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American Morning

Westerfield Found Guilty; Shareholder Suit Hits Martha Stewart

Aired August 22, 2002 - 07:07   ET

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

PAULA ZAHN, CNN ANCHOR: After nearly nine days of deliberations, a guilty verdict. The jury in the trial of David Westerfield made its decision yesterday.
(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We, the jury, in the above-entitled cause, find the defendant, David Alan Westerfield, guilty of the crime of murder in violation of Penal Code Section 187.

(END VIDEO CLIP)

ZAHN: He was found guilty in the kidnapping and killing of 7- year-old Danielle van Dam last February. He was also found guilty of possessing child pornography.

Now, next week, that same jury will begin hearing evidence on whether Westerfield should be sentenced to death.

And to talk about that phase of the trial, CNN legal analyst, Jeffrey Toobin.

Before we look ahead, let's look back. Were you surprised at all by this guilty verdict, despite the length of the deliberations?

JEFFREY TOOBIN, CNN LEGAL ANALYST: Not a bit. I mean, the DNA evidence in this case was so strong. Danielle van Dam's blood on Westerfield's jacket, that evidence was never explained by the defense, because I don't think there is an explanation. I think the explanation is because he killed her. That's why the blood was there. I think that's what the jury saw. End of story.

ZAHN: So walk us through the next phase of what the jury has to go through. They have the challenge of either deciding to go for the death penalty or a life sentence without parole.

TOOBIN: Right. And it begins next Wednesday, and it really will be a trial about David Westerfield's life, not really about this crime. The question will be, does -- you know, are there other parts of his life, the defense will argue, that suggests he is not, you know, a predator, someone who is just so evil that he must be killed? So they're going to be calling friends, relatives, people to show that, you know, his life is broader than just this one horrible event.

What's interesting is that there have been secret hearings in this case about what evidence the prosecution can put on. The suggestion being that they will try to put on evidence of other misconduct that has not become public regarding Westerfield.

ZAHN: Which they weren't allowed to do the first time.

TOOBIN: Which they weren't allowed to do in the trial, and the question is, will they be able to do it in the penalty phase.

ZAHN: And do we know how damaging any of that information is?

TOOBIN: Well...

ZAHN: I know these are secret hearings...

TOOBIN: You know, I...

ZAHN: ... but you're a good reporter. You've always got your...

(CROSSTALK)

TOOBIN: You know, I have to say I don't really know. Certainly, there will be very emotional testimony from Danielle's parents, talking about the impact on them of Danielle's death, which -- you know, I think it was very easy to predict, basically, that this trial was going to end in a conviction.

The penalty phase, I think, is a real mystery. I don't know how -- I don't have a guess as to how this will come out.

ZAHN: Let's move on to other legal matters. Martha Stewart's face is splashed across the front pages of many newspapers this morning. She has now become the subject of a lawsuit charging her with dumping her own stock, I guess, presumably ...

TOOBIN: Yes.

ZAHN: ... when she found out that she was going to be targeted in this ImClone trader -- inside trader scandal.

TOOBIN: It's a very interesting lawsuit. The law firm that filed this suit, Milberg, Weiss, does nothing but these kinds of cases, shareholder class-action cases. When a stock goes down, they sue on behalf of the shareholders. It's very controversial. A lot people in the corporate community think these people are ambulance chasers, that they're extortionists, that they're terrorists.

Milberg, Weiss points out that they have been saying these companies were corrupt, accounting, you know, irregularities for years, that they were well ahead of everybody else. It's a serious lawsuit.

ZAHN: How successful how they have been in getting money for other traders who said they weren't privy to the same information as the folks who ran the company?

TOOBIN: Well, it's interesting. The cases almost never go to trial, but these companies often decide to settle, often for significant amounts of money, rather than let the cases proceed. So they actually do very well for themselves. These lawyers have made a lot of money for themselves. Some question about how well the shareholders do. But I mean, this is not a nuisance lawsuit. This is something that Martha Stewart is going to have to be very concerned about.

ZAHN: I know you have been doing a lot of research on this personally.

TOOBIN: Yes, for my other job at "The New Yorker."

ZAHN: Is there -- for your other job. Well, I guess we allow you to have other employment around here.

TOOBIN: Sure.

ZAHN: But is there not an obvious appearance of ambulance chasing going on here? Martha Stewart's attorneys this morning are saying in the papers, this suit is without merit.

TOOBIN: Absolutely. And you know, they have frequently been thrown out of court, because judges don't like these cases. But they are also the same -- Milberg, Weiss' firm is also the same people who are suing Enron on behalf of their shareholders. And in many cases, they have identified fraud that other people have not found.

So I mean, it's a really good story, because there are really strong arguments on both sides. I hate to weasel out on you on this one, but it's really true that, yes, you can call them ambulance chasers, but they also have a point.

ZAHN: But the simplistic core, and we've got five seconds left here, is the allegation that she dumped the stock knowing that her own stock was going to tumble because she was going to be targeted in this ImClone trading scandal.

TOOBIN: Exactly. Insider trading on her own shares...

ZAHN: Wow!

TOOBIN: ... in her own company.

ZAHN: Jeffrey Toobin, thanks for covering the world for us this morning.

TOOBIN: OK, spanning the globe.

ZAHN: That's right. That's why we bring you in here. Have a good day.

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