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CNN LARRY KING LIVE
Panel Discusses Stewart's Sentence
Aired July 16, 2004 - 21:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
MARTHA STEWART: I'm not afraid whatsoever. I'm just very, very sorry that it's come to this, that a small personal matter has been able to be blown out of all proportion, and with such venom.
(END VIDEO CLIP)
NANCY GRACE, GUEST HOST: Tonight, Martha Stewart sentenced today to five months behind bars for lying to the feds about her stock sale. How is Martha Stewart really taking it, and will she appeal? We go straight to the source, her own legal team, Walter Dellinger and attorney David Chesnoff. Also with us tonight, Martha Stewart's friend, Dominick Dunne, he is the host of Court TV's "Power, Privilege and Justice." He was inside the courtroom today when the sentence came down. Stacy Honowitz, Broward County, Florida prosecutor. Henry Blodget, of "Slate" magazine, former securities analyst. He was also inside the courtroom today. And Susan McDougal, the Whitewater figure who spent 22 months in women's federal corrections.
It is all next on LARRY KING LIVE.
Welcome to LARRY KING LIVE. I'm Nancy Grace from Court TV, in for Larry tonight. I want to thank you for being with us, and I want to remind you, Monday night, Larry will interview Martha Stewart live right here, 9:00 sharp. Don't miss that.
Before I begin to discuss the case and the sentencing today with Martha Stewart's new appellate attorney, take a listen to what Martha Stewart had to say outside the courtroom today.
(BEGIN VIDEO CLIP)
STEWART: Today is a shameful day. It's shameful for me and for my family and for my beloved company, and for all of its employees and partners. What was a small personal matter came over -- became over the last two years an almost fatal circus event of unprecedented proportions. I have been choked and almost suffocated to death during that time, all the while more concerned about the wellbeing of others than for myself, more hurt for them and for their losses than for my own, more worried for their futures than the future of Martha Stewart the person.
(END VIDEO CLIP)
GRACE: Well, if anybody was waiting for Martha Stewart to crack, to cry, to show emotion, to break down and confess all in front of a camera outside the courthouse today, it didn't happen. And now let's take a listen to what her new attorney has to say. He's going to be leading the appellate battle for Martha Stewart. With us, Walter Dellinger, not only Stewart's appeal lawyer, he is the former acting U.S. solicitor-general here in this country.
Welcome, Walter. What do you think the strongest points of appeal will be for Stewart?
WALTER DELLINGER, STEWART'S APPELLATE ATTORNEY: Well, I think, Nancy, one thing that is interesting about the appeal is that for the first time one is going to be able to put together everything that went wrong and everything that was questionable about this trial. Each of these issues, perjury by a juror who failed to reveal a gender-based criminal charge, a serious perjury by a key government witness, the head of a laboratory, the use of an allegation about insider trading that was never really a charge, and never anything that she did, but influenced the jury, I think in particular ways. All of that gets put together for the first time on appeal.
GRACE: Walter, weren't those same issues brought before the trial judge, Cedarbaum, in a motion for a new trial and she rejected them?
DELLINGER: Most of the issues have been brought up one by one before the judge, but not all of them. There are a couple of Supreme Court...
GRACE: Or comprehensively?
DELLINGER: There are a couple of Supreme Court decisions that have come down since the trial even that...
GRACE: You mean Crawford?
DELLINGER: The Crawford case is one. There is a confrontation, there is an issue of whether she was able to confront witnesses under Crawford. But if you step back from it, I think there are going to be some questions of first impression for the appellate court.
GRACE: You're talking like a lawyer.
DELLINGER: I know that. But I think (UNINTELLIGIBLE).
GRACE: All right? By case as a first impression, you mean cases the courts have never dealt with before.
DELLINGER: There are some extraordinary things about this case. I mean, for example, when did you have a case where we have two independent perjuries, one by a juror, one by a key witness, introduced after the trial?
GRACE: Now, you're talking about Chappell Hartridge, the juror that lied. And under the juror oath to tell the truth about prior arrests, he also seemed to have an agenda. Because, remember, after the verdict, he came out, Walter, and stated, well, this is a blow for the little guy. I mean, who did he think Martha Stewart was at the beginning? She came from Nutley, New Jersey, nowhere, nobody, went to the top of the corporate ladder.
DELLINGER: That's right. She did really an extraordinary job of building up this -- building up this company. I mean, it is really a remarkable story. She started out with nothing and built this into an enormous company about which she cares very, very deeply. I mean, she thinks a lot about the people employed by this company, she really is eager to get back to the day where she can devote her full attention to the company and its development.
GRACE: I've got to ask you something, today when she came out of the courtroom and spoke on the courthouse steps, she mentioned her company, she mentioned the impact this case would have on her company. She asked people to support the magazine and the company. You know, a lot of critics stated that that was simply hucksterism. On the other hand, how many people does Stewart employ? How many people can potentially lose their jobs over this double nickel, five months behind bars, five months on house arrest?
