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American Morning
Martha Stewart Faces Sentencing; Fire in Carson City Threatening Approximately 1,000 Homes
Aired July 16, 2004 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDERSON COOPER, CNN ANCHOR: Prison, house arrest, community service -- all possibilities for Martha Stewart as she faces a judge and sentencing this morning.
Intense fires raging in the West and moving like a flash through mountain neighborhoods.
And John Kerry's team embraces Hillary Clinton at the upcoming convention. Will she be satisfied with her new role?
All those stories ahead on this AMERICAN MORNING.
ANNOUNCER: From the CNN Broadcast Center in New York, this is AMERICAN MORNING with Soledad O'Brien and Bill Hemmer.
COOPER: And a good Friday to you. I'm Anderson Cooper. Bill is on vacation this week. Soledad is resting.
HEIDI COLLINS, CNN ANCHOR: I'm Heidi Collins. Some of the news making headlines now this morning.
All that guessing about Martha Stewart's sentence for lying about a stock sale could come to an end in just a few hours from now. The judge in the case has a number of options. We're going to be looking at them and talk to Jeffrey Toobin about what we can expect in court today.
COOPER: Yes, it will be very interesting, indeed. Also the U.S. Army has dropped its case against a soldier accused of cowardice in Iraq. Sergeant Georg-Andreas Pogany says he is still owed an apology. A report on that case and how the military's use of an anti-malaria drug actually figured in to it.
COLLINS: Also, think you have a good poker face? Well, in a few minutes, part five of our series on lying. Today, we'll find out the sure-fire signs in a person's face that can give away a lie.
COOPER: Oh, it's all in the eyes, I bet.
COLLINS: Just in the eyes?
COOPER: I made that up.
Jack Cafferty is off today, but Toure' is going to have the e- mail question of the day in just a few minutes. Let's take a look at what's happening this morning. It is judgment day for Martha Stewart. In just a few hours the domestic diva will hear her sentence for obstructing justice and lying to federal investigators.
Deborah Feyerick is live now at the federal courthouse in New York. Good morning, Deborah.
DEBORAH FEYERICK, CNN CORRESPONDENT: Good morning, Anderson. Well, Martha Stewart does have the option this morning to address the judge before she is sentenced. But with an appeal pending she has to be careful about anything she may or may not say. Now this as she remains confident in her innocence.
(BEGIN VIDEOTAPE)
FEYERICK (voice-over): She's been convicted of perjury and obstruction of justice. Martha Stewart still has faith she'll win on appeal.
MARTHA STEWART, INDICTED DOMESTIC DIVA: I'm a believer in American justice.
FEYERICK: Legal experts say in state court a first-time offender like Stewart might get probation. But this is federal court, and sentencing guidelines mandate felons serve between 10 and 16 months.
UNIDENTIFIED MALE: Martha could do five months in jail and then have to do five months home confinement. But she can't escape jail unless there's some form of a reduction from the guidelines.
FEYERICK: The judge has received hundreds of letter on Stewart's behalf. Other factors the judge would likely consider: Stewart's charity work, the impact prison might have on Stewart's now faltering business empire and what Stewart's sentencing expert calls "collateral damage."
UNIDENTIFIED MALE: There's been enough punishment already. I mean, the caricatures and the public humiliation that's gone on, and certainly the financial devastation that her companies have undergone.
FEYERICK: One former prosecutor says that's unlikely to make any difference.
UNIDENTIFIED MALE: The judge would be concerned that any sentence of leniency might be construed as giving Martha Stewart a break because she's a woman of considerable financial means and is a woman of some fame.
FEYERICK: Her lawyers plan to argue Stewart should be sentenced to community service. She recently met with a group that helps low- income women develop their own businesses.
UNIDENTIFIED MALE: What would be served by having her wash dishes for five months in a federal prison versus having her work in the Women's Venture Fund for five months and help them -- you know, help thousands of women start their own business. (END VIDEOTAPE)
FEYERICK: Now expect prosecutors to argue against any sort of lighter sentence. Prosecutors will say there simply is no legal ground. Meantime, Stewart's broker Peter Bacanovic who has largely been lost in Stewart's shadow, he will be sentenced this afternoon at 2:30 -- Anderson?
COOPER: All right. Deborah Feyerick, thanks very much for that.
There are a lot of questions to be answered this morning. Will Martha Stewart say something in front of the judge? Where could Martha Stewart be sent to serve her time if, in fact, she is sent anywhere?
Some experts think she'll go to the same minimum security prison that hotel magnate Leona Helmsley went to for tax evasion. That, of course, is in Danbury, Connecticut. Or the feds could ship her to a place tougher or more highly structured.
Regardless, even life in minimum security lock-up is no picnic. Martha will likely wear prison clothes, be required to work 40 hours a week and have very little privacy.
CNN's senior legal analyst Jeffrey Toobin will be in the courtroom later this morning when Martha Stewart receives her sentencing. He joins us now from the federal courthouse here in New York.
Good morning, Jeff.
JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Good morning, Anderson.
COOPER: All right. So, mandatory federal guidelines require 10 to 16 months. How much of that time in a prison?
TOOBIN: Well, you know, there's a lot of play in the joints here. The sentencing guidelines work, especially at this relatively low level of a sentence, the judge could do various things.
She could depart from the guidelines, although that's unlikely, and give an all-probation sentence. A much more likely possibility is what's called a split sentence, possibly six months in prison, six months in house arrest. Or she could sentence to as much as maybe 24 months in prison.
Although, given judge Cedarbaum's reputation for relative leniency in sentencing, a sentence that severe seems really unlikely.
COOPER: And though we will hear the sentence this morning, it doesn't begin to be served out today. I mean, Martha Stewart is not going to be led away in handcuffs or anything today, is she?
