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Martha Stewart Guilty on All Four Counts; Interview With Commerce Secretary Don Evans

Aired March 5, 2004 - 15:30   ET


ANNOUNCER: New political jousting over jobs. The one he has, the one he wants. And the ones Americans have lost.

The Bush ad flap, take two.

UNIDENTIFIED FEMALE: Find some other way to run a campaign without stepping on the bodies of our dead.

RUDY GIULIANI, FMR. MAYOR OF NEW YORK: It was done in a very sensitive way. The administration is correct to focus on the president's record, including, you know, September 11.

ANNOUNCER: A tug-of-war, and the Republican wins. Will name the elephant in the room in the "Political Play of the Week."



JUDY WOODRUFF, HOST: Thank you for joining us.

We will, of course, continue to cover breaking developments in that guilty verdict around Martha Stewart. We'll bring you those as we learn what they are.

Well, turning to the world of politics, Democrats are hitting hard today at what they perceive to be President Bush's weak spot: the jobs picture in America. The government reports that only 21,000 jobs outside the farm sector were created last month. That's well below the 125,000 that many economists had expected. The unemployment rate did hold steady at 5.6 percent.

Unofficial Democratic presidential nominee, John Kerry, says the numbers show that when it comes to creating jobs, Mr. Bush has overpromised and underdelivered. We'll have a live report on John Kerry a little bit later. Here's what he said to supporters in New Orleans just a short time ago, citing recent comments by Vice President Cheney.

(BEGIN VIDEO CLIP) SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: He went on TV, and he said, "If we had John Kerry's tax policies we wouldn't have had the job growth we had in this country right now." And I came here today to say, you're darn right, Mr. Vice President. We'd have had real job growth.

Americans would be working. That's exactly what we'd be doing.


WOODRUFF: Meanwhile, back here on Capitol Hill today, Democratic lawmakers and dozens of workers protested the growing number of American jobs being lost to workers overseas. Minority Leader Tom Daschle and other Democrats in the Senate issued statements blaming President Bush for sluggish job growth.

A little earlier, I spoke with the secretary of commerce, Don Evans, about today's jobs report. And I started by asking if today's report that only 21,000 jobs were created last month is a disappointment or, as the White House maintains, a continuation of good news.


DON EVANS, COMMERCE SECRETARY: Well, Judy, the economy is strong and continues to get stronger. And we continue to create jobs in this economy, and have created some 364,000 jobs over the last six months now.

Unemployment continues to drift lower. It peaked at 6.3 percent. It's now at 5.6 percent. Technically, actually, it was a little bit less this month than it was the last month. So it continues to trend in the right direction.

Also a very positive sign is that layoffs are down considerably. When you look at initial unemployment claims have dropped dramatically over the last six or seven months from 400,000-plus to about 350,000, and so that means layoffs are down dramatically, which means that job security is up for the American workers.

But listen, Judy, we know that if there's one worker out there that wants a job that does not have a job we've got work to do. And we expect because of this strong economy that we're right -- the strong recovery that we're in the middle of, that job creation is going to pick up steam.

WOODRUFF: I saw a number that I guess surprised me. It was in the report today, 392,000 people left the civilian workforce last month. How do you explain that? What's going on?

EVANS: Well, Judy, I can't really -- month-to-month trying to understand the numbers. We've got different surveys. What happens oftentimes, the payroll survey picks up businesses and workers that are working for businesses across America.

Oftentimes, what they don't pick up are the entrepreneurs and sole proprietors and small business owners that are creating new businesses. So I'm not certain that that many people have left the workforce. We've got the Household Survey that shows that we've added some 900,000 jobs since January of 2001. So, you know, it's quite possible that those numbers the Payroll Survey is now missing have been picked up over in the Household Survey.

WOODRUFF: Well, one person who's weighed in is John Kerry, no surprise. But he said, at this rate, the Bush administration won't create its first job, new job for more than 10 years. Are you worried this is going to be an issue in this campaign?

EVANS: Well, what I know, Judy, is that this is going to be a very clear choice for the American workers and the American families. What I know is that John Kerry likes higher taxes.

He's voted to raise taxes 350 times. He's already told the American people that he would raise taxes within the first 100 days. If you want to destroy jobs in this country, you raise taxes.

