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American Morning

Martha Stewart Case

Aired November 18, 2003 - 07:10   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.


SOLEDAD O'BRIEN, CNN ANCHOR: Martha Stewart is expected back in court today. Her lawyers are trying to get at least one of the criminal charges against her dismissed. Stewart faces trial in January for alleged securities fraud and obstruction of justice. The charges are linked to her sale of ImClone shares just before the stock price plummeted nearly two years ago.
Does she stand a chance of having a charge tossed out? Joining me to talk about that this morning, CNN's legal analyst, Jeffrey Toobin, and Andy Serwer, also of "Fortune" magazine, in addition to joining us every morning.

Hi. Good morning, guys.

Let's start legally speaking. This pretrial hearing, as we mentioned, her attorneys are hoping to get one of these two charges thrown out. Which one, and on what grounds?

JEFFREY TOOBIN, CNN LEGAL ANALYST: It's securities fraud that they're trying to have thrown out. Part of the case against her is obstruction of justice, lying to investigators. That certainly is going to go to the jury when this case is tried in January.

The very interesting novel charge against her is securities fraud. The government argues that by publicly asserting her innocence, she artificially pumped up the price of her shares, by refusing to admit her guilt, thereby committing securities fraud, defrauding the investors in her shares.

O'BRIEN: Sort of a catch-22, isn't it.

TOOBIN: It's a very unusual charge. I've never seen a charge like this before. I think she has a real chance of getting that thing tossed. It does not seem sort of fair, merely by asserting your own innocence you are somehow engaging in securities fraud.

O'BRIEN: But aren't the prosecutors also saying outside of just saying I didn't do it, I'll be proven innocent, as we sort of hear everybody say when they've been charged with something, that by virtue of the fact that she detailed the sale of the stock itself she was being dishonest, they say, and therefore was really being deceptive? It was more than just a, hey, guys, I'm innocent, I didn't do it.

TOOBIN: That's the argument. But the thing that is so odd about that is that it is one thing to detail those charges -- to detail her response to investigators that I had this pre-existing plan to sell the shares at $60 a share to investigators. That's what she told investigators, and they say that's a lie, and they say that's a crime, which clearly it is if it's false. But to say that the public disclosure of that story is somehow another crime, if that's a crime, it's a new one, and the judge will have to simply accept that.

O'BRIEN: Let's talk financially now, Andy, Martha, Inc., overall the whole company and Martha Living Omnimedia -- Martha Stewart Omnimedia. How is that company doing? Is it making a comeback? Because, of course, the shares started plummeting.

ANDY SERWER, "FORTUNE" MAGAZINE: Yes. Well, no question, Soledad, this is a business under pressure. Ad sales, the lifeblood of this company, are down 31 percent this year. There's a $4 million loss in the third quarter. And you can imagine her trying to hire people, for instance, just to name one thing.

On the other hand, there is the scenario where the glass is half- full. Her new magazine, "Everday Food," is catching on. Her ads are back at K-mart. Her furniture line, which is in 250 galleries across the country, is doing extremely well. And, you know...

O'BRIEN: The TV show is back on TV.

SERWER: And the TV show is back on. Here is the latest issue of the December issue. I mean, it's a real, viable publication. There is some cocoa for Jeff Toobin perhaps to make a recipe there.

TOOBIN: Yes.

SERWER: So, it's an ongoing concern, as they say.

TOOBIN: What is interesting though, is that when this story started, they were saying, you know, this doesn't really affect us. They've pretty much acknowledged that...

(CROSSTALK)

SERWER: Oh, yes. No, they have. That's right, Jeff.

TOOBIN: That the investigation has taken a real toll on all (UNINTELLIGIBLE).

SERWER: Because people shy away from it -- advertisers and, again, hiring people, those sorts of things. They don't want to have anything to do with it. When it's gone...

O'BRIEN: It's going to have an impact.

SERWER: Right.

TOOBIN: But the thing is it's a real business. I mean, you know, people want to buy her products regardless of her personal problems.

SERWER: Yes.

O'BRIEN: Jeff Toobin, Andy Serwer, thanks, you guys. Appreciate it.