TOOBIN: Again, that's almost -- an almost impossible, but not entirely. The overwhelming likelihood is that her bail will be extended pending her appeal. And this appeal, like many federal appeals, could take quite a number of months. And I suspect that if she -- if appeal proceeds normally, and if she loses, as I think is likely she'll lose, the appeal probably won't be over until early 2005. So she probably wouldn't go to prison until early next year.
COOPER: Martha Stewart's attorneys have submitted evidence about why the judge should be lenient. Deborah Feyerick was reporting she -- the judge has received hundreds of letters from friends and supporters for Martha Stewart asking for leniency. How persuasive are those arguments in this kind of sentencing?
TOOBIN: I think they are helpful, but I don't think they are extremely helpful.
The most interesting argument that I've heard lawyers have made is the one that says there will be so much collateral damage to her business if she goes to prison.
Interestingly, that's an argument that appeals courts have approved of here in New York, that there have been business people who have been spared prison because they are so indispensable to their business that people will be thrown out of work. And the judges have said that justifies what's called a downward departure from the guidelines.
I think that's probably not going to succeed here given how high- profile this is, given how it might be seen that she'd be given a special break because she's wealthy. But that is an argument that judges have accepted before.
COOPER: You know, Stewart has the opportunity to talk in front of the judge. Do you think she's going to take it? And if she does, does it matter or has the judge already made up her mind?
TOOBIN: You know, Anderson, I think that is such an interesting question. And I've been struggling back and forth.
I don't see how she can go to her sentence without saying something. I think some sort of general apology that does not acknowledge that she did what she is accused of doing, but expresses sorrow about the whole situation, that's probably likely.
But as regard to your other point, based on my experience with federal judges, 90-plus percent of the time they've already decided on the sentence. And barring some extremely unusual outburst or something, you know, completely unexpected happening, I think judge Cedarbaum has made up her mind. And what happens in court today is basically just a formality -- she knows what the sentence will be.
COOPER: All right. Well, Jeffrey will be in the courtroom -- Jeffrey Toobin. We'll check in with you later. Thanks, Jeff.
TOOBIN: 10:00 a.m. This morning.
COOPER: All right.
You'll want to stay with us for more about truth and deception.
Toure' will talk more about Martha Stewart when he poses the question of the day.
And in the final installment of our week-long series on lying, how to tell whether someone is lying to you. Interesting.
COLLINS: Yes, indeed.
Meanwhile, the fierce wildfires in Southern California are still forcing people to evacuate this morning. The fires burned about 25,000 acres just this week. Fast-moving flames are blazing through the Angeles National Forest now. That's north of L.A.
And about 2,000 firefighters are still battling this massive blaze near Lake Hughes. Thick smoke and heat are hindering those firefighters, though. More than 500 residents were evacuated.
Some encouraging news -- a wildfire close to San Bernardino National Forest is now 95 percent contained.
And firefighters gained some control over an explosive wildfire in Nevada. It incinerated a dozen homes and forced evacuations of hundreds of other people.
Well CNN's Ted Rowlands is live at the fire command center now, near Carson City, where the only highway to the city was actually closed last night, right, Ted?
TED ROWLANDS, CNN CORRESPONDENT: Right, Heidi. That highway has reopened. Late last night it was opened up.
Firefighters here were hoping for a major break in the weather. They did not get it. This fire in Carson City is still threatening approximately 1,000 homes and is still burning out of control.
(BEGIN VIDEOTAPE)
ROWLANDS (voice-over): The fire, which started early Wednesday morning, has now consumed more than 10,000 acres. At least 20 homes have burned.
People say as the flames approached, they took what they could and got out.
This woman lost her home.
NORMA JEAN BEST, FIRE VICTIM: I'm not mad. I'm very sad. But I don't know.
ROWLANDS: Hundreds of firefighters from around the region had been called in to help control the wind-driven blaze, but they say the weather conditions are making their job very difficult. SCOTT HUNTLY, FIRE INFORMATION OFFICE: The weather is very dry. The humidity is very low. So we're not getting any breaks in this fire. There are some breaks, though, because we did save a lot of homes last night.
ROWLANDS: A late afternoon wind shift forced the closure of highway 395, the main road into and through Carson City. Dozens of people forced out of their homes, some of them crying, sat with packed cars watching the flames move closer.
MATTHEW MURDOCK, EVACUEE: We got like a car load. We didn't really think that it was going to get that bad so we just took a few things. We probably could have taken a few more things now that we know.
DAVID BRUKETTA, EVACUEE: It's hard. It's emotional. You know, it's just my house, my life is back there. But, you know, I got my kids and my family and that's the important thing.
(END VIDEOTAPE)
ROWLANDS: There is some good news as you take a live look at this fire here this morning. After going over and taking an air look at this fire, they were able to reduce the amount of acreage down to 7,200 acres that have now been burned, they're estimating.
And when they went in to some of the burned out neighborhoods, they figured that instead of the 21 homes they thought they lost, they actually only lost 14. However, still a lot of work to go, which starts in earnest at daybreak when they will begin the air assaults here, once again, in Carson City.
As for a cause, they know it was caused by an individual or group of individuals. They are looking in to the possibility that a group of teenagers up in the hills may be responsible -- Heidi?
COLLINS: Wow. Those pictures behind you are unbelievable.
Ted, thanks so much for the update on that.
So want to know if the weather is going to provide any help today? Chad Myers is standing by at the CNN Center with the very latest. Not much moisture in the air, they're saying.
CHAD MYERS, CNN METEOROLOGIST: No, not at all. And it fact, it will actually hurt because there will be some wind today just like yesterday, gusting to 20 to 25 miles per hour.
(WEATHER BREAK)
MYERS: Back to you guys.
