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PAULA ZAHN NOW

President Bush's War Cabinet; Other Nations Rooting For John Kerry?

Aired March 8, 2004 - 20:00   ET

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

PAULA ZAHN, CNN ANCHOR: Good evening. Thanks so much for joining us tonight. I'm Paula Zahn.
It's Monday, March 8, 2004.

(BEGIN VIDEOTAPE)

ZAHN (voice-over): "In Focus" tonight, Martha Stewart and her broker, Peter Bacanovic, why he really stood by his boss and his friend Martha Stewart.

John Kerry says leaders of other nations are rooting for him to win. Are they really lining up against the president?

Finally, the bleak last days of Dr. Atkins, shocking new details on the nutrition expert's bad health and rocky relationship with the medical community.

(END VIDEOTAPE)

ZAHN: All that ahead tonight. Plus, an offbeat country music star tosses his 10-gallon hat into the political ring.

But, first, though, here are some of the headlines you need to know right now at this hour.

More than four years after taking her company public, Martha Stewart may be in the process of separating herself from the company that bears her name. A source tells CNN that she will leave the board of directors of Martha Stewart Living Omnimedia.

And the woman who has given so many celebrity interviews over the years arrived with an interview with her probation officer today in New York today. The officer's report could determine how Stewart is treated when the judge hands down her sentence in June.

Martha Stewart is "In Focus" now. We are also learning now that Stewart's prospects might have turned out dramatically differently.

We begin with a report from Deborah Feyerick.

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT (voice-over): Martha Stewart could have cut a deal with federal investigators and avoided criminal charges and prison time had she immediately come clean to SEC officials. A source close to the case says all Stewart had to do was admit to trading on inside information from the very beginning. Stewart would have had to pay $200,000 as defined by SEC guidelines and step down as head of her company, something she ultimately did last summer when she took on the title of chief creative officer.

Instead, Stewart stuck to her story about having a $60 sell price in place for ImClone stock. Once criminal charges were in the works, sources close to the case tell CNN Stewart's lawyers talked with prosecutors about cutting a different deal. One source called the offers very sweet. Prosecutors could not guarantee Stewart would serve no prison time since that's up to the judge.

A source close to Stewart calls the deal palatable and says the breaking point was not the possible jail time but the false charges under discussion. Negotiations broke down, says the source, because Stewart firmly believed she had nothing wrong.

(on camera): And why would federal investigators have offered Stewart a plea bargain in the first case? Says one official tied to the case, you don't go trying to ruin somebody for an innocent mistake.

Deborah Feyerick, CNN, New York.

(END VIDEOTAPE)

ZAHN: Well, as you can see, the latest CNN/"USA Today"/Gallup poll shows most arms would prefer to see Stewart behind bars. What's the chance that will happen and for how long?

Joining us now to discuss the Martha Stewart possibilities, Jeffrey Toobin, our senior legal analyst, Simon Crittle, a reporter for "TIME" magazine, and Charles Gasparino, who is with "The Wall Street Journal."

Welcome, all.

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Hi.

ZAHN: First of all, Jeffrey, how sweet was the deal that was offered to her?

TOOBIN: Well, it wasn't as sweet as all that, because the government was not going to offer her a no guarantee of no jail time. The government doesn't do that. The U.S. attorney's office doesn't do that.

(CROSSTALK)

ZAHN: So why take the deal?

TOOBIN: And she didn't. And the option was, take your chances with one count of making false statements. She didn't want to take the deal, but I think she would have been in better shape today obviously if she did.

ZAHN: She would have been in better shape but you could also argue that you would have taken the same roll of the dice, Charles?

CHARLES GASPARINO, "THE WALL STREET JOURNAL": Right.

Listen, what she was against was, if she committed fraud, she couldn't run a public company. And right now, she can't run a public company anyway so why not roll the dice?

ZAHN: So you don't blame her?

GASPARINO: I don't blame her.

ZAHN: Simon, a lot was made of her demeanor in the courtroom, showing very little emotion. But you say that was all betrayed behind the scenes. What can you tell us was going on?

SIMON CRITTLE, "TIME": I learned from a good source to Martha that actually, on Wednesday night, the first day the jury was given the case, that she actually did break down. Obviously, this went completely against the Martha Stewart we saw in court, which was this sort of stony-faced expression. She showed very little emotion, especially after the verdict. We saw nothing.

ZAHN: What did she think was coming? She had a hint by that time? Do you think her attorneys had tipped her off that things were not going well?

CRITTLE: Well, I think Martha had a very good idea what was coming. We were all in the courtroom. We all saw what happened.

TOOBIN: She's no dummy. We all watched the same trial. She knew.

(CROSSTALK)

ZAHN: And yet some people were still surprised she was convicted on all four counts.

TOOBIN: Maybe on all four counts.

I think the surprise of people outside the courtroom was greater than those of us who were inside the courtroom. Those of us inside there -- I don't mean to speak for others, but I wasn't surprised and I don't think many people.

GASPARINO: I disagree.

I think most journalists thought she was getting off at some point. I think, late in the game, I think right up until maybe Thursday night, they were starting to think that maybe there was a chance that she was going to get off.

TOOBIN: Well, I spoke too soon, I guess. I actually did think she was going to be convicted and, for a change, I was right.

(CROSSTALK)

ZAHN: Simon, you're shaking your head.

