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American Morning

Martha Stewart Sentencing; 'The Truth About Lying'; Edwards' Role

Aired July 16, 2004 - 8:59   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: The time has come for Martha Stewart on her way to a federal court. Will she be heading to prison? You're looking at a live shot outside the courthouse.
Senator John Edwards says it's been an easy transition to running mate in his first interview with CNN since joining the Democratic ticket.

And a terrifying ordeal for people living in the fire zone. Raging wildfires now threatening hundreds of homes 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 good morning, to you. I'm Anderson Cooper. Bill is on vacation this week, Soledad is resting in the final weeks of her pregnancy. Thanks for joining us.

HEIDI COLLINS, CNN ANCHOR: And I'm Heidi Collins. You're looking at a live picture now of the federal courthouse here in New York. Martha Stewart's sentencing is coming up this morning. It's scheduled for just about an hour from now. She is expected to arrive any minute, so we will be keeping our eye on this shot and let you know when she gets there.

COOPER: We will, of course, bring that to you live. Deborah Feyerick is standing by with more on what will be happening this morning. We'll also hear from Jeffrey Toobin in a few minutes about the legal options and what we are likely to see and hear this morning. Jack Cafferty, of course, is off today, but Toure will have the e-mail "Question of the Day" all about Martha Stewart in just a few minutes.

COLLINS: That's right. And more poems.

COOPER: And more poems. That's right.

COLLINS: Yes.

COOPER: Well, let's talk about Martha Stewart for a moment. She is going to appear in federal court really in just a few moments, where she'll learn if she's going to prison and, if so, for how long. Deborah Feyerick is covering the sentencing at the New York federal courthouse.

Deborah, what is the latest? DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Anderson, we are told that she should be arriving within the next 10 to 15 minutes. She is hoping that her lawyers can keep her out of prison while they appeal this conviction.

(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, DEFENDANT: 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.

JOSEPH BONDY, CRIMINAL DEFENSE ATTORNEY: Martha could do five months in jail and then have to do five months home confinement. But she can't escape jail unless there is some form of reduction from the guidelines.

FEYERICK: The judge has received hundreds of letters on Stewart's behalf. Other factors the judge will 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.

HERB HOELTER, CENTER INSTITUTIONS & ALTERNATIVES: There's been enough punishment already. I mean, the caricatures and the -- 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.

BRAD SIMON, CRIMINAL DEFENSE ATTORNEY: 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 for 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, if the judge decides that Martha Stewart should begin serving her prison term, she would have between 60 to 90 days to surrender to a prison facility. There is one near her home in Connecticut, but the Bureau of Prisons not saying whether that's where she would do her time -- Anderson.

COOPER: Deborah Feyerick standing by. And as we said, we are anticipating any moment now Martha Stewart appearing in court. We will bring that to you live.

Some legal experts think that Martha Stewart will serve her time in a minimum security facility, perhaps Danbury, Connecticut. And in comparison to what she was making at her company, an average of $673 an hour, behind bars, she would be required to work 40 hours a week at a maximum of only 40 cents an hour. But, of course, there are many different forms of sentencing she could receive today.

CNN's senior legal analyst Jeffrey Toobin will be in the courtroom when Martha Stewart is sentenced in just about an hour. He joins us now from outside the federal courthouse in New York.

Jeffrey, good morning.

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Good morning, Anderson.

I've already been inside the courtroom. It's up on the third floor. It's almost full already. There are a couple of rows left for Martha Stewart's family, for the prosecutors and their team to roll in, but the line here at 7:00 a.m. had about 50 people on it, and it's just about full in the courtroom already.

COOPER: What are you anticipating seeing and hearing today in the courtroom?

TOOBIN: Almost -- this will almost certainly be mostly the defense's show. Federal prosecutors at sentencing rarely say much. Robert Morvillo, her primary lawyer, will argue for a -- what's called a downward departure from the federal guidelines. He will argue that the sentencing guidelines should not be 10 to 16 months, as we expect that they are, but something lesser, so that probation is an appropriate sentence.

He may argue that her conduct was not as severe as the probation department thought. He will argue in an interesting argument that the penalty to Martha Stewart's business, that the employees will suffer so much, that that justifies keeping her out of prison. And he will argue that, if there is to be some sort of sentence imposed, it should be community service, working for the Women's Venture Fund, not prison.

COOPER: Well, Jeff, how likely are they to be successful in those arguments? I mean, they already tried to get the sentencing guidelines declared unconstitutional and they lost that fight.

TOOBIN: I think it's all a long shot. I think the best thing they can hope for is a relatively short sentence, perhaps what is known as a split sentence, where you could get, say, six months of -- of prison, six months of home detention. The sentencing guidelines, yes, they're called guidelines, but they are closer to laws. And they're very hard for lawyers to get out of, at least the way the rules are currently configured.

COOPER: And the likelihood that Martha Stewart will speak on her own behalf today this morning?

TOOBIN: Boy, I've been struggling about that. I don't know.

She has to walk a tightrope if she -- if she speaks in court. She has insisted on her innocence from day one and continues to insist on her innocence. So she doesn't want to provoke the judge by saying this was all a travesty, but she doesn't want to concede something that might hurt -- hurt her on appeal. So I would expect if she says something, it will be a general expression of sorrow that this whole situation came about, but I doubt she will admit any culpability.

COOPER: As we said, we are standing by, anticipating Martha Stewart to arrive really any moment now. Jeffrey Toobin, if you'll continue to stand by with us as long as you can -- I know you have to make your way back into the courtroom at some point, but stand by.

TOOBIN: I don't want to lose my seat.

COOPER: I know you don't. Jeff will be in the courtroom when the hearing actually begins at around 10:00, but as we said, as you see from this live picture, we are anticipating Martha Stewart, her attorneys, to arrive any moment. We will bring that to you live.

And Jeff, stand by as long as you can -- Heidi.

COLLINS: All this week, we've been telling you "The Truth About Lying," who lies, why and when. Today, we're asking how. How can you 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're talking about.

WILLIAM JEFFERSON CLINTON, FMR. PRESIDENT OF THE UNITED STATES: I did not have sexual relations with that woman, Ms. Lewinsky.

LIEBERMAN: We could see that there was a gap connecting him and Monica Lewinsky. Clearly, he felt the degree of guilt in lying and wanted to distance is himself unconsciously from that message.

COLLINS: If seeing is believing, Patty Woods (ph), a corporate communications trainer, says just concentrate on the person's face.

UNIDENTIFIED FEMALE: One of the indications that somebody may be lying would be that before they speak, they go -- and symbolically, you can see that they're withholding the truth. They know the truth, but they're keeping it in by going "mm." And it's called lip sucking.

COLLINS: Other body clues may be more subtle.

UNIDENTIFIED FEMALE: If I'm in a performance appraisal with you and you're asking me whether I've been honest on all of 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 Krieger wrote "Poker for Dummies." He thinks it's easy to call people on that as well.

LOU KRIEGER, CO-AUTHOR, "POKER FOR DUMMIES": We all give off cues about what we're thinking and feeling and about to do. Sometimes if you have a big hand, you can't control it and your -- 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 human lie detector.

LIEBERMAN: And if you pay attention to it, it can be glaringly obvious.

(END VIDEOTAPE)

COLLINS: All right. We want to take this moment now to take you back live outside of the courthouse in New York here. Our Deborah Feyerick is standing by. We're waiting for Martha Stewart to arrive at the courthouse. As you know, her sentencing phase will happen today with Judge Miriam Cedarbaum.

Deb, tell us a little bit about what you're seeing out there. We expect her to be there any moment, correct?

FEYERICK: We do. As a matter of fact, we're getting the heads up that she's really just a couple of blocks away from here.

To explain the scene here, there are probably about 30 to 40 cameras here. That's not including still photographers, dozens and dozens of journalists. Clearly, the focus on this story enormous. All major networks leading with this, this morning.

I spoke to one legal person, and they said, you know, there is a irony here. They said if this were state court, if this was somebody who had been convicted of a first-time drug offense or a first-time burglary offense, they would likely just get probation, but because this is Martha Stewart, she will likely have to do prison time. That's what the federal guidelines mandate, and so that is what is most likely going to happen.

Right now, though, we are waiting for her. We understand that she is on her way. Everybody just in anticipation -- Heidi.

COLLINS: And Deb, obviously, there has been quite a bit of speculation about doing community service in order to avoid that jail time. Any thoughts on that?

FEYERICK: Well, you know, it's very interesting, because she hired a sentencing consultant, a man who has done a lot of work for Robert Morvillo, her lawyer's firm. The sentencing consultant came with basically what amounts to an option.

He says, look, we're going to approach several nonprofit organizations. As a matter of fact, we are told they approached about 10 different nonprofit organizations to see which would be the perfect match for Martha Stewart.

They did find one. It's called the Woman's -- the Women's Venture Fund. It is a group that helps low income and poor women try to help develop their own businesses. And the consultant says this will be an ideal fit for Martha.

He said what is to be gained by sentencing her to prison, where she'll wash dishes or be sort of, you know, kept doing nothing very constructive at all? Why not put her with women who she could truly help? The consultant says this is something she does all of the time, this is something that she has done throughout the course of her life, that is help other women, so why not do it in this kind of capacity? Do community service, not incarceration -- Heidi.

COLLINS: All right. Deb, thanks so much. I think Anderson has a question for you.

COOPER: Yes. Also, Deborah, what we're looking for this morning, I mean, when Martha Stewart shows up to court, and this court proceeding, which will begin around 10:00, we're not actually expecting to see Martha Stewart going to prison today if that is, indeed, what she is sentenced to. That would likely not happen for -- for sometime, correct?

FEYERICK: Well, that's exactly right. Two things could happen. First of all, her lawyer will likely argue that she should be free pending the appeal.

The judge could say, OK, let's take that tact, and that means that Martha Stewart could be out, waiting until the legal process is finished. Also, however, though, if the judge says, no, I'm sorry, but you really do need to start serving your sentence, then that means that Martha Stewart has between 60 and 90 days before she needs to surrender herself to any sort of prison facility. So that is another option, but the judge may just say, let's wait and see what happens through the court.

COOPER: And Deborah, as we're seeing now a vehicle pull up, let's watch as Martha Stewart makes her way into the court.

FEYERICK: (UNINTELLIGIBLE) son-in-law. The gentleman behind her, there to -- what looks -- the gentleman directly behind her, that is her son-in-law escorting her into court. He was there through the course of the entire legal proceeding.

She's also accompanied there by her bodyguard. And I do believe that that is her daughter in the light blue dress, Alexis Stewart. There were high hopes that perhaps Alexis Stewart might step in to take over her mother's empire. There has been no sort of word whether, in fact, that is the plan to save the company -- Anderson.

COOPER: There had also been a lot of talk about whether Martha Stewart will say anything in the courtroom today in her own defense. That, of course, still an open question. The proceedings begin in about 45 minutes from now.

It could go either way. I mean, we were talking with Jeff Toobin just a sort time ago. He's really not sure whether or not she will say anything. I mean, she has to sort of walk a fine line. She can't admit to guilt or culpability to anything, and yet she has to seem to at least seem remorseful about all of the trouble that this has caused.