WOODRUFF: I was just going to say, what do you say, though, to those who did a calculation and look at the number of jobs created so far this year and say, to reach the goal that it has set, the Bush administration has set, you'd have to have something like 250,000 jobs created every month, which is not realistic?

EVANS: Judy, no, listen. What we say is, continue to focus on policies for the people and not politics. I mean, people are saying -- for Senator Kerry to say we're going to create jobs by raising taxes, it has no economic basis to it at all. The way to destroy jobs is to raise taxes.

WOODRUFF: Well, when you refer to his raising taxes, you're talking about his rolling back the Bush tax cuts on the higher-income people. That's what you're referring to.

EVANS: Well, what I'm referring to is he's voted 350 times to raise taxes. And he has told the American people that he would raise taxes within the first 100 days.

WOODRUFF: Final very quick question, Mr. Secretary.

EVANS: Sure.

WOODRUFF: The criticism coming from some of the survivors, the families of 9/11, families about the Bush campaign ads depicting the twin tower collapse.

EVANS: Judy, listen, that was a defining moment in the history of this world, and it is a moment when this country and this world look for leadership. What they got was, and what they saw was, strong, steady, focused, disciplined leadership. And so I think it's certainly very appropriate that we continue to show the American people that they have a strong, steady leader in the Oval Office.


WOODRUFF: Commerce Secretary Don Evans. I talked to him just moments ago.

Well, speaking of that heat that the Bush team is getting over those campaign ads featuring images of the twin towers coming down, a group of relatives of 9/11 victims today urged the president to immediately pull the ads off the air.


BOB MCILVAINE, LOST SON ON 9/11: I am outraged, absolutely outraged that any political party would use Ground Zero for their -- for his or her political gain. It upsets me tremendously that Bobby, my son, could be used as a political pawn to be manipulated, and at times abused. It truly makes me sick.


WOODRUFF: The speakers took no position publicly on the presidential race, and said they would not want to see any politician use 9/11 images in campaign ads. The Bush camp, though, is not backing down. They say that 9/11 families, some of them, and firefighters, support the ads, as does former New York City Mayor Rudy Giuliania.


GIULIANI: September 11, people have very, very different emotional views about it. But I think the president is quite correct to point out that this was one of the challenges that he faced. And in my opinion, he faced in a really very, very superb way for this country. I mean, it's hard for me to think of having had more support, more strength, more of a sense of purpose, and having lived through it and being there with the president on September 14 than President Bush and Vice President Cheney brought to this.


WOODRUFF: Giuliani says he believes the ads were "very tastefully done."

New presidential campaign poll numbers are hot off the presses in today's "Campaign News Daily." We begin in the state that brought us the 2000 election standoff.

A new survey of likely Florida voters shows John Kerry and President Bush neck and neck, with 45 percent for Kerry and 44 percent for Bush. Independent candidate Ralph Nader gets 4 percent, suggesting that he could be a factor in the Florida outcome.

In Missouri, a new poll shows President Bush with a solid lead in a state that he narrowly won four years ago. A survey of likely Missouri voters shows Mr. Bush with 50 percent, John Kerry with 39 percent. Ralph Nader with 5 percent.

As Kerry begins his vice President school search, a reminder that John Edwards is a favorite VP choice among Democrats nationwide.

We're going to quickly scoot from politics back to New York City, and that verdict, guilty verdict for Martha Stewart.

This is David Kelley speaking.

DAVID KELLEY, ASST. U.S. ATTORNEY: ... both of whom are paralegals who have worked very hard on this case, as well as assistant U.S. Attorney Michael Schacter (ph). We've also been partners in this case with the FBI. And behind me is my close friend and colleague, Pasquale Demuro (ph) from the FBI, who is the assistant director in charge of the New York office. And not with us standing here today, but very much in our minds as we come out here, are the agents who worked on the case: Katherine Former (ph), David Makle (ph) and Michael Ryan (ph).

Now, when we first indicted this case, we said that it was about lies. It was all about lies. And as you saw in the evidence, that's what it was. Lies to the FBI, lies to the Securities and Exchange Commission about very important matters.

It is very important for us to protect the integrity of this system, of the market system, of the Securities and Exchange Commission proceedings, and of the FBI. And our failure to do so results in a flood of corruption. Corruption that infects our entire markets, our entire society. So it's so important that we root it out.