CRITTLE: I have to disagree with Charlie.

The evidence was overwhelming. We saw those three witnesses. They were just so powerful.

(CROSSTALK)

GASPARINO: I'm not saying that the witness -- the evidence wasn't overwhelming. I think most journalists, especially early on, thought she was innocent and thought this was a needless prosecution. I think, towards the end, that started to change, but reluctantly.

ZAHN: The one thing you have been critical of from the very beginning was Martha Stewart's P.R. strategy.

(CROSSTALK)

GASPARINO: Oh, I thought it was horrible.

ZAHN: And it started off with an article Jeffrey Toobin, yours truly, wrote, down at the other end of the sofa. And you say that ultimately backfired.

(CROSSTALK)

GASPARINO: It was like sticking a finger right in the government's eye. As she's negotiating some sort of deal, she leaks the story out. Listen, it was a great scoop for you but the bottom line is it wasn't smart P.R. and she compounded it throughout the whole trial.

When she was indicted, the first thing she said is that this was some sort of a witch-hunt because she's a successful woman and I think these sort of things, they resonate with the government.

(CROSSTALK)

ZAHN: What did she think your article was going to yield, Jeffrey?

TOOBIN: Well, I think what she wanted with the story in "The New Yorker" was an examination of the evidence that was very different from the way Congress was investigating.

Remember, the way this thing mostly came to the public eye was through a very hostile, negative investigation in the Energy and Commerce Committee that really I think behaved abominably and was really out to get her.

(CROSSTALK)

TOOBIN: She wanted another side of the story presented. I did my best to give both sides of the story, but she put forth the evidence she wanted to put forth and I think the story, on balance, was favorable to her. ZAHN: Simon, how badly do you think Martha Stewart's team blew it by having all these celebrities come in on an almost daily basis? Did that hurt her?

CRITTLE: Well, it's hard to know what's in the mind of the jurors. We've spoken to some of them. Some have said yes. Some have said no. Certainly, it kind of elevates her above and beyond them, doesn't it? So perhaps it hurt her.

(CROSSTALK)

TOOBIN: I don't buy that. I don't think it mattered much one way or another. You remember, this is a five-week trial. We're talking about three celebrities, Rosie O'Donnell one day, Bill Cosby for about an hour, and Brian Dennehy, who is not exactly a household name. I don't think that makes a big difference.

(CROSSTALK)

ZAHN: Well, that may be true. But you did hear jurors say after the fact that it was a distraction and it connoted a lack of seriousness on her part.

GASPARINO: Right. It's like they didn't take the case seriously.

(CROSSTALK)

GASPARINO: They trot in these guys. They stay for a couple hours. Bill Cosby is in there with his dark glasses on. It was a joke.

TOOBIN: She is a famous person. She has famous friends. i don't think that is all that outrageous, that some of them would be there to support her.

GASPARINO: But they saw right through it. They saw it as this sort of blatant attempt to sway them. And they laughed at it and that's a problem.

(CROSSTALK)

ZAHN: And also as a reminder this whole theme you run through all their remarks about the big person against the little people.

GASPARINO: Oh, yes. I mean, Bill Cosby coming in with those dark glasses was so hysterical. Where did he think he was, in Hollywood? This is a New York courtroom. These people live in the Bronx. They live in queens. They live in Westchester County. What do they care about these folks?

ZAHN: The blinding glare of the scrutiny in the courtroom.

(CROSSTALK)

ZAHN: How is the appeal shaping up, Simon? CRITTLE: Well, I've heard from a source also that I think one of the grounds for appeal is going to be the fact that Martha wasn't charged with insider trading. And her lawyers weren't allowed to talk about that in the courtroom, so this goes to her motivation for the crime.

If she wasn't charged -- I mean, sorry. If -- if she lied about something she never did, why weren't they allowed to go into the courtroom and talk about that? So...

GASPARINO: She was charged with civil insider trading. And it's against the law essentially to lie to the SEC, which brings the civil charges. They're making it sound like the SEC is like the New York Sanitation Department. They're not a serious thing.

(CROSSTALK)

ZAHN: And a reminder that she was under no obligation to even talk to them.

TOOBIN: A technical legal phrase to describe her chances on appeal, slim and none. There is no way this is going to be overturned.

(LAUGHTER)

ZAHN: I guess that says it all.

Charles Gasparino of "The Wall Street Journal," Simon Crittle of "TIME", Jeffrey Toobin, thanks to all of you.

(CROSSTALK)

ZAHN: Meanwhile, what did Peter Bacanovic say after he heard the word guilty four times? I'll talk to a close friend in an exclusive interview.

Also, the Atkins diet. The low-carb, high-protein regimen rubbed the medical establishment the wrong way for years. But that wasn't the only controversy surrounding Dr. Atkins. We are going to look at a surprising new report about the diet doctor's own health problem.

And are foreign leaders secretly hoping John Kerry wins in November? Well, the senator says so. We'll debate whether that's true and whether it's something you should even consider on Election Day.

(COMMERCIAL BREAK)

ZAHN: Democrat John Kerry campaigning in Florida today made this statement to a group of fund-raisers -- quote -- "I've met foreign leaders, who can't go out and say this publicly, but boy, they look at you and say, 'You gotta win this. You gotta beat this guy. We need a new policy,' things like that."