COOPER: All right, Chad. Thanks very much.
It is just about 12 minutes past the hour. Time for a look at some of the other day's top stories with Daryn Kagan in Atlanta. Hey, Daryn.
DARYN KAGAN, CNN ANCHOR: Anderson, good morning to you.
Let's begin in India where rescue crews are combing through the wreckage of a massive fire. The blaze raced through a girl's school in the southern Indian state of Tamil Nadu.
Officials say that at least 78 children have been killed, that the death toll is expected to rise. It's believed the flames were sparked by an electrical short in the kitchen of that school.
The U.S. embassy in Tokyo is confirming that former world chess champion Bobby Fischer has been detained. Fischer has been wanted since 1992 for breaking U.N. sanctions by playing a tournament in Yugoslavia.
Japanese officials say he was taken into custody Tuesday as he tried to leave for the Philippines, but a report says he'll be deported to the U.S.
And this story just in to CNN -- the terror network of Abu Musab Al-Zarqawi is claiming responsibility for the killing of a provincial governor in Iraq earlier this week. That is according to messages posted on three Islamic militant Web sites. The governor died in an ambush Wednesday as his convoy traveled near the city of Tikrit.
The U.S. Army is dropping its case against a soldier accused of cowardice. Sergeant Georg-Andreas Pogany drew attention after suffering a panic attack on his second day in Iraq.
The Army claimed the attack came after Pogany saw a bloody corpse, but a doctor last month diagnosed the soldier as suffering from damage to his balance system most likely caused by an anti- malaria drug.
Medicare is reclassifying obesity. The government insurance program has abandoned its longstanding policy that obesity is not a medical problem. That move allows millions of Americans to make medical claims for treatment such as stomach surgery and diet programs. It's not clear when that change will go into effect.
And from the world of sports saying, you know what, he really always wanted to be a Los Angeles Lakers. Kobe Bryant has signed a new seven-year contract with the team. It is worth over $136 million.
Bryant chose the Lakers over cross-town rivals L.A. Clippers. The Lakers offered him a longer deal and more money. Bryant's sexual assault trial begins in Colorado on August 27th.
Talk about two different futures. Seven years, $136 million or four years to life for a prison sentence if he is found guilty on those charges.
Heidi, back to you.
COLLINS: All right, Daryn. Thanks so much.
Well, as you may know, 110 days to go in the countdown to the November 2nd election. Hillary Clinton will speak at the Democratic convention after all.
All nine female Democrats in the Senate were initially left off the speakers' list. But yesterday Senator John Kerry called Senator Clinton and invited her to address the delegates. She has agreed to introduce her husband, former president Bill Clinton on opening night.
President Bush heads to the swing state of Florida, today. He'll be in Tampa appealing to conservative voters with an address on human trafficking and then to a rally in Beckley, West Virginia.
Vice President Cheney is still knocking down rumors that he'll drop off the Republican ticket. He is in Michigan and Iowa today.
And John Kerry will be in Washington speaking to the American Federation of Teachers. He's promising full funding for the No Child Left Behind Act. Later he'll hold a rally in Arlington, Virginia.
COOPER: And we are rallying right now for Toure' who is here...
COLLINS: Toure'! Toure'! Toure'!
COOPER: ... with the question of the day.
TOURE', "ROLLING STONE" MAGAZINE: It's going to be fun today.
The last time I was here on a Friday we asked for poems. And our audience is so smart and so great that they had great stuff. So we're going to do it again. It's Martha Stewart's day -- so poems for Martha Stewart. Let's start with mine.
Oh, Martha, American homemaking queen What marvelous theater these past months you've been. Promise me now the show will not end. It's on you that Kmart and Nobu depend. Hold your head, write your book. No matter what that judge says, people joke about the soap. You just watch out for your friends.
So that's bad.
COLLINS: I heard some rhyming issues there.
COOPER: Yes.
TOURE': We're starting on that note.
COLLINS: But pretty good.
TOURE': I didn't get much sleep last night.
COLLINS: Oh, you wrote it this morning?
TOURE': Yes.
COLLINS: OK.
TOURE': But we want to hear more from you. So, in the form of a poem, what do you have to say to Martha now on her day of getting sentenced?
E-mail us now at am@CNN.com.
COOPER: I like how you said this is her day, as if it's like her birthday or something.
TOURE': Well, it's a big...
COOPER: It's not a good day for her.
COLLINS: No.
TOURE': Well, it's a big day in her life.
COOPER: It is a big day, yes.
TOURE': I mean, you know...
COOPER: All right.
COLLINS: OK. We'll take that. All right, Toure'. Thanks so very much. Can't wait to read those.
COOPER: Yes.
COLLINS: All this week we have been telling "The Truth About Lying." Who lies, why and when? Well, today we're asking how you can spot a liar.
(BEGIN VIDEOTAPE)
COLLINS (voice-over): It seems so easy to spot a liar in the animated world. Pinocchio lies, his nose grows -- no strings attached.
But how do we mere mortals know if someone is lying to us?
DAVID LIEBERMAN, AUTHOR, "NEVER BE LIED TO AGAIN": The truth is, if you know what to listen for and what to look for, it can be uncannily obvious to you that the person is lying.
COLLINS: David Lieberman says if you don't want to be lied to, you must listen carefully to the words people use when they talk.
LIEBERMAN: Very often somebody who lies will leave out the pronoun. For example, somebody having lied about their car being stolen might say, the car was stolen or that car, instead of my car.
COLLINS: When people lie, he says they want to distance themselves from what they are talking about. BILL CLINTON, 42ND PRESIDENT OF THE UNITED STATES: I did not have sexual relations with that woman -- Ms. Lewinsky.