FEYERICK: That's exactly right. And every word she says, if she does decide to say something to the judge, must be very carefully measured, because even some sort of apology might be construed as an admission. And that would clearly hurt her method of appeal.

So therefore, you know, she's going to have to be very careful, tread a very delicate line if, in fact, she does decide to address the court. She did decide during the trial not to testify. Really, the only thing that we've heard her say publicly in the court is "not guilty" when she was read the charges against her.

COOPER: All right. Deborah Feyerick standing by at the court. And just moments ago, we saw Martha Stewart bringing into the courtroom. Andy Serwer standing by here, along with Heidi Collins.

Andy, as you watch this, what goes through your mind?

ANDY SERWER, EDITOR-AT-LARGE, FORTUNE MAGAZINE: Well, it's just -- it's a remarkable day. I mean, here is a person who is at the very pinnacle of power in this country not only as a businesswoman, but as a celebrity. She was arguably one of the most powerful businesswomen in the United States, along with, say, an Oprah Winfrey and a Carly Fiorina, the head of Hewlett Packard.

And here she is facing judgment day. She was also on the board of the New York Stock Exchange. Again, an extremely prestigious position. And, Anderson, you know, if you knew this person, she's reserved and kind of a quiet person, but had an incredibly powerful persona. And to see her in this position today, Heidi, is really remarkable.

COLLINS: Yes, interesting, too. Obviously, her TV show on hiatus. The magazine, "Martha Stewart Living," I've read that they're going to slowly sort of move her name down lower, smaller, less obvious on the magazine itself.

Also talking with Jeffrey Toobin about the sentence. And, you know, how much damage that company is going to suffer if she is sent to prison and after, you know, the damage that it's already suffered, will hurt a lot of people, the people that work at that company.

SERWER: Right. I mean, it remains to be seen. I mean, it's a day of comeuppance for her. But she hasn't been contrite.

She has not acknowledged her guilt. She said she's sorry that it's happened. And, you know, I think the next step after this punishment phase, after we find out what her sentence is, is, you know, this rehabilitation phase.

I mean, I'm really spinning things forward, but when you talk about her business, her empire, her company, you know, where does she go from here? Can she carry on after this?

I have a feeling that she's going to find a way to do it. But it's going to take a while, and we have to obviously get through today's events and the days that follow.

COOPER: Yes. Anyone who knows Martha Stewart will say, look, do not count this woman out.

SERWER: No.

COLLINS: No.

COOPER: You know, she's been counted out before in her life and she has always come back very strong.

Also, later today, Peter Bacanovic, the former broker for Merrill Lynch who was involved with Martha Stewart in all of this, he, too, will be sentenced. And he's sort of lost in -- I mean, everyone's sort of paying attention to Martha Stewart, but his sentencing happens today as well.

SERWER: Yes, I think that's right. And, I mean, in a way, he becomes sort of a footnote to this entire episode, this saga. But obviously, it's judgment day for him as well.

COLLINS: We just mentioned a little while ago -- at least Deb Feyerick -- as we watch here as her daughter Alexis comes in behind her going into the courthouse -- there you see her. What are your thoughts on whether or not she might try to take over the company? SERWER: Well, you know, it's a difficult situation, because Martha Stewart owns -- has a controlling vote of the company. But, still, it's a public company. You can't just insert someone in without the board approving, without other shareholders signing off on this.

Is she qualified? I mean, probably. She's someone who lives, you know, very closely with her mother and all of her mother's projects and business. But there has been no indication that she will step in directly.

COOPER: And she said on "LARRY KING" -- she said to Larry King that she really wasn't interested in doing that.

SERWER: Right.

COLLINS: Right.

COOPER: She's interested in the environment and other -- other areas of life.

SERWER: Yes. And who would want to be in that spotlight right now?

COLLINS: Yes, probably not.

SERWER: Difficult.

COLLINS: All right. Andy, thanks so much for that.

SERWER: You're welcome.

COLLINS: Want to go ahead and get to some of the other news now, just about 17 minutes mast past the hour. Daryn Kagan is standing by for that.

Hi, Daryn.

DARYN KAGAN, CNN ANCHOR: Heidi, I'm going to start in southern India, where rescue crews are searching for the missing after a massive fire involving children. At least 78 people, most of them believed to be kids, are believed to be dead. An official says that some 900 students were attending the school when the blaze broke out. It's believed the flames were sparked by an electrical short in the kitchen.

A claim of responsibility now for an assassination in Iraq. Messages posted on some Islamic militants Web sites say the terror network of Abu Musab al-Zarqawi is responsible for the killing of a provincial governor earlier this week. The governor died in an ambush Wednesday as his convoy traveled near the city of Tikrit.

The U.S. Army says it's dropping its case against a soldier accused of cowardice. Sergeant George Andreas Pagani (ph) was said to have suffered a panic attack after seeing a bloody Iraqi corpse. But a doctor last month diagnosed the soldier as suffering from damage to his balance system, which was most likely caused by an anti-malaria drug.

Here in the U.S., Medicare is redefining obesity as a medical problem. The policy change would allow 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 finally, building inspectors and insurance agents still have a lot of work to do in Campbelltown, Pennsylvania, part of the community west of Harrisburg, for the brunt of a powerful tornado that roared through that region on Wednesday. Twenty-four people were injured in what officials are calling the state's worst twister in six years.

Nearly 120 homes were either damaged or destroyed. And Chad, of course, in just a bit will have a lot more on the weather.

Back to you.

COOPER: All right, Daryn. Thanks for that.

As for John Edwards, he'll be in California later today, the end of his first week of solo campaigning. Last night, CNN's Kelly Wallace caught up with the vice presidential candidate for his first interview with CNN since being named to the Democratic ticket for CNN.

(BEGIN VIDEOTAPE)

KELLY WALLACE, CNN NATIONAL CORRESPONDENT (voice-over): In Houston last night, John Edwards told us he sees his main role helping voters get to know his boss.

SEN. JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: I think part of my responsibility is to make sure they know both John Kerry better and me. They need to know us both. And getting out the message of his own personal history, my own personal history.

WALLACE (on camera): Is it an adjustment, though? I mean, just a few moments ago, you were John Edwards, presidential candidate. It was all about Edwards all the time.

EDWARDS: Of course it's an adjustment, but this has been a very easy transition. To be perfectly blunt about it, John and Teresa and their family made it so easy for us.

WALLACE (voice-over): Edwards and Kerry both voted for the Iraqi war resolution. And so I asked Edwards, knowing what he knows now about questionable prewar intelligence, if he regrets his vote.

EDWARDS: I believe that the president should have been given the authority that he was given. I also believe it's a very good thing that Saddam is gone. I think it's good for America and good for that region of the world.

WALLACE (on camera): So you don't regret your vote then?

EDWARDS: I think at the time it was the right thing to do to give the president that authority. But can I just add one thing? I know it's the most natural question for journalists to ask, and it's a fair question, fair question. And I take full...

WALLACE: Because some voters might say that their views have changed after all the reports.

EDWARDS: Of course they might, but let me...

WALLACE: So don't they have a right to know what your -- if your views have changed?

EDWARDS: Let me say very clearly, I take responsibility, complete responsibility for my vote. Not anybody else. It's a John Edwards vote. I fully accept responsibility for it. I took it very seriously, and I still take it very seriously.

I do think, though, that it's important for the people who are watching this interview and all of our discussion about these issues to also look at the future. I mean, it's a natural thing to look back, but what are we going to do? Because people (UNINTELLIGIBLE) want to know, what is President Bush going to do, how is it different from what we'll do? And John Kerry has a real plan to deal with Iraq.

WALLACE (voice-over): On the subject of Dick Cheney, does he think he has overstepped his authority as vice president?

EDWARDS: It's clear that he's had an enormous influence on what's happened. And, you know, it's for the president to determine whether that influence is appropriate or not.

I will say this, I think that in the case of John Kerry and John Edwards, we will have a strong partnership, a vibrant partnership. But at the end of the day, John Kerry will be president and he'll make the final decision.

WALLACE (on camera): Do you hope he remains on the ticket?

EDWARDS: Oh, I don't have -- that's entirely for the president to decide.

WALLACE (voice-over): Asked if his family is ready for the attention that comes with a general election campaign...

EDWARDS: What's hard to judge are my young kids, you know? Emma Claire is six, Jack is four. This is kind of overwhelming for them. Jack has a natural tendency to want the cameras to focus on him to get attention.

WALLACE (on camera): He seems very comfortable in that spotlight.

EDWARDS: He's very, very easy and doesn't mind standing on the stage in front of 10,000 people. Emma is a little shyer. I mean, I think in her case, it's a little bit overwhelming. But I think -- you know, with god's help, I think they'll be OK. WALLACE (voice-over): He said wife, Elizabeth, and daughter, Cate, a recent college graduate, will be seen frequently on the campaign trail. But for now, he's flying solo, wrapping up a cross- country blitz in his new role.

Kelly Wallace, CNN, Houston.

(END VIDEOTAPE)

COOPER: Candidate's children have been absent from the campaign trail for the past several election cycles, but this one will be full of kids, with Barbara and Jenna Bush, although hardly kids, Elizabeth and Mary Cheney, and Alex and Vanessa Kerry, all stumping for their favorite candidates.

Still to come this morning, iPods, a must have toy for a lot of people, but they've really faced little competition, until now, that is. Andy Serwer is "Minding Your Business."

COLLINS: Plus, we'll go back to the courthouse live for Martha Stewart's sentencing. Stewart arrived at court just a few moments ago, as you see there. She is now inside. We'll have the latest.

(COMMERCIAL BREAK)

COOPER: Medicare is changing one of its policies. It now considers obesity an illness. Now, this may allow millions of overweight Americans to submit medical claims for treatments like stomach stapling surgery. Medical correspondent Elizabeth Cohen is filling in for Dr. Sanjay Gupta. She is in Washington with details.

Good morning, Elizabeth.

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Anderson, good morning.

This would represent a sea change if this goes through. What the federal government did is that, up until this point, they've said obesity is not a disease and we're not going to pay for the treatment that people need to lose weight. But now they've decided to take away some of that language. They haven't said that they will pay for these treatments, but they're at least paving the way. As I said, this would be a complete change from where they've gone in the past because, of course, if you start to treat obesity, that leads you down the road to pay for many, many treatments -- Anderson.

COOPER: Doesn't this open up the U.S. government, though, to billions of dollars in claims?

COHEN: Absolutely. I mean, it almost seems like it would be endless. Because, first, you would have many different treatments that you would have to pay for.

If you say, I'm going to pay for treatments for obesity, then you're opening yourself up to paying for surgery, to paying for weight loss programs, to paying for drugs. The list goes on and on. Nutritional counseling -- it goes on and on. And what's interesting is that often, when Medicare, when the federal government decides that they're going to pay for treatments for their recipients, for the people who take -- who get Medicare, which, of course, are the elderly, private health insurers often follow suit.

So they'll then be under the gun. Do they start paying for these treatments? After all, two-thirds of Americans are obese; many of them need these treatments. You start paying for them, it's a lot of money.

COOPER: So as you look forward, who is likely to -- to be the critics of this policy and who is likely to support it?

COHEN: The critics of this policy are going to be health insurance companies. They're going to say, hey, you know, what -- how do you decide when to start paying, when someone is 10 pounds overweight, 20 pounds, 40 pounds, 50 pounds? What if they lose weight and then they gain it back? Do you start paying for it again?