Are foreign leaders really lining up against President Bush? We are pitting a former U.N. ambassador vs. a former assistant secretary of defense tonight.

Joining me here in New York, Ambassador Richard Holbrooke, who served under President Clinton, and, in Washington tonight, Richard Perle, who served in the Reagan Pentagon. He is also a fellow at the American Enterprise Institute. His latest book is called "An End to Evil: How to Win the War on Terror."

Welcome, gentlemen. Glad to have both of you with us.

(CROSSTALK)

ZAHN: Mr. Ambassador, today, John Kerry made these remarks that we just put up on the screen. Who was he referring to? Which foreign leaders want him to win?

RICHARD HOLBROOKE, FORMER U.S. AMBASSADOR: John Kerry made a terrible, terrible mistake today. He told the truth. And Washington doesn't understand the truth. They don't like it.

The fact is, anywhere in the world you go -- I've spent -- in the last six months, I've been in Africa, Europe, Mideast and Asia, everyone says that. The rest of the world is uneasy about American leadership. They don't know if it's reliable anymore and they want a change. They're not going to get involved in the selection, but that is their personal preference.

ZAHN: Do you want to name some names in Europe? Are you talking about President Chirac? Are you talking about Mr. Schroeder? Who?

HOLBROOKE: Paula, you know perfectly well that no foreign leader who has to still work -- and they all do -- with the incumbent administration is going to say, we want a change in governments.

But everybody who travels in Europe or in Asia or in the Mideast knows that this is the overwhelming desire. And that's what Senator Kerry said today. And the American public will vote any way they want, but they ought to know the truth. And this is the truth.

ZAHN: Richard Perle, you don't buy that? You don't believe any of these foreign leaders have told John Kerry that?

RICHARD PERLE, FORMER ASSISTANT SECRETARY OF DEFENSE: Well, I think the American people certainly should know the truth, but we're not hearing it from the senator and we're not hearing it from Richard Holbrooke. Who are these leaders? The American people ought to be able to evaluate who is lining up for us and who's lining up against us.

ZAHN: But, Mr. Perle, you understand what Ambassador Holbrooke just said, that no person who is in power now could sort of publicly state that and not incur the wrath of a lot of folks.

PERLE: Well, if Senator Kerry wants to pitch his supporters by saying that he has overseas support, he ought to tell us who it is, who is supporting us -- who is supporting him and why. Why do they want to see him in the White House and President Bush out? It may be because their interests are not the same as the interests of the American people, which the president is committed to protecting and defending.

ZAHN: What about that?

HOLBROOKE: Well, first of all, Richard and I have worked together a long time. We have been together at several conferences, like the Munich security conference last year. Richard was there. He knows the truth. He saw it firsthand.

He knows also that incumbent government leaders are not going to say they want to change the regime, nor should they. They shouldn't interfere in our policies. But the American public deserves to know that a lot of people are worried about our leadership in the world today. That is simply a fact. And Richard Perle, who happens to be one of the reasons for this, knows it very, very well.

PERLE: The American people certainly should know who it is who wants to see a change and why do they want to see that change.

(CROSSTALK)

HOLBROOKE: Well, let me just cite one example, Paula, Turkey, a country that Richard has worked in a great deal, and I have, too.

When Bill Clinton left office, 65 percent of the Turkish people considered America their best friend. Here is the strategic frontline state on Iraq's northern border. Today, the figure, according to the latest polls, is around 15 percent or lower. There is an example of a place where American support has eroded when it was absolutely critical.

ZAHN: Mr. Perle, does that trouble you or you won't even commit to saying that's true?

PERLE: No, it doesn't trouble me.

HOLBROOKE: Which means it's true.

PERLE: President Bush is not running to be prime minister or president of Turkey.

The American interest is not necessarily the same as the Turkish interest. And there are differences between this country and a number of countries abroad. That is understandable. But there should be no question about whose interest the president is protecting. They are the interests of the American people.

Now, one government that has said kind things about Senator Kerry is the North Korean government. And I'm quite sure that Richard Holbrooke doesn't want that kind of an endorsement.

So, Richard, tell us who it is.

HOLBROOKE: You know, the real issue here is that the United States public just should know that we are the world's greatest power but we need the support of other countries. And we have lost a lot of that support.

Senator Kerry spoke the truth today. Richard hasn't denied the facts here. He's just asking for names. I can't give names because it would be betraying confidences. Richard has kept confidences in his career. I will keep mine. Senator Kerry will keep his. But the American public should know that it is a fact. And that will help them decide how to vote in November.

(CROSSTALK)

ZAHN: Mr. Perle, can you point to any nation whose relationship with the United States has been enhanced by this war with Iraq?

PERLE: Oh, I think we have very good and very close relationships with a number of countries, with Spain, with Italy, with the United Kingdom, with Poland.

ZAHN: What about France? What about Germany?

(CROSSTALK)

PERLE: Well, the French have their own ideas about how to organize Europe and they want to do it in opposition to the United States.

Now, if President Chirac is one of Senator Kerry's supporters, I think the American people ought to know that, because, given a choice between French policy and American policy, I have no doubt whose policy Americans are going to choose in November.

ZAHN: Ambassador Holbrooke, you get the last word.

HOLBROOKE: It isn't who Chirac is going to support. It isn't who Schroeder is going to report. It's about the American public understanding that our position in the world has been weakened by the diplomacy and the leadership of the current administration.