Now, this is not a case about lying to the FBI and the SEC and suddenly they become victims. The victims in this case is the entire American public, who relies on the integrity of our system to make sure that justice is done and that they can invest their money safely and securely knowing that it's being handled honestly.

Now, if you are John Q. Citizen or Martha Stewart or Peter Bacanovic, we're going to go after you if you make these types of lies. We do cases each and every day. We do large ones; we do small ones. And we do cases that draw some attention, but some cases that don't draw all this attention. Nonetheless, all those cases are equally important.

Let this case, as all of those cases, send an important message that we will not and, frankly, cannot tolerate dishonesty and corruption in any sort of official proceeding, especially ones such as these that can affect such a wide range of interests, both business and personal throughout the country.

Now lastly, I also want to thank those members of the jury. They obviously sat through very patiently this lengthy trial and paid attention to the evidence. And when it was time to listen to the jury instructions, and retire to the jury room and conduct their deliberations, they obviously did so very carefully, very thoughtfully, and very dutifully. So we thank them for their service.

That completes my statement.

Yes, sir?

QUESTION (OFF-MIKE) KELLEY: I think anybody in corporate America is going -- the word is, beware, and don't engage in this type of conduct, because it will not be tolerated.


KELLEY: Well, that's a very narrow view. And I think that there are people throughout the public who says, you know, we will not and cannot and should not tolerate lying to public officials who are investigating very important matters.

And like I said a moment ago, this was maybe a six week trial, but we do trials in cases such as these all the time that try to root out this type of corruption whether it's Martha Stewart or not.

Yes, ma'am?


KELLEY: We don't ask for any particular sentence in any case, and we won't do it in this case. It's up to sentencing guidelines. Calculation will be made and offered to the court by the Pretrial Services Department, and the court will determine what the sentence will be.


KELLEY: I'm not going to comment on any other cases that we may or may not prosecute.

QUESTION: Were you surprised at the length of the jury's deliberation? And what do you think was the turning point?

KELLEY: I think standing here now and try to give you an answer to that, I might as well put up a sign that I'm a psychic. I don't do palm readings and I don't read tea leaves, so I couldn't answer that question for you.


KELLEY: I wouldn't comment one way or another. And you shouldn't draw any inference if there's any sort of discussion about any sort of plea at any time.


KELLEY: Well, Faneuil obviously was a very important witness. He was there longer than any other witness, and he provided the large overview of the case. But there are several witnesses who were very important to the case, and I can't tell you which witness, if any one in particular, weighed most heavily on the minds of the jury.


KELLEY: Beg your pardon?


KELLEY: That doesn't really warrant a comment. As I answered a moment ago, I'm not going to answer any questions about what we may or may not do in future prosecutions.


KELLEY: I can't -- that's a question that you ought to pose to the jury, as to what impact she had and her testimony may have had.

WOODRUFF: We're listening to David Kelley, who is one of the prosecutors in the Martha Stewart case. That verdict coming down just moments ago.

Martha Stewart found guilty on all the counts against her in that stock trading case. And we heard David Kelley say, ""Let this send a very strong signal that we cannot tolerate any dishonesty or corruption in these sort of official transactions." Again, David Kelly speaking just outside the courthouse in New York City after the multiple guilty verdicts in the Martha Stewart case.

We want to let you know that tonight at 8:00, "PAULA ZAHN NOW" will have a special all about the Martha Stewart case. They will look at what the verdict means. Again, that's "PAULA ZAHN NOW," tonight at 8:00.

Well, it is back to politics and week one in the Bush-Kerry contest. Coming up, political reporters share their scoops on the campaigns and where they go from here.

This is INSIDE POLITICS, the place for campaign news.



ANNOUNCER: On the trail. John Kerry, the senator from Massachusetts, heads South to the Big Easy.

KERRY: I promise I will not ask any of you how you got your beads.

ANNOUNCER: But can Kerry beat President Bush down in Dixie?

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANIDIDATE: We have been the little engine that could.

ANNOUNCER: One race ends and another begins. We'll look back at the political week that was.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Boy, I love it when the people go to the polls and they flex their muscles and let their voices be heard. Isn't that great, huh?

