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NEWS FROM CNN

Martha Stewart Back Home; Bush on the Road; Pullout Plan

Aired March 4, 2005 - 11:59   ET

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


WOLF BLITZER, CNN ANCHOR: Unfolding this hour here on NEWS FROM CNN, Martha Stewart back home. Still under arrest, though, but with a lot nice linens and other things. We'll explore her life after prison.
And criminal and political intrigue in Ukraine. An apparent suicide adding to the thickening plot if a notorious murder case all tied to the struggle for democracy. Our Jill Dougherty standing by live for that story.

Then, a murder mystery hard to fathom right here at home, the killing of a federal judge's husband and mother in Chicago. We'll sift through the latest clues in the case. We're also standing by in the coming moments for a news conference from Chicago.

First, some other headlines "Now in the News."

A marijuana bust turns deadly in the frozen Canadian tundra. The Royal Canadian Mounties suffer their worst single loss since the 1800s. Four officers dead at the hands of a narco suspect who killed himself, as well. The Mounties were involved in a crackdown against industrialized pot.

A mixed bag for those seeking work. 262,000 jobs were added to company payrolls last month. That's better than analysts expected. Still, the unemployment rate has edged up two-tenths of a percent.

Among the most popular stories this hour on CNN.com, when chimpanzees attack. It happened at an animal sanctuary in California. A man was critically injured when two chimps escaped from their cages and attacked him. It happened during what was supposed to be a birthday party for a 39-year-old chimp named Mo.

Find out what else is popular on the Web. Simply go to CNN.com.

Up first this hour, Martha Stewart, ex-con. Having paid her debt to society, the hyper-successful entrepreneur bids adieu to a federal prison. And by all indications, she's poised to resume her stellar business career.

But first things first. For the 63-year-old Stewart, more than ever today, there's no place like home.

CNN's Mary Snow is right there in snowy Bedford, New York. That's just north of New York City.

Mary, set the stage for us. Tell us what has happened since she arrived there.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, she's certainly getting her first taste of freedom after spending five months in prison. Earlier this morning, she came out. She's certainly not shying away from the cameras.

She told reporters that she's feeling fine, that she's feeling great. And she even offered reporters and photographers camped outside of her house some coffee and doughnuts. And she also shared a story about not having cappuccino in prison.

(BEGIN VIDEO CLIP)

MARTHA STEWART, MARTHA STEWART LIVING OMNIMEDIA: And this is a funny. All (UNINTELLIGIBLE) asked the guards every day for a cappuccino. You know, just as a joke. And they'd come in with their cups of coffee and stuff.

And so I get here, and I have a spot for a cappuccino machine. And it didn't work. So I don't have any cappuccino.

UNIDENTIFIED MALE: She doesn't have any cappuccino.

UNIDENTIFIED FEMALE: Want me to get you one?

STEWART: No.

UNIDENTIFIED MALE: She doesn't have any cappuccino. The cappuccino machine does not work.

(END VIDEO CLIP)

SNOW: Now, Stewart has a 153-acre estate here in Bedford. She took a stroll on it earlier today, visiting her horses, also walking with her daughter Alexis.

She's looking relaxed. She was smiling. She was certainly smiling last night as she boarded her private jet in Greenbrier, West Virginia. This after being released from prison after midnight.

Even that shot of her departure from West Virginia was carefully orchestrated. Her company renting a flatbed truck for the photographers taking her picture as she departed.

Now, on her Web site, she also released a statement saying, "The experience of the last five months has been life-altering and life- affirming." She went on to say, "You could be sure that I will never forget the friends that I met here, all they have done to help me over the five months, their children, the stories that they have told me."

Now, after she was released she has 72 hours to contact her probation officer. When that meeting does take place, she will be hooked up with an electronic monitoring device. It's a device worn on her ankle that must stay on during the five months of her home confinement. She'll be allowed to leave her home for 48 hours a week. This in order to go to work, go to medical appointments, religious services and grocery shopping. But even if she leaves her home, the probation officer will know when she has left the house and when she's coming back in.

And any kind of trips have to first be approved in terms of going to work. That work schedule will be worked out with that probation officer -- Wolf.

BLITZER: Mary, any restrictions on visitors coming to her home?

SNOW: The only restriction on visitors is that she can't have visitors who have a criminal record. And that is the only restriction right now.

BLITZER: One final question, Mary. We saw the picture of her getting on the plane. She was wearing those tight, very fashionable jeans. She looked great. Her hair was excellent, as usual. Not the kind of hairdo we would expect someone coming out of five months in a prison to have.

Did she really lose a lot of weight? Is she in much better shape now than she was before? This is a 63-year-old woman. Take a look at how she looks. She looks great.