Senator Kerry told the truth today. He said a very important thing. I'm delighted that Richard Perle has come on to confirm Senator Kerry's point of view, which he did. Thank you, Richard.

(LAUGHTER)

ZAHN: All right, gentlemen, I have got to leave it there.

Richard Holbrooke, Richard Perle, thank you both for your time tonight.

They call themselves the Vulcans, after the Roman god of fire. They are the president's closest advisers on war and foreign policy. Now there is a probing new look at the people behind the president and the decades they spent shaping American policy.

And if a wrestler and an actor can become governors, why not a singing Jewish cowboy? Kinky Friedman's next big quest coming up.

(COMMERCIAL BREAK)

ZAHN: In Baghdad today, members of Iraq's governing council signed an interim constitution. The document lays the groundwork for elections, a permanent constitution and a return to self-rule. One of those who signed played a crucial and controversial role in President Bush's decision to go to war in Iraq.

Our "Truth Squad" report tonight on that man from national security correspondent David Ensor.

(BEGIN VIDEOTAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over): Before the war, Ahmad Chalabi was a consistent voice for disarming Saddam Hussein by force.

AHMAD CHALABI, IRAQI EXILE: Saddam wants to keep weapons of mass destruction. He will not renounce them and he will hide and lie and cheat and disseminate and deflect the United Nations.

ENSOR: Back then, Chalabi offered U.S. intelligence officials several Iraqi exiles who said they knew about weapons of mass destruction in Iraq. CIA and State Department officials were skeptical. Chalabi and his group were controversial.

But people like Vice President Dick Cheney and Undersecretary of Defense Douglas Feith were ready to listen. One allegation ended up in key intelligence documents and Secretary of State Colin Powell's prewar testimony at the United Nations.

COLIN POWELL, SECRETARY OF STATE: An Iraqi major who defected confirmed that Iraq has mobile biological research laboratories.

ENSOR: Officials now admit that assertion was based heavily on the say-so of the defector offered up by Chalabi, a man the Defense Intelligence Agency determined well before Powell spoke had lied to them.

GEORGE TENET, CIA DIRECTOR: We recently discovered that relevant analysts in the community missed a notice that identified a source that we had cited as providing information that in some cases was unreliable and in other cases fabricated. We've acknowledged this mistake.

PATRICK LANG, FORMER DEFENSE INTELLIGENCE AGENCY OFFICIAL: When you start listening to the testimony of an emigre or an exile, who is obviously the interested party, in the business of deciding whether or not the United States should intervene in Iraq or whatever home country they have, you're taking an awfully big chance, because this person has every reason in the world to tell us what it is that he thinks will move you in the direction that they want you to go.

ENSOR: Which in this case was toward war. His ally and friend, Richard Perle, says Chalabi was only trying to help. PERLE: Ahmad Chalabi and others in the Iraqi National Congress did what they could to gather what information there was to be gathered. The CIA will tell you how difficult it is to penetrate. In fact, that's part of their excuse for the failure to get things right.

ENSOR: Ahmad Chalabi has said that he never vouched for the information from the defectors, that checking it out up was to intelligence professionals. But a senior intelligence official told CNN he believes the major was coached by Chalabi's people to say things the major knew to be false, but that they thought the Americans wanted to hear.

David Ensor, CNN, Washington.

(END VIDEOTAPE)

ZAHN: President Bush relied on six key foreign policy advisers in making his decision to go to war. They call themselves the Vulcans after the Roman god of fire. The president's powerful war cabinet gets the "High Five" treatment tonight, five quick questions, five direct answers.

For that, we turn to James Mann, whose new book take us inside Bush's inner circle. It is called "Rise of the Vulcans: The History of Bush's War Cabinet." And he joins us from Washington for an exclusive national TV interview.

Welcome. Good to have you with us tonight, sir.

JAMES MANN, AUTHOR, "RISE OF THE VULCANS": Glad to be here.

ZAHN: So who are the Vulcans?

MANN: The Vulcans, the six Vulcans, are the vice president, Dick Cheney, the deputy and -- excuse me, deputy -- Secretary of State Colin Powell, Richard Armitage, Don Rumsfeld, Paul Wolfowitz and the national security adviser, Condoleezza Rice.

ZAHN: And how much does the president actually rely on them?

MANN: A lot.

He relied on them in the first year or so of his administration. After all, the president took office without any previous experience in foreign policy. And all of these officials, the Vulcans, had served in prior Republican administrations.

ZAHN: And who of all those that you just mentioned had the most influence over the president in the beginning?

MANN: Well, particularly in the beginning I would say the vice president, Dick Cheney, had the most influence. He had been the secretary of defense before. He also had very close ties going back for 30 years with the new secretary of defense, Don Rumsfeld. So I would say that he was first among equals.

ZAHN: How that power shifted at all and who has the most influence today?

MANN: I think it's shifted a little bit. I think that Cheney is still enormously influential.

I think just in the last six or eight months that, first of all, the president himself has taken more of the initiative on his own and his national security adviser, Condoleezza Rice, has become more influential.

ZAHN: And which of the Vulcans do you think will remain if there is a second term?

MANN: Well, although Condoleezza Rice says that she may leave, I think it's very possible she'll remain. I think Colin Powell has made clear that he is not going to remain. And the deputy secretary of state, Richard Armitage, has at least suggested he is going to leave.