DELLINGER: There are a lot of employees of this company, and the company, I think, she believes has a very bright future. But she's concerned about what has happened to it so far. Not only that, she's created jobs not just for people that are employed directly by her companies, but there are lots of artisans and craftspeople around the country who supply the products that feed into this company, that partner up with it. And she's concerned about them as well.
GRACE: But speaking of her company, Walter, the stock shot up about 37 percent today. I don't think we have to worry about them being put out on the street.
DELLINGER: Well, I think they like some certainty, and they can see where this is -- where this is going. But I think she's been really indomitable throughout all of this.
GRACE: Describe -- you've been working very closely with her. What was that like?
DELLINGER: I think she's really quite remarkable. I mean, this is -- this is a matter where, you know, an investigation began into whether she had engaged in -- whether she had some inside information, and it moved away from that.
GRACE: Why did she speak to the feds to start with? Let me tell you, if the federal investigators showed up at my front door, I would think long and hard, because bottom line, she was never prosecuted for insider trading. Allegedly getting the tip on the stock and making the sale based on insider info. She went to trial for lying to the feds. Why did she speak to them to start with?
DELLINGER: Well, you know, that's a matter I don't want to get into in terms of the trial strategy. But I think she was always quite open with them because she knew that she didn't have inside information about what was happening within that -- within that company. What is interesting is that... GRACE: You mean Waksal did not call her and say, guess what...
DELLINGER: No. And no one ever charged that.
GRACE: ... ImClone is not going to suffer because of Erbitux, the drug is not going to be approved by the FDA?
DELLINGER: There was never any -- nobody ever wound up charging her with that, because it simply didn't happen. But...
GRACE: That's one of your grounds of appeal, too.
DELLINGER: Well, here's what happened, I think, in a large sense. There was -- this was a trial that was dominated by an uncharged crime of insider trading, that was not charged because it was never brought. And then there was a very unusual count, it's called count nine.
GRACE: Count nine.
DELLINGER: And it was that by asserting her innocence, that that was supporting the price of the stock of her company. At the end of the trial...
GRACE: The judge threw it out.
DELLINGER: ... the judge dropped it. But the whole course of the trial was in a sense structured and framed by comments about insider tipping, about cheating the little guy, none of which ever happened. And that -- that influenced the jury.
GRACE: OK, hold on, let me get this straight. In count nine, the feds charged Martha Stewart with, by declaring her innocence publicly, manipulating her stock, in a nutshell. Then the feds referred to that all throughout the trial. Then the count was dropped. So your claim is that they essentially brought up evidence of other crimes, insider trading, during the trial and she wasn't charged with that?
DELLINGER: That is roughly it. I think there was some serious unfairness in a way the trial was framed. But there are issues that the court of appeals has said just haven't been decided in that court. There are issues about, for example, she was not given the standard form notice that says that this is a particular matter where any false statement happens to be criminal.
GRACE: But she was a stockbroker. She had a seat on the New York Stock Exchange. This is probably a woman that was smarter than all the lawyers put together in the whole courtroom. She had to know that.
DELLINGER: Well, she has, I think, handled herself really well throughout this. And I think there was a good job done at the trial, but inevitably at a trial, you only look at what happened. When you put together two perjuries, each of which affected the outcome of the trial, the fact that the courts have held that a reversal should be virtually automatic when the government itself is implicated in a perjury, and here we know that the perjury was done by somebody who was head of a forensic laboratory.
GRACE: Walter, how long -- yeah, it is not very often you catch a Secret Service agent charged with perjury. Walter, how long will the appeals process take? A very extraordinary thing happened today, and that is, Judge Cederbaum allowed Martha Stewart to stay on bond until her appeals process is completed. How long are we looking at?
DELLINGER: I think realistically you could imagine an argument in this case -- the case being argued to the court even in November or December, written briefs submitted in the fall. And it is hard to...
GRACE: OK, hold up. We're up to the fall. And then I assume if you lose, you're going to appeal it out of the circuit court, all the way to the Supreme Court.
DELLINGER: Well, one always makes those decisions one step at a time. You have to know what the decision is. I think we could realistically expect the decision from this court sometime in the spring.
GRACE: Walter, a lot of people have asked me this question today and I want to ask you.
With us is Martha Stewart's appeals lawyer. He's taking over now. Morvillo was the trial lawyer. Walter Dellinger, the appellate lawyer. A lot of people said, you know, she's should have just come to court with her tooth brush, gone and gotten it over. She's looking at five months behind bars. Would that have been an easier pill to swallow than a long protracted appeals process when the indecision, of not knowing what will happen at the end?
DELLINGER: I think what you've got some very serious issues to present to a court, that you ought to do it. I mean, the appeal would go forward whether she took her time now or later. The appeal is going to go forward in any event. Because once you have a conviction, the case is still alive one and the appeal would go forward, Whether or when she served her time.