SNOW: Right. And, you know, she had that fashionable poncho on, as well.

It's hard to say how much weight she exactly lost. You know, friends of hers, though, who visited her, said that she was trimming down during her time there, that she was teaching yoga. She was walking on the grounds at Alderson. And that certainly she enjoyed getting in to shape.

So, you know, from all accounts, from her friends, she certainly got into shape. And she seemed very relaxed.

BLITZER: She looks like she could have emerged from a spa, as opposed to a prison, the way she looked. All right, Mary. I'm going to have you stand by. We're going to bring you back later this hour.

We have a lot more to talk about involving Martha Stewart. Mary Snow reporting for us from Bedford.

If there's anything America has learned from Martha Stewart, you can take a basket of lemons and produce lemonade. In the one year since her conviction a year ago tomorrow, her stock hit a low of $8 a share, but has now more than quadrupled since.

Can Martha Stewart turn prison into a profit? Standing by live with that part of the story, CNN's senior correspondent, Allan Chernoff.

Allan, what's the answer? Can she turn this company around big- time? ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Well, Wolf, it won't only be Martha Stewart, but certainly the company learned a very important lesson while Martha Stewart was in prison. The television business suffered. The media business, the magazines, they all suffered. But one thing that actually held up, merchandising, Martha Stewart products.

So the company found that no matter what the public thought about Martha Stewart the person, people still had high regard for Martha Stewart products, for the brand itself. In fact, the CEO of the company has told me she believes that "The Martha Stewart brand is our single greatest asset."

So Martha Stewart Living Omnimedia now plans to build on that brand. They want to expand dramatically. They want to have how-to videos based upon the more than 1,500 hours of television footage from Martha Stewart's shows.

They also are thinking about home improvement products, such as cabinets, perhaps doors, windows, hooks. These are all in the works right now, all on the drawing board.

They're thinking even about the possibility of frozen food. Of course, Martha Stewart known very much for the foods.

But more immediately, we're going to see more products coming out of the company at Kmart, for example. They're offering a new line of five-star linens, some ready-to-assemble furniture. We have a picture of a bed, as well. Only $300, and it looks pretty nice.

So they really are counting very much on this expansion. And remember, Kmart is merging with Sears, so Martha Stewart is anticipating that will dramatically expand her retail base.

Now, the company itself will be working on all those projects. Martha Stewart will be writing a column for the magazine. She has two television shows in development, a version of "The Apprentice," and also a new syndicated program. She will also, this fall, be promoting a new baking book.

And friends of Martha Stewart have told us that while in prison, she actually took notes for what they believe is a personal book. So that could be a big seller.

So certainly the company and Martha Stewart herself extremely busy -- Wolf.

BLITZER: Allan, what are restrictions that have been imposed on her as a result of the fact she is a convicted felon and this is a public company?

CHERNOFF: That's right. For now, Martha Stewart is not allowed to resume her role as chairman and chief executive officer. This is because the SEC, the Securities and Exchange Commission, has a suit pending against Martha Stewart. They're demanding that she be barred for life from serving as a chief executive or a director of the company.

Now, we understand from her lawyer and other sources familiar with a case that a settlement is likely at some point, most likely after the appeal of the criminal conviction of Martha Stewart. Remember, that's separate from the civil case from the SEC.

But once the criminal case is resolved, it is likely there will be a settlement. And the SEC most likely, according to a source, would agree to a ban of five years on Martha Stewart serving as a director or officer of her company -- Wolf.

BLITZER: Allan Chernoff reporting for us. Allan, I'm going to have you stand by, as well, because I'm going to bring you back later this hour. We're going to continue this discussion of Martha Stewart, now out of prison.

Another former CEO's fate is now in the hands of a New York jury. Bernard Ebbers led WorldCom, the telecommunications giant, driven into bankruptcy by an accounting scandal.

Ebbers is accused of ordering subordinates to cook the books, to prop up company stock. The defense says the prosecution's star witness, former chief financial officer Scott Sullivan, acted on his own. Sullivan has pleaded guilty, but testified Ebbers pressured him to commit fraud.

President Bush, meanwhile, is filling more top jobs in his administration. This morning, he nominated Stephen Johnson as the person he wants to lead the Environmental Protection Agency. Johnson is a career government official who's already serving as acting head of the EPA.

Then the president hit the road once again to promote changes in Social Security, stopping first in New Jersey, ahead of a trip later today to Indiana. But his strongest comments weren't on Social Security, but on the Middle East, specifically Syria.

Our White House correspondent Dana Bash joining us now live from Westfield, New Jersey.