LIEBERMAN: You can see that there was a gap connecting him and Monica Lewinsky. Clearly, he felt the degree of guilt in lying and wanted to distance himself unconsciously from that message.
COLLINS: If seeing is believing, Patty Wood, a corporate communications trainer, says just concentrate on the person's face.
PATTY WOOD, CORPORATE COMMUNICATIONS TRAINER: One of the indications that somebody may be lying would be that before they speak they go (gesture). And symbolically you can see that they are withholding the truth.
They know the truth, but they are keeping it in by going (gesture). And that's called lip sucking.
COLLINS: Other body clues may be more subtle.
WOOD: If I'm in a performance appraisal with you and you're asking me whether I've been honest on all my forms that I'm filling out, and I go, "Oh, yes, I've always filled those out accurately," and I rub my eye; well, that could be an indication that what I've said is a lie because the situation doesn't look right to me.
COLLINS: But can't some people hide behind a poker face? Lou Kriegar wrote "Poker for Dummies." He thinks it's easy to call people on that as well.
LOU KRIEGAR, CO-AUTHOR "POKER FOR DUMMIES": We all give off cues about what we are thinking and feeling and about to do. Sometimes if you have a big hand, you can't control it and your vein in your neck pulses.
People who bet and their hands are trembling when they reach for their chips, that's usually a sign they have a very strong hand.
COLLINS: While no one method of detection is 100 percent accurate, Lieberman says being aware of the clues may help you become a better human lie detector.
LIEBERMAN: And if you pay attention to it, it can be glaringly obvious.
(END VIDEOTAPE)
COLLINS: So, here's an ethical challenge now:
Suppose you are a doctor and your patient needs a treatment that their HMO won't pay for. Would you lie to the insurance company to help your patient?
Log on to our Web site cnn.com/am and take our ethics test. Answer that and several other challenging questions, and then see how everyone else responded. COOPER: And still to come this morning, Andy Serwer is "Minding Your Business." He's going to tell us why hindsight is always 20/20. Even for Martha Stewart, there is one way she could have avoided all this trouble and been richer to boot, apparently.
COLLINS: Also ahead, cowardice or just a nervous breakdown. There's a big development involving the first soldier charged with cowardice since Vietnam.
COOPER: And have you heard the rumor about Vice President Cheney? We're going to look at why political rumors die hard, even when there is absolutely no evidence to back them up -- ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
COLLINS: Martha could have made a mint and stayed out of trouble had she held on tight. Andy Serwer is "Minding Your Business" now on that.
Yes.
ANDY SERWER, "FORTUNE" MAGAZINE: Yes. You know, why did she do this? I mean, there's just -- when you start running the numbers here, Heidi, it's just ridiculous.
Let's take a look at the stock sale. This, of course, is all about selling ImClone stock, panicking when the FDA was about to not approve Erbitux, the drug.
So she sold that stock back in late 2001 at $58, reaping a gain of $228,000. Now, of course, ImClone stock has taken off because the drug has been approved. The stock is now at $80. She could have sold for $315. She would have made $87,000 more.
But that, of course is chump change. That's peanuts. The real thing is her stock in her own company, Martha Stewart Omnimedia has gone way down. Basically, going from $20 to $10. She had about $600 million of stock at $20, and now at $10 she's got $300 million.
So, she lost $300 million, plus jail time, plus the reputation. I mean, it's crazy.
Also, at savemartha.com, that Web site where people are trying to help her out, there is a petition to the president of the United States, "Dear Mr. President, a terrible injustice has been done to Martha Stewart," and on and on and on. But, it's just...
COLLINS: You are not going to read the whole thing?
SERWER: No, I'm not because its pages. So, you know, it's pretty funny to look at that.
Let's look at the market though quickly, Heidi. Yesterday, summer doldrums have clearly set in here. Dow down 45 points. NASDAQ following suit. Weakness in Nokia and Citigroup. Futures are up this morning. But that's what happened yesterday and look what the market ended up doing.
COLLINS: Exactly.
SERWER: So, no promises.
COLLINS: Well, that's great. Thanks a lot, Andy.
SERWER: You're welcome for that uplifting report.
COOPER: Yes, really.
Well, there's a lot of talk about the diet company that dropped a high-profile spokeswoman after she criticized President Bush.
"The Daily Show's" Jon Stewart had something to say about John Kerry's Democratic fund-raiser where Whoopi Goldberg made her remarks and had a little fun with yours truly too.
(BEGIN VIDEO CLIP)
JON STEWART, COMEDY CENTRAL'S "THE DAILY SHOW WITH JON STEWART": As for Republicans, they are shocked at what they consider the negative tone of the entire Democratic fund-raiser from Whoopi Goldberg to the musical performance by Chinky McJewington and the Wop- ettes.
(LAUGHTER)
STEWART: The whole thing was a mess.
(LAUGHTER)
STEWART: And Kerry just stood there laughing -- laughing -- at Chinky McJewington and, of course, his Wop-ettes.
So there you have it, Whoopi Goldberg fired by Slim Fast -- Anderson?
COOPER (ON CNN CLIP): We're going to cover this a lot tonight.
(LAUGHTER)
STEWART: Now in fairness.
(CHEERING)
STEWART: In fairness in Mr. Cooper, he does have 360 degrees to fill.
(END VIDEO CLIP)
SERWER: Now, were you talking about that? Were you referring to that?
COOPER: I was. I was. We covered it.
COLLINS: They were going to talk a lot.
SERWER: OK.
COOPER: It's true. Not a lot, but anyway.
SERWER: A little bit. Some.
COOPER: More to come -- let's get your weekend started early with some "90-Second Pop."
COLLINS: HBO wants a new hit show. Will it get good vibrations from Mark Wahlberg's new project?
Plus, come on, get happy. You could be the star of the new "Partridge Family."