ANNOUNCER: Another victory at the polls for Arnold Schwarzenegger. Is California's new governor unstoppable? (END VIDEOTAPE)


WOODRUFF: Welcome back.

We are going to talk about politics, but right now we do want to move you quickly back to New York City. The verdict in Martha Stewart's trial, guilty on all counts. This is one of the jurors, his name is Chappell Hartridge, He's at the courthouse. Let's listen.


CHAPPELL HARTRIDGE, JUROR: ... what we needed to do to come to our conclusion. And we talked about it before we took any votes.


HARTRIDGE: Nothing was quick, no sir. There were a lot of debates, a lot of talk. We didn't jump to anything.

QUESTION: Did you believe Doug Faneuil's testimony?

HARTRIDGE: I kept an open mind during his testimony knowing circumstances such as his deal with the government. But hearing other testimony, that's what made us believe that he's telling the truth because other people said the same thing he said.

QUESTION: What did you think of Robert Morvillo's closing remarks?

HARTRIDGE: He didn't sway our decision in any way. We based everything on evidence. He didn't really have much to work on.


HARTRIDGE: It didn't make a difference if she testified or not. I didn't expect to hear her testify.


HARTRIDGE: I'm sorry?


HARTRIDGE: The perjury charge for Peter Bacanovic only because we were told that we needed either two witnesses, or one witness, and a document to back it up. And we didn't know if we had enough.

So we wrote a letter to the judge asking us can we use (UNINTELLIGIBLE) testimony and the documents she kept? The phone message from Peter Bacanovic.

QUESTION: (OFF-MIKE) HARTRIDGE: What message does this send to investors? Maybe to the middle investors maybe feel a little bit more comfortable that they can invest in the market and not worry about these type of scams where they can lose their 401(k)s or just lose money on stocks.

QUESTION: (OFF-MIKE) can you describe what evidence, what you feel about that?

HARTRIDGE: I guess the cover-up began when Merrill Lynch started to do their internal investigation and Peter realized that oh, boy I better start covering things up. And then when Doug kept questioning him about what they did, it was don't worry about it, we're all on the same page, Martha and I we're all on the same page. So this is the story, it was a tax loss. It was a tax loss. That was around the beginning of it. [


HARTRIDGE: It didn't make any difference to me one way or the other.


HARTRIDGE: Well, if we had enough evidence it didn't make a difference if Martha would have got on and said something to the contrary. It didn't phase me one way or the other what she had to say.


HARTRIDGE: Not at all. Not at all. Not at all. She's just another human being as far as I'm concerned.


HARTRIDGE: Well everyone has a right to make that opinion but that's not my opinion.


HARTRIDGE: That was very strong. Because that was Martha's way of trying to cover this up, about what message Peter left. That was very strong.


HARTRIDGE: I can't honestly remember the first count we did. I really can't remember.


HARTRIDGE: I had no opinion at the beginning.


HARTRIDGE: I leaned a little bit towards that but we were not going to make our decision until we re-read the evidence and brought several things back and just went over it again.


HARTRIDGE: In the end after we opened up the testimony again and again and again, yes. Yes.


HARTRIDGE: If you notice, that was the one thing we could not prove, that that mark was put on at another time. We could not prove that.


HARTRIDGE: do I think she's going to be sentenced to prison time? Well she committed a crime, she got convicted, yes. If she's going to, I don't know.


HARTRIDGE: I feel bad for him because he was dragged into this. He at the beginning thought that something was wrong and this wasn't the right thing to do. But he listened to what his boss asked him to do.

QUESTION: (OFF-MIKE) What about the celebrities that came to trial? Did that influence you?

HARTRIDGE: Not at all. Not at all.


HARTRIDGE: Very stressful. Again two people's lives were in our hands. We knew that all the attention, as you see, this was going to get, so we wanted to make sure we did the right thing.


HARTRIDGE: I did mention already that was one thing we could not say beyond a reasonable doubt that he put that mark on after the fact. We didn't think we had evidence. In our minds we think he did but we couldn't prove it.


HARTRIDGE: Honestly, no.


HARTRIDGE: Hartridge. Chappell.