There are very few limits here. It's hard to know. And what drugs do you pay for and what drugs don't you pay for. And do you pay for Weight Watchers and Jenny Craig. There are a lot of gray areas here, which could mean a lot of money being spent.

COOPER: Yes. A lot of questions, I guess, still to be answered and figured out. Elizabeth Cohen, thanks -- Heidi.

COHEN: Thanks.

COLLINS: Still to come this morning, more on the Martha Stewart sentencing. She arrived for the hearing just moments ago. We'll go back to the federal courthouse live for the very latest on that.

Stay with us on AMERICAN MORNING.

(COMMERCIAL BREAK)

COOPER: And the opening bell has just rung on Wall Street. The Dow Jones industrial average starts today's session at 10,163. That's down more than 45 points yesterday. At the Nasdaq market site, the Composite Index opens at 1,912, down two points from yesterday. And obviously, a lot of attention being focused on Martha Stewart this morning.

COLLINS: That's for sure. Welcome back, everybody. It is just about half past the hour now on this AMERICAN MORNING.

I'm Heidi Collins. Bill Hemmer is on vacation and Soledad is resting in the last few weeks of her pregnancy.

COOPER: And good morning. I'm Anderson Cooper. Thanks for joining us this morning.

Sentencing for Martha Stewart begins in just about half an hour. She arrived at a federal court, as you see here, just a few minutes ago. We are covering that live, of course.

Stewart was convicted of conspiracy, obstruction of justice and lying to federal investigators about her sale of ImClone stock. Deborah Feyerick, of course, is live at the New York federal courthouse as she has been all morning -- Deborah.

FEYERICK: Well, Anderson, her daughter was with her, her daughter, Alexis. Also, her son-in-law, a lawyer who helped her throughout this entire court proceeding. And she linked her arm within his as she climbed up the stairs to the federal court.

She's just half an hour away from finding just out how she will spending the next couple of months. We do know that she has written a letter to the judge -- she's entitled to do that -- citing the reasons why she should get a lighter sentence. Martha Stewart hoping, of course, hoping to avoid prison time and instead serve her sentence at a Women's Venture Fund, a community group that helps women develop their own businesses.

Now, hundreds of friends and fans have written letters to the judge trying to persuade the judge that Martha Stewart is a good person, that she has done a lot to help other people, and that her effect on the community at large has been a good one. She does have the option of addressing the court, but every word will have to be measured very, very carefully, because she is planning to appeal. And so anything that she says, even some sort of an apology, could be construed as an admission. So each word has to be weighed carefully.

Now, one of her lawyers will be citing grounds for their intended appeal, but the paperwork on that does not have to be filed within the next 10 days. If the judge says that Martha Stewart must begin serving her prison term, then Stewart will have between 60 to 90 days before she surrenders to a federal prison. That facility to be determined -- Anderson.

COOPER: OK. Deborah Feyerick standing by for that. Thanks very much. And that court proceeding will begin around 10:00, in just about half an hour -- Heidi.

COLLINS: While awaiting her sentence, Martha Stewart has maintained a public profile. And could that possibly be a factor in the judge's decision? Attorney Lanny Davis is Martha Stewart's former media adviser. Earlier on AMERICAN MORNING, I spoke with Davis, asking why he believes Martha has been so public in the days since her conviction.

(BEGIN VIDEOTAPE)

LANNY DAVIS, STEWART'S FMR. MEDIA ADVISER: She's being Martha Stewart. She is probably one of the most effective communicators alive today with a public following that is very significant.

She's also, in my personal experience, with her, one of the most authentic and charming people when she is herself. And she is looking to life after incarceration, which I hope will be brief. And I hope that the judge on the merits will regard this situation as unique. COLLINS: But Mr. Davis, do you think that that visibility could actually become a liability in terms of her sentencing?

DAVIS: No. I think is this a very esteemed judge who will view this purely on the merits and will not hold it against Martha for being herself and for not thinking her life is over if she is incarcerated.

The judge has criteria to look at, and among the criteria is exactly what happened at the trial. I think this is a prosecution that never should have been brought. Remember, she was convicted of lying about a crime that the government chose not to charge her with, which is amazing...

COLLINS: But again, in terms of the sentencing, isn't it true that when a judge sentences in a case like this, remorse is part of what he or she, in this case, she would look at?

DAVIS: Well, I think remorse is one issue, but that's why the exact crime that she was convicted of, we have to ask why was she prosecuted in the first place when the government chose not to charge her with the underlying crime, but only with the denial that she made publicly. That's a part of why the remorse issue may be unique here.

But at the end of the day, this is a very, very good judge. She will not blame Martha Stewart for being Martha Stewart. What has made her successful is her willingness to be herself. And rightly or wrongly, Martha Stewart, in my experience with her, is very charming, is very authentic, and she is out there telling everybody that there will be life and a success story after she returns from incarceration.

(END VIDEOTAPE)

COLLINS: As we've reported, Martha Stewart is inside the federal courthouse right now. CNN will bring you the results of her sentencing just as soon as we know.

Meanwhile, an army of firefighters battling to control a sweeping wildfire in Nevada. Five people hurt, hundreds more evacuated. The wildfires move so swiftly, anybody near the flames could find themselves in extreme danger in a matter of seconds. A news crew from KRNV found themselves inside a firestorm.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Go, go! I want you to go that way. You're doing good.

UNIDENTIFIED FEMALE: If I hit a tree, am I in trouble?

UNIDENTIFIED MALE: No. Just go. That a girl. You got it. Go.

UNIDENTIFIED FEMALE: Jeff (ph)?

UNIDENTIFIED MALE: It's all right.

UNIDENTIFIED FEMALE: Jeff?

UNIDENTIFIED MALE: It's all right. You're doing good.

UNIDENTIFIED FEMALE: Jeff (ph)?

UNIDENTIFIED MALE: You're doing good. See? Good job. Good job. Keep going. You're doing fine.

(END VIDEOTAPE)

COLLINS: A devastating fire has so far destroyed 21 structures, is now threatening 550 other homes and businesses on the edge of Nevada's capital city.

COOPER: Unbelievable how quickly it just comes up. I've never been in something like that.

COLLINS: Yes.

COOPER: Remarkable.

COLLINS: Me either, no.

COOPER: Let's hope it doesn't -- let's hope we're not.

COLLINS: Let's hope we're not. We'll state right here.

COOPER: Still to come, the latest from a federal courthouse as Martha Stewart gets ready to hear from a judge in about 20 minutes what her sentencing will be.

COLLINS: Also ahead, we'll tell you about a boy who turned a fight against cancer into fun and games. "Extra Effort" ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

COOPER: So many truly important things to talk about in "90- Second Pop" on this Friday.

Joining us this morning, Sarah Bernard from "New York" magazine, Josh Elliott of "Sports Illustrated," and Jessica Shaw from "Entertainment Weekly." Let's get right to it.

Jessica, you have seen, I think, the first episode of the new Mark Wahlberg HBO show, "Entourage."

JESSICA SHAW, "ENTERTAINMENT WEEKLY": Yes.

COOPER: Can it fill the (UNINTELLIGIBLE) of "Sex and the City?"

SHAW: Well, I don't know about that, but it is really, really good. Mark Wahlberg is not in it. He has like a little tiny cameo.

COOPER: He's like the executive producer.

SHAW: He is the producer and the creator. But it's about this child star and his hangers-on in Hollywood.

JOSH ELLIOTT, "SPORTS ILLUSTRATED": This is a guy's "Sex and the City." I had a conversation with some male friends of mine. It's a great idea. This is a wonderful idea. This could absolutely be a guy "Sex and the City."

COOPER: Well, it's sort of based on what happened Wahlberg. Apparently a lot of his friends sort of came with him from the old neighborhood.

SHAW: Yes.

SARAH BERNARD, "NEW YORK" MAGAZINE: I think it's kind of amazing that they're going to try this again, because remember that show "Action" with Jay Mohr, which was really, I thought, great?

SHAW: Yes.

BERNARD: But really inside Hollywood and people were sort of thinking there was not going to be an audience for that thing. But then, obviously, since Mark Wahlberg was behind it, they are going to give it another shot.

SHAW: I think this show is so much better than that one.

BERNARD: It's funnier.

SHAW: And (UNINTELLIGIBLE) if you used a bad word.

ELLIOTT: Exactly.

COOPER: And there's only going to be eight episodes?

SHAW: Yes.

COOPER: OK. So a very limited run.

SHAW: Well, you know, it's very clever.

COOPER: Who knows? Who knows? "Entourage" 2 and 3. Right.

SHAW: You know, there's a lot of, like, pool parties and there's a lot of drama with women and there's also...

COOPER: That's what you all do out in L.A., those pool parties.

SHAW: Oh, yes.

BERNARD: There is one scene, isn't there, where this is what your entourage does. They play golf on the roof of his mansion.

COOPER: There you go.

BERNARD: And they try to hit -- instead of holes, they try to hit Pierce Brosnan's house.

COOPER: That's what happens over Hemmer's house every day.

BERNARD: Yes, they keep pelting on his roof.

COOPER: Let's move on. VH-1 -- I couldn't believe this -- is holding auditions for a new Partridge family across the country. Do we need another Partridge family?

BERNARD: Do we need a new Partridge Family? I don't know.

SHAW: Do you want to be Danny?

BERNARD: Yes.

ELLIOTT: Danny...

BERNARD: (UNINTELLIGIBLE) you look like Danny.

COOPER: Why would you...

BERNARD: I don't even know -- that's the wrong show for Anderson.

COOPER: So, guys.

BERNARD: I know. This is kind of unbelievable. What VH-1 is doing is they're casting a new family, but they're using the auditions as the show. So then after that, maybe part two will be the family performing. But they said they are actually looking for people who resemble the original cast. So all of the awkward red-headed 14-year- olds...

COOPER: Everybody grow out your hair. Get ready.

BERNARD: Yes, exactly. But...

SHAW: How about the bus? Is the bus going to be recast?

BERNARD: I don't think that's going to work anymore. It's just way too G-rated. They're going to have to have some tricked-out trailer with (UNINTELLIGIBLE) and everything else.

ELLIOTT: I don't see this. I don't feel it. I want to feel it. Look, reality TV is my thing. But this one, I don't see it swimming.

COOPER: OK, very briefly. Italian police apparently arrested 23 mobsters trying to shake down the crew of "Ocean's 12," which is the sequel to "Ocean's 11."

ELLIOTT: OK. The bottom line is, first of all, this is cool. OK? This just makes this movie even cooler.

COOPER: Do you think it's true? I think it's one of those publicity stunts.

BERNARD: Yes. ELLIOTT: It's almost like hoax, I'm guessing. Two things. In Sicily, understand, the mob in Sicily is not Tony Soprano at all rolling in their Escalades. It's like the fishermen in the village, who like everybody -- it's like joining the mob or there Mafia there is like, you know, being in the YMCA.

COOPER: It's going to be good for the movie, though.

BERNARD: I think it's got some people right there.

ELLIOTT: Of course.

(CROSSTALK)

SHAW: Yes, exactly. Maybe they just wanted to be actors, you know?