The biggest question mark in my mind is the secretary of defense, Don Rumsfeld. That's an unanswered question.

ZAHN: And is that of his own making or pressure from the outside?

MANN: I think that he'll make that decision on his own, but he's been -- you know, it's been a long four years and I'm not sure whether he'll want to stay another four years.

ZAHN: All right, James Mann, thank you for running through the drill with us tonight.

MANN: Thank you.

ZAHN: Coming up, inside the mind of Peter Bacanovic. Martha Stewart's co-defendant finds his Wall Street career is in tatters. A close friend tells how he took the shock and what it has done to his family. We'll have an exclusive interview.

And the Atkins diet is still highly popular, but who was the real Dr. Robert Atkins? We're going to ask one writer why he thinks the final story is yet to be told. Atkins a sham or a savior?

(COMMERCIAL BREAK)

ZAHN: Here's what you need to know right now. As Florida voters prepare to go to the polls in tomorrow's presidential primary. There are some new concerns about electronic voting machines. Problems reported in California, Maryland, and Georgia on Super Tuesday. And there are calls in Congress to require paper records for every electronic ballot. John Zarrella reports.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT: For an hour during last week's Maryland primary, a memory card error in new electronic machines forced voters to go back to the old-fashioned way, paper ballots. That doesn't surprise Oliver Parker who is still scratching his head. UNIDENTIFIED MALE: It just doesn't make sense.

ZARRELLA: Parker lost a Florida state House seat by 12 votes. He believes the electronic machines malfunctioned because 137 of the voters went to the polls, pushed the vote button, but never selected a candidate. Because electronic machines don't leave a paper trail, there was no recount.

UNIDENTIFIED MALE: The whole problem with this is the votes exist in cyberspace but we exist in real space. And you can't manually count something in cyberspace.

ZARRELLA: Devices that could print out a voter receipt have not been purchased.

UNIDENTIFIED MALE: I'm asking for a backup system.

ZARRELLA: Florida Congressman Robert Wexler has filed suit in federal court to force the state to put in printers because machines, like people are not perfect.

UNIDENTIFIED MALE: Effectively, they're telling us or asking us to believe that these are the first machines in the history of mankind that will never, ever have a problem. I think people said that about the Titanic.

UNIDENTIFIED FEMALE: Push the blinking red light.

UNIDENTIFIED FEMALE: OK.

ZARRELLA: Nationwide, as many as 50 million Americans could be casting ballots electronically in November. Florida's Broward county is using an extra 600 county workers to run Tuesday's primary. State officials say there is bound to be growing pains with new technology.

BRENDA SNIPES, SUPERVISOR, BROWARD COUNTY ELECTIONS: We are marrying people and machines and I think there will be issues that will crop up, that we'll just have to deal with.

ZARRELLA: Preferably now, rather than in November, when the presidency is on the line. John Zarrella, CNN, Miami.

(END VIDEOTAPE)

ZAHN: And we turn back now to the Martha Stewart case and the other defendant. As a stockbroker, Peter Bacanovic was trusted by some of the wealthiest and the most famous investors on Wall Street. Well, now his conviction, because of his involvement with Stewart has changed all that. What effect has that on had on him and his family? Susan Fales-Hill should know. She has been a very close friend of Bacanovic since grade school and spoke with him this weekend. She joins us now for this exclusive interview. Thanks for coming in.

SUSAN FALES-HILL, LONGTIME BACANOVIC FRIEND: I'm thrilled to be here, Paula.

ZAHN: First of all, how did he take the verdict?

FALES-HILL: Needless to say, he's devastated and he's somewhat in shock and as he said, at this point, it's hour by hour. He's had the wind taken out of his sails at this point.

ZAHN: What did he really think was going to happen?

FALES-HILL: He tried to be optimistic. Of course, he was realistic as well and he knew it could go either way but he hoped. You have to go in with hope every day and he's been so incredibly strong and graceful through this entire process and it's been a 2 1/2 year process we have to remember since his life literally exploded before his eyes.

ZAHN: Was there a point he came to you particularly toward the end of the trial and said things do not look good for Martha or for me?

FALES-HILL: No, he never said that. As I said, he was realistic. He knew he wasn't home free by any stretch of the imagination but he did go in always with hope and resilience and he knows who he is and that he is an honest human being.

ZAHN: Well, that is not what the jury found. As you know, the jury of his peers found him guilty of making false statements, conspiracy, perjury, and obstruction of justice. Do you think he regrets the fact that he didn't take the deal that the Feds allegedly offered him?

FALES-HILL: I don't want to speculate on that and from my understanding, he was not offered a deal. Martha was offered a deal but I don't want to speak to the facts of the case. I really want to speak to the man that I know and have known for 30 years.

ZAHN: It was widely reported even before the case got underway that if he had talked, he might have walked.

FALES-HILL: My understanding was he himself was never offered a deal but regardless but regardless, he's a person of impeccable moral character and a certain standard and he did what he felt he should do and I remember after the summations, after his lawyer finished, he said to me, I feel that I was defended as well as I could be defended and whatever happens, I stand by what we've done.

ZAHN: So he was not upset with the strategy the defense used?

FALES-HILL: Absolutely not.

ZAHN: Why was he so devoted to Martha Stewart?