WOODRUFF: We're listening to -- you just heard him say his name. Chappell Hartridge, one of the jurors who convicted Martha Stewart on all four counts, including obstructing justice, lying to the government about a stock sale. Mr. Hartridge among other things explaining the jurors' decision, how they reached the verdict and also saying I think this is a message to little investors, makes them a little more comfortable they don't have to worry as much about their retirement accounts.

Well, of course we'll continue to keep an eye on developments in New York in the wake of that surprising, to some people anyway, verdict in the Martha Stewart case.

Back to politics now. We want to talk to a group of journalist about the status of the Bush-Kerry race for the White House. Bringing us up to speed, Liz Marlentes, she's with "The Christian Science Monitor," John Dickerson, he's with "TIME" magazine and Anne Kornblut of "The Boston Globe." Great to see all three of you. Thanks very much.

Anne, let me start with you. To what extent do you think the Bush campaign anticipated there would be the crescendo of criticism we're hearing about these first round of ads they're running, including the images of the twin towers coming down?

ANNE KORNBLUT, "THE BOSTON GLOBE": They knew they were taking a calculated risk. In the words of one of them that I spoke to yesterday that in their words anything they did that involved September 11 would spark some kind of negative reaction.

I'm not sure they expected it to be quite this loud, to be on the front page of all the New York tabloids as it was yesterday. But they felt they wanted to do this now, get some of the furor out of the way and go ahead with the campaign, able to talk about September 11 without getting the same kind of backlash.

WOODRUFF: We're going to interrupt all three of you. Here's Martha Stewart. She's apparently coming out of the courthouse and apparently going to talk to reporters. Although we'll wait and see.

Martha Stewart found guilty on four counts in this trial that has gone on for weeks in New York City. We're trying to get a better handle here on whether she's going to talk to reporters. we Had been told earlier she'd already left the courthouse. Clearly that's not the case.

No mistaking that was Martha Stewart coming out of the federal courthouse there in New York City. She was found guilty on four counts of obstructing justice. Lying to the government, about a stock sale, in the words of the Associated Press, in a devastating verdict, probably meaning prison time for Martha Stewart.

All right, quickly back to the campaign. If you're getting a little vertigo here it's understandable. So are we.

Let's see. John Dickerson, I want to come back to you on this point about the Bush campaign, this ads. Is the criticism hurting their attempt to get the message out about the president and the job that he's done the first three years in office? JOHN DICKERSON, "TIME": Well, it's a distraction, to be sure. This was the week the president was going to engage, the battle was going to begin, they wanted it to be a positive tableau of the president's accomplishments. It's a distraction.

But having said that, they knew this fight was going to come, as Anne said. They focus grouped these ads, they knew they were going to catch some heat. But they're trying to turn this into a conversation about 9/11 and the president's response. They think that's an issue that works very well for them and hurts John Kerry.

WOODRUFF: Liz Marlentes, in the middle of all this what is the John Kerry strategy for coming back at the Bush folks?

LIZ MARLENTES, "THE CHRISTIAN SCIENCE MONITOR": Yes, I think it's been very interesting. Certainly, the rapid response to these ads was something that everybody I think took notice of. Coming from all different directions. And of course the Kerry campaign is saying they weren't coordinating a lot of these responses.

But it is worth noting that the fire fighters union has endorsed Kerry and that was one of the most vocal group coming out against these ads. In a way it did send a message that the Kerry campaign was ready for this and they're going to be ready for whatever the Bush campaign is going to throw at them.

WOODRUFF: Anne, can we tell everything from this about the broader Kerry strategy going forward? They are up against the Bush/Cheney campaign, what, $100 million and counting, this year.

KORNBLUT: Yes, there's a lot of money already stacked up on the other side.

That said a lot of the Democratic forces, not coordinated with the Kerry campaign, the 527s as they're called under the new campaign finance laws, are able to finance their own ads that can be pro-Kerry, anti-Bush in some ways. They can't come out and say that they're pro- Kerry and anti-Bush, and they have quite a bit of money themselves from independent financiers like George Soros.

So while it looks like an imbalance on the actual sheets, the log sheets right now, I do think Kerry will have a lot of support independently on the outside.

WOODRUFF: John Dickerson, would you agree with that, that it's going to end up if not exactly balanced in terms of money, at least that the Kerry people will be able to draw on a lot of resources here?