"90-Second Pop" is ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
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Aired July 16, 2004 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDERSON COOPER, CNN ANCHOR: Prison, house arrest, community service -- all possibilities for Martha Stewart as she faces a judge and sentencing this morning.
Intense fires raging in the West and moving like a flash through mountain neighborhoods.
And John Kerry's team embraces Hillary Clinton at the upcoming convention. Will she be satisfied with her new role?
All those stories ahead on this AMERICAN MORNING.
ANNOUNCER: From the CNN Broadcast Center in New York, this is AMERICAN MORNING with Soledad O'Brien and Bill Hemmer.
COOPER: And a good Friday to you. I'm Anderson Cooper. Bill is on vacation this week. Soledad is resting.
HEIDI COLLINS, CNN ANCHOR: I'm Heidi Collins. Some of the news making headlines now this morning.
All that guessing about Martha Stewart's sentence for lying about a stock sale could come to an end in just a few hours from now. The judge in the case has a number of options. We're going to be looking at them and talk to Jeffrey Toobin about what we can expect in court today.
COOPER: Yes, it will be very interesting, indeed. Also the U.S. Army has dropped its case against a soldier accused of cowardice in Iraq. Sergeant Georg-Andreas Pogany says he is still owed an apology. A report on that case and how the military's use of an anti-malaria drug actually figured in to it.
COLLINS: Also, think you have a good poker face? Well, in a few minutes, part five of our series on lying. Today, we'll find out the sure-fire signs in a person's face that can give away a lie.
COOPER: Oh, it's all in the eyes, I bet.
COLLINS: Just in the eyes?
COOPER: I made that up.
Jack Cafferty is off today, but Toure' is going to have the e- mail question of the day in just a few minutes. Let's take a look at what's happening this morning. It is judgment day for Martha Stewart. In just a few hours the domestic diva will hear her sentence for obstructing justice and lying to federal investigators.
Deborah Feyerick is live now at the federal courthouse in New York. Good morning, Deborah.
DEBORAH FEYERICK, CNN CORRESPONDENT: Good morning, Anderson. Well, Martha Stewart does have the option this morning to address the judge before she is sentenced. But with an appeal pending she has to be careful about anything she may or may not say. Now this as she remains confident in her innocence.
(BEGIN VIDEOTAPE)
FEYERICK (voice-over): She's been convicted of perjury and obstruction of justice. Martha Stewart still has faith she'll win on appeal.
MARTHA STEWART, INDICTED DOMESTIC DIVA: I'm a believer in American justice.
FEYERICK: Legal experts say in state court a first-time offender like Stewart might get probation. But this is federal court, and sentencing guidelines mandate felons serve between 10 and 16 months.
UNIDENTIFIED MALE: Martha could do five months in jail and then have to do five months home confinement. But she can't escape jail unless there's some form of a reduction from the guidelines.
FEYERICK: The judge has received hundreds of letter on Stewart's behalf. Other factors the judge would likely consider: Stewart's charity work, the impact prison might have on Stewart's now faltering business empire and what Stewart's sentencing expert calls "collateral damage."
UNIDENTIFIED MALE: There's been enough punishment already. I mean, the caricatures and the public humiliation that's gone on, and certainly the financial devastation that her companies have undergone.
FEYERICK: One former prosecutor says that's unlikely to make any difference.
UNIDENTIFIED MALE: The judge would be concerned that any sentence of leniency might be construed as giving Martha Stewart a break because she's a woman of considerable financial means and is a woman of some fame.
FEYERICK: Her lawyers plan to argue Stewart should be sentenced to community service. She recently met with a group that helps low- income women develop their own businesses.
UNIDENTIFIED MALE: What would be served by having her wash dishes for five months in a federal prison versus having her work in the Women's Venture Fund for five months and help them -- you know, help thousands of women start their own business. (END VIDEOTAPE)
FEYERICK: Now expect prosecutors to argue against any sort of lighter sentence. Prosecutors will say there simply is no legal ground. Meantime, Stewart's broker Peter Bacanovic who has largely been lost in Stewart's shadow, he will be sentenced this afternoon at 2:30 -- Anderson?
COOPER: All right. Deborah Feyerick, thanks very much for that.
There are a lot of questions to be answered this morning. Will Martha Stewart say something in front of the judge? Where could Martha Stewart be sent to serve her time if, in fact, she is sent anywhere?
Some experts think she'll go to the same minimum security prison that hotel magnate Leona Helmsley went to for tax evasion. That, of course, is in Danbury, Connecticut. Or the feds could ship her to a place tougher or more highly structured.
Regardless, even life in minimum security lock-up is no picnic. Martha will likely wear prison clothes, be required to work 40 hours a week and have very little privacy.
CNN's senior legal analyst Jeffrey Toobin will be in the courtroom later this morning when Martha Stewart receives her sentencing. He joins us now from the federal courthouse here in New York.
Good morning, Jeff.
JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Good morning, Anderson.
COOPER: All right. So, mandatory federal guidelines require 10 to 16 months. How much of that time in a prison?
TOOBIN: Well, you know, there's a lot of play in the joints here. The sentencing guidelines work, especially at this relatively low level of a sentence, the judge could do various things.
She could depart from the guidelines, although that's unlikely, and give an all-probation sentence. A much more likely possibility is what's called a split sentence, possibly six months in prison, six months in house arrest. Or she could sentence to as much as maybe 24 months in prison.
Although, given judge Cedarbaum's reputation for relative leniency in sentencing, a sentence that severe seems really unlikely.
COOPER: And though we will hear the sentence this morning, it doesn't begin to be served out today. I mean, Martha Stewart is not going to be led away in handcuffs or anything today, is she?
