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ANDERSON COOPER 360 DEGREES

Martha Stewart Convicted; Job Creation Woes; Addiction in America

Aired March 5, 2004 - 19:00   ET

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

(BEGIN VIDEOTAPE)
SOLEDAD O'BRIEN, HOST (voice-over): Guilty on all counts. The bombshell verdict in the Martha Stewart trial. Will she face club fed? How will the verdict affect Martha, Incorporated? And Martha's own response. Her vow to fight on.

Plus, our weeklong series, "Addiction in America." Hooked on Drugs: we hit the streets and find young addicts desperate to feed their habit.

(END VIDEOTAPE)

ANNOUNCER: Live, from the CNN Broadcast Center in New York, this is ANDERSON COOPER 360.

O'BRIEN: Welcome to 360, everybody. I'm Soledad O'Brien, in for Anderson Cooper tonight.

Our top story, a stunning verdict for Martha Stewart. A jury finds her guilty on all four counts against here. Complete coverage this evening with Deborah Feyerick, who's at the courthouse, and Jason Carroll, who is tracking how the verdict might affect Stewart's empire.

Let's begin with Deborah Feyerick tonight.

Deborah, good evening.

DEBORAH FEYERICK, CNN CORRESPONDENT: Good evening, Soledad.

Well, the judge read the verdict on each count with hesitating. Through it all, Martha Stewart showed no emotion.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): Looking poised, a fur scar around her neck, Martha Stewart left federal court a convicted felon. A jury of four men and eight women found her guilty of conspiracy, guilty of making false statements, guilty of obstructing justice. Prosecutors called the victory a warning to others in corporate America.

DAVID KELLEY, PROSECUTOR: We will not, and frankly cannot, tolerate dishonesty and corruption in any sort of official proceeding. FEYERICK: Stewart's broker, Peter Bacanovic, was also found guilty on four of the five counts against him. Lawyers for both Bacanovic and Stewart vowed to appeal the verdict.

ROBERT MORVILLO, STEWART'S ATTORNEY: We are confident that once we get our day in the court of appeals, the conviction will be reversed and Martha Stewart will ultimately be determined not to have done anything wrong.

FEYERICK: Most of the jury members left through a side door. Only juror number eight stayed to talk. Chappell Hartridge said among the strongest evidence, the message left by Stewart's broker the day Stewart sold ImClone. The message Stewart's assistant testified Stewart tried to change.

CHAPPELL HARTRIDGE, JUROR: Well, testimony was very important. The fact that she said that Martha tried to delete that message. That message was probably the foundation of the case.

FEYERICK: The jurors said it made no difference that Stewart did not testify in her own defense.

(END VIDEOTAPE)

FEYERICK: Now, the verdict came out at about 3:00 this afternoon. The judge said because of the lateness of the hour, Stewart would not have to go over to the probation office. That will happen on Monday.

She's scheduled for sentencing on June 17. And she could face a maximum of five years on each count, making that a total of 20 years. Though, more likely, her sentence will be a matter of months -- Soledad.

O'BRIEN: Deborah, did that juror, juror number eight, say anything about the credibility of Douglas Faneuil and his testimony and how important that was?

FEYERICK: You know, it's interesting, because the defense lawyers had hammered way at Doug Faneuil, saying that he was simply not to be trusted. However, the juror I spoke with said they did believe what Faneuil said and there were documents to back it up, and that's why they reached the decision that they reached.

O'BRIEN: Deborah Feyerick at the courthouse for us this evening. Deborah, thanks.

Just minutes after the verdict, trading of stock in Stewart's company was temporarily halted. The conviction sent shares plunging, closing down almost 23 percent. That brings us to the potential impact the jury's decision may have on Martha, Inc, her corporate empire.

With that, here's CNN's Jason Carroll.

(BEGIN VIDEOTAPE) JASON CARROLL, CNN CORRESPONDENT (voice-over): Martha in her better days, cooking things up in the kitchen and marketing domestic perfection in a way no one has done before. The question we asked superstar ad executives, can she still do it with a conviction?

UNIDENTIFIED MALE: I think it's going to be a very difficult and very long road, you know, for her to be able to ever come back to what, you know, what she stood. Because again, she stood for something that this charge drives right at the heart of.

CARROLL: Ad exec Richard Kirshenbaum oversees ads for Martha Stewart's competitor, Target Stores. He says one reason why some dislike Stewart is now gone.

RICHARD KIRSHENBAUM, KIRSHENBAUM, BOND AND PARTNERS: I think in a certain sense, now Martha is the underdog. And I think that women don't perceive her as being as perfect as she was in the past. And I actually think that there will be a groundswell of emotion, a movement towards embracing Martha and her brand.

CARROLL: And what a brand. The Stewart name is on everything from bed sheets to gardening tools.

MARTHA STEWART, MARTHA STEWART LIVING OMNIMEDIA: This is an amazing hand tool.

CARROLL: "We are deeply saddened by the news of Martha Stewart's conviction and our thoughts are with her in this difficult time. We are confident that our assets are more than sufficient to continue MSO's development as a leading how-to brand building company."

But how can you separate the name from the brand? One industry leader says keeping the name and the face might be a good thing.

UNIDENTIFIED MALE: This is crisis management at this point. I think honesty, stepping forward, having a point of view, and not receding and -- from the public view is one of the most important things she could do.

(END VIDEOTAPE)

CARROLL: And the ad execs we spoke to say in situations like this, people love to watch others fail, but they like to see a comeback too. Stewart's company says its board of directors will meet to take actions as appropriate -- Soledad.

O'BRIEN: Jason Carroll for us this evening. Jason, thanks.

Now some insight into the jury's deliberations. One of the jurors explains just how they handled the case.

(BEGIN VIDEO CLIP)

HARTRIDGE: We had people's lives in our hands. Before we made any decisions, we combed the evidence, we talked about it. We wanted to be very sure about this. (END VIDEO CLIP)

O'BRIEN: That was juror number eight. Our senior legal analyst, Jeff Toobin, was inside the courtroom as the verdicts were read.

Jeff, good evening to you.

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Hey.

O'BRIEN: Martha Stewart definitely going to jail? And for how long?

TOOBIN: Almost certainly going to jail. The federal sentencing guidelines control. There will be debate about which guidelines apply and how the point system is allocated. But as I do the guidelines, my sense is it will be somewhere like 12 to 18 months or 18 months to 24 months, which she will serve virtually all of if she's sentenced.

O'BRIEN: Really?

TOOBIN: Yes.

O'BRIEN: We heard a little from juror number eight. And it really provided, I thought, a lot of insight into what all the jurors were thinking. What did you think the most compelling thing about what he had to say was?

TOOBIN: I thought what he said -- he said the two most important witnesses were Ann Armstrong, Martha's secretary, who saw her alter the document and then re-alter it, put it back in its original form, and her friend, Mariana Pasternak, who traveled with her to Mexico immediately after the stock sale and heard Martha say Sam was selling all his stock, giving lie to the contention that she didn't know Sam was selling the stock.

I thought -- I agreed completely. I thought they were the most compelling witnesses. And given what the jurors said, and given the notes that the jurors sent and the evidence they asked for, I thought they were extremely sensitive, extremely intelligent. And I think they got it right.

O'BRIEN: He also seemed to indicate that the jury generally thought it was a victory for the small guy, that Martha Stewart steamed arrogant, cold, and that