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CNN Live At Daybreak

Coffey Talk: Martha's Mess

Aired June 05, 2003 - 06:37   ET

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


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


CAROL COSTELLO, CNN ANCHOR: Domestic diva Martha Stewart is defending herself in a full-page ad in today's "USA Today." Here it is. The move comes after she stepped down as chairman and CEO of her company and begins a legal fight.
Federal authorities have charged Stewart with conspiracy to obstruct justice, making false statements and committing perjury. She's also accused of making false statements and obstruction of justice and securities fraud.

And her stockbroker is accused of conspiracy to obstruct justice, make false statements, commit perjury, as well as false statements and making and using false documents. He also faces perjury and obstruction of justice charges.

Federal prosecutors say this case comes down to one thing, though.

(BEGIN VIDEO CLIP)

JAMES COMEY, U.S. ATTORNEY: This criminal case is about lying, lying to the FBI, lying to the SEC and lying to investors. That is conduct that will not be tolerated by anyone. Martha Stewart is being prosecuted not because of who she is, but because of what she did.

(END VIDEO CLIP)

COSTELLO: In response, Stewart's attorney says: "Martha Stewart has done nothing wrong. The government is making her the subject of a criminal test case."

Time now for some "Coffey Talk" now. Let's stir it up with more talk of Martha.

Legal analyst Kendall Coffey is live on the phone from Miami.

Good morning -- Kendall.

KENDALL COFFEY, CNN LEGAL ANALYST: Good morning, Carol.

COSTELLO: All right, Kendall, we're getting a lot of e-mails with this question, with Enron and WorldCom and other recent Wall Street scandals: Is Martha Stewart being singled out? Is she really getting a fair shake?

COFFEY: Well, I think they're clearly concerned about public perception. You saw several references to it during the course of the interview, and I think that may, in fact, be why they didn't charge her with insider trading, because that's something that happens a lot and very few people are arrested for it. Instead, they went with a much simpler charge, which is lying, lying and more lying to federal authorities, because if you do that and if it can be proven, that's very clearly a crime.

COSTELLO: Well, let's talk about being proven, because that's not going to be easy. From what I understand that these alleged lies occurred in a phone conversation that was not taped by investigators.

COFFEY: Part of the allegations involve phone conversations, others involve an actual interview in the presence of authorities. And interestingly, when the FBI conducts these kinds of interviews, they often don't have a tape and they often don't have a transcript. They rely on their own notes, and a FBI interview form called a "302." And if the jury believes what the FBI said she said, that could be good enough.

COSTELLO: Well, I'm reading this statement by Martha Stewart in the "USA Today" newspaper, and she says, "The government has decided to bring charges against me for matters that are personal and entirely unrelated to the business of Martha Stewart Living Omnimedia." What is she trying to say there, Kendall?

COFFEY: Well, she's saying there's nothing about her mismanagement of the company itself, as opposed to, for example, Enron, WorldCom, some of the other things where the allegations are that the CEOs plundered or looted their own company. So, from her standpoint, that's an important distinction, and in many ways it is relevant. Whatever she did or didn't do, it was as an investor acting on her own investment accounts.

COSTELLO: From the evidence you've seen, Kendall, how likely is it that Martha Stewart would convicted and go to jail?

COFFEY: I think that a lot of what the government has alleged is going to be tough to prove.

The one thing that's intriguing and troubling is the government says that on January 31, 2002, right after she was told that she would be speaking to the U.S. attorney's office, she went in and deleted a portion of a message on her secretary's phone log describing the Peter Bacanovic phone conversation, in which he said ImClone stock may be going downward. If it turns out that she was doctoring some kind of evidence right in the middle of this thing, that's the kind of thing that's going to be very hard to explain to a jury.

COSTELLO: It should be interesting. Kendall Coffey, thanks for your insight this morning and for waking up early with DAYBREAK.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.






Aired June 5, 2003 - 06:37   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Domestic diva Martha Stewart is defending herself in a full-page ad in today's "USA Today." Here it is. The move comes after she stepped down as chairman and CEO of her company and begins a legal fight.
Federal authorities have charged Stewart with conspiracy to obstruct justice, making false statements and committing perjury. She's also accused of making false statements and obstruction of justice and securities fraud.

And her stockbroker is accused of conspiracy to obstruct justice, make false statements, commit perjury, as well as false statements and making and using false documents. He also faces perjury and obstruction of justice charges.

Federal prosecutors say this case comes down to one thing, though.

(BEGIN VIDEO CLIP)

JAMES COMEY, U.S. ATTORNEY: This criminal case is about lying, lying to the FBI, lying to the SEC and lying to investors. That is conduct that will not be tolerated by anyone. Martha Stewart is being prosecuted not because of who she is, but because of what she did.

(END VIDEO CLIP)

COSTELLO: In response, Stewart's attorney says: "Martha Stewart has done nothing wrong. The government is making her the subject of a criminal test case."

Time now for some "Coffey Talk" now. Let's stir it up with more talk of Martha.

Legal analyst Kendall Coffey is live on the phone from Miami.

Good morning -- Kendall.

KENDALL COFFEY, CNN LEGAL ANALYST: Good morning, Carol.

COSTELLO: All right, Kendall, we're getting a lot of e-mails with this question, with Enron and WorldCom and other recent Wall Street scandals: Is Martha Stewart being singled out? Is she really getting a fair shake?

COFFEY: Well, I think they're clearly concerned about public perception. You saw several references to it during the course of the interview, and I think that may, in fact, be why they didn't charge her with insider trading, because that's something that happens a lot and very few people are arrested for it. Instead, they went with a much simpler charge, which is lying, lying and more lying to federal authorities, because if you do that and if it can be proven, that's very clearly a crime.

COSTELLO: Well, let's talk about being proven, because that's not going to be easy. From what I understand that these alleged lies occurred in a phone conversation that was not taped by investigators.

COFFEY: Part of the allegations involve phone conversations, others involve an actual interview in the presence of authorities. And interestingly, when the FBI conducts these kinds of interviews, they often don't have a tape and they often don't have a transcript. They rely on their own notes, and a FBI interview form called a "302." And if the jury believes what the FBI said she said, that could be good enough.

COSTELLO: Well, I'm reading this statement by Martha Stewart in the "USA Today" newspaper, and she says, "The government has decided to bring charges against me for matters that are personal and entirely unrelated to the business of Martha Stewart Living Omnimedia." What is she trying to say there, Kendall?

COFFEY: Well, she's saying there's nothing about her mismanagement of the company itself, as opposed to, for example, Enron, WorldCom, some of the other things where the allegations are that the CEOs plundered or looted their own company. So, from her standpoint, that's an important distinction, and in many ways it is relevant. Whatever she did or didn't do, it was as an investor acting on her own investment accounts.

COSTELLO: From the evidence you've seen, Kendall, how likely is it that Martha Stewart would convicted and go to jail?

COFFEY: I think that a lot of what the government has alleged is going to be tough to prove.

The one thing that's intriguing and troubling is the government says that on January 31, 2002, right after she was told that she would be speaking to the U.S. attorney's office, she went in and deleted a portion of a message on her secretary's phone log describing the Peter Bacanovic phone conversation, in which he said ImClone stock may be going downward. If it turns out that she was doctoring some kind of evidence right in the middle of this thing, that's the kind of thing that's going to be very hard to explain to a jury.

COSTELLO: It should be interesting. Kendall Coffey, thanks for your insight this morning and for waking up early with DAYBREAK.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.