SERWER: OK.

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 November 18, 2003 - 07:10   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Martha Stewart is expected back in court today. Her lawyers are trying to get at least one of the criminal charges against her dismissed. Stewart faces trial in January for alleged securities fraud and obstruction of justice. The charges are linked to her sale of ImClone shares just before the stock price plummeted nearly two years ago.
Does she stand a chance of having a charge tossed out? Joining me to talk about that this morning, CNN's legal analyst, Jeffrey Toobin, and Andy Serwer, also of "Fortune" magazine, in addition to joining us every morning.

Hi. Good morning, guys.

Let's start legally speaking. This pretrial hearing, as we mentioned, her attorneys are hoping to get one of these two charges thrown out. Which one, and on what grounds?

JEFFREY TOOBIN, CNN LEGAL ANALYST: It's securities fraud that they're trying to have thrown out. Part of the case against her is obstruction of justice, lying to investigators. That certainly is going to go to the jury when this case is tried in January.

The very interesting novel charge against her is securities fraud. The government argues that by publicly asserting her innocence, she artificially pumped up the price of her shares, by refusing to admit her guilt, thereby committing securities fraud, defrauding the investors in her shares.

O'BRIEN: Sort of a catch-22, isn't it.

TOOBIN: It's a very unusual charge. I've never seen a charge like this before. I think she has a real chance of getting that thing tossed. It does not seem sort of fair, merely by asserting your own innocence you are somehow engaging in securities fraud.

O'BRIEN: But aren't the prosecutors also saying outside of just saying I didn't do it, I'll be proven innocent, as we sort of hear everybody say when they've been charged with something, that by virtue of the fact that she detailed the sale of the stock itself she was being dishonest, they say, and therefore was really being deceptive? It was more than just a, hey, guys, I'm innocent, I didn't do it.

TOOBIN: That's the argument. But the thing that is so odd about that is that it is one thing to detail those charges -- to detail her response to investigators that I had this pre-existing plan to sell the shares at $60 a share to investigators. That's what she told investigators, and they say that's a lie, and they say that's a crime, which clearly it is if it's false. But to say that the public disclosure of that story is somehow another crime, if that's a crime, it's a new one, and the judge will have to simply accept that.

O'BRIEN: Let's talk financially now, Andy, Martha, Inc., overall the whole company and Martha Living Omnimedia -- Martha Stewart Omnimedia. How is that company doing? Is it making a comeback? Because, of course, the shares started plummeting.

ANDY SERWER, "FORTUNE" MAGAZINE: Yes. Well, no question, Soledad, this is a business under pressure. Ad sales, the lifeblood of this company, are down 31 percent this year. There's a $4 million loss in the third quarter. And you can imagine her trying to hire people, for instance, just to name one thing.

On the other hand, there is the scenario where the glass is half- full. Her new magazine, "Everday Food," is catching on. Her ads are back at K-mart. Her furniture line, which is in 250 galleries across the country, is doing extremely well. And, you know...

O'BRIEN: The TV show is back on TV.

SERWER: And the TV show is back on. Here is the latest issue of the December issue. I mean, it's a real, viable publication. There is some cocoa for Jeff Toobin perhaps to make a recipe there.

TOOBIN: Yes.

SERWER: So, it's an ongoing concern, as they say.

TOOBIN: What is interesting though, is that when this story started, they were saying, you know, this doesn't really affect us. They've pretty much acknowledged that...

(CROSSTALK)

SERWER: Oh, yes. No, they have. That's right, Jeff.

TOOBIN: That the investigation has taken a real toll on all (UNINTELLIGIBLE).

SERWER: Because people shy away from it -- advertisers and, again, hiring people, those sorts of things. They don't want to have anything to do with it. When it's gone...

O'BRIEN: It's going to have an impact.

SERWER: Right.

TOOBIN: But the thing is it's a real business. I mean, you know, people want to buy her products regardless of her personal problems.

SERWER: Yes.

O'BRIEN: Jeff Toobin, Andy Serwer, thanks, you guys. Appreciate it.

SERWER: OK.

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