY: Yes. I mean, that's unbelievable.

Now, yesterday, the representative -- the chairman of the House Energy and Commerce Oversight Subcommittee, Representative James Greenwood, issued a statement. And he said the following. We'll put it up on the screen, so the people at home can read it as well. It says: "We have told her," Martha Stewart, "that we want information about her phone call records, her e-mail records, and that we want that by the 20th of August. If she provides that information to us voluntarily, we'll review it. If she does not provide it to us, the information will be subpoenaed. Then, we'll make a decision as to whether we need to call her forward under subpoena as well, and we may have to do that."

It sounds like they are playing hard ball in Congress, and that they are not in any sort of a conciliatory mood, at least at this point.

WEISSKOPF: Yes, that's changed over time. Initially, they were quite conciliatory, but they feel like they have been, according to a committee spokesman, sandbagged by her evolving story. And it almost appears as if her lawyers, coming New York, are treating members of Congress as kind of lesser investigators.

CAFFERTY: Now, the other players in this are the stockbrokers that may or may not have been involved in this trade that happened before the stock price fell.

Here is an e-mail account between Peter Bacanovic and his assistant, Doug Faneuil, at Merrill Lynch. Bacanovic asks: "Has news come out yet? Let me know. Thx, P." And the assistant replies: "Nothing yet. I'll let you know. No call from Martha either."

To what degree are the brokers involved? And how important is their testimony or cooperation of what may eventually happen to Martha Stewart?

WEISSKOPF: Essential, because they served as a bridge between the Waksals, who they also represented, and Martha. The big issue is whether Martha, as she asserts, sold her stock in some kind of prearranged deal where when it reached below $60 a share, or whether she had inside information. And the exchange of e-mail between the broker and his assistant suggests they were waiting for something big. Was it the knowledge of the FDA rejection of the ImClone drug, Erbitux?

CAFFERTY: All right. The possible charges against Martha Stewart: fraud, perjury, obstruction of justice, conspiracy. In 10 seconds, yes or no, are we going to see an indictment do you think?

WEISSKOPF: Too early to tell. She'll be required, though, to put up a pretty strong defense.

CAFFERTY: All right, Mike, nice to have you with us. Thank you very much. Michael Weisskopf writing in this week's edition of "Time" magazine joining us this morning from Washington.

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