DICKERSON: That's right. They're in the fight. There are a lot of Democrats who really want to beat George Bush. They're very excited about Kerry. One of the things you might look for is the Bush campaign might run their ads to define John Kerry pretty soon. They want to take advantage of this period while Kerry's out trying to raise money to put their mark on John Kerry before he can really defend himself.

WOODRUFF: Liz, is the Kerry campaign ready for that?

MARLENTES: I was going to say, one of the other interesting things we've noticed is that although the Kerry campaign is more than ready to respond to whatever the Bush team is doing it's a little less clear what their positive message about John Kerry is right now. That's something that I think they're going to have to start getting out of there as soon as they can. That's a scenario where the lack of money is going to make it harder. They can use the independent groups to try to respond to whatever Bush does but they can't use them to define Kerry in the way they're going to have to start to do very quickly, I think.

WOODRUFF: So Anne, do we know what the Kerry campaign has in mind in terms of defining John Kerry in a positive way?

KORNBLUT: Well, I have to agree with Liz, they've been very busy redefining George Bush. Hoping to chip away at his credibility, in their words, and so far they would say they've got a health care plan, they've got an economics plan, but even in the economics plan we've seen some revision of the numbers and talk about going back into them. I think they're still finding their way. One definition of John Kerry that they are going to keep to and have so far is Vietnam. He is a war hero. He served his time in Vietnam. That's not going to go anywhere. Beyond that they're still finding their way.

WOODRUFF: And John Dickerson, what's your sense of that? Are the Kerry people ready to put some positive definition, if you will, on their man?

DICKERSON: Well, I think they're distracted a little bit. They're also dog tired. They've been through a lot of hard work. I think the Bush campaign again trying to capture on this moment right now is going to bring this essentially down to one thing. They'll talk about the economy and national security. They will essentially say, this is the Bush message when things get hot John Kerry waffles, George Bush doesn't. And that will be their sort of attack. You've seen it from the president a little bit. But this is the main thrust of their coming attack.

WOODRUFF: Liz, the Bush campaign saying today that they fully expect that the president's going to be behind in the polls right up until the Republican convention. Is that spin or what do we think?

MARLENTES: They've been saying it all along. Certainly there are a lot of indications that this will be a close election. I think in some ways it is understandable given all the attention that's been on the Democrats throughout the primary season that Bush would be slightly behind right now. I also would say having talked to some of the people in the Bush campaign, they are confident, and I don't think it's totally spin. I think they do think they have a lot of things going for them. Particularly the war chest that's going to help them to get ahead in coming months.

WOODRUFF: Anne, very quickly in terms of timing, vice presidential pick, we're all anxious to know who it's going to be. Should we look for something sooner or later closer to the Democratic convention?

KORNBLUT: I think you can expect the campaign to play off that sense of suspense and to milk it for what it's worth. They will be able to drag this out, have us focus on it. I'm not sure we'll see it before June or July.

WOODRUFF: John, what's your sense?

DICKERSON: That seems reasonable. You want a little bit of wind-up here because you want this to look like a big, presidential decision. You want some theater, you want some suspense to make it look like Kerry can pull the trigger and make a real big-time presidential decision.

WOODRUFF: All right. We are going to have to leave it there. Liz, Anne, John, great to see all three of you. Thanks very much. Especially on this chaotic news day.

Sometimes it seemed like Super Tuesday would never get here. All of a sudden it is behind us. Coming up, our Friday look back at the political week that was.

And somewhere in there is the political play of the week. If it isn't John Kerry's near sweep on Super Tuesday, what could it be?


WOODRUFF: Martha stewart's attorney Robert Morvillo coming out of the courthouse. Let's listen to what these gentlemen are saying.

RICHARD STRASSBERG, PETER BACANOVIC ATTORNEY: We intend -- excuse me, Peter is innocent of these charges. We intend to continue to fight, and we will be appealing. It's been a horrible ordeal for Peter. But he is going to make it through. And we will ultimately be vindicated in the end. Thank you.

ROBERT MORVILLO, MARTHA STEWART ATTORNEY: We want to thank everybody. This group, the marshals, the jurors, the judge, and everybody that was part of this case, for being cooperative at all times, polite, and we really appreciate that, because it was a difficult process for all of us.