GRACE: With us tonight, Walter Dellinger, a man you will become very familiar with. Not only is he the former acting U.S. solicitor general of this country, he is now Martha Stewart's appellate lawyer. Stay with us.
(BEGIN VIDEO CLIP)
STEWART: I will be back. Whatever I have to do in the next few months, I hope the months go by quickly. I'm used to all kinds of hard work, as you know. And I'm not afraid. I'm not afraid whatsoever.
I'm just very, very sorry that it's come to this, that a small, personal matter has been able to be blown out of all proportion. And with such venom and such gore. I mean, it is just terrible.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
STEWART: Perhaps all of you out there can continue to show your support by subscribing to our magazine, by buying our products, by encouraging our advertisers to come back and in full force to our magazines. Our magazines are great. They deserve your support.
(END VIDEO CLIP)
GRACE: Welcome back to LARRY KING LIVE. I'm Nancy Grace from Court TV in for Larry tonight. And I want to thank you for being with us. Big day in America's courtrooms today: Martha Stewart, an icon in the domestic world, sentenced to a double nickel as it is called, five months behind bars, five months on house arrest, followed by supervision and a $30,000 fine.
We have got an all-star lineup tonight. But first, I want to remind you, Monday night, Larry King will interview, exclusive live interview, taking your calls, with Martha Stewart. Again, Monday night, a live interview with Martha Stewart, taking your calls with Larry King. I hope you tune in.
And now to today's sentencing. With me, her attorney David Chesnoff, her attorney and friend, I might add. Also with us Dominick Dunne, host of Court TV's "Power, Privilege and Justice," also a close confidant of Martha Stewart. Stacey Honowitz, Broward County, Florida prosecutor and Henry Blodget of "Slate" magazine and former securities analyst.
Right off the top, David Chesnoff, how significant is the perjury, the alleged perjury on the part of a juror, Chappell Hartridge as well as a Secret Service agent, Larry Stewart who testified for the state?
DAVID CHESNOFF, MARTHA STEWART'S ATTORNEY: I think you have to put it in the context of this perfection, where the government is saying we're going pursue you, Martha, because you lied. And then they allow a juror to sit, who perjured himself, and then the fellow who is in charge of the Secret Service laboratory is indicted for perjury. The Justice Department should have said two perjures in this case, new trial. If they are really out to see the truth, why didn't they say that?
GRACE: But David, isn't the reality that if the defense knew that there was a guy on the jury that had had problems with police, they would say, hey, great, he will empathize with Martha Stewart, she's having problems.
CHESNOFF: Not in this case where it was a gender-related charge. I think it would be malpractice on the part of an attorney who knew that somebody had been involved in an allegation of beating up a woman to have that person on a jury where you're dealing with a high powered woman. GRACE: Dominick Dunne, you've been a close confidant of Martha Stewart's for such a long time. You visited with her during the trial.
DOMINICK DUNNE, COURT TV: I'm a friend, not a confidant.
GRACE: A friend.
DUNNE: I got to get that straight.
GRACE: I would not want that confusion to cloud your career from this point on. You saw what went down in the courtroom today, her statement to the judge as well as her statement on the courthouse steps, apparently a vast difference.
DUNNE: Two different things. In the courtroom, for the first time, in this trial, Martha showed a real emotion. I mean, I felt, Henry can maybe back me up on this, that she was kind of choking as she was talking. There were tears in her voice. And it was incredibly moving. It was a very, very moving moment in the courtroom.
By contrast, she gave almost the same speech with ad libs outside the courtroom on the steps afterwards. And she changed, she changed. It was displeasing at times, I felt. And I'm her big fan.
And I sort of didn't like hawking the magazine at that moment. I think that's OK for her to do on Barbara Walter's show tonight later, or on Larry's show next Monday, but at that moment, it just seemed wrong to me on the steps of the courthouse where she had just been sentenced.
GRACE: But, Dominick, let's just get real for a moment. Have you ever known a criminal defendant in life that did not claim that they had been mistreated? Did you really expect her, Martha Stewart, who dug in her heels from the get go, to go outside and say, you know what, hey, they caught me, I deserve to go to jail, in fact, I've got my toothbrush in my pocketbook? I never expected that to happen. I expected her to be angry and defiant until the very end.
DUNNE: But she wasn't angry and defiant in the courtroom.
HENRY BLODGET, SLATE MAGAZINE: And I think what she conveyed in the courtroom was just the incredible stress and anxiety of going through this process and the remorse at simply being involved in the process.
GRACE: So, she had remorse in court?
BLODGET: Being involved in the process. She didn't come out and apologize for what she did, but certainly what the situation was.