TOOBIN: Again, that's almost -- an almost impossible, but not entirely. The overwhelming likelihood is that her bail will be extended pending her appeal. And this appeal, like many federal appeals, could take quite a number of months. And I suspect that if she -- if appeal proceeds normally, and if she loses, as I think is likely she'll lose, the appeal probably won't be over until early 2005. So she probably wouldn't go to prison until early next year.
COOPER: Martha Stewart's attorneys have submitted evidence about why the judge should be lenient. Deborah Feyerick was reporting she -- the judge has received hundreds of letters from friends and supporters for Martha Stewart asking for leniency. How persuasive are those arguments in this kind of sentencing?
TOOBIN: I think they are helpful, but I don't think they are extremely helpful.
The most interesting argument that I've heard lawyers have made is the one that says there will be so much collateral damage to her business if she goes to prison.
Interestingly, that's an argument that appeals courts have approved of here in New York, that there have been business people who have been spared prison because they are so indispensable to their business that people will be thrown out of work. And the judges have said that justifies what's called a downward departure from the guidelines.
I think that's probably not going to succeed here given how high- profile this is, given how it might be seen that she'd be given a special break because she's wealthy. But that is an argument that judges have accepted before.
COOPER: You know, Stewart has the opportunity to talk in front of the judge. Do you think she's going to take it? And if she does, does it matter or has the judge already made up her mind?
TOOBIN: You know, Anderson, I think that is such an interesting question. And I've been struggling back and forth.
I don't see how she can go to her sentence without saying something. I think some sort of general apology that does not acknowledge that she did what she is accused of doing, but expresses sorrow about the whole situation, that's probably likely.
But as regard to your other point, based on my experience with federal judges, 90-plus percent of the time they've already decided on the sentence. And barring some extremely unusual outburst or something, you know, completely unexpected happening, I think judge Cedarbaum has made up her mind. And what happens in court today is basically just a formality -- she knows what the sentence will be.
COOPER: All right. Well, Jeffrey will be in the courtroom -- Jeffrey Toobin. We'll check in with you later. Thanks, Jeff.
TOOBIN: 10:00 a.m. This morning.
COOPER: All right.
You'll want to stay with us for more about truth and deception.
Toure' will talk more about Martha Stewart when he poses the question of the day.
And in the final installment of our week-long series on lying, how to tell whether someone is lying to you. Interesting.
COLLINS: Yes, indeed.
Meanwhile, the fierce wildfires in Southern California are still forcing people to evacuate this morning. The fires burned about 25,000 acres just this week. Fast-moving flames are blazing through the Angeles National Forest now. That's north of L.A.
And about 2,000 firefighters are still battling this massive blaze near Lake Hughes. Thick smoke and heat are hindering those firefighters, though. More than 500 residents were evacuated.
Some encouraging news -- a wildfire close to San Bernardino National Forest is now 95 percent contained.
And firefighters gained some control over an explosive wildfire in Nevada. It incinerated a dozen homes and forced evacuations of hundreds of other people.
Well CNN's Ted Rowlands is live at the fire command center now, near Carson City, where the only highway to the city was actually closed last night, right, Ted?
TED ROWLANDS, CNN CORRESPONDENT: Right, Heidi. That highway has reopened. Late last night it was opened up.
Firefighters here were hoping for a major break in the weather. They did not get it. This fire in Carson City is still threatening approximately 1,000 homes and is still burning out of control.
(BEGIN VIDEOTAPE)
ROWLANDS (voice-over): The fire, which started early Wednesday morning, has now consumed more than 10,000 acres. At least 20 homes have burned.
People say as the flames approached, they took what they could and got out.
This woman lost her home.
NORMA JEAN BEST, FIRE VICTIM: I'm not mad. I'm very sad. But I don't know.
ROWLANDS: Hundreds of firefighters from around the region had been called in to help control the wind-driven blaze, but they say the weather conditions are making their job very difficult. SCOTT HUNTLY, FIRE INFORMATION OFFICE: The weather is very dry. The humidity is very low. So we're not getting any breaks in this fire. There are some breaks, though, because we did save a lot of homes last night.
ROWLANDS: A late afternoon wind shift forced the closure of highway 395, the main road into and through Carson City. Dozens of people forced out of their homes, some of them crying, sat with packed cars watching the flames move closer.
MATTHEW MURDOCK, EVACUEE: We got like a car load. We didn't really think that it was going to get that bad so we just took a few things. We probably could have taken a few more things now that we know.
DAVID BRUKETTA, EVACUEE: It's hard. It's emotional. You know, it's just my house, my life is back there. But, you know, I got my kids and my family and that's the important thing.
(END VIDEOTAPE)
ROWLANDS: There is some good news as you take a live look at this fire here this morning. After going over and taking an air look at this fire, they were able to reduce the amount of acreage down to 7,200 acres that have now been burned, they're estimating.
And when they went in to some of the burned out neighborhoods, they figured that instead of the 21 homes they thought they lost, they actually only lost 14. However, still a lot of work to go, which starts in earnest at daybreak when they will begin the air assaults here, once again, in Carson City.
As for a cause, they know it was caused by an individual or group of individuals. They are looking in to the possibility that a group of teenagers up in the hills may be responsible -- Heidi?
COLLINS: Wow. Those pictures behind you are unbelievable.
Ted, thanks so much for the update on that.
So want to know if the weather is going to provide any help today? Chad Myers is standing by at the CNN Center with the very latest. Not much moisture in the air, they're saying.
CHAD MYERS, CNN METEOROLOGIST: No, not at all. And it fact, it will actually hurt because there will be some wind today just like yesterday, gusting to 20 to 25 miles per hour.
(WEATHER BREAK)
MYERS: Back to you guys.
COOPER: All right, Chad. Thanks very much.