FALES-HILL: I don't want to say that it's devotion to Martha Stewart. He is an honorable, loyal person who took care of all of his clients equally well. There was one in particular who spoke on the stand. So I don't want to characterize it as devotion to Martha Stewart. He was just the sort of person who did -- gave 150 percent of himself to everyone. ZAHN: Did he like her?

FALES-HILL: Yes, he did like her and respected her as a woman and as a businesswoman.

ZAHN: Because you hear so many unkind things about Martha Stewart.

FALES-HILL: Well, that wasn't her interaction with him. I think she's been characterized that way but to many people she's been very lovely and I think he was one of them.

ZAHN: Obviously, as a friend who loves and adores you, it must hurt when you hear these charges repeated over and over again, charges he's found guilty of. Does that just...

FALES-HILL: It just ripped me apart. I've known him since I was 11 years old. That's 30 years and he has had a blameless life, an unimpeachable life up to this point. This is one of the kindest human beings you'll ever meet and who cares about other people, who treats everyone the same whether they're scrubbing a toilet or the queen of England. He has been characterized in ways that I just don't recognize and as you just introduced him, he's sort of the other defendant. this is an extraordinary man who even in the midst of all these trials, has still shown consideration for others.

I lost my mother a couple of years ago and the first anniversary of that death occurred in the middle of the investigation. And he took the time to write me a letter and to send me a plant and to say there is a better day coming for you and there is more coming for you and there is hope. For someone who is going through the kind of trials of Job that he is enduring to take the time to do that speaks volumes of what he is.

ZAHN: That's a side of Peter Bacanovic we haven't heard a lot about.

FALES-HILL: And that's the man that I want people to understand. Not what's happened here.

ZAHN: And the potential spending of a fair amount of time in prison down the road. Susan Fales-Hill, thank you for sharing your story with us tonight.

FALES-HILL: Thank you.

ZAHN: For months now Martha Stewart has been the butt of jokes and cartoons but now that a jury has found her guilty, some of us who are doing that may be feeling a little guilty about laughing at her expense. Jeanne Moos reports.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: Only the paparazzi would dare call Martha Stewart sweetheart. She went from baking cookies to getting caught with her hand in the cookie jar. After months of ridicule, Martha Stewart lying, Martha Stewart living behind bars, polishing handcuffs. Martha is finally getting some sympathy. Do you feel at all sorry for Martha Stewart?

UNIDENTIFIED FEMALE: Of course, I do.

UNIDENTIFIED MALE: I feel absolutely sorry for her.

UNIDENTIFIED FEMALE: A little bit.

MOOS: No one will be sorrier to see the Martha Stewart saga end than comedians.

UNIDENTIFIED FEMALE: My name is Martha Stewart and I'm on a boat-load of anti-anxiety medication right now. It's a good thing.

UNIDENTIFIED FEMALE: Middle-aged white women are rioting and looting to protest the Martha Stewart verdict. It's wild WASPy mayhem!

MOOS: After all those jokes about prison stripes, always appropriate, when working in your rock garden or love the outfit, thanks. It's from the new Martha Stewart collection, reality is catching up with the cartoons. If it were up to you, how much jail time -- would she get jail time?

UNIDENTIFIED MALE: Oh, yes.

UNIDENTIFIED FEMALE: I'd say probably five years would do it.

UNIDENTIFIED FEMALE: I give her a year.

MOOS: Other opted for community service.

UNIDENTIFIED FEMALE: The most humble task, get down and dirty.

MOOS: The Martha story hasn't quite pierced the blissful ignorant, some.

You've heard of her?

UNIDENTIFIED MALE: Vaguely.

UNIDENTIFIED FEMALE: I just can't picture Martha Stewart in jail.

MOOS: But cartoonists can turning a cell commode into a lovely vase, showing how to make the perfect (UNINTELLIGIBLE), handcrafting tasteful tattoos on fellow inmates. How can you not feel sorry?

UNIDENTIFIED MALE: In a way, I do, in a way, I don't.

MOOS: Now that her goose is cooked. Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

ZAHN: More of the Stewart trial. Why didn't the jury believe Stewart's lawyers? Some firsthand opinions from a member of the jury.

And the late Dr. Robert Atkins says he lived for years on his low- carb, high protein diet. So what is the final word on his physical condition?

(COMMERCIAL BREAK)

ZAHN: No matter how famous the defendant or how high paid the attorneys, it's the jury who had the final word in the Martha Stewart trial. Is there anything that might have convinced the jury to vote not guilty. Amos Mellinger was one of those juries -- jurors that is joins us now with the inside view of the Stewart trial.

And Sharon Cotlinger who covered the trial for "People Magazine."

Welcome to both of you.

Amos, when did you become convinced of Martha Stewart's guilt?

AMOS MELLINGER, MARTHA STEWART JUROR: Basicly the last day of the trial. I mean, up until then we had to discuss the evidence, we all took it in, listened in. And only when we started talking seeing where the evidence marshalled the facts to and beyond a reasonable doubt, she was guilty.

ZAHN: Leaped out at you in particular?

MELLINGER: The testimony of Douglas Fanueil. He was there for four days and hit hard by cross examination, but maintained the facts as he saw them. And also Ann Armstrong, her faithful servant, in some sense, employee who had to say that a log was changed and then brought evidence against Peter.

ZAHN: And then in the final deliberations of the jury, was there any piece of information that was particularly troubling to you all?

That would of compelled you to come up with a non-guilty verdict?