Like Rich Strassburg, we are disappointed at the outcome. We look at this as having lost the first round. We look at this as an opportunity for us to go to the next rounds, and to explain to the court of appeals what we think went wrong in this case, and why the case came out the way it did. We are confident that once we get our day in the court of appeals, the conviction will be reversed, and Martha Stewart will ultimately be determined not to have done anything wrong. Again, let me thank all of you for your cooperation.

WOODRUFF: Robert Morvillo, of course, a familiar face in these last few weeks, the attorney for Martha Stewart speaking after the attorney for Peter Bacanovic, Martha Stewart's ex-stockbroker. You heard him say it, we're disappointed at the outcome but we look at this as just the first round. We think we're going to have an opportunity to turn it around. He said we're confident once we get into the court of appeals that this guilty verdict will be reversed. Again, tonight CNN will focus on the Martha Stewart guilty verdicts. "PAULA ZAHN NOW" will spend an hour looking at what this verdict means. "PAULA ZAHN NOW" at 8:00.

Back to politics, and the presidential campaign. In New Orleans today, John Kerry seems to be letting the good times roll you might say. He went to Louisiana, buoyed by his new status as the de facto Democratic presidential nominee and with some new ammunition against President Bush. Our senior political correspondent Candy Crowley is in New Orleans covering John Kerry -- Candy.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Hi, Judy. First just a little trivia. We're in Waldenberg Park (ph). Maybe it looks familiar to you and some of our viewers. This is where Dan Quayle, along the Mississippi, came out and was introduced as George Bush, the first one's, running mate. We didn't get any news about a running mate here from John Kerry. Had some awfully nice things to say about Senator Landrieu. But mostly this was the senator's stock speech.

However a couple things have happened since the last time he gave a speech, and that is a, those controversial Bush commercials came out. And b, that anemic job growth. So Kerry found a way to put both of those things in a single graph.


SEN. JOHN KERRY, (D-MA), PRESIDENTIAL CANDIDATE: His first advertisements had pictures of ground zero. Now he's, you know, as a strategy, and you're all good strategists down here, you understand why he's doing that. He can't come out here and talk to you about jobs.


CROWLEY: The Kerry campaign also put out a statement saying that the anemic job growth is yet another underperformance and overpromise of the Bush administration. They see jobs as they see everything, through the prism of the president's credibility. It's not just about jobs. They say, look, he promised this three years ago, this two years ago. Now he's saying this and it never comes true.

So this is sort of a double issue for them. Not only has the booming economy failed to produce jobs, it's also, they say, a matter of the president's credibility.

Judy, as you know, we're going through most of the Gulf states now because there's another primary next Tuesday night. So we'll be visiting all of them. And hearing pretty much the same thing. And I think Tuesday night is the night that he may actually put it away mathematically -- Judy.

WOODRUFF: Southern Tuesday. We won't miss that.

Candy, we keep hearing that the Bush campaign is going to follow up the current ads with some ads as they say contrasting Senator Kerry. In other words criticizing his record. Is the Kerry camp braced for that? Are they ready to come back with that? What do they think at this point?

CROWLEY: Well, if they're not ready for it they haven't been reading the papers.

Yes, I think they know that for instance what they got hit on during the primary. This is a senator who voted for the war, and then against the money to continue to support it. This is a candidate who voted for No Child Left Behind, and yet now is against it. A candidate who voted for the PATRIOT Act and now talks against it.

So there's a lot of things out there. However he's had a lot of practice over the course of this campaign because those are all the things that Dean hit him on.

And so they sell this as sort of John Kerry as a nuanced thinker, that he went along with things because he thought certain things would happen and they didn't. He says look, if you think I would have conducted this war the way George Bush did then you shouldn't vote for me. That's been probably their most effective response.

So they know all of the soft spots out there. And they know pretty much where the Bush campaign is going to hit.

Now there's a question of money. Can they do that in ads? No. They're king of the press release. They hit back very quickly. I wouldn't be surprised if they didn't already have written some of the responses to those things.

WOODRUFF: All right, Candy Crowley following John Kerry through some of these Southern states that will be voting next Tuesday. Candy, thank you very much. In Louisiana.