It is just about 12 minutes past the hour. Time for a look at some of the other day's top stories with Daryn Kagan in Atlanta. Hey, Daryn.
DARYN KAGAN, CNN ANCHOR: Anderson, good morning to you.
Let's begin in India where rescue crews are combing through the wreckage of a massive fire. The blaze raced through a girl's school in the southern Indian state of Tamil Nadu.
Officials say that at least 78 children have been killed, that the death toll is expected to rise. It's believed the flames were sparked by an electrical short in the kitchen of that school.
The U.S. embassy in Tokyo is confirming that former world chess champion Bobby Fischer has been detained. Fischer has been wanted since 1992 for breaking U.N. sanctions by playing a tournament in Yugoslavia.
Japanese officials say he was taken into custody Tuesday as he tried to leave for the Philippines, but a report says he'll be deported to the U.S.
And this story just in to CNN -- the terror network of Abu Musab Al-Zarqawi is claiming responsibility for the killing of a provincial governor in Iraq earlier this week. That is according to messages posted on three Islamic militant Web sites. The governor died in an ambush Wednesday as his convoy traveled near the city of Tikrit.
The U.S. Army is dropping its case against a soldier accused of cowardice. Sergeant Georg-Andreas Pogany drew attention after suffering a panic attack on his second day in Iraq.
The Army claimed the attack came after Pogany saw a bloody corpse, but a doctor last month diagnosed the soldier as suffering from damage to his balance system most likely caused by an anti- malaria drug.
Medicare is reclassifying obesity. The government insurance program has abandoned its longstanding policy that obesity is not a medical problem. That move allows millions of Americans to make medical claims for treatment such as stomach surgery and diet programs. It's not clear when that change will go into effect.
And from the world of sports saying, you know what, he really always wanted to be a Los Angeles Lakers. Kobe Bryant has signed a new seven-year contract with the team. It is worth over $136 million.
Bryant chose the Lakers over cross-town rivals L.A. Clippers. The Lakers offered him a longer deal and more money. Bryant's sexual assault trial begins in Colorado on August 27th.
Talk about two different futures. Seven years, $136 million or four years to life for a prison sentence if he is found guilty on those charges.
Heidi, back to you.
COLLINS: All right, Daryn. Thanks so much.
Well, as you may know, 110 days to go in the countdown to the November 2nd election. Hillary Clinton will speak at the Democratic convention after all.
All nine female Democrats in the Senate were initially left off the speakers' list. But yesterday Senator John Kerry called Senator Clinton and invited her to address the delegates. She has agreed to introduce her husband, former president Bill Clinton on opening night.
President Bush heads to the swing state of Florida, today. He'll be in Tampa appealing to conservative voters with an address on human trafficking and then to a rally in Beckley, West Virginia.
Vice President Cheney is still knocking down rumors that he'll drop off the Republican ticket. He is in Michigan and Iowa today.
And John Kerry will be in Washington speaking to the American Federation of Teachers. He's promising full funding for the No Child Left Behind Act. Later he'll hold a rally in Arlington, Virginia.
COOPER: And we are rallying right now for Toure' who is here...
COLLINS: Toure'! Toure'! Toure'!
COOPER: ... with the question of the day.
TOURE', "ROLLING STONE" MAGAZINE: It's going to be fun today.
The last time I was here on a Friday we asked for poems. And our audience is so smart and so great that they had great stuff. So we're going to do it again. It's Martha Stewart's day -- so poems for Martha Stewart. Let's start with mine.
Oh, Martha, American homemaking queen What marvelous theater these past months you've been. Promise me now the show will not end. It's on you that Kmart and Nobu depend. Hold your head, write your book. No matter what that judge says, people joke about the soap. You just watch out for your friends.
So that's bad.
COLLINS: I heard some rhyming issues there.
COOPER: Yes.
TOURE': We're starting on that note.
COLLINS: But pretty good.
TOURE': I didn't get much sleep last night.
COLLINS: Oh, you wrote it this morning?
TOURE': Yes.
COLLINS: OK.
TOURE': But we want to hear more from you. So, in the form of a poem, what do you have to say to Martha now on her day of getting sentenced?
E-mail us now at am@CNN.com.
COOPER: I like how you said this is her day, as if it's like her birthday or something.
TOURE': Well, it's a big...
COOPER: It's not a good day for her.
COLLINS: No.
TOURE': Well, it's a big day in her life.
COOPER: It is a big day, yes.
TOURE': I mean, you know...
COOPER: All right.
COLLINS: OK. We'll take that. All right, Toure'. Thanks so very much. Can't wait to read those.
COOPER: Yes.
COLLINS: All this week we have been telling "The Truth About Lying." Who lies, why and when? Well, today we're asking how you can spot a liar.
(BEGIN VIDEOTAPE)
COLLINS (voice-over): It seems so easy to spot a liar in the animated world. Pinocchio lies, his nose grows -- no strings attached.
But how do we mere mortals know if someone is lying to us?
DAVID LIEBERMAN, AUTHOR, "NEVER BE LIED TO AGAIN": The truth is, if you know what to listen for and what to look for, it can be uncannily obvious to you that the person is lying.
COLLINS: David Lieberman says if you don't want to be lied to, you must listen carefully to the words people use when they talk.
LIEBERMAN: Very often somebody who lies will leave out the pronoun. For example, somebody having lied about their car being stolen might say, the car was stolen or that car, instead of my car.
COLLINS: When people lie, he says they want to distance themselves from what they are talking about. BILL CLINTON, 42ND PRESIDENT OF THE UNITED STATES: I did not have sexual relations with that woman -- Ms. Lewinsky.
LIEBERMAN: You can see that there was a gap connecting him and Monica Lewinsky. Clearly, he felt the degree of guilt in lying and wanted to distance himself unconsciously from that message.