Dana, what did he say?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, this seems to be a daily action by the president and his top aides to try to continue to put pressure on Syria. As you mentioned, the president was here in New Jersey talking about Social Security. And he started his event not talking about that, but talking about Syria, saying once again that he wants that country to withdraw its troops and its intelligence services from Lebanon.

And he also noted that he was pleased that the Saudi Crown Prince Abdullah, somebody with very close ties to the Syrian leader, Bashar Assad, said that he agreed with President Bush that those troops should be removed.

(BEGIN VIDEO CLIP) GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The world is beginning to speak with one voice. We want that democracy in Lebanon to succeed. And we know it cannot succeed so long as she is occupied by a foreign power.

And that power is Syria. There's no half-measures involved. And the job of the United States and the work of others...

(END VIDEO CLIP)

BLITZER: Dana, let me move on from Syria and the Middle East to Social Security. That's the main item on the president's agenda, by all accounts.

He's got a rough road ahead to sell his privatization plan through a skeptical American public, at least if we take a look at the polls. What different is he going to do now on this new campaign swing, if you will, to get his Social Security reforms done?

BASH: Sorry about that, Wolf. I lost audio there. But I heard you on Social Security.

And it was very interesting to hear the president today, because this is part of his renewed effort, according to the White House. But he had already visited nine states trying to sell Social Security. And according to several national polls, it didn't seem to be going very well.

So today he changed his language. And it was quite notable.

He started not talking about those personal accounts for Social Security, but he started using a Democratic catch phrase, and that is "the safety net." He said it is important for people to realize that he agrees it's key to save that safety net, and that the problem is that there is a hole in it.

Now, that is noteworthy because several Republicans, including, for example, we understand, Senator Lindsey Graham, somebody who perhaps will be key to a compromise, has urged the White House to change their language a little bit because talking simply about personal accounts had not been working.

Having said that, the president did afterwards go in to his pitch for personal accounts, saying that he does believe that is the best way for younger workers to see their investments grow, much better than what they see in Social Security, because as he has said many times, he doesn't believe and they don't believe Social Security will be there for them once they retire. And to prove, perhaps, that he is still sticking by that, he stacked a panel of people he had here in New Jersey with testimonials, talking about the idea that they liked his idea for personal accounts -- Wolf.

BLITZER: Dana Bash reporting for us on the road in New Jersey today. Dana, thank you very much for that.

This note. Sunday on "LATE EDITION," I'll interview Dan Bartlett, the White House counselor, to talk about Social Security and a lot more. That's Sunday, noon Eastern.

Is Syria bending under international pressure to withdraw from Lebanon? Signs may be pointing to that. Details on the latest plans for Syrian troops, that's coming up. We'll go live to Damascus.

And a former Ukrainian interior minister is found dead. Did it have anything to do with the murder investigation of a slain journalist?

You're watching NEWS FROM CNN, and we're back in a moment.

(COMMERCIAL BREAK)

BLITZER: There's a story we're following from Eatontown, New Jersey. We're going to be getting some pictures on this shortly, but let me read from The Associated Press that just came in.

The roof of a Petco building -- that's a pet supply store -- collapsed Friday after an explosion caused by workers who damaged a gas line outside. Authorities say they're trying to rescue people they believe are still trapped inside the store's rubble.

No one is believed to have been killed in this, but six -- there are six people inside the store. Two of them have been taken to hospital. They think some of the others may be trapped.

We'll get some more information, share it with you, get some of these pictures, as well. And when we get some more information we'll share it with you. But once again, explosion, apparently a ruptured gas line causing it out in New Jersey.

Let's move on to other news we're following around the world.

A partial pullout of troops from Lebanon, that's what Syria may be planning in the wake of mounting international public and -- pressure on Syria to withdraw its troops from Lebanon. Our senior international correspondent Brent Sadler is in Beirut, where there's also talk of who assassinated the former Lebanese prime minister, Rafik Hariri.

What's the latest information we're getting, Brent?

BRENT SADLER, CNN SR. INTERNATIONAL CORRESPONDENT: Wolf, first of all, the Syrian president under tremendous international pressure, led by the United States and France, and supported widely across the Arab world now, seems to be forcing Bashar al-Assad's hand. He's due to make a speech, unscheduled speech before parliament in Damascus Saturday.

Widely expected he's going to announce plans for a withdrawal and a partial pullout of Syria's some 15,000 solders that are still stationed in Lebanon. That kind of move, though, would not satisfy the U.N. demands of Security Council Resolution 1559, sponsored by the United States and France, and certainly falls way, way short of what President George W. Bush is demanding. That is, a withdrawal of all those troops, and not just the troops, also Syria's secretive intelligence services in this country -- Wolf.