STACEY HONOWITZ, PROSECUTOR, BROWARD COUNTY, FLORIDA: I don't think it is remorse for what happened. I think most criminal defendants when they get to the day, sitting in front of a jury for months and months and months is not pleasant but it is not a horrible experience. On that day of reckoning when you're going to be sentenced in front of a judge and now realistically you're looking at prison time, there is a motion. There is almost mercy on the court. And so I would expect her to kind of show that emotion, to be almost teary-eyed and shaken and then when she walked outside and realized what her sentence was, a very good sentence, to become defiant and to then once again take charge.
GRACE: You said a very good sentence. Why do you say that? Of course, five months confined to Turkey Hill, that's her mansion, not...
DOMINICK DUNNE, COURT TV: It's not going to be in Turkey Hill. It's going to be in the house in Bedford.
GRACE: Now, OK. Wait a minute. First she's got five months in Danbury, women's correctional facility which is kind of a dormitory atmosphere. And then the five months is at her home in...
DUNNE: In Bedford.
GRACE: Dominick, come on, Martha Stewart's home. It would be a palace to the rest of us. That's not chicken feed, OK?
CHESNOFF: You have to understand, the judge confined her to her house, so that she can go out to work. The sentence was consistent with the minimum sentence this judge could give. The judge also commented as everybody knows that the sentencing guidelines are now under strict scrutiny and the Supreme Court will be deciding whether or not -- deciding whether they'll still apply. It is conceivable as part of our appeal that that's going to be an issue and it may be that Martha Stewart doesn't go jail. If it wasn't for the sentencing guidelines she wouldn't. And as far as defiance, Martha has maintained her innocence. If that translates to defiance, then so be it.
GRACE: Very quickly, I want to go to Susan McDougal who did 22 months behind bars at a women's federal correctional institute. Susan, when you first pull up at the institute as they call it, the jail, the penitentiary, everything I imagine that you have been through before kind of fades away as you realize you're going to be confined behind bars.
SUSAN MCDOUGAL, WHITEWATER CONVICT: It does. You can't prepare yourself for it. You don't -- you think of every bad thing that could potentially happen. But when you pull up and that door closes behind you, and you realize that everyone there is intent on making sure that you know that you are no different from any other person in there, it is such a feeling of complete -- you're just so alone and you feel so frightened.
When you're staring in the face of the dormitory, which is probably, you know, in the place that they put me, the dormitory, there were 150 women. Most of them young women off the streets, some older women, but screaming, yelling, you know, it doesn't take that many women to make it kind of a chaotic environment. GRACE: Susan McDougal is joining us from L.A. As you know she did 22 months behind bars after the Whitewater investigation. We'll be right back. We're talking about the Martha Stewart sentencing and it went down today in a federal courtroom. Stay with us.
(BEGIN VIDEO CLIP)
MARTHA STEWART: Whatever happened to me personally shouldn't have any effect whatsoever on the great company Martha Stewart Living Omnimedia. And I don't want to use this as a sales pitch for my company, but we love that company. We worked so hard on that company. And we really think it merits great attention from the American public.
(END VIDEO CLIP)
GRACE: Welcome back to LARRY KING LIVE. I'm Nancy Grace from Court TV in for Larry tonight. Thank you for being with us. I want to remind you. Monday night, Larry will have the first and only live interview with Martha Stewart here on LARRY KING LIVE and she will be taking your calls.
Today a sentence went down in a federal courtroom that stunned many. Others say they weren't surprised at all. Martha Stewart got the sentence of a double nickel. Five months at Danbury prison we believe, and then five months on house arrest at one of her homes. Also a $30,000 fine.
Let me go back to Susan McDougal. You all know Susan McDougal. She spent 22 months behind bars at a woman's facility after the Whitewater investigation. Susan, what is a day in the life like in a women's facility?
MCDOUGAL: Well, she will be working. They'll assign her a job. I've seen women her age crying at night, holding their arms and talking about how, you know, hard it was to work in the kitchen and lift those heavy pots and to do the kind of heavy lifting and work that they're assigned to. All of the cushion jobs are, you know, people are standing in line for them.
So you get the very worst of the jobs when you first get there. And she'll work all day. You're not allowed to sit or be even -- or lie on your bed anytime during the day. I used to wonder if there wasn't a soft place in the world. There are all metal chairs, all concrete benches. I would think if I could just find somewhere soft to sit down.
If you have a visit from your lawyer or from your family, you are pat searched before you go which is sort of an intrusive pat search and then afterward you have an entire strip search which is one of the hardest things that I had to go through when I was there. There were times when I would say, you know, I've had two visits today, please don't come because there are guards that can make that just a terrible experience. They can put their gloved hands in your mouth, feel around your teeth, look under your tongue, of course, check every orifice in your body. There are guards that want to humiliate you and want to make that just a desperate process. There are guards that are kind. I don't want to mean that every one of them makes it hard.