We all had our eyes on John Kerry last Tuesday but our senior political analyst Bill Schneider was watching something else as well. He's a man of multiple talents and he's here to explain -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: You know, John Kerry may have swept the Democrats on Super Tuesday. But another politician swept both Democrats and Republicans, the same day. So who do you think gets the "Political Play of the Week"?


GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Shall we rebuild our state together? Or shall we fight amongst ourselves, creating even deeper division and fail the people of California?

SCHNEIDER (voice-over): That was the night Arnold Schwarzenegger got elected governor of California. His first major initiative was to restructure the state's debt.

SCHWARZENEGGER: We consolidate the debt, and then we refinance it and then we tear up the credit cards and throw it away so that our politicians can never, ever do that again.

SCHNEIDER: To do that he needed voters to pass two propositions they were initially wary of.

SCHWARZENEGGER: Everyone wrote us off. Everyone said this is not going to happen. The Democrats, and the Republicans will never work together.

SCHNEIDER: But the Democrats made a calculation.

DARRY SRAGOW, CALIF. DEMOCRATIC CONSULTANT: Had he been able to portray the Democrats as a party that was preventing him from solving the problems in California, I think we could have painted ourselves into a very dangerous corner.

SCHNEIDER: So most Democrats decided to join forces with the governor.

SEN. DIANE FEINSTEIN (D), CALIFORNIA: What you see is major Democratic elected officials in the state of California supporting this Republican governor.

SCHNEIDER: Even the guy he defeated.

GRAY DAVIS (D), FRM. GOV. OF CALIF.: I think Arnold's off to a good start.

SCHNEIDER: On Super Tuesday, California voters overwhelmingly approved the propositions. Republicans, and Democrats voted yes. So did whites, African-Americans, Latinos, Asian-Americans, and Jews. Everybody but gay and lesbian voters.

Schwarzenegger seemed to know he had a problem there. So he moved to fix it.

SCHWARZENEGGER: So I have no use for constitutional amendment.

SCHNEIDER: For once, Mr. Universe needed help.

SCHWARZENEGGER: That we have a massive weight that we must lift off our state. Alone I cannot lift it. But together we can.

SCHNEIDER: And -- oof -- they did it.

SCHWARZENEGGER: You are the greatest power lifters in the world.

SCHNEIDER: Governor Schwarzenegger didn't quite win everything this week.

BUSH: I know you were a little disappointed like I was that "Terminator 3" didn't win any Oscars. But Arnold's had a pretty good year.

SCHNEIDER: After all, he does win the "Political Play of the Week."


SCHNEIDER: A politician who can pull Republicans and Democrats together like that could be a valuable national commodity. You know, Judy, maybe he does have use for a constitutional amendment, after all?

WOODRUFF: Right, one that allows somebody born outside the United States to run for president?

SCHNEIDER: There's a thought.

WOODRUFF: OK, Bill Schneider, thank you very much.

All right we're continuing to watch not only politics this hour, but of course the startling verdicts out of New York City. The Martha Stewart found guilty on four counts. The latest on that and more right after the break.


WOODRUFF: Once again updating the top story this hour. That is the guilty verdict in the trial of Martha Stewart. The verdict being handed down just a little over an hour ago. For the very latest on what's happened to Martha Stewart's stock let's go to Darby Mullany at the New York Stock Exchange.

DARBY MULLANY, CNN CORRESPONDENT: Thank you, Judy. I'm standing at the post where shares of Martha Stewart Living Omnimedia trade. This was a very dramatic scene. Very crowded as traders gathered around the post just before the verdict was read. The stock was halted after the verdict was read that Martha Stewart had been convicted. The stock was halted. Then the shares slumped some 20 percent erasing an earlier rally.

It was a roller coaster ride ahead of the verdict for the stock. The stock had surged on expectations that she would be exonerated.

As far as the broader measures of the market, the Dow ended lower -- ended higher by seven points, the Nasdaq was lower by seven and the S&P gained two.



WOODRUFF: We'll continue to follow all the developments in the Martha Stewart verdict.

Meantime, that's it for this hour of INSIDE POLITICS. I'm Judy Woodruff. Be sure to join Kelly Wallace on Sunday at 10:00 Eastern for "INSIDE POLITICS SUNDAY." Have a good weekend. "CROSSFIRE" starts right now.


Commerce Secretary Don Evans>

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