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American Morning

Martha Stewart Case

Aired February 17, 2004 - 07:42   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: Here in New York, the prosecution is expected to rest its case against Martha Stewart later this week.
CNN's senior legal analyst Jeff Toobin joins us to talk about what he expects will take place in the courtroom.

Good morning.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Hi.

O'BRIEN: At the end of the day, this comes down to two issues for Martha Stewart. One, public statements that she made as CEO of Martha Stewart Living Omnimedia. And two, did she lie to investigators? The big deal on Friday was the judge ruling on the first issue, the public statements made. The judge said experts can't testify, and that's really critical, isn't it?

TOOBIN: I think that first part of the case, the sort of defrauding investors by defending yourself, that's always been a weak link in this case. The judge called it a novel theory at the beginning of the case. She's paring down the government's proof.

I really think that is a weak count. She's unlikely to be convicted, but the false statements remain the heart of the case.

O'BRIEN: Well, the first part, though, the prosecution hoped to put on expert after expert saying, as CEO, if she got up there in a press conference and made public statements, this would have an effect on the stock; thereby she did defraud her shareholders.

TOOBIN: Right. What the judge said was, stock analysts, you know, from investment banks could not testify about the impact of her statements on the stock market. As I said, I don't think that was a very believable theory to start with. The heart of this case -- and it remains I think a pretty strong heart of the case -- is: Did she lie to the investigators about her stock sale of ImClone?

O'BRIEN: So, how do you think the case is going? You say you think it's pretty strong so far.

TOOBIN: I think the case has gone better than I expected for the government. Douglas Faneuil, who was the, you know, key witness for the government, really gave a compelling story of saying that the real purpose of this stock sale was that she knew that Sam Waksal, the CEO, was selling, not some pre-existing plan, not tax planning, but she was selling because the CEO was selling. O'BRIEN: So, if you're defending Martha Stewart, do you say we need to put her on the stand so she can defend her actions? Or do you think to some degree that make it worse, because some might say, well, changing information and things like that in the memo, are kind of indefensible when she's cross-examined?

TOOBIN: I think it's such a tough call whether or not to put her on the stand. I think ultimately they will not. I think the default decision on defendants testifying is no, and all of the...

O'BRIEN: Many people would say, though, you're the woman -- excuse me -- who knows TV, who is very telegenic (ph), who has been on TV for easily 20 years. I mean, she seems like she would be a good gamble, right?

TOOBIN: She would be a good gamble, but all of the arguments that they have, the best arguments that they have are already in the record, I think. The fact that Faneuil really didn't know the reason for the stock sale, that's the best argument they have. They don't need her on the stand to make that argument.

O'BRIEN: On Friday, there was testimony from a FBI agent. Her name was...

TOOBIN: Farmer (ph).

O'BRIEN: Yes. And she -- I was surprised that she testified that a lot of what she was recalling were from notes that she took or from the top of her head, as opposed to tape recording it. Why would you not in a high-profile case that you know this is going to be go ahead and put it on tape?

TOOBIN: Well, you have to remember the context. When she was interviewed, they didn't know this was an investigation of Martha Stewart. This was really an investigation of Sam Waksal at that point. She was just an ordinary office interview with the FBI. They are not usually tape recorded.

O'BRIEN: You could argue she's a famous person who you wouldn't necessarily want to just have your handwritten notes on.

TOOBIN: It's true, and it's a big problem for the government. It may be the biggest problem for the government, because, you know, they have to prove two things. They have to prove what she said and that it's false. Without a transcript proving what she said, without a tape recording, it's very difficult.

O'BRIEN: We will see, as we always say. They're expected to wrap up soon.

TOOBIN: I can't wait to get down to the courthouse.

O'BRIEN: You're really...

TOOBIN: I'm really into this case.

(CROSSTALK)

TOOBIN: I like my work, I know.

O'BRIEN: As always...

TOOBIN: I'm nerdy, what can I say?

O'BRIEN: All right, Jeff, thanks.