But I have a feeling with Martha it will be a lot like me. She is a polarizing figure and there'll be people who want to knock her down a step or two. And that is a terrible feeling to be at someone else's control. I think that probably that is not something she's felt very often. And I agree with our guests, I don't think she'll go jail. I think after today it was a great victory. When she came out there and gave that speech, that was a victory speech for her. I think now they'll work so hard to keep her out of jail and, of course, what good is it doing anybody for Martha Stewart to go to jail.
GRACE: You know, Dominick Dunne, something Susan McDougal just said really stood out to me, the fact that you lose control. You don't have control over even your daily life. And Stewart has been so in control of her empire, her company, her home, right down to preparing Sunday lunch. How hard is that going to be? How difficult for Martha Stewart to give up control?
DUNNE: It is going to be terrible. It is going to be terrible for Martha Stewart. I mean, you know, I'm one of those who thinks that she shouldn't go to prison. And I think that they should have given her a bigger fine than $30,000, which seems an awful piddling fine to me. And no jail time. That's what I would like to have seen.
I think she's going to do it. I think Martha -- I mean Martha's the type you stay in her house, she knocks on your door at 5:00 in the morning and says, hi. It's true. And -- And, you know, so she's going to -- she's a tough lady.
HONOWITZ: She'll fare well.
DUNNE: Yes, she will.
GRACE: Well, Stacy, of course, disagrees with you about the sentence and the fine. And let me just clue you in, Dominick. In some parts of the country, $30,000 can buy you a house and a car. So for a lot of people, that's a lot of money.
DUNNE: But you know what I mean.
GRACE: I do. Compared to what she's built up and the fortune she has amassed, you're right, that's a drop in the bucket.
Martha Stewart's sentence today, fives month in a women's facility and five months house arrest, followed by supervision and a fine.
Was she treated differently than others? Is she a celebrity trophy defendant? Or does she believe she is above the law?
Stay with us. (COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
STEWART: More than 200 people have lost their jobs at my company and as a result of the situation. I want them to know how very, very sorry I am for them and their families.
I would like to thank everybody who stood by me, who wished me well, waved to me on the street, like these lovely people over here, smiled at me, called me, wrote to me.
We received thousands of support letters and more than 170,000 e- mails to MarthaTalks.com. And I appreciate each and every one of those pieces of correspondence. I really feel good about it.
(END VIDEO CLIP)
GRACE: Welcome back to "LARRY KING LIVE." I'm Nancy Grace from Court TV in for Larry tonight. I want to thank you for being with us.
Martha Stewart's sentenced today in a federal courtroom. I want to remind you that Monday night will be the first and only live interview. Larry will have that interview with Martha Stewart, and she will be taking your calls.
Let me go to Stacy Honowitz, Broward County, Florida, prosecutor.
You've got a different take on this whole proceeding. What do you think about the sentence?
HONOWITZ: I think that the sentence is very fair. I think justice is served.
GRACE: Or lenient?
HONOWITZ: I think it was lenient in that she went all the way down to the bottom of the guidelines. She got the best sentence that she possibly could.
But I think -- I think...
GRACE: She could have gotten...
HONOWITZ: Between 10 and 16.
HONOWITZ: Months. And I think people that wanted her to go prison will say, "Oh, my God. How could she only get five months in prison and, you know, five months house arrest?"
And people that think that she should never have been prosecuted can't even believe that the prosecution was brought.
But I think that everyone has to know that, as a prosecutor, we don't get up there and say, "We need the maximum. We need the maximum."
A message was sent. She was prosecuted. She lied, and she got a just sentence for lying.
GRACE: Well, the reality is if you take a look at this judge, Cedarbaum's record, she's a pretty tough little nut to crack. There was never a day I thought she would give Martha Stewart straight probation. It's just not going to happen.
HONOWITZ: Right. And they filed a motion for downward departure in court today, and she didn't agree that.
But certainly, she took many things into consideration when she sentenced her so low.
HONOWITZ: The letters from people.
GRACE: Fifteen hundred letters.
HONOWITZ: You got 1,500 letters; you did good for the community. And these are factors which judges do consider when they sentence someone.
GRACE: Stacy, when you say downward departure, what she's talking about are those federal sentencing guidelines. The black and white letter of the law says Martha Stewart could have gotten 20 years behind bars, five years on each count.
But the guidelines were imposed by Congress, basically dictating judges what they can sentence so judges won't differ so -- so widely in their sentencing.
Let me go to you, Henry Blodget.
In court today, what was your sense of Martha Stewart's reaction as well as the onlookers?
BLODGET: It was funereal when she came in. The whole courtroom hushed, obviously, when she read her statement. It was very moving.
It's an incredible experience where the judge is saying, "I am sentencing you." It is quite a solemn ritual. And I think that after that happened what surprised me was as soon as the sentence is delivered, actually then there's light at the end of the tunnel.
It is only five months, which is obviously horrifying, but there is something that's going to go on after that. And I think Martha probably was able to look right past that. And certainly the stock market...
GRACE: What exactly do you think...
BLODGET: ... saw that.