ELLIOTT: They were autograph hounds, you know.

COOPER: We're going to have to leave it there. It's a little abbreviated "90-Second Pop" edition this time around.

SHAW: It's 30-second pop.

COOPER: It's 30 seconds. Jessica Shaw, thanks very much. Sarah Bernard and Josh Elliott, thanks very much -- Heidi.

COLLINS: Thanks, Anderson.

Still to come this morning, Martha Stewart is less than half an hour away from being sentenced. We'll keep an eye on the courthouse for you and bring you the very latest.

Keep it here on AMERICAN MORNING.

(COMMERCIAL BREAK)

COLLINS: You're looking at some pictures from just a little while ago, when Martha Stewart showed up at the courthouse right here in New York City for her sentencing hearing. She is inside at this time and will, in just about, I believe, 30 minutes or so, know the fate of the rest of her life, actually, at least on this determination by Judge Miriam Cederbaum.

Again, we are awaiting to see what the sentence will be. Some people saying this could be a split sentence, some people saying, no, she will actually do some jail time. It won't be right away, though. So we're going to wait to hear from it.

Deb Feyerick is there. Jeffrey Toobin is there. We'll have the very latest as soon as we know it.

In the meantime, Andy Serwer is here talking more about another company, correct?

SERWER: No, I'm going to be talking about Martha Stewart, that's right. Talking about Martha Stewart's company.

And it's -- you know, people use this cliche "judgment day," but it really is judgment day for Martha Stewart. It will be fascinating to hear what happens just a few moments from now. So stay tuned for that.

Let's check on the markets, though, first. Stocks actually up a little bit for the first time in days. Stay up! I root for the markets. See? I'm a biased reporter.

COLLINS: You scared them.

SERWER: Fifty-three points up on the Dow. Nasdaq up a little bit, too. One stock moving upwards, interestingly enough, Martha Stewart Omnimedia is up almost seven percent this morning.

COLLINS: Really?

SERWER: And interesting. Why is that? Well, I think, you know, the stock market loves resolution, doesn't like uncertainty. And perhaps we're going to be getting some resolution today, at least as far as the sentence for Martha Stewart goes.

Interesting, the company in a lot of turmoil. The magazine has seen ad revenues shrink. Her contract with Kmart, on the other hand, has been extended to 2009, so she has a little bit of stability there. You know, the leadership of the company is obviously very uncertain, and it's just interesting when you have a person like this going to jail with the name of the company, you know, on her lapel. It's just an unprecedented situation, really.

COLLINS: Yes. And wondering about those numbers from Kmart a little bit earlier this week, too. The big sale that they had, right?

SERWER: Yes, the sale. They're having a sale on Martha Stewart items over the weekend. And as Anderson noted, it is just a coincidence that that is happening.

(CROSSTALK)

COOPER: Well, you were calling it a sentencing sale.

SERWER: I call it a sentencing sale. And the Kmart executives said there is no truth to that. It just so happens it's happening simultaneously.

COLLINS: Suspiciously.

SERWER: Yes.

COOPER: Let's check in with Toure, who's sitting in for Jack Cafferty this morning, Toure, whose sneakers are shinier than my shoes.

COLLINS: They are.

SERWER: Sweet.

COOPER: Yes.

SERWER: Yes.

COOPER: So...

TOURE, "ROLLING STONE" MAGAZINE: I count on that.

COOPER: Yes, OK.

TOURE: So we've been doing poems for Martha.

SERWER: Good shot. Nice shot.

COOPER: Yes, they are.

TOURE: These are Yohji Yamamoto's, just in case you want to...

(CROSSTALK)

COOPER: Are those from Kmart? Do you find Yohji Yamamoto in Kmart?

TOURE: No, no. No, no, brother. Yohji's -- not yet at least.

(LAUGHTER)

SERWER: Bring on the Yohji.

TOURE: Maybe at the end of this segment.

COOPER: Maybe at Target.

TOURE: So we've been doing poems for Martha. Some of them have been a little snippy, but we had a little more positive ones this time.

SERWER: Anderson called for some positive ones.

TOURE: I'm going to -- I'm going to read mine again, since those who weren't up at 7:00 perhaps didn't catch it.

SERWER: You go.

TOURE: Oh, Martha America 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 (UNINTELLIGIBLE) depend. Hold your head, write your book, no matter what that judge says, people will joke about the soap. You just watch out for your friends.

Now...

COLLINS: That's where you lose me, that part. Anyway...

(CROSSTALK) SERWER: Is that the friends in prison?

(LAUGHTER)

TOURE: This wasn't...

COOPER: It's best not to delve too much into the details of what it means.

SERWER: Yes, indeed.

TOURE: OK. Moving right along from people who didn't write poems this morning.

From Ruth Ann, in Beardstown, Illinois, "Martha Stewart has been our guide, should we use Arid Cheer or Tide? With plants or food or decorating, your work, we're sill propagating."

COOPER: There you go.

TOURE: "You set a goal for which to gain, and we are with you in your pain."

COOPER: See? I asked for nice poems and there is a nice one.

TOURE: And Ruth Ann was very sweet.

COOPER: There you go. Thank you.

SERWER: She propagates, that Ruth Ann, doesn't she?

TOURE: Lisa from Waterville, Minnesota, says, "For the people like me, who just can't cook, we can't learn good things out of a book. We need Martha's tips, we need Martha's help. Who else can make wreathes out of bayline (ph) and kelp?"

(LAUGHTER)

TOURE: "There are much worse people out in the street. Save the cell for someone not nearly as sweet. Goodbye to Martha and your 'good things,' this is what happens when Peter B. sings."

(APPLAUSE)

COOPER: Hey. Now that is one of the best ones.

TOURE: That was a good one. That was a good one. Well, I think Andy has got the best one covered.

SERWER: I do?

TOURE: But Guy is going for the silver medal here. Guy from Atlanta: "Martha, oh, Martha, where do I send you mail? It's so below you to go to jail. It's a good thing that they grant you bail, but the jury's choice was pass or fail. I'll think of you skiing in Vail, but this is America. Justice must prevail." COOPER: There you go. Down in Atlanta.

TOURE: So there you go.

COOPER: Very good. And excellent all day long, though. Excellent from our audience.

TOURE: Our audience is smart, literate. I love them!

COOPER: Yes.

(CROSSTALK)

COLLINS: And they can rhyme.

TOURE: And they can rhyme.

COOPER: You know what...

COLLINS: So do you.

COOPER: ... when you came up with the whole notion of asking for poetry, I didn't think it was going -- I didn't think it was going to work.

SERWER: You underestimate...

(CROSSTALK)

COOPER: I'm telling you.

TOURE: Our audience.

COOPER: I'm telling you, yeah.

COLLINS: All right. Still ahead...

COOPER: Not like that "360."

(LAUGHTER)

COLLINS: Let's not talk about that.

SERWER: You're talking about that a lot, right?

COLLINS: Still ahead this morning, we are coming up to the top of the hour. Martha Stewart's sentencing, of course, give you an eye on that for you.

Plus, we'll tell you about a young cancer survivor who went the "Extra Effort" to make he fight easier for other kids.

Stay with us on AMERICAN MORNING.

(COMMERCIAL BREAK)

(WEATHER REPORT)

COLLINS: A wish has come true for 9-year-old Ben Duskin. He's battled leukemia for half of his young life. His wish was create a video game that would teach kids how to be healthy and have fun doing it.

Eric Johnston, a senior software engineer with LucasArts, a company owned by famed director George Lucas, helped Ben realize his dream. And Ben and Eric are joining us now to tell us all about it.

Good morning to you guys. Thanks for being here.

Ben, I just want to ask you right off the bat, why did you create this game?

BEN DUSKIN, CREATED VIDEO GAME: Well, I wanted to create this game for the kids to have something to do. And I really like video games.

COLLINS: And, Ben, you're talking about other kids who are in the hospital, who are suffering from diseases like leukemia, like you did. You get bored, huh?

DUSKIN: Yeah.

COLLINS: So this helps them out a little bit. Tell us how the game works. What do you do on this video game?

DUSKIN: Well, you're a little guy on a hover board who shoots cancer cells.

COLLINS: Wow. And there are like several different types, right?

DUSKIN: There are several different bosses that you face.

COLLINS: What is the toughest one?

DUSKIN: They're all pretty easy for me, but some of them are pretty tough.

COLLINS: Easy for you because you've been playing it for a while. What is the toughest that you face in real life when you were going through your treatment?

DUSKIN: Probably chicken pox.

COLLINS: OK. I know you also debuted this game at -- I believe it was the University of California San Francisco Pediatric Center. How did the kids react to the game? Did they like it?

DUSKIN: Yes, they really liked it. And they said, "Are you coming out with a sequel?"

COLLINS: Already? Wow. What did they like about the game?

DUSKIN: They like that it's -- that like you don't have to die and start over. You just keep on going.

COLLINS: Eric, I don't want to leave you just sitting there. You were quite a partner in crime, if you will, on this whole adventure. Tell us how you got involved.

ERIC JOHNSTON, SOFTWARE ENGINEER: At the time, it was kind of a light decision. Since then, it's become really, really important to me and something that, you know, I look forward to every week when we get together to work on it.

COLLINS: Yes. And there has been quite a bit of time that you guys have spent together. Many, many hours working on this. And I know you did it all on your own time after work. Have you guys gotten pretty close?

JOHNSTON: About two feet. We're -- we're -- it's like I have a little brother now.

COLLINS: Eric and Ben, we appreciate your time this morning. Thanks so much.

JOHNSTON: Thank you very much.

DUSKIN: Thank you.

COOPER: Coming up on CNN, we are expecting Martha Stewart's sentence to be handed down within moments. You'll hear it about as soon as it happens on "CNN LIVE" with Daryn Kagan.

And AMERICAN MORNING will be back in a moment.

(COMMERCIAL BREAK)

COOPER: And we are anticipating Martha Stewart's sentencing to go occur in just a few moments, the hearing to begin. You're watching her as she arrived in court just a few moments ago. Martha Stewart is now in the courtroom, and the sentencing is set to begin in about one minute.

For Heidi Collins, I'm Anderson Cooper. Thanks so much for watching.

And for Toure and Andy Serwer, guys thanks very much. It's been a fun week.

COLLINS: Happy Friday, everybody.

SERWER: Yes. Great to see you guys. Have a great weekend.

COLLINS: Daryn Kagan is standing by at the CNN Center to take you through the next few hours on "CNN LIVE TODAY."

Hi, Daryn. Happy weekend to you.

DARYN KAGAN, CNN ANCHOR: Thank you. We have a little bit of Martha's sentencing to take care of before I head off to my weekend, but you guys have a great one, and we'll get started here in Atlanta.

Good morning from CNN world headquarters in Atlanta. I'm Daryn Kagan.

"Now in the News" this hour: Martha Stewart learns if she goes to prison, and, if so, for how long. A judge will hand down a sentence for the homemaking icon who was convicted of lying about a stock sale. We have a live report coming up from New York in just a minute.

Meanwhile, other headlines. Abu Musab al-Zarqawi, his group is claiming responsibility for Wednesday's killing of an Iraqi provincial governor. Insurgents ambushed a convoy that was transporting the governor, killing him and two guards. The Zarqawi network's claim was posted on three Islamic Web sites today.