MELLINGER: Basically, the issue of creating the false document. That's where we actually found Peter innocent, because we didn't believe that. We couldn't prove that, in fact, the 60 was put on after the fact. There was no way of dating the ink.

ZAHN: Do you have any seconds thoughts at all about the action you and your fellow jurors took?

MELLINGER: Not at all. We went over everything two times to be doubly sure. We asked the judge for testimony or legal opinions in terms of how to interpret the law. We tried everything we could to not have to go beyond a reasonable doubt, but we didn't.

ZAHN: Sharon, we've heard about some of the legal issues that the jury had to wrestle with. There was also a issue of Martha Stewart not being a terribly sympathetic character. She was widely reported to be a woman who was power hungry, who abusive to the little people. How much do you think that colored the opinion of the jurors you've spoken with?

SHARON COTLIAR, "PEOPLE MAGAZINE": Well, the jurors I've spoken with are actually pretty diligent when they talk about the case, they talk about the evidence. But I don't think it helped her just in the overall atmosphere to hear that this is somebody who tried to expense her vacation. That this is somebody who, you know, expensed coffee. I don't think, in general, it helped the impression of her, but they took it seriously and I think they made their decision on the evidence.

ZAHN: It's interesting to see the polls that have been done after the fact and the latest CNN/"USA Today"/Gallop Poll about a gender split that we saw. Seventy-two percent of men thought Stewart was treated fairly, while only 61 percent of women agreed.

In the end, Amos, was this trial about gender?

MELLINGER: Not at all. Not at all. Look, the judge was a woman, one of the prosecutors was, one of the defendants was. I don't think gender played any factor in there whatsoever.

ZAHN: Are you surprised to see the statistics that men felt she was fairly judged and women thought that the court was too tough?

COTLIAR: I'm not surprised because in my discussions with people and in my interviews, it often seems to split by women. Many of the women I talk to talk about the fact they think this was an unfair prosecution. I think they identify with her as a woman.

ZAHN: The prosecution was sicked on her because she was a powerful woman?

COTLIAR: That it certainly came to their attention she's a powerful woman and a celebrity and that may have played a role in their choosing to prosecute.

ZAHN: Sharon, thanks for coming by and I bet you're probably in dire need of sleep after a long endurance running court.

Amos, thank you.

MELLINGER: Thank you.

ZAHN: Coming up, the Atkins Diet created a sea change in the American eating habits, but a year after his death the medical world is more divided than ever over the doctor as well as his diet.

Did his own diet kill him?

And you'd think being a writer, musician and unwanted pet rancher would be enough work for anyone. Well, now, the most famous of the Jewish cowboys want to be governor of the lower west side of the country.

Kinky Friedman for Texas governor, next.

(COMMERCIAL BREAK)

ZAHN: Yes, the biscuits are in the oven aren't they?

If Arnold Schwarzenegger can be governor of California, why can't Kinky Friedman be the governor of Texas?

The Texas humorous and musician, says he's running even though the race is two years away. His slogan, "why the hell not."

Kinky Friedman, joins here as he tours for his latest book, "The Prisoner of Vandam Street.

KINKY FRIEDMAN, ENTERTAINER: Vandam Street, yes.

ZAHN: Congratulations, sir.

FRIEDMAN: Well, thank you very much.

ZAHN: So why are you running for governor?

FRIEDMAN: Well, why the hell not?

I mean, I told Molly Ivins I was running and she said why and I said why the hell not. And she said that's beautiful.

ZAHN: She is a columnist in Texas who has a lot of reach? And what she (UNINTELLIGIBLE) often has impacts.

FRIEDMAN: We have other slogans. "How hard could it be," is one.

ZAHN: Right.

FRIEDMAN: And if you elect me the first Jewish governor of Texas, I'll reduce the speed limits to 54.95.

ZAHN: But you ended up with why the hell not. That must have been tough.

FRIEDMAN: That is one of the slogans. I'm a writer of fiction who tells the truth.

ZAHN: What are the three key issues of your campaign? Would you like to run through those for us tonight?

FRIEDMAN: The platform has changed a bit. One is -- initially was outlawing declawing cats.

ZAHN: That must have been popular.

FRIEDMAN: It is popular and legalizing gambling and fighting all kinds of political correctness to try to make -- fight the wussification (ph) of Texas to rise and shine and bring back the glory of Texas. ZAHN: Of those three things, what are the most popular issues in Texas right now? Getting rid of the political correctness, I'm sure.

FRIEDMAN: We're trying to get rid of the politicians, too. I want the politicians out of politics. I'm not a bureaucratic political kind of guy. I will be very unconventional in this campaign. I will not kiss babies, I'll kiss their mothers, that is the kind of thing.

ZAHN: I bet you would do that. Where do you stand on gay marriages these days?

FRIEDMAN: We always said cowboys are secretly fond of each other and that's actually a song by Ned Sublette that me and Willie Nelson threatened to record for years. Willie, of course, is a hillbilly Dalai Lama and he will be very active in the campaign and in the Friedman administration.

ZAHN: I'd love to see what you're going to have Willie doing for you.

FRIEDMAN: He wants to be head of the Texas Rangers or the DEA, either one of those two.

ZAHN: Good luck, Willie. What about the death penalty?