GRACE: ... will go on after that? How will she re-enter society? This is going to fly by just like that.
BLODGET: I think certainly with the appeals...
GRACE: Once the appellate process is over.
BLODGET: ... she now has a long time to really set up everything. She can work at her company. She can get things in place.
GRACE: But she can't work behind bars for her company.
BLODGET: But even if she does end up going, it is only five months. And it would be a year out after all of the appeals. And certainly the market can look through five months and then you know she's going to come back very strong.
GRACE: Well, interestingly, Henry, the market -- the stocks bounced up 37 percent today after the sentencing. Why?
BLODGET: Very strong. I think a factor of two things. One, the sentence was less than it could have been. Certainly, the market focused on that.
And two, I think more than anything, it is certainty. You had a lot of uncertainty about how this was going to be resolved. Now we know the worst-case scenario, which is that she is in prison for five months.
BLODGET: And, again, the market can look through that.
GRACE: And who do you think will take over the reigns of her company while she's behind bars?
CHESNOFF: Well, I think Martha is going to maintain significant influence. There is a board. There are presidents. The company is filled with creative people.
GRACE: But somebody has got to make the decisions. Pink, green, aqua, cotton, poly. Tell me, who's going to make that decision?
CHESNOFF: What I do want to tell you is that I think the reason things went well with the stock today are the following.
The judge granted her bail pending appeal. The government did not object to that. That was a major decision.
What it means is that all the parties -- the judge, the government and the defense -- agree that there are substantial issues on appeal which can lead to Martha's complete vindication.
So she's out. People know that. People know she may never go jail because of the fact that she's engaged people to help her, particularly Professor Dellinger, who's a brilliant man who understands constitutional and criminal law and is going to present to the Second Circuit, along with Marty Weinberg from Boston, a very compelling argument as to why this trial was unfair.
And I think that's why Martha feels good tonight, because she knows the criminal justice system is not complete with her.
GRACE: You know, David, you say it was all unfair. A lot of people would say house arrest and five months in a dormitory, having your big count, count No. 9, thrown out by the judge is actually very much in her favor.
However, I'm going to go Susan McDougal.
Susan, a lot of people have suggested -- many, many people have suggested that -- and don't get mad at me, all you men, that if she had been a man, she would have been referred to as shrewd, an excellent CEO.
But since she's a woman, barking orders left and right, she's suddenly a bad person. This has boiled down to a popularity contest. Comment?
MCDOUGAL: You know, Nancy, that it's documented that women get harsher sentences than men. It's just true. They're held to a higher standard.
And the fact that Martha Stewart had the attitude that she had and the -- carried herself the way she did and even the comments to what purse she was carrying all showed that this was very directed toward her as a woman.
And the snide comments...
GRACE: Yes, I did notice that, Susan. Because I remember Kobe Bryant came out with a $50,000 bracelet and nobody blinked an eye. But she showed up with that pocketbook, the pundits talked about it for three weeks. They're still talking about it.
She didn't even bring a pocketbook. She brought a little briefcase to court today.
MCDOUGAL: Yes. There was an article written about me. I crossed the street smiling one day, and they said I was enjoying the media attention.
And then I came in one day. I had tears in my eyes. I was worried about something, and it was I was dramatic.
You can't please anyone when you're a woman. They're always looking at you: what you're wearing, how you're acting. And I never see that, the emotional side of what a person is doing walking into court when they're a man.
It is really a different story when it's a woman. I agree with you.
GRACE: Well, Lady Justice is supposedly blind to race, creed, sex, money and color. We'll find out. The appeals process is on. Martha Stewart today sentenced to five months in a women's correction facility -- it's kind of like a dormitory -- if she in fact goes to Danbury, then five months in house arrest. Now of course, that's Martha Stewart's home. A lot of us would like to be closeted there.
Stay with us.
(BEGIN VIDEO CLIP)
LARRY KING, HOST: Is all of this very shocking to you?
STEWART: No one has ever prepared for such a thing.
KING: I wouldn't imagine.
STEWART: No one. And no one is ever strong enough for such a thing. No one is -- is -- You know, you have no idea how much worry and sadness and grief it causes.
KING: And I would imagine especially if someone thinks, "I didn't do anything wrong."
KING: So that's got to drive you berserk.
STEWART: Well, but that -- having done nothing wrong allows you to sleep...
KING: It does?
STEWART: ... allows you to continue your work, gives you -- gives you the opportunity to -- to think about other things. But there's always the worry. I mean, a trial is coming up.
(END VIDEO CLIP)
GRACE: Welcome back to "LARRY KING LIVE." I'm Nancy Grace from Court TV, in for Larry tonight. I want to thank you for being with us.
Martha Stewart's sentence today: five months at women's correctional facility, five months house arrest, supervision and a $30,000 fine. Was it fair?
Very quickly to Stacy Honowitz.