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 February 17, 2004 - 07:42   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Here in New York, the prosecution is expected to rest its case against Martha Stewart later this week.
CNN's senior legal analyst Jeff Toobin joins us to talk about what he expects will take place in the courtroom.

Good morning.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Hi.

O'BRIEN: At the end of the day, this comes down to two issues for Martha Stewart. One, public statements that she made as CEO of Martha Stewart Living Omnimedia. And two, did she lie to investigators? The big deal on Friday was the judge ruling on the first issue, the public statements made. The judge said experts can't testify, and that's really critical, isn't it?

TOOBIN: I think that first part of the case, the sort of defrauding investors by defending yourself, that's always been a weak link in this case. The judge called it a novel theory at the beginning of the case. She's paring down the government's proof.

I really think that is a weak count. She's unlikely to be convicted, but the false statements remain the heart of the case.

O'BRIEN: Well, the first part, though, the prosecution hoped to put on expert after expert saying, as CEO, if she got up there in a press conference and made public statements, this would have an effect on the stock; thereby she did defraud her shareholders.

TOOBIN: Right. What the judge said was, stock analysts, you know, from investment banks could not testify about the impact of her statements on the stock market. As I said, I don't think that was a very believable theory to start with. The heart of this case -- and it remains I think a pretty strong heart of the case -- is: Did she lie to the investigators about her stock sale of ImClone?

O'BRIEN: So, how do you think the case is going? You say you think it's pretty strong so far.

TOOBIN: I think the case has gone better than I expected for the government. Douglas Faneuil, who was the, you know, key witness for the government, really gave a compelling story of saying that the real purpose of this stock sale was that she knew that Sam Waksal, the CEO, was selling, not some pre-existing plan, not tax planning, but she was selling because the CEO was selling. O'BRIEN: So, if you're defending Martha Stewart, do you say we need to put her on the stand so she can defend her actions? Or do you think to some degree that make it worse, because some might say, well, changing information and things like that in the memo, are kind of indefensible when she's cross-examined?

TOOBIN: I think it's such a tough call whether or not to put her on the stand. I think ultimately they will not. I think the default decision on defendants testifying is no, and all of the...

O'BRIEN: Many people would say, though, you're the woman -- excuse me -- who knows TV, who is very telegenic (ph), who has been on TV for easily 20 years. I mean, she seems like she would be a good gamble, right?

TOOBIN: She would be a good gamble, but all of the arguments that they have, the best arguments that they have are already in the record, I think. The fact that Faneuil really didn't know the reason for the stock sale, that's the best argument they have. They don't need her on the stand to make that argument.

O'BRIEN: On Friday, there was testimony from a FBI agent. Her name was...

TOOBIN: Farmer (ph).

O'BRIEN: Yes. And she -- I was surprised that she testified that a lot of what she was recalling were from notes that she took or from the top of her head, as opposed to tape recording it. Why would you not in a high-profile case that you know this is going to be go ahead and put it on tape?

TOOBIN: Well, you have to remember the context. When she was interviewed, they didn't know this was an investigation of Martha Stewart. This was really an investigation of Sam Waksal at that point. She was just an ordinary office interview with the FBI. They are not usually tape recorded.

O'BRIEN: You could argue she's a famous person who you wouldn't necessarily want to just have your handwritten notes on.

TOOBIN: It's true, and it's a big problem for the government. It may be the biggest problem for the government, because, you know, they have to prove two things. They have to prove what she said and that it's false. Without a transcript proving what she said, without a tape recording, it's very difficult.

O'BRIEN: We will see, as we always say. They're expected to wrap up soon.

TOOBIN: I can't wait to get down to the courthouse.

O'BRIEN: You're really...

TOOBIN: I'm really into this case.

(CROSSTALK)

TOOBIN: I like my work, I know.

O'BRIEN: As always...

TOOBIN: I'm nerdy, what can I say?

O'BRIEN: All right, Jeff, thanks.

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