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


Aired July 16, 2004 - 8:59   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDERSON COOPER, CNN ANCHOR: The time has come for Martha Stewart on her way to a federal court. Will she be heading to prison? You're looking at a live shot outside the courthouse.
Senator John Edwards says it's been an easy transition to running mate in his first interview with CNN since joining the Democratic ticket.

And a terrifying ordeal for people living in the fire zone. Raging wildfires now threatening hundreds of homes 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 good morning, to you. I'm Anderson Cooper. Bill is on vacation this week, Soledad is resting in the final weeks of her pregnancy. Thanks for joining us.

HEIDI COLLINS, CNN ANCHOR: And I'm Heidi Collins. You're looking at a live picture now of the federal courthouse here in New York. Martha Stewart's sentencing is coming up this morning. It's scheduled for just about an hour from now. She is expected to arrive any minute, so we will be keeping our eye on this shot and let you know when she gets there.

COOPER: We will, of course, bring that to you live. Deborah Feyerick is standing by with more on what will be happening this morning. We'll also hear from Jeffrey Toobin in a few minutes about the legal options and what we are likely to see and hear this morning. Jack Cafferty, of course, is off today, but Toure will have the e-mail "Question of the Day" all about Martha Stewart in just a few minutes.

COLLINS: That's right. And more poems.

COOPER: And more poems. That's right.

COLLINS: Yes.

COOPER: Well, let's talk about Martha Stewart for a moment. She is going to appear in federal court really in just a few moments, where she'll learn if she's going to prison and, if so, for how long. Deborah Feyerick is covering the sentencing at the New York federal courthouse.

Deborah, what is the latest? DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Anderson, we are told that she should be arriving within the next 10 to 15 minutes. She is hoping that her lawyers can keep her out of prison while they appeal this conviction.

(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, DEFENDANT: 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.

JOSEPH BONDY, CRIMINAL DEFENSE ATTORNEY: Martha could do five months in jail and then have to do five months home confinement. But she can't escape jail unless there is some form of reduction from the guidelines.

FEYERICK: The judge has received hundreds of letters on Stewart's behalf. Other factors the judge will 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.

HERB HOELTER, CENTER INSTITUTIONS & ALTERNATIVES: There's been enough punishment already. I mean, the caricatures and the -- 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.

BRAD SIMON, CRIMINAL DEFENSE ATTORNEY: 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 for 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, if the judge decides that Martha Stewart should begin serving her prison term, she would have between 60 to 90 days to surrender to a prison facility. There is one near her home in Connecticut, but the Bureau of Prisons not saying whether that's where she would do her time -- Anderson.

COOPER: Deborah Feyerick standing by. And as we said, we are anticipating any moment now Martha Stewart appearing in court. We will bring that to you live.

Some legal experts think that Martha Stewart will serve her time in a minimum security facility, perhaps Danbury, Connecticut. And in comparison to what she was making at her company, an average of $673 an hour, behind bars, she would be required to work 40 hours a week at a maximum of only 40 cents an hour. But, of course, there are many different forms of sentencing she could receive today.

CNN's senior legal analyst Jeffrey Toobin will be in the courtroom when Martha Stewart is sentenced in just about an hour. He joins us now from outside the federal courthouse in New York.

Jeffrey, good morning.

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Good morning, Anderson.

I've already been inside the courtroom. It's up on the third floor. It's almost full already. There are a couple of rows left for Martha Stewart's family, for the prosecutors and their team to roll in, but the line here at 7:00 a.m. had about 50 people on it, and it's just about full in the courtroom already.

COOPER: What are you anticipating seeing and hearing today in the courtroom?

TOOBIN: Almost -- this will almost certainly be mostly the defense's show. Federal prosecutors at sentencing rarely say much. Robert Morvillo, her primary lawyer, will argue for a -- what's called a downward departure from the federal guidelines. He will argue that the sentencing guidelines should not be 10 to 16 months, as we expect that they are, but something lesser, so that probation is an appropriate sentence.

He may argue that her conduct was not as severe as the probation department thought. He will argue in an interesting argument that the penalty to Martha Stewart's business, that the employees will suffer so much, that that justifies keeping her out of prison. And he will argue that, if there is to be some sort of sentence imposed, it should be community service, working for the Women's Venture Fund, not prison.

COOPER: Well, Jeff, how likely are they to be successful in those arguments? I mean, they already tried to get the sentencing guidelines declared unconstitutional and they lost that fight.

TOOBIN: I think it's all a long shot. I think the best thing they can hope for is a relatively short sentence, perhaps what is known as a split sentence, where you could get, say, six months of -- of prison, six months of home detention. The sentencing guidelines, yes, they're called guidelines, but they are closer to laws. And they're very hard for lawyers to get out of, at least the way the rules are currently configured.

COOPER: And the likelihood that Martha Stewart will speak on her own behalf today this morning?

TOOBIN: Boy, I've been struggling about that. I don't know.

She has to walk a tightrope if she -- if she speaks in court. She has insisted on her innocence from day one and continues to insist on her innocence. So she doesn't want to provoke the judge by saying this was all a travesty, but she doesn't want to concede something that might hurt -- hurt her on appeal. So I would expect if she says something, it will be a general expression of sorrow that this whole situation came about, but I doubt she will admit any culpability.

COOPER: As we said, we are standing by, anticipating Martha Stewart to arrive really any moment now. Jeffrey Toobin, if you'll continue to stand by with us as long as you can -- I know you have to make your way back into the courtroom at some point, but stand by.

TOOBIN: I don't want to lose my seat.

COOPER: I know you don't. Jeff will be in the courtroom when the hearing actually begins at around 10:00, but as we said, as you see from this live picture, we are anticipating Martha Stewart, her attorneys, to arrive any moment. We will bring that to you live.

And Jeff, stand by as long as you can -- Heidi.

COLLINS: All this week, we've been telling you "The Truth About Lying," who lies, why and when. Today, we're asking how. How can you 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're talking about.

WILLIAM JEFFERSON CLINTON, FMR. PRESIDENT OF THE UNITED STATES: I did not have sexual relations with that woman, Ms. Lewinsky.

LIEBERMAN: We could see that there was a gap connecting him and Monica Lewinsky. Clearly, he felt the degree of guilt in lying and wanted to distance is himself unconsciously from that message.

COLLINS: If seeing is believing, Patty Woods (ph), a corporate communications trainer, says just concentrate on the person's face.

UNIDENTIFIED FEMALE: One of the indications that somebody may be lying would be that before they speak, they go -- and symbolically, you can see that they're withholding the truth. They know the truth, but they're keeping it in by going "mm." And it's called lip sucking.

COLLINS: Other body clues may be more subtle.

UNIDENTIFIED FEMALE: If I'm in a performance appraisal with you and you're asking me whether I've been honest on all of 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 Krieger wrote "Poker for Dummies." He thinks it's easy to call people on that as well.

LOU KRIEGER, CO-AUTHOR, "POKER FOR DUMMIES": We all give off cues about what we're thinking and feeling and about to do. Sometimes if you have a big hand, you can't control it and your -- 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 human lie detector.

LIEBERMAN: And if you pay attention to it, it can be glaringly obvious.

(END VIDEOTAPE)

COLLINS: All right. We want to take this moment now to take you back live outside of the courthouse in New York here. Our Deborah Feyerick is standing by. We're waiting for Martha Stewart to arrive at the courthouse. As you know, her sentencing phase will happen today with Judge Miriam Cedarbaum.

Deb, tell us a little bit about what you're seeing out there. We expect her to be there any moment, correct?

FEYERICK: We do. As a matter of fact, we're getting the heads up that she's really just a couple of blocks away from here.

To explain the scene here, there are probably about 30 to 40 cameras here. That's not including still photographers, dozens and dozens of journalists. Clearly, the focus on this story enormous. All major networks leading with this, this morning.

I spoke to one legal person, and they said, you know, there is a irony here. They said if this were state court, if this was somebody who had been convicted of a first-time drug offense or a first-time burglary offense, they would likely just get probation, but because this is Martha Stewart, she will likely have to do prison time. That's what the federal guidelines mandate, and so that is what is most likely going to happen.

Right now, though, we are waiting for her. We understand that she is on her way. Everybody just in anticipation -- Heidi.

COLLINS: And Deb, obviously, there has been quite a bit of speculation about doing community service in order to avoid that jail time. Any thoughts on that?

FEYERICK: Well, you know, it's very interesting, because she hired a sentencing consultant, a man who has done a lot of work for Robert Morvillo, her lawyer's firm. The sentencing consultant came with basically what amounts to an option.

He says, look, we're going to approach several nonprofit organizations. As a matter of fact, we are told they approached about 10 different nonprofit organizations to see which would be the perfect match for Martha Stewart.

They did find one. It's called the Woman's -- the Women's Venture Fund. It is a group that helps low income and poor women try to help develop their own businesses. And the consultant says this will be an ideal fit for Martha.

He said what is to be gained by sentencing her to prison, where she'll wash dishes or be sort of, you know, kept doing nothing very constructive at all? Why not put her with women who she could truly help? The consultant says this is something she does all of the time, this is something that she has done throughout the course of her life, that is help other women, so why not do it in this kind of capacity? Do community service, not incarceration -- Heidi.

COLLINS: All right. Deb, thanks so much. I think Anderson has a question for you.

COOPER: Yes. Also, Deborah, what we're looking for this morning, I mean, when Martha Stewart shows up to court, and this court proceeding, which will begin around 10:00, we're not actually expecting to see Martha Stewart going to prison today if that is, indeed, what she is sentenced to. That would likely not happen for -- for sometime, correct?

FEYERICK: Well, that's exactly right. Two things could happen. First of all, her lawyer will likely argue that she should be free pending the appeal.

The judge could say, OK, let's take that tact, and that means that Martha Stewart could be out, waiting until the legal process is finished. Also, however, though, if the judge says, no, I'm sorry, but you really do need to start serving your sentence, then that means that Martha Stewart has between 60 and 90 days before she needs to surrender herself to any sort of prison facility. So that is another option, but the judge may just say, let's wait and see what happens through the court.

COOPER: And Deborah, as we're seeing now a vehicle pull up, let's watch as Martha Stewart makes her way into the court.

FEYERICK: (UNINTELLIGIBLE) son-in-law. The gentleman behind her, there to -- what looks -- the gentleman directly behind her, that is her son-in-law escorting her into court. He was there through the course of the entire legal proceeding.

She's also accompanied there by her bodyguard. And I do believe that that is her daughter in the light blue dress, Alexis Stewart. There were high hopes that perhaps Alexis Stewart might step in to take over her mother's empire. There has been no sort of word whether, in fact, that is the plan to save the company -- Anderson.

COOPER: There had also been a lot of talk about whether Martha Stewart will say anything in the courtroom today in her own defense. That, of course, still an open question. The proceedings begin in about 45 minutes from now.

It could go either way. I mean, we were talking with Jeff Toobin just a sort time ago. He's really not sure whether or not she will say anything. I mean, she has to sort of walk a fine line. She can't admit to guilt or culpability to anything, and yet she has to seem to at least seem remorseful about all of the trouble that this has caused.

FEYERICK: That's exactly right. And every word she says, if she does decide to say something to the judge, must be very carefully measured, because even some sort of apology might be construed as an admission. And that would clearly hurt her method of appeal.

So therefore, you know, she's going to have to be very careful, tread a very delicate line if, in fact, she does decide to address the court. She did decide during the trial not to testify. Really, the only thing that we've heard her say publicly in the court is "not guilty" when she was read the charges against her.

COOPER: All right. Deborah Feyerick standing by at the court. And just moments ago, we saw Martha Stewart bringing into the courtroom. Andy Serwer standing by here, along with Heidi Collins.

Andy, as you watch this, what goes through your mind?

ANDY SERWER, EDITOR-AT-LARGE, FORTUNE MAGAZINE: Well, it's just -- it's a remarkable day. I mean, here is a person who is at the very pinnacle of power in this country not only as a businesswoman, but as a celebrity. She was arguably one of the most powerful businesswomen in the United States, along with, say, an Oprah Winfrey and a Carly Fiorina, the head of Hewlett Packard.

And here she is facing judgment day. She was also on the board of the New York Stock Exchange. Again, an extremely prestigious position. And, Anderson, you know, if you knew this person, she's reserved and kind of a quiet person, but had an incredibly powerful persona. And to see her in this position today, Heidi, is really remarkable.

COLLINS: Yes, interesting, too. Obviously, her TV show on hiatus. The magazine, "Martha Stewart Living," I've read that they're going to slowly sort of move her name down lower, smaller, less obvious on the magazine itself.

Also talking with Jeffrey Toobin about the sentence. And, you know, how much damage that company is going to suffer if she is sent to prison and after, you know, the damage that it's already suffered, will hurt a lot of people, the people that work at that company.

SERWER: Right. I mean, it remains to be seen. I mean, it's a day of comeuppance for her. But she hasn't been contrite.

She has not acknowledged her guilt. She said she's sorry that it's happened. And, you know, I think the next step after this punishment phase, after we find out what her sentence is, is, you know, this rehabilitation phase.

I mean, I'm really spinning things forward, but when you talk about her business, her empire, her company, you know, where does she go from here? Can she carry on after this?

I have a feeling that she's going to find a way to do it. But it's going to take a while, and we have to obviously get through today's events and the days that follow.

COOPER: Yes. Anyone who knows Martha Stewart will say, look, do not count this woman out.

SERWER: No.

COLLINS: No.

COOPER: You know, she's been counted out before in her life and she has always come back very strong.

Also, later today, Peter Bacanovic, the former broker for Merrill Lynch who was involved with Martha Stewart in all of this, he, too, will be sentenced. And he's sort of lost in -- I mean, everyone's sort of paying attention to Martha Stewart, but his sentencing happens today as well.

SERWER: Yes, I think that's right. And, I mean, in a way, he becomes sort of a footnote to this entire episode, this saga. But obviously, it's judgment day for him as well.

COLLINS: We just mentioned a little while ago -- at least Deb Feyerick -- as we watch here as her daughter Alexis comes in behind her going into the courthouse -- there you see her. What are your thoughts on whether or not she might try to take over the company? SERWER: Well, you know, it's a difficult situation, because Martha Stewart owns -- has a controlling vote of the company. But, still, it's a public company. You can't just insert someone in without the board approving, without other shareholders signing off on this.

Is she qualified? I mean, probably. She's someone who lives, you know, very closely with her mother and all of her mother's projects and business. But there has been no indication that she will step in directly.

COOPER: And she said on "LARRY KING" -- she said to Larry King that she really wasn't interested in doing that.

SERWER: Right.

COLLINS: Right.

COOPER: She's interested in the environment and other -- other areas of life.

SERWER: Yes. And who would want to be in that spotlight right now?

COLLINS: Yes, probably not.

SERWER: Difficult.

COLLINS: All right. Andy, thanks so much for that.

SERWER: You're welcome.

COLLINS: Want to go ahead and get to some of the other news now, just about 17 minutes mast past the hour. Daryn Kagan is standing by for that.

Hi, Daryn.

DARYN KAGAN, CNN ANCHOR: Heidi, I'm going to start in southern India, where rescue crews are searching for the missing after a massive fire involving children. At least 78 people, most of them believed to be kids, are believed to be dead. An official says that some 900 students were attending the school when the blaze broke out. It's believed the flames were sparked by an electrical short in the kitchen.

A claim of responsibility now for an assassination in Iraq. Messages posted on some Islamic militants Web sites say the terror network of Abu Musab al-Zarqawi is responsible for the killing of a provincial governor earlier this week. The governor died in an ambush Wednesday as his convoy traveled near the city of Tikrit.

The U.S. Army says it's dropping its case against a soldier accused of cowardice. Sergeant George Andreas Pagani (ph) was said to have suffered a panic attack after seeing a bloody Iraqi corpse. But a doctor last month diagnosed the soldier as suffering from damage to his balance system, which was most likely caused by an anti-malaria drug.

Here in the U.S., Medicare is redefining obesity as a medical problem. The policy change would allow 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 finally, building inspectors and insurance agents still have a lot of work to do in Campbelltown, Pennsylvania, part of the community west of Harrisburg, for the brunt of a powerful tornado that roared through that region on Wednesday. Twenty-four people were injured in what officials are calling the state's worst twister in six years.

Nearly 120 homes were either damaged or destroyed. And Chad, of course, in just a bit will have a lot more on the weather.

Back to you.

COOPER: All right, Daryn. Thanks for that.

As for John Edwards, he'll be in California later today, the end of his first week of solo campaigning. Last night, CNN's Kelly Wallace caught up with the vice presidential candidate for his first interview with CNN since being named to the Democratic ticket for CNN.

(BEGIN VIDEOTAPE)

KELLY WALLACE, CNN NATIONAL CORRESPONDENT (voice-over): In Houston last night, John Edwards told us he sees his main role helping voters get to know his boss.

SEN. JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: I think part of my responsibility is to make sure they know both John Kerry better and me. They need to know us both. And getting out the message of his own personal history, my own personal history.

WALLACE (on camera): Is it an adjustment, though? I mean, just a few moments ago, you were John Edwards, presidential candidate. It was all about Edwards all the time.

EDWARDS: Of course it's an adjustment, but this has been a very easy transition. To be perfectly blunt about it, John and Teresa and their family made it so easy for us.

WALLACE (voice-over): Edwards and Kerry both voted for the Iraqi war resolution. And so I asked Edwards, knowing what he knows now about questionable prewar intelligence, if he regrets his vote.

EDWARDS: I believe that the president should have been given the authority that he was given. I also believe it's a very good thing that Saddam is gone. I think it's good for America and good for that region of the world.

WALLACE (on camera): So you don't regret your vote then?

EDWARDS: I think at the time it was the right thing to do to give the president that authority. But can I just add one thing? I know it's the most natural question for journalists to ask, and it's a fair question, fair question. And I take full...

WALLACE: Because some voters might say that their views have changed after all the reports.

EDWARDS: Of course they might, but let me...

WALLACE: So don't they have a right to know what your -- if your views have changed?

EDWARDS: Let me say very clearly, I take responsibility, complete responsibility for my vote. Not anybody else. It's a John Edwards vote. I fully accept responsibility for it. I took it very seriously, and I still take it very seriously.

I do think, though, that it's important for the people who are watching this interview and all of our discussion about these issues to also look at the future. I mean, it's a natural thing to look back, but what are we going to do? Because people (UNINTELLIGIBLE) want to know, what is President Bush going to do, how is it different from what we'll do? And John Kerry has a real plan to deal with Iraq.

WALLACE (voice-over): On the subject of Dick Cheney, does he think he has overstepped his authority as vice president?

EDWARDS: It's clear that he's had an enormous influence on what's happened. And, you know, it's for the president to determine whether that influence is appropriate or not.

I will say this, I think that in the case of John Kerry and John Edwards, we will have a strong partnership, a vibrant partnership. But at the end of the day, John Kerry will be president and he'll make the final decision.

WALLACE (on camera): Do you hope he remains on the ticket?

EDWARDS: Oh, I don't have -- that's entirely for the president to decide.

WALLACE (voice-over): Asked if his family is ready for the attention that comes with a general election campaign...

EDWARDS: What's hard to judge are my young kids, you know? Emma Claire is six, Jack is four. This is kind of overwhelming for them. Jack has a natural tendency to want the cameras to focus on him to get attention.

WALLACE (on camera): He seems very comfortable in that spotlight.

EDWARDS: He's very, very easy and doesn't mind standing on the stage in front of 10,000 people. Emma is a little shyer. I mean, I think in her case, it's a little bit overwhelming. But I think -- you know, with god's help, I think they'll be OK. WALLACE (voice-over): He said wife, Elizabeth, and daughter, Cate, a recent college graduate, will be seen frequently on the campaign trail. But for now, he's flying solo, wrapping up a cross- country blitz in his new role.

Kelly Wallace, CNN, Houston.

(END VIDEOTAPE)

COOPER: Candidate's children have been absent from the campaign trail for the past several election cycles, but this one will be full of kids, with Barbara and Jenna Bush, although hardly kids, Elizabeth and Mary Cheney, and Alex and Vanessa Kerry, all stumping for their favorite candidates.

Still to come this morning, iPods, a must have toy for a lot of people, but they've really faced little competition, until now, that is. Andy Serwer is "Minding Your Business."

COLLINS: Plus, we'll go back to the courthouse live for Martha Stewart's sentencing. Stewart arrived at court just a few moments ago, as you see there. She is now inside. We'll have the latest.

(COMMERCIAL BREAK)

COOPER: Medicare is changing one of its policies. It now considers obesity an illness. Now, this may allow millions of overweight Americans to submit medical claims for treatments like stomach stapling surgery. Medical correspondent Elizabeth Cohen is filling in for Dr. Sanjay Gupta. She is in Washington with details.

Good morning, Elizabeth.

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Anderson, good morning.

This would represent a sea change if this goes through. What the federal government did is that, up until this point, they've said obesity is not a disease and we're not going to pay for the treatment that people need to lose weight. But now they've decided to take away some of that language. They haven't said that they will pay for these treatments, but they're at least paving the way. As I said, this would be a complete change from where they've gone in the past because, of course, if you start to treat obesity, that leads you down the road to pay for many, many treatments -- Anderson.

COOPER: Doesn't this open up the U.S. government, though, to billions of dollars in claims?

COHEN: Absolutely. I mean, it almost seems like it would be endless. Because, first, you would have many different treatments that you would have to pay for.

If you say, I'm going to pay for treatments for obesity, then you're opening yourself up to paying for surgery, to paying for weight loss programs, to paying for drugs. The list goes on and on. Nutritional counseling -- it goes on and on. And what's interesting is that often, when Medicare, when the federal government decides that they're going to pay for treatments for their recipients, for the people who take -- who get Medicare, which, of course, are the elderly, private health insurers often follow suit.

So they'll then be under the gun. Do they start paying for these treatments? After all, two-thirds of Americans are obese; many of them need these treatments. You start paying for them, it's a lot of money.

COOPER: So as you look forward, who is likely to -- to be the critics of this policy and who is likely to support it?

COHEN: The critics of this policy are going to be health insurance companies. They're going to say, hey, you know, what -- how do you decide when to start paying, when someone is 10 pounds overweight, 20 pounds, 40 pounds, 50 pounds? What if they lose weight and then they gain it back? Do you start paying for it again?

There are very few limits here. It's hard to know. And what drugs do you pay for and what drugs don't you pay for. And do you pay for Weight Watchers and Jenny Craig. There are a lot of gray areas here, which could mean a lot of money being spent.

COOPER: Yes. A lot of questions, I guess, still to be answered and figured out. Elizabeth Cohen, thanks -- Heidi.

COHEN: Thanks.

COLLINS: Still to come this morning, more on the Martha Stewart sentencing. She arrived for the hearing just moments ago. We'll go back to the federal courthouse live for the very latest on that.

Stay with us on AMERICAN MORNING.

(COMMERCIAL BREAK)

COOPER: And the opening bell has just rung on Wall Street. The Dow Jones industrial average starts today's session at 10,163. That's down more than 45 points yesterday. At the Nasdaq market site, the Composite Index opens at 1,912, down two points from yesterday. And obviously, a lot of attention being focused on Martha Stewart this morning.

COLLINS: That's for sure. Welcome back, everybody. It is just about half past the hour now on this AMERICAN MORNING.

I'm Heidi Collins. Bill Hemmer is on vacation and Soledad is resting in the last few weeks of her pregnancy.

COOPER: And good morning. I'm Anderson Cooper. Thanks for joining us this morning.

Sentencing for Martha Stewart begins in just about half an hour. She arrived at a federal court, as you see here, just a few minutes ago. We are covering that live, of course.

Stewart was convicted of conspiracy, obstruction of justice and lying to federal investigators about her sale of ImClone stock. Deborah Feyerick, of course, is live at the New York federal courthouse as she has been all morning -- Deborah.

FEYERICK: Well, Anderson, her daughter was with her, her daughter, Alexis. Also, her son-in-law, a lawyer who helped her throughout this entire court proceeding. And she linked her arm within his as she climbed up the stairs to the federal court.

She's just half an hour away from finding just out how she will spending the next couple of months. We do know that she has written a letter to the judge -- she's entitled to do that -- citing the reasons why she should get a lighter sentence. Martha Stewart hoping, of course, hoping to avoid prison time and instead serve her sentence at a Women's Venture Fund, a community group that helps women develop their own businesses.

Now, hundreds of friends and fans have written letters to the judge trying to persuade the judge that Martha Stewart is a good person, that she has done a lot to help other people, and that her effect on the community at large has been a good one. She does have the option of addressing the court, but every word will have to be measured very, very carefully, because she is planning to appeal. And so anything that she says, even some sort of an apology, could be construed as an admission. So each word has to be weighed carefully.

Now, one of her lawyers will be citing grounds for their intended appeal, but the paperwork on that does not have to be filed within the next 10 days. If the judge says that Martha Stewart must begin serving her prison term, then Stewart will have between 60 to 90 days before she surrenders to a federal prison. That facility to be determined -- Anderson.

COOPER: OK. Deborah Feyerick standing by for that. Thanks very much. And that court proceeding will begin around 10:00, in just about half an hour -- Heidi.

COLLINS: While awaiting her sentence, Martha Stewart has maintained a public profile. And could that possibly be a factor in the judge's decision? Attorney Lanny Davis is Martha Stewart's former media adviser. Earlier on AMERICAN MORNING, I spoke with Davis, asking why he believes Martha has been so public in the days since her conviction.

(BEGIN VIDEOTAPE)

LANNY DAVIS, STEWART'S FMR. MEDIA ADVISER: She's being Martha Stewart. She is probably one of the most effective communicators alive today with a public following that is very significant.

She's also, in my personal experience, with her, one of the most authentic and charming people when she is herself. And she is looking to life after incarceration, which I hope will be brief. And I hope that the judge on the merits will regard this situation as unique. COLLINS: But Mr. Davis, do you think that that visibility could actually become a liability in terms of her sentencing?

DAVIS: No. I think is this a very esteemed judge who will view this purely on the merits and will not hold it against Martha for being herself and for not thinking her life is over if she is incarcerated.

The judge has criteria to look at, and among the criteria is exactly what happened at the trial. I think this is a prosecution that never should have been brought. Remember, she was convicted of lying about a crime that the government chose not to charge her with, which is amazing...

COLLINS: But again, in terms of the sentencing, isn't it true that when a judge sentences in a case like this, remorse is part of what he or she, in this case, she would look at?

DAVIS: Well, I think remorse is one issue, but that's why the exact crime that she was convicted of, we have to ask why was she prosecuted in the first place when the government chose not to charge her with the underlying crime, but only with the denial that she made publicly. That's a part of why the remorse issue may be unique here.

But at the end of the day, this is a very, very good judge. She will not blame Martha Stewart for being Martha Stewart. What has made her successful is her willingness to be herself. And rightly or wrongly, Martha Stewart, in my experience with her, is very charming, is very authentic, and she is out there telling everybody that there will be life and a success story after she returns from incarceration.

(END VIDEOTAPE)

COLLINS: As we've reported, Martha Stewart is inside the federal courthouse right now. CNN will bring you the results of her sentencing just as soon as we know.

Meanwhile, an army of firefighters battling to control a sweeping wildfire in Nevada. Five people hurt, hundreds more evacuated. The wildfires move so swiftly, anybody near the flames could find themselves in extreme danger in a matter of seconds. A news crew from KRNV found themselves inside a firestorm.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Go, go! I want you to go that way. You're doing good.

UNIDENTIFIED FEMALE: If I hit a tree, am I in trouble?

UNIDENTIFIED MALE: No. Just go. That a girl. You got it. Go.

UNIDENTIFIED FEMALE: Jeff (ph)?

UNIDENTIFIED MALE: It's all right.

UNIDENTIFIED FEMALE: Jeff?

UNIDENTIFIED MALE: It's all right. You're doing good.

UNIDENTIFIED FEMALE: Jeff (ph)?

UNIDENTIFIED MALE: You're doing good. See? Good job. Good job. Keep going. You're doing fine.

(END VIDEOTAPE)

COLLINS: A devastating fire has so far destroyed 21 structures, is now threatening 550 other homes and businesses on the edge of Nevada's capital city.

COOPER: Unbelievable how quickly it just comes up. I've never been in something like that.

COLLINS: Yes.

COOPER: Remarkable.

COLLINS: Me either, no.

COOPER: Let's hope it doesn't -- let's hope we're not.

COLLINS: Let's hope we're not. We'll state right here.

COOPER: Still to come, the latest from a federal courthouse as Martha Stewart gets ready to hear from a judge in about 20 minutes what her sentencing will be.

COLLINS: Also ahead, we'll tell you about a boy who turned a fight against cancer into fun and games. "Extra Effort" ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

COOPER: So many truly important things to talk about in "90- Second Pop" on this Friday.

Joining us this morning, Sarah Bernard from "New York" magazine, Josh Elliott of "Sports Illustrated," and Jessica Shaw from "Entertainment Weekly." Let's get right to it.

Jessica, you have seen, I think, the first episode of the new Mark Wahlberg HBO show, "Entourage."

JESSICA SHAW, "ENTERTAINMENT WEEKLY": Yes.

COOPER: Can it fill the (UNINTELLIGIBLE) of "Sex and the City?"

SHAW: Well, I don't know about that, but it is really, really good. Mark Wahlberg is not in it. He has like a little tiny cameo.

COOPER: He's like the executive producer.

SHAW: He is the producer and the creator. But it's about this child star and his hangers-on in Hollywood.

JOSH ELLIOTT, "SPORTS ILLUSTRATED": This is a guy's "Sex and the City." I had a conversation with some male friends of mine. It's a great idea. This is a wonderful idea. This could absolutely be a guy "Sex and the City."

COOPER: Well, it's sort of based on what happened Wahlberg. Apparently a lot of his friends sort of came with him from the old neighborhood.

SHAW: Yes.

SARAH BERNARD, "NEW YORK" MAGAZINE: I think it's kind of amazing that they're going to try this again, because remember that show "Action" with Jay Mohr, which was really, I thought, great?

SHAW: Yes.

BERNARD: But really inside Hollywood and people were sort of thinking there was not going to be an audience for that thing. But then, obviously, since Mark Wahlberg was behind it, they are going to give it another shot.

SHAW: I think this show is so much better than that one.

BERNARD: It's funnier.

SHAW: And (UNINTELLIGIBLE) if you used a bad word.

ELLIOTT: Exactly.

COOPER: And there's only going to be eight episodes?

SHAW: Yes.

COOPER: OK. So a very limited run.

SHAW: Well, you know, it's very clever.

COOPER: Who knows? Who knows? "Entourage" 2 and 3. Right.

SHAW: You know, there's a lot of, like, pool parties and there's a lot of drama with women and there's also...

COOPER: That's what you all do out in L.A., those pool parties.

SHAW: Oh, yes.

BERNARD: There is one scene, isn't there, where this is what your entourage does. They play golf on the roof of his mansion.

COOPER: There you go.

BERNARD: And they try to hit -- instead of holes, they try to hit Pierce Brosnan's house.

COOPER: That's what happens over Hemmer's house every day.

BERNARD: Yes, they keep pelting on his roof.

COOPER: Let's move on. VH-1 -- I couldn't believe this -- is holding auditions for a new Partridge family across the country. Do we need another Partridge family?

BERNARD: Do we need a new Partridge Family? I don't know.

SHAW: Do you want to be Danny?

BERNARD: Yes.

ELLIOTT: Danny...

BERNARD: (UNINTELLIGIBLE) you look like Danny.

COOPER: Why would you...

BERNARD: I don't even know -- that's the wrong show for Anderson.

COOPER: So, guys.

BERNARD: I know. This is kind of unbelievable. What VH-1 is doing is they're casting a new family, but they're using the auditions as the show. So then after that, maybe part two will be the family performing. But they said they are actually looking for people who resemble the original cast. So all of the awkward red-headed 14-year- olds...

COOPER: Everybody grow out your hair. Get ready.

BERNARD: Yes, exactly. But...

SHAW: How about the bus? Is the bus going to be recast?

BERNARD: I don't think that's going to work anymore. It's just way too G-rated. They're going to have to have some tricked-out trailer with (UNINTELLIGIBLE) and everything else.

ELLIOTT: I don't see this. I don't feel it. I want to feel it. Look, reality TV is my thing. But this one, I don't see it swimming.

COOPER: OK, very briefly. Italian police apparently arrested 23 mobsters trying to shake down the crew of "Ocean's 12," which is the sequel to "Ocean's 11."

ELLIOTT: OK. The bottom line is, first of all, this is cool. OK? This just makes this movie even cooler.

COOPER: Do you think it's true? I think it's one of those publicity stunts.

BERNARD: Yes. ELLIOTT: It's almost like hoax, I'm guessing. Two things. In Sicily, understand, the mob in Sicily is not Tony Soprano at all rolling in their Escalades. It's like the fishermen in the village, who like everybody -- it's like joining the mob or there Mafia there is like, you know, being in the YMCA.

COOPER: It's going to be good for the movie, though.

BERNARD: I think it's got some people right there.

ELLIOTT: Of course.

(CROSSTALK)

SHAW: Yes, exactly. Maybe they just wanted to be actors, you know?

ELLIOTT: They were autograph hounds, you know.