Stacy, do you have any doubt in your mind that she got a phone call saying, "Guess what? Erbitux is being denied by the FDA. Dump your stock." And she said, "Hello, I need to dump my stock." Do you have any doubt that that insider trade was made?
HONOWITZ: No. I think when you read and you see the evidence, you hear the testimony, there was overwhelming evidence that something took place, i.e., insider trading. The SEC is going after her now.
There was a reason why she dumped that stock. The timing -- when you look back at the timing, right after the phone call. So one can assume -- I hate to say that -- you assume that there was insider trading. There was a tip.
GRACE: But the reality is, David Chesnoff, even if she did make that call, even if she had that information, which is wrong, why was she selected to be prosecuted?
CHESNOFF: First of all, it's not wrong, because she was never charged with insider trading. She was charged with lying...
GRACE: Even by the SEC?
CHESNOFF: The SEC has a case. It's a preponderance of the evidence.
GRACE: With insider trading.
CHESNOFF: I'm confident that she's going to be successful in the SEC case.
GRACE: I'm asking you, was she targeted for prosecution?
CHESNOFF: Yes. Because she got caught up in this whole public relations Justice Department issue of white-collar crime. So they used her as a symbol.
And unfortunately, they went overboard when they used her for a symbol. One of the things that they did was they used Bacanovic's interrogation by the SEC in order to provide testimony against her at trial.
That's what the Crawford case. The Supreme Court says the government cannot use the testimony of a co-defendant, the hearsay testimony, if you don't have a chance to cross-examine.
GRACE: Cross-examine. Right.
CHESNOFF: She never had a chance to cross-examine Bacanovic because they had a joint trial.
GRACE: And of course, that's a very far-reaching case, the Crawford case.
Very quickly to what lies ahead of her. Henry Blodget, what do you think about her faring behind bars?
BLODGET: I -- Based on everything that I've seen of her, and I don't know her personally, but she has accomplished so much. And any challenge that has come her way she's dealt with it with style and grace and a huge amount of drive. And I think prison would be no different.
GRACE: What about it, Dominick? DUNNE: I absolutely agree with Henry. She's going to cope. I mean, it isn't -- it isn't going to defeat her. And -- and she's -- I mean, I know what Susan said in there. She's going to hold her own. I just believe it totally.
And you know, there is the extra added attraction of her celebrity. And, you know that can work against you, but it also -- most people are just riveted by somebody...
HONOWITZ: They're going to cozy up to her. They're going to want to be friends with her.
DUNNE: They're going to cozy up to her, yes.
HONOWITZ: I really think so. And I think she's going to fare very well behind bars. I really do.
DUNNE: So do I.
GRACE: Susan McDougal, you've been there. How will she fare behind bars?
MCDOUGAL: I'll tell you. I went to a screening last night of "Hunting of the President," and they showed my incarceration. And there wasn't a dry eye in the theater.
You don't know what it's like until you're there, and I'm a pretty tough cookie myself. I mean, I pretty much chose my two years in jail.
And it will really make you -- the pain is so evident in that movie that there -- the people were shocked at what happened.
And I know that Martha Stewart is tough, and I know that she will make it. Five months, she can make it with her eyes closed. But it is a horrifying thing. And there are women there tonight who shouldn't be there, just like Martha Stewart shouldn't be there.
GRACE: Well, Dominick, I'm very torn, because just looking at the facts to me, it looks as if she made the call and she dumped the stock.
On the other hand, I feel very strongly that she was a celebrity trophy defendant. That once defense found out about this, they basically had a tiger by the tail, Dominick. If they let her go, they would be attacked for being partial to a celebrity. If they prosecuted her, they're attacked for prosecuting a celebrity. And it just seems to me she got caught in the crosshairs.
DUNNE: She got caught in the crosshairs. And because she's a celebrity, because she's so successful, I mean, she's been news for two and a half years for these -- for the feds.
And, you know, Ken Lay didn't have the -- the national name that she had.
GRACE: Yes. And the reality is that these other corporate giants were like pigs at the troth...
GRACE: ... feeding off people's pensions and retirements, and they're walking scot-free.
David Chesnoff wants to respond, but we've got to take a break. Martha Stewart sentenced today.
Stay with us. We'll be right back.
(BEGIN VIDEO CLIP)
KING: How about God in this period? Are you religious?
STEWART: Well, I was brought up a Catholic. Mom still goes church every Sunday. I have beliefs. I have ways to reach out. And I think that it helps a lot.
KING: Are you a roaming Catholic as Jackie Gleason used to call himself?
STEWART: Well, I visit every church and every cathedral wherever I am.
KING: Do you pray at a time like this?
STEWART: Well, it might be an unorthodox way to pray the way I pray. But -- but I have my good thoughts.
GRACE: Welcome back to "LARRY KING LIVE." I'm Nancy Grace from Court TV in for Larry tonight. Thank you for being with us.
Martha Stewart sentenced in a federal courtroom today. Very quickly to David Chesnoff, a response?