COLLINS: If seeing is believing, Patty Wood, a corporate communications trainer, says just concentrate on the person's face.
PATTY WOOD, CORPORATE COMMUNICATIONS TRAINER: One of the indications that somebody may be lying would be that before they speak they go (gesture). And symbolically you can see that they are withholding the truth.
They know the truth, but they are keeping it in by going (gesture). And that's called lip sucking.
COLLINS: Other body clues may be more subtle.
WOOD: If I'm in a performance appraisal with you and you're asking me whether I've been honest on all my forms that I'm filling out, and I go, "Oh, yes, I've always filled those out accurately," and I rub my eye; well, that could be an indication that what I've said is a lie because the situation doesn't look right to me.
COLLINS: But can't some people hide behind a poker face? Lou Kriegar wrote "Poker for Dummies." He thinks it's easy to call people on that as well.
LOU KRIEGAR, CO-AUTHOR "POKER FOR DUMMIES": We all give off cues about what we are thinking and feeling and about to do. Sometimes if you have a big hand, you can't control it and your vein in your neck pulses.
People who bet and their hands are trembling when they reach for their chips, that's usually a sign they have a very strong hand.
COLLINS: While no one method of detection is 100 percent accurate, Lieberman says being aware of the clues may help you become a better human lie detector.
LIEBERMAN: And if you pay attention to it, it can be glaringly obvious.
(END VIDEOTAPE)
COLLINS: So, here's an ethical challenge now:
Suppose you are a doctor and your patient needs a treatment that their HMO won't pay for. Would you lie to the insurance company to help your patient?
Log on to our Web site cnn.com/am and take our ethics test. Answer that and several other challenging questions, and then see how everyone else responded. COOPER: And still to come this morning, Andy Serwer is "Minding Your Business." He's going to tell us why hindsight is always 20/20. Even for Martha Stewart, there is one way she could have avoided all this trouble and been richer to boot, apparently.
COLLINS: Also ahead, cowardice or just a nervous breakdown. There's a big development involving the first soldier charged with cowardice since Vietnam.
COOPER: And have you heard the rumor about Vice President Cheney? We're going to look at why political rumors die hard, even when there is absolutely no evidence to back them up -- ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
COLLINS: Martha could have made a mint and stayed out of trouble had she held on tight. Andy Serwer is "Minding Your Business" now on that.
Yes.
ANDY SERWER, "FORTUNE" MAGAZINE: Yes. You know, why did she do this? I mean, there's just -- when you start running the numbers here, Heidi, it's just ridiculous.
Let's take a look at the stock sale. This, of course, is all about selling ImClone stock, panicking when the FDA was about to not approve Erbitux, the drug.
So she sold that stock back in late 2001 at $58, reaping a gain of $228,000. Now, of course, ImClone stock has taken off because the drug has been approved. The stock is now at $80. She could have sold for $315. She would have made $87,000 more.
But that, of course is chump change. That's peanuts. The real thing is her stock in her own company, Martha Stewart Omnimedia has gone way down. Basically, going from $20 to $10. She had about $600 million of stock at $20, and now at $10 she's got $300 million.
So, she lost $300 million, plus jail time, plus the reputation. I mean, it's crazy.
Also, at savemartha.com, that Web site where people are trying to help her out, there is a petition to the president of the United States, "Dear Mr. President, a terrible injustice has been done to Martha Stewart," and on and on and on. But, it's just...
COLLINS: You are not going to read the whole thing?
SERWER: No, I'm not because its pages. So, you know, it's pretty funny to look at that.
Let's look at the market though quickly, Heidi. Yesterday, summer doldrums have clearly set in here. Dow down 45 points. NASDAQ following suit. Weakness in Nokia and Citigroup. Futures are up this morning. But that's what happened yesterday and look what the market ended up doing.
COLLINS: Exactly.
SERWER: So, no promises.
COLLINS: Well, that's great. Thanks a lot, Andy.
SERWER: You're welcome for that uplifting report.
COOPER: Yes, really.
Well, there's a lot of talk about the diet company that dropped a high-profile spokeswoman after she criticized President Bush.
"The Daily Show's" Jon Stewart had something to say about John Kerry's Democratic fund-raiser where Whoopi Goldberg made her remarks and had a little fun with yours truly too.
(BEGIN VIDEO CLIP)
JON STEWART, COMEDY CENTRAL'S "THE DAILY SHOW WITH JON STEWART": As for Republicans, they are shocked at what they consider the negative tone of the entire Democratic fund-raiser from Whoopi Goldberg to the musical performance by Chinky McJewington and the Wop- ettes.
(LAUGHTER)
STEWART: The whole thing was a mess.
(LAUGHTER)
STEWART: And Kerry just stood there laughing -- laughing -- at Chinky McJewington and, of course, his Wop-ettes.
So there you have it, Whoopi Goldberg fired by Slim Fast -- Anderson?
COOPER (ON CNN CLIP): We're going to cover this a lot tonight.
(LAUGHTER)
STEWART: Now in fairness.
(CHEERING)
STEWART: In fairness in Mr. Cooper, he does have 360 degrees to fill.
(END VIDEO CLIP)
SERWER: Now, were you talking about that? Were you referring to that?
COOPER: I was. I was. We covered it.
COLLINS: They were going to talk a lot.
SERWER: OK.
COOPER: It's true. Not a lot, but anyway.
SERWER: A little bit. Some.
COOPER: More to come -- let's get your weekend started early with some "90-Second Pop."
COLLINS: HBO wants a new hit show. Will it get good vibrations from Mark Wahlberg's new project?
Plus, come on, get happy. You could be the star of the new "Partridge Family."
"90-Second Pop" is ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
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