FRIEDMAN: Well, there is -- it's one point I disagree with George W. on is that there is an innocent man on death row right now named Max Soffar in Texas and there is no evidence against Max. I've written a piece about him in the "Texas Monthly" so I ask you seriously either read the piece in "Texas Monthly" or check the Web site, Kinkyfriedman.com has that on there. Allen Dershowitz, helped us. Going from crucifixion to the more civilized lethal injection is a horrible thing when you kill an innocent person and this man is innocent.

ZAHN: All right, let's talk about your relationship with the both of the Bushes. The former president and the current president. You say the main place where you differ is on the death penalty with the current president. Does he like you?

FRIEDMAN: We've become friends. I was really Laura's friend through the Texas Book Festival. Then one night I went to this party at the governor's -- I didn't even know George and I was wearing my preaching coat and Larry (UNINTELLIGIBLE) didn't show up so I slapped his nametag on my jacket and I was kind of walking on my knuckles that night, smoking a cigar, and people started coming at me and said, Mr.(UNINTELLIGIBLE), you've done so much for Texas and I said thank you kindly.

And they'd say I can't believe I'm shaking hands with Larry (UNINTELLIGIBLE), and I'd say thank you kindly. And then George told the security guys, I want that guy for my campaign manager. and George and I have become friends. He's got a lot of charm, so does Bill Clinton. I'm good for three minutes of superficial charm which is good for a candidate. ZAHN: So we'll leave our conversation right there. We've done our three minutes. Kinky Friedman, thank you for sharing your campaign platform.

FRIEDMAN: Thank you very much, it's been a pleasure to be here.

ZAHN: We look forward to hearing you sing as well.

The new details about Dr. Robert Atkins and the state of his health in the days leading up to his death. Was the king of the low- carb, high-fat diet a victim of his own medicine?

(COMMERCIAL BREAK)

ZAHN: You can't go into a grocery store these days without seeing shelves full of low-carb this and that. And Dr. Robert Atkins is largely responsible for low-carb, high-fat diet trend but now there is evidence, some new evidence that the low-carb king died an unhealthy man. The last days of Dr. Atkins is the cover story of "New York Magazine" this week. Joining us is the author of the report, Steve Fishman. A "New York Magazine" contributing editor. How are you doing tonight?

STEVE FISHMAN, CONTRIBUTING EDITOR, "NEW YORK MAGAZINE": Very good. Thanks for having me.

ZAHN: Our pleasure. So do you think Dr. Atkins killed himself with his diet?

FISHMAN: I think the short answer is probably not. I think Dr. Atkins dies of this fall on the sidewalk as reported. The real question is what is the state of his heart when he dies?

ZAHN: Was it healthy or not?

FISHMAN: Was it healthy or not. The kind of fascinating background so this is that the fight gets refought a year after his death. He died a year ago. A year after his death, this fight gets refought in this pitched way, the vegetarians on one side and the high-fat people on the other side fighting over literally his body. What do we know about the state of his heart?

ZAHN: You actually spoke with Dr. Atkins' own cardiologist who was, for a time, an employee of Mr. Atkins and he revealed some pretty damning information to you. What did he tell you?

FISHMAN: In context, he said that -- this guy's name is Dr. (UNINTELLIGIBLE) alone. He was an employee for years. He left the employ in June 2002 up until which time he was Dr. Atkins' cardiologist and he basically said, you know, you have to understand that Dr. Atkins would come out and make somewhat showmanlike statements about the glorious state of his health. Dr. (UNINTELLIGIBLE) was more tempered and more moderate. Dr. Atkins would say my arteries are perfect. They're pristine and clear and the Dr. (UNINTELLIGIBLE) would say not really. There was 30 percent to 40 percent blockage in the arteries. You don't actually need to have a procedure, an intervention until you reach 70 percent blockage. But between what was actually happening and what Dr. Atkins would like you to believe, there was a difference.

ZAHN: So what does that mean to the millions of people who are hooked on this diet? Was it a scam?

FISHMAN: Oh, I don't think it was a scam. I mean, I think that what you'll find, a, is that the case of one person probably doesn't mean anything, even if it's Dr. Atkins in terms of the medical import. You know...

ZAHN: It might but isn't it helpful for a person who becomes addicted to the diet who knows the person who spearheaded it at least had a healthy heart?

FISHMAN: Symbolically, it's certainly important and there are huge corporate interests involved. The company sold for $500 million. A lot of people have a stake in which way this falls. I think for the average consumer what is interesting is to kind of find out all of the facts at this point.

ZAHN: Can you help us do that because there is so much contradictory information out there. Does this diet work or not?

FISHMAN: The diet certainly works. It will make you lose weight. The studies are now being done to find out whether it is the healthy diet that you would like it to be.

ZAHN: How will my heart be when I'm 50 or 60 years old?

FISHMAN: So far, it looks like your heart is probably going to be OK. Dr. Atkins' heart was in pretty good shape. He had to have an intervention treatment which nobody knew about and his wife came out and talked about that. That is something somebody who is 72 years old has. It was not as if he could, as he sometimes claimed, reverse heart disease. That was not what he could do.

ZAHN: Fascinating stuff. Steve Fishman, thanks for sharing your story with us tonight. Appreciate you dropping by. That wraps it up for all of us here tonight. Thanks so much for being with us tonight. We will be back same time, same place tomorrow night. "LARRY KING LIVE" is next. Have a great night. Hope to see you tomorrow.

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