CHESNOFF: Yes, I mean, Martha was not a white-collar criminal raiding a corporate community chest, cooking the books. I mean, this was a simple allegation. No one gets prosecuted for what Martha got prosecuted for.
GRACE: Very rare for under $50,000 trade, very rare.
CHESNOFF: I'm telling you right now, with the merits of this appeal, it will keep Martha from going to jail.
HONOWITZ: I'm not so sure about that. I'm really not. I mean, you never know what's going to happen on appeal. No one can ever, ever figure out when the appellate court comes down with a decision.
But the judge already made a decision with regard to the FBI agent. She made a fact-finding decision. It was not a material aspect of the case, and that -- nobody was even convicted on that count. GRACE: I don't know. I don't know. I think he may be right technically, but Henry, when you've got a federal agent representing this state, commit perjury on the stand, how with a straight face can the prosecutor say that does not affect the integrity of this trial?
BLODGET: It looks terrible. It's the same thing with the juror. It looks terrible.
GRACE: The whole thing -- I know.
Even though technically I know you're right, Stacy, it was -- he testified on another matter. Stewart wasn't even charged with that. But it still smells.
BLODGET: It smells terrible. But I do think Judge Cedarbaum was very clear in her reasoning, very logical and very defensible.
And I think, obviously, from a layperson's perspective looking at the appeals, the issue to me that jumps out really is the insider trading issue, where this is hanging in the background, the entire trial, you committed insider trading. The defense wasn't allowed to say, "We didn't." And yet, that's obviously in the jurors' minds.
GRACE: Dominick, she appeared to be so strong, so stalwart. Is that what she's really like?
DUNNE: Yes. She is. But she's also an extremely kind person. And you know, you hear all this stuff, she yells at the people.
You know, I know a lot of the people who work for her, and they have been with her for 10 and 15 years. You know, you don't hang in there that long.
Although I did hear one thing in court today that really fascinated me. Ann Armstrong -- Annie Armstrong, you remember, her assistant, and who, you know, who cried over the plum pudding and so forth and so on. And I never felt she was crying for the plum pudding. I felt she was crying because of what she had to say the next day.
But she doesn't work for Martha anymore. Did you know that? I just found that out today. I think that's sort of an interesting -- I've got to check that one out tomorrow.
GRACE: David, will she do the full five months?
CHESNOFF: I don't think she's going to do any time.
GRACE: Oh, right. I'm sorry. You're her appellate lawyer. Of course you don't.
Let me throw that one over here. Will she do the full five months?
HONOWITZ: I think she'll do the full five months. GRACE: I mean, if she goes to Danbury -- we're assuming it's going to be Danbury women's correctional facility -- or will she do 85 percent of it? Will she do the full five months?
God, we're acting like it is 20 years. It's five months.
HONOWITZ: I think she'll probably do about four and a half, four months, something like that.
GRACE: Eighty-five percent of the time.
HONOWITZ: And she'll do fine.
GRACE: Of course, Susan McDougal, when you're walking through those doors, five months seems like an awful long time.
MCDOUGAL: I wanted to tell you what Mark Geragos told me once. He said, "If I can keep you out of jail for a day, I can keep you out of jail for a year."
So if he can keep her out of jail for a year, she won't do a day. I can promise you. I really don't think she will go to jail.
GRACE: Any advice for Martha Stewart tonight, Susan? You've been there.
MCDOUGAL: She has to be jubilant. She has to be so happy to have these wonderful men working for her and representing her so wonderfully.
And that was a victory dance for me out on the steps of that courthouse saying, you know, "I'll be back" and "I'm strong" and "I can do anything." I'm proud of her today that she -- she did this.
The one thing I would ask is that across the country, judges start doing that for every woman who stands before them, instead of giving them the maximum and sending them to jail that very day. I mean, this is really an unusual sentence.
And I beg that every woman who stands there, no matter how much money they have, or how many lawyers they have, could be treated as fairly.
GRACE: Susan McDougal joining us. As you know, she did 22 months behind bars following the Whitewater investigation. Susan McDougal, thank you for speaking out.
MCDOUGAL: Thank you.
GRACE: I don't know. Was it a witch-hunt? Was it a popularity contest? The sentencing went down today, five months behind bars, five months on house arrest and a fine. That was the sentence for Martha Stewart.
I want to thank David Chesnoff, friend and attorney of Martha Stewart; of course, my friend and Martha's, Dominick Dunne; Stacy Honowitz, prosecutor from Broward County, Florida; and Henry Blodget, contributor to "Slate" magazine and former securities analyst.
Especially, I want to thank you for inviting us into your home tonight. Thank you for being with us.
I want to remind you, Monday night, an one-on-one, first and only live interview Larry will be having with Martha Stewart. And Ms. Stewart will be taking your phone calls.
Again, thank you for being with us. And coming up next, "NEWSNIGHT" with Wolf Blitzer.
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