COOPER: We're going to have to leave it there. It's a little abbreviated "90-Second Pop" edition this time around.

SHAW: It's 30-second pop.

COOPER: It's 30 seconds. Jessica Shaw, thanks very much. Sarah Bernard and Josh Elliott, thanks very much -- Heidi.

COLLINS: Thanks, Anderson.

Still to come this morning, Martha Stewart is less than half an hour away from being sentenced. We'll keep an eye on the courthouse for you and bring you the very latest.

Keep it here on AMERICAN MORNING.

(COMMERCIAL BREAK)

COLLINS: You're looking at some pictures from just a little while ago, when Martha Stewart showed up at the courthouse right here in New York City for her sentencing hearing. She is inside at this time and will, in just about, I believe, 30 minutes or so, know the fate of the rest of her life, actually, at least on this determination by Judge Miriam Cederbaum.

Again, we are awaiting to see what the sentence will be. Some people saying this could be a split sentence, some people saying, no, she will actually do some jail time. It won't be right away, though. So we're going to wait to hear from it.

Deb Feyerick is there. Jeffrey Toobin is there. We'll have the very latest as soon as we know it.

In the meantime, Andy Serwer is here talking more about another company, correct?

SERWER: No, I'm going to be talking about Martha Stewart, that's right. Talking about Martha Stewart's company.

And it's -- you know, people use this cliche "judgment day," but it really is judgment day for Martha Stewart. It will be fascinating to hear what happens just a few moments from now. So stay tuned for that.

Let's check on the markets, though, first. Stocks actually up a little bit for the first time in days. Stay up! I root for the markets. See? I'm a biased reporter.

COLLINS: You scared them.

SERWER: Fifty-three points up on the Dow. Nasdaq up a little bit, too. One stock moving upwards, interestingly enough, Martha Stewart Omnimedia is up almost seven percent this morning.

COLLINS: Really?

SERWER: And interesting. Why is that? Well, I think, you know, the stock market loves resolution, doesn't like uncertainty. And perhaps we're going to be getting some resolution today, at least as far as the sentence for Martha Stewart goes.

Interesting, the company in a lot of turmoil. The magazine has seen ad revenues shrink. Her contract with Kmart, on the other hand, has been extended to 2009, so she has a little bit of stability there. You know, the leadership of the company is obviously very uncertain, and it's just interesting when you have a person like this going to jail with the name of the company, you know, on her lapel. It's just an unprecedented situation, really.

COLLINS: Yes. And wondering about those numbers from Kmart a little bit earlier this week, too. The big sale that they had, right?

SERWER: Yes, the sale. They're having a sale on Martha Stewart items over the weekend. And as Anderson noted, it is just a coincidence that that is happening.

(CROSSTALK)

COOPER: Well, you were calling it a sentencing sale.

SERWER: I call it a sentencing sale. And the Kmart executives said there is no truth to that. It just so happens it's happening simultaneously.

COLLINS: Suspiciously.

SERWER: Yes.

COOPER: Let's check in with Toure, who's sitting in for Jack Cafferty this morning, Toure, whose sneakers are shinier than my shoes.

COLLINS: They are.

SERWER: Sweet.

COOPER: Yes.

SERWER: Yes.

COOPER: So...

TOURE, "ROLLING STONE" MAGAZINE: I count on that.

COOPER: Yes, OK.

TOURE: So we've been doing poems for Martha.

SERWER: Good shot. Nice shot.

COOPER: Yes, they are.

TOURE: These are Yohji Yamamoto's, just in case you want to...

(CROSSTALK)

COOPER: Are those from Kmart? Do you find Yohji Yamamoto in Kmart?

TOURE: No, no. No, no, brother. Yohji's -- not yet at least.

(LAUGHTER)

SERWER: Bring on the Yohji.

TOURE: Maybe at the end of this segment.

COOPER: Maybe at Target.

TOURE: So we've been doing poems for Martha. Some of them have been a little snippy, but we had a little more positive ones this time.

SERWER: Anderson called for some positive ones.

TOURE: I'm going to -- I'm going to read mine again, since those who weren't up at 7:00 perhaps didn't catch it.

SERWER: You go.

TOURE: Oh, Martha America 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 (UNINTELLIGIBLE) depend. Hold your head, write your book, no matter what that judge says, people will joke about the soap. You just watch out for your friends.

Now...

COLLINS: That's where you lose me, that part. Anyway...

(CROSSTALK) SERWER: Is that the friends in prison?

(LAUGHTER)

TOURE: This wasn't...

COOPER: It's best not to delve too much into the details of what it means.

SERWER: Yes, indeed.

TOURE: OK. Moving right along from people who didn't write poems this morning.

From Ruth Ann, in Beardstown, Illinois, "Martha Stewart has been our guide, should we use Arid Cheer or Tide? With plants or food or decorating, your work, we're sill propagating."

COOPER: There you go.

TOURE: "You set a goal for which to gain, and we are with you in your pain."

COOPER: See? I asked for nice poems and there is a nice one.

TOURE: And Ruth Ann was very sweet.

COOPER: There you go. Thank you.

SERWER: She propagates, that Ruth Ann, doesn't she?

TOURE: Lisa from Waterville, Minnesota, says, "For the people like me, who just can't cook, we can't learn good things out of a book. We need Martha's tips, we need Martha's help. Who else can make wreathes out of bayline (ph) and kelp?"

(LAUGHTER)

TOURE: "There are much worse people out in the street. Save the cell for someone not nearly as sweet. Goodbye to Martha and your 'good things,' this is what happens when Peter B. sings."

(APPLAUSE)

COOPER: Hey. Now that is one of the best ones.

TOURE: That was a good one. That was a good one. Well, I think Andy has got the best one covered.

SERWER: I do?

TOURE: But Guy is going for the silver medal here. Guy from Atlanta: "Martha, oh, Martha, where do I send you mail? It's so below you to go to jail. It's a good thing that they grant you bail, but the jury's choice was pass or fail. I'll think of you skiing in Vail, but this is America. Justice must prevail." COOPER: There you go. Down in Atlanta.

TOURE: So there you go.

COOPER: Very good. And excellent all day long, though. Excellent from our audience.

TOURE: Our audience is smart, literate. I love them!

COOPER: Yes.

(CROSSTALK)

COLLINS: And they can rhyme.

TOURE: And they can rhyme.

COOPER: You know what...

COLLINS: So do you.

COOPER: ... when you came up with the whole notion of asking for poetry, I didn't think it was going -- I didn't think it was going to work.

SERWER: You underestimate...

(CROSSTALK)

COOPER: I'm telling you.

TOURE: Our audience.

COOPER: I'm telling you, yeah.

COLLINS: All right. Still ahead...

COOPER: Not like that "360."

(LAUGHTER)

COLLINS: Let's not talk about that.

SERWER: You're talking about that a lot, right?

COLLINS: Still ahead this morning, we are coming up to the top of the hour. Martha Stewart's sentencing, of course, give you an eye on that for you.

Plus, we'll tell you about a young cancer survivor who went the "Extra Effort" to make he fight easier for other kids.

Stay with us on AMERICAN MORNING.

(COMMERCIAL BREAK)

(WEATHER REPORT)

COLLINS: A wish has come true for 9-year-old Ben Duskin. He's battled leukemia for half of his young life. His wish was create a video game that would teach kids how to be healthy and have fun doing it.

Eric Johnston, a senior software engineer with LucasArts, a company owned by famed director George Lucas, helped Ben realize his dream. And Ben and Eric are joining us now to tell us all about it.

Good morning to you guys. Thanks for being here.

Ben, I just want to ask you right off the bat, why did you create this game?

BEN DUSKIN, CREATED VIDEO GAME: Well, I wanted to create this game for the kids to have something to do. And I really like video games.

COLLINS: And, Ben, you're talking about other kids who are in the hospital, who are suffering from diseases like leukemia, like you did. You get bored, huh?

DUSKIN: Yeah.

COLLINS: So this helps them out a little bit. Tell us how the game works. What do you do on this video game?

DUSKIN: Well, you're a little guy on a hover board who shoots cancer cells.

COLLINS: Wow. And there are like several different types, right?

DUSKIN: There are several different bosses that you face.

COLLINS: What is the toughest one?

DUSKIN: They're all pretty easy for me, but some of them are pretty tough.

COLLINS: Easy for you because you've been playing it for a while. What is the toughest that you face in real life when you were going through your treatment?

DUSKIN: Probably chicken pox.

COLLINS: OK. I know you also debuted this game at -- I believe it was the University of California San Francisco Pediatric Center. How did the kids react to the game? Did they like it?

DUSKIN: Yes, they really liked it. And they said, "Are you coming out with a sequel?"

COLLINS: Already? Wow. What did they like about the game?

DUSKIN: They like that it's -- that like you don't have to die and start over. You just keep on going.

COLLINS: Eric, I don't want to leave you just sitting there. You were quite a partner in crime, if you will, on this whole adventure. Tell us how you got involved.

ERIC JOHNSTON, SOFTWARE ENGINEER: At the time, it was kind of a light decision. Since then, it's become really, really important to me and something that, you know, I look forward to every week when we get together to work on it.

COLLINS: Yes. And there has been quite a bit of time that you guys have spent together. Many, many hours working on this. And I know you did it all on your own time after work. Have you guys gotten pretty close?

JOHNSTON: About two feet. We're -- we're -- it's like I have a little brother now.

COLLINS: Eric and Ben, we appreciate your time this morning. Thanks so much.

JOHNSTON: Thank you very much.

DUSKIN: Thank you.

COOPER: Coming up on CNN, we are expecting Martha Stewart's sentence to be handed down within moments. You'll hear it about as soon as it happens on "CNN LIVE" with Daryn Kagan.

And AMERICAN MORNING will be back in a moment.

(COMMERCIAL BREAK)

COOPER: And we are anticipating Martha Stewart's sentencing to go occur in just a few moments, the hearing to begin. You're watching her as she arrived in court just a few moments ago. Martha Stewart is now in the courtroom, and the sentencing is set to begin in about one minute.

For Heidi Collins, I'm Anderson Cooper. Thanks so much for watching.

And for Toure and Andy Serwer, guys thanks very much. It's been a fun week.

COLLINS: Happy Friday, everybody.

SERWER: Yes. Great to see you guys. Have a great weekend.

COLLINS: Daryn Kagan is standing by at the CNN Center to take you through the next few hours on "CNN LIVE TODAY."

Hi, Daryn. Happy weekend to you.

DARYN KAGAN, CNN ANCHOR: Thank you. We have a little bit of Martha's sentencing to take care of before I head off to my weekend, but you guys have a great one, and we'll get started here in Atlanta.

Good morning from CNN world headquarters in Atlanta. I'm Daryn Kagan.

"Now in the News" this hour: Martha Stewart learns if she goes to prison, and, if so, for how long. A judge will hand down a sentence for the homemaking icon who was convicted of lying about a stock sale. We have a live report coming up from New York in just a minute.

Meanwhile, other headlines. Abu Musab al-Zarqawi, his group is claiming responsibility for Wednesday's killing of an Iraqi provincial governor. Insurgents ambushed a convoy that was transporting the governor, killing him and two guards. The Zarqawi network's claim was posted on three Islamic Web sites today.

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