BLITZER: All right. Brent, I'm going to cut this short, because unfortunately we have to go to Chicago right now. There's a news conference on the murder of the husband and mother of a federal judge. Let's listen in.

DEPUTY SUPERINTENDENT HIRAM GRAU, CHICAGO POLICE: ... to this case, and their assistance has helped us move the investigation forward.

All of us are very pleased with the progress on this investigation. We continue to process leads, conduct interviews, and analyze evidence. Despite that progress, however, we will not slow down until we identify the person or persons responsible for these murders.

We have said all along that this case will be solved the same way we solved so many of our cases, through the skilled work of our detectives and through information from the public. The information and the cooperation we've received from the public has been remarkable.

So far, we have received 232 tips from callers to our tip line. One hundred of those -- 102 of those have come in since releasing the composite sketches on Wednesday night. We're following up on every single lead, and every little bit of information helps. So all of us continue to urge anyone to share information and come forward with anything that you may think is relevant.

We're thankful that the FBI is offering an added incentive for people to come forward with information. And here to discuss that is Robert Grant, special agent in charge for the FBI Chicago field office -- Rob.

ROBERT GRANT, SPECIAL AGENT IN CHARGE OF FBI CHICAGO FIELD OFFICE: Thanks, Hiram.

I don't think there's much that we're going to disclose here today that you haven't already either printed or broadcast. In fact, I was somewhat surprised to find this morning that I think -- is there someone here from the "Chicago Sun-Times"? Love to know who gave you that information. I know you won't tell me.

But we were kind of hoping to announce it here. But you all seem to be very good reporters.

But the purpose of my being here today is to announce that the FBI is offering a reward of up to $50,000 to persons who come forward with information which leads to the identification of a person or persons who are involved in the murders of Mr. Michael Lefkow and Mrs. Donna Humphrey, pictured over here.

We are seeking additional information. We are, as the deputy superintendent explained, receiving a lot of cooperation from the public. We are attempting to accelerate that cooperation. We have not eliminated any avenue of investigation. And we are hoping by offering this reward some people who may be in positions of having information, or who may be involved, may decide they would like to come forward.

That concludes my remarks.

Anybody?

QUESTION: Mr. Grant, mind if I ask a question, sir, before you step away?

GRANT: Sure.

QUESTION: Given the horrific nature of these murders, isn't it a little galling for people in law enforcement to have to offer money for information, good, hard, solid information that might lead to the killers?

GRANT: There are people who are motivated by many different things. And some people are motivated by money, particularly people in the criminal elements.

So this is an added incentive. We're getting a lot of cooperation from the honest citizens of Chicago. We are running down a tremendous amount of information.

We have a very multifaceted investigation involving virtually all the federal agencies in Chicago and the Chicago Police Department, as well as state and local law enforcement in the community. So this, to me, and this to the FBI, is an attempt to accelerate information to us by people who may be otherwise reluctant to come forward to law enforcement.

UNIDENTIFIED MALE: Another question?

QUESTION: If it's determined that -- the investigation determines that it is a hate crime or definitely related to Judge Lefkow's work on the federal bench, will the FBI take the lead in the investigation?

GRANT: Let me explain to you how this investigation got started. I, in fact, was on an aircraft with Superintendent Klein (ph) when he was notified that Judge Lefkow's...

BLITZER: Unfortunately we've lost that feed coming in from Chicago. But I think we got the news basically, the $50,000 FBI reward for information leading to the arrest of those who committed the murder of Michael Lefkow, 64 years old, the husband of Judge Joan Lefkow, and Donna Humphrey, the 89-year-old mother of this federal judge.

Wendy Cole of "TIME" Magazine is in Chicago. She's keeping a very close eye on this story. She's joining us now live.

What have you learned, Wendy, you and your colleagues at "TIME" magazine out in the Midwest, on this investigation? Do they have any solid leads right now?

WENDY COLE, "TIME" MAGAZINE: Well, they are being very careful about what they release. And obviously there is a huge amount of speculation about the connections with hate groups, and particularly Matt Hale, who we know has released a statement saying of course that he did not have any involvement. But that, of course, doesn't mean -- preclude that some people who are his followers or believers in the same kinds of white supremacist views wouldn't have been involved. And, you know, viewing Hale as some kind of a martyr role.

But of course authorities are not going to confirm this, because they're -- as I said, they're not ruling anything out or anything in, as far who's behind this.

BLITZER: The statement that Matthew Hale released through -- I guess through his mother, is that right, denying that he had any involvement of this thing, it would be idiotic to assume he had anything to do with this, "TIME" Magazine reported this on its Web site yesterday. Fill our viewers in on how this came about.

COLE: Well, my colleague Marguerite Michaels (ph) was actually the first reporter who was with Hale's mother when -- shortly after he had his weekly phone call with her, which is when he dictated to her his comments that are now, you know, pretty widely been disseminated. And his point about it being idiotic to suggest it was him has some plausibility in the fact that he is supposed to be sentenced next month in the very crime involved with plotting to murder the judge herself.

BLITZER: And he's facing potentially -- he's facing potentially 40 years in prison, is that right?

COLE: Correct, yes.

BLITZER: And so...

COLE: And so he's looking for any kind of a -- I'm sorry.

BLITZER: Yes. I was going to say, if he's worried -- if he's worried about getting a harsh sentence, this kind of situation is only going to make matters a lot worse for him. Is that -- that's the bottom-line point he's trying to make?

COLE: Exactly. I mean, he's looking for -- any kind of leniency or, you know, consideration during the sentencing time would be a very strange time to in any way send out any sort of a code or hints that -- that would be ordering the murder of the judge or her family.

BLITZER: What about one of his supporters or former colleagues in the white supremacist movement out there? Is that one of the lines, the theories they're investigating right now, as well, that this could have been simply someone acting on his own?

COLE: Right. I mean, the so-called lone wolf theory that even if it wasn't an instruction by Hale, he's had a bit of resurgence, I understand, in terms of loyalty and a bit growth in a number of chapters of his organization, which is now known as the Creativity Movement. And they see Hale as a martyr.

And this is -- you know, he is a galvanizing figure. And even though he sits in a jail cell, he still wields some influence, even if he doesn't have a direct communication with these other hate groups right now.

BLITZER: A horrific crime indeed. Wendy Cole of our sister publication, "TIME" Magazine, joining us.

Thanks, Wendy, very much.

COLE: Sure. Thank you.

BLITZER: Things are looking up for Martha Stewart. Prison is now behind her and she has a lot of options for someone with a criminal record. What can the public expect from such a well-known celebrity? Coming up, I'll speak with four journalists who followed Stewart's roller coaster ride.

All that coming up next.

(COMMERCIAL BREAK)

BLITZER: A 4-year-old murder case in Ukraine may have yielded yet another victim. A former government minister implicated in that killing is found dead, apparently, apparently by his own hand.

CNN's Moscow bureau chief Jill Dougherty is covering the story for us. She's joining us live -- Jill.

JILL DOUGHERTY, CNN MOSCOW BUREAU CHIEF: Well, Wolf, you know, this really is a murder mystery. It sat on the shelves, the investigation sat on the shelf for four years, no progress, and now after the Orange Revolution, the case is moving very, very fast, and this last chapter, which appears to be a suicide by one of the key people implicated in that murder.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): The body of Yuri Kravchenko was found Friday morning at his country house outside the Ukrainian capital Kiev. Investigators say the ex-interior minister most likely committed suicide, shooting himself just hours before he was to be questioned about the notorious murder of opposition journalist Georgi Gongadza (ph), a slaying in which he was implicated.

Ukraine's President Victor Yushchenko said the suicide could be linked to the Gongadza murder case, and ordered top officials to conduct a transparent and thorough investigation. The 31-year-old Internet journalist, who campaigned against corruption in Ukraine, was abducted from the streets of Kiev September 16th, 2000. Two months later, his headless body was found in the woods outside the city. Opposition politicians pointed to the finger at then-Ukrainian President Leonid Kuchma, releasing secretly recorded audiotapes in which Kuchma was heard saying of the journalist, "Drive him out. Give him to the Chechens." Kuchma claimed the tapes were doctored. And in an interview with CNN in December of 2000, denied any involvement in Gongadza's murder. He said the charges were part of a political attack against him.

The brutal killing was never solved. Kuchma's opponents charged the government was deliberately protecting the assassins. Demonstrators took to the streets, setting up tents on the main street in Kiev, just as they would do four years later during the Orange Revolution that swept in new president Victor Yushchenko into office. Yushchenko vowed to make the case a top priority. And this week, the Ukrainian prosecutor-general accused four members of the interior ministry of carrying out the grisly murder, suffocating Gongadza, beheading him, dousing his body with fuel and setting it afire.

(END VIDEOTAPE)

DOUGHERTY: And the latest development just a few minutes ago, in fact, Interfax news agency citing police sources saying that Kravchenko left a suicide note and he blamed his suicide, according to these police officers, on President Kuchma and his entourage. Also said he did it because he wanted to protect his family against any attacks. And then finally these sources also, according to Interfax, saying that there were two bullet wounds. Apparently he tried once, it did not kill him, and then he finally did succeed in killing himself -- Wolf.

BLITZER: Jill Dougherty reporting on this mystery for us from Moscow. Jill, thanks very much.

I want to move from Moscow to Everett, Washington, Washington State. Take a look at these live pictures we're getting in from there. This is the USS Abraham Lincoln, the aircraft carrier, it's now returning to its homeport in Everett, Washington, after five months at sea, mostly in the Western Pacific most recently. It was deployed there, among other things, to help deliver emergency supplies and medical aid to tsunami victims. Helicopters flew hundreds of missions to Sumatra from the Abraham Lincoln. The Abraham Lincoln battlecraft -- aircraft carrier battlegroup now returning to its homeport of Everett, Washington. Some 6,000 sailors aboard that vessel. Lots of happy families waiting for their return.

We're told, by the way, that among the crew members, 40 babies were born while they were offshore, while they were on assignment in the Western Pacific.

Welcome home to them.

More now on Martha Stewart. With the pain of prison behind her, Martha Stewart gets ready to reconnect with her friends and family. Did prison life change her? Is the headstrong businesswoman perhaps more humble? Where does she take it all from here?

Joining us now on Stewart's next act, CNN's Mary Snow and Allan Chernoff, they're standing by live in Bedford, New York. That's outside of New York City at the Stewart estate. Live from midtown Manhattan Dennis Kneale of "Forbes" magazine, Keith Naughton of "Newsweek" magazine. They're at the Time-Warner Center. All of them have been covering this story very, very closely.

Let me bring Keith Naughton in first. You helped contribute to that "Newsweek" cover story on the new, shall we say improved Martha Stewart. Based on what you've seen over these past 12 hours or so since she was released from the prison, what's your assessment?

KEITH NAUGHTON, DETROIT BUREAU CHIEF, "NEWSWEEK": Well, the strategy of repositioning Martha Stewart as this sort of humble, accessible Martha of the people is already taking place. You saw that very stage-managed departure from the airport last night, where she looked so youthful and hip in that outfit with the poncho and the jeans. And then today, coming outside and talking to the press. She is showing that she's accessible. She's not the sort of icy queen of perfection she used to be. This is all part of the plan to make Martha reach a much broader audience than she used to and overcome the past flaws.

Dennis Kneale of "Forbes" magazine, what's your assessment, the 12 hours now that we've seen Martha? There's been so much coverage of her since her release from prison.

DENNIS KNEALE, "FORBES" MAGAZINE: There sure have. This is the best marketing Martha has ever done, and she's taken what could have destroyed her career and her company and turned it into something that could make it more successful than ever. The question I have, though, is at what point does a certain portion of America get a little sick of how much she's almost reveling in it and enjoying it? And don't we need to hear Martha look into that camera and apologize and say I screwed up, I hurt my employees, I hurt my family, and I'm sorry about it. And she hasn't quite done that yet. She seems to be almost enjoying this a little too much.

BLITZER: Mary Snow, you're out there in Bedford at the estate of Martha Stewart. She spoke briefly with some of the photographers, some of the reporters who are camped out there. Is there any expectation she's going to make a more formal statement to the news media on camera? We saw the written statement she released through her company on the Web.

MARY SNOW, CNN CORRESPONDENT: That's a good question, Wolf. But you know, she's come out twice now in the past couple of hours, and she's kind of joked a little bit with reporters. You know, she's going to be going to work within the next couple of days, we anticipate. So perhaps she might make a more formal statement at that time. But right now, it's really just kind of an informal thing where she's walking around the grounds.

BLITZER: But, Mary, there's no restrictions on her talking to the news media, are there?

SNOW: No. In fact, she does not have restrictions on talking to the press once she was released from prison. So that is one thing -- there are restrictions, though, on her movements around that estate. Once she has that ankle bracelet put on. So she has to contact her probation officer by midnight on Sunday. But, you know, today, as we saw, she was able to walk pretty freely around that estate. BLITZER: If you take a look at the boots she was wearing, they seem pretty snug. The ankle bracelet must be very, very modest. It didn't show any effect there, did it, Mary?

SNOW: Well, she hasn't actually put it on yet. She'll meet with her probation officer, she has to contact him by midnight on Sunday, and they're going to sit down, she has to sign an agreement, and at that point once that bracelet goes on, it has to stay on for the next five months. She cannot take that off.

BLITZER: Let me bring Allan Chernoff in. He's been spending a lot of time covering Martha Stewart over these many months, shall we say, years.

Allan, what do you make of Dennis' suggestion, maybe it would be a good idea to look into the camera and apologize for the crime that she committed?

ALLAN CHERNOFF, CNN CORRESPONDENT: Wolf, there is actually one restriction on Martha Stewart, and that is the simple fact that she is still appealing her criminal conviction. As a matter of fact, there's a hearing before a three-judge panel on March 17th. So Martha Stewart really has no reason to give any apology prior to that time, because she really does hope still that her conviction will be overturned. Now, in addition, there is also an SEC case still against her. She is still charged with insider trading. That, of course, a civil case, separate from the criminal case.

BLITZER: Dennis, what about that?

KNEALE: You know, I think that Allan makes a really good point, but the fact is, we're not talking about reality here. We're talking about reality television and perception. And America, which got to see her eat a little dirt and go to jail and is now willing to forgive her, also needs to see her be a little sorry. She put a lot of other people, not just herself, she put a lot of other people through hell over fibbing to federal authorities.

Now I think the feds cracked down on her way too much for what she did. She kind of panicked, she told a federal agent something, she wasn't under oath. OK, but given all that, at some point, you got to fess up, you got to tell America sorry about that before America will let you get up and get on with your success.

BLITZER: Keith Naughton, is there anything in her character, based on your reporting, that would suggest she might do that?

NAUGHTON: You know, she's doggedly pursuing this appeal. And you know, many advertisers, even advisers, wish she wouldn't because it sort of highlights the old Martha and it's time to move on to the new Martha. But she's in this catch-22. You know, one of her first public appearances could be that March 17th court date, which would only remind us of all the bad news from last year. If she really wants to move on, she has to recognize that ultimate vindication won't come in a courtroom. It will come in a court of public opinion. BLITZER: Allan Chernoff, I want to bring you back, because in your earlier report this hour on our program, you said that her company wants to branch out into all sorts of areas. One of the most fascinating, frozen food. I take it she used to eat a lot of frozen food in prison that she would put in the microwave. Is there a connection, is there something going on that we don't know about?

CHERNOFF: No, Wolf, I think this is absolutely nothing at all to do with the microwaves at the Alderson Prison. That's very funny. What it does have to do is with the brand identity of Martha Stewart. People recognize that this brand stands for quality. I mean, that is the perception, at least, among Americans. Whether or not they like Martha Stewart, the person.

What is Martha Stewart known for? Home decorating, home improvement, crafts, and also, food. So as a result, that is one of the many products that the company is considering right now branching out into, trying to build upon that brand.

BLITZER: Mary, the whole nature of Martha Stewart and being a hands-on kind of CEO, a chairman, an executive, it's going to have to be different, given the legal restrictions that are now imposed on her.

SNOW: That's right, Wolf. Not only the legal restrictions, but the position in her company. Because since she's been in prison, there now is a new CEO, Susan Lyne. And also as we know earlier this week, the head of the publishing unit also stepped down, so that's another big change. And the big question that people who follow this company say, you know, she's not particularly good at playing second fiddle. And how will this relationship work? Because she does have to answer to her new boss. So that's going to be one of the tests going forward in this new business.

KNEALE: No, she doesn't.

BLITZER: Flesh that out. Who said no she doesn't?

KNEALE: I did. She doesn't have to answer to any boss, really, so long as she owns 60 percent of that entire company. You know, Susan Lyne is a sharp executive, and if Martha is smart, she will let that president take the reins and run it because she doesn't want to have to do that and she can focus on color schemes or something. But the fact is Susan Lyney knows that Martha owns this company, controls it and she's going to have to do what Martha says.

SNOW: She does. But also the company is in a tight spot right now. I mean, there's a lot riding on this return of hers. And you know, so many people have said, well the stock has gone up so much. And these two shows that she's doing are certainly going to be good for her. But then also the question is how much will that help the company? And they've reported losses. And they really have to put -- be very precise on how they turn this company around and steer it in the right direction.

BLITZER: And we all know that the stock has skyrocketed, has dramatically improved in recent months. But you know what? There are a lot of companies that have seen stocks go up and then stocks go down almost as rapidly. There's a lot riding on her comeback right now. We're going to take another quick break. We have a lot more on Martha Stewart and her comeback right after this short break.

(COMMERCIAL BREAK)

BLITZER: Back again now with more on Martha Stewart. Our guests, CNN's Mary Snow and Allan Chernoff. They're standing by live in Bedford, New York. That's outside the Stewart estate. And joining us from Manhattan, Dennis Kneale of "Forbes" magazine and Keith Naughton of "Newsweek" magazine there at the Time Warner Center in Manhattan.

Let me start with you, Keith. The statement she released on the web, her prison experience, she said, was life-altering and life- affirming. Is there any indication she's going to become an activist for women's rights in prison?

NAUGHTON: That's what a lot of prison reform advocates would like. You know, she put out that letter while she was still in prison, imploring America to consider these 1,200 women she's incarcerated with, and in fact, all women who are in prison and look at sentences and look at the need for rehabilitation. So there's the hope that she steps forward as a prison reform advocate. But that's a delicate balance, too. You know, you also need the ability to show that you're moving on and that there is a new, reformed Martha, as well. So if she becomes too much of a prison reform advocate, that could, you know, sort of stick her in the past.

BLITZER: Do you agree with that, Dennis? Dennis Kneale of "Forbes" magazine. That it's a two-edged sword, if she starts becoming an activist for women's rights in prison?

KNEALE: I really think there's a big downside there. And if you're a shareholder in her company, you want Martha to focus on getting back to work. This is not a TV movie of the week where Martha honestly is going to come out of this a totally changed person and a better human being. I'll bet you Martha is still Martha. And while I'm happy that she wants to help women in jail, women are in jail because usually they did something wrong. And so I wonder how much Martha should really get involved. You want to help, do things privately, give them money, give them training. But don't get on a soap box about this because instead you should be talking about your brand and about your company.

BLITZER: Mary, you've been speaking with people who have been in touch with her, have actually gone to see her in prison over these past 5 months. What are her friends and associates telling you about the so-called new Martha Stewart?

SNOW: One thing that a number of people have said is that she is much more relaxed. People, even in interviews, have even suggested that this was a really life-altering experience that she admitted, but also a rest for her, a break from her marathon workaholic life. And they seemed to think that she's been refocused, relaxed, and as we've been talking about, you know, getting in shape and kind of a different demeanor.

BLITZER: I was impressed, Allan, her daughter, Alexis, who greeted her at the prison, flew back with her, has been at her side every step of the way. This is a pretty loving relationship between mother and daughter?

CHERNOFF: Well, that's very true. Alexis very close to Martha, and actually after the conviction, Alexis was the one who broke down in tears in the courtroom, not Martha Stewart. I should also add something about Martha Stewart's personality publicly. The company certainly wants everyone to see what they call the real Martha Stewart.

Many people who know her say Martha has a wonderful sense of humor, and that hasn't come across very often. But this morning, actually, she did tell something fairly funny to a number of the photographers. She was talking about how in prison, they would every day ask the guards for some cappuccino, as the guards would be walking around with their cups of coffee. And she said, well I came home to my house here in Bedford, I have a cappuccino machine. And guess what? It's broken. So no cappuccino for Martha today.

BLITZER: I suspect it will be fixed very, very soon.

Allan Chernoff, Mary Snow, thanks to both of you for joining us. You'll be on CNN throughout the day, back here at 5:00 p.m. on "WOLF BLITZER REPORTS." I also want to thank Keith Naughton of "Newsweek" magazine, Dennis Kneale of "Forbes" magazine. An excellent discussion on Martha Stewart.

We'll continue our coverage. We'll take another quick break. We'll take another quick break, when we come back, a vicious animal attack in California. What would make a chimp attack a man, leaving him critically injured? It's among the most popular stories right now at CNN.com. We'll have details. That's coming up in the next hour on "LIVE FROM."

I'll be right back.

(COMMERCIAL BREAK)

BLITZER: We're getting this news in right now, good news from Rome, the Italian journalist Julianna Segrana (ph) held hostage in Iraq for about a month has now been freed. According to media reports, her newspaper, "Il Manifesto (ph)," said that she has been freed. They have confirmation that she is now a free woman. Good news for her.

Before we fly the coop ourselves, a little more fun with Martha Stewart. Here's David Letterman on last night's "Late Show."

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, "LATE SHOW" HOST: She had a lot of last-minute details on her mind. She's been racking her brain all week, you know, how much does she tip the warden? When Martha gets out, she will be under house arrest in her big $40 million mansion in Bedford. Boy, that will teach her. And she's only allowed out of the house for like doctors visits, grocery shopping, or to dump more stock.

By the way, Martha, if you're watching, I waited for you.

(END VIDEO CLIP)

BLITZER: Dave Letterman last night. I'll be back later today, every weekday, 5:00 p.m. Eastern for "WOLF BLITZER REPORTS."

Later today, I'll be speaking with the new United States attorney General Alberto Gonzales. We'll have that interview, coming up 5:00 p.m. Eastern Today.

Until then, thanks very much for watching the news from CNN, I'm Wolf Blitzer in Washington.

"LIVE FROM" with Kyra Phillips and Tony Harris. They have a lot more coming up on Martha. I'm predicting that right now. We'll be right back.

(COMMERCIAL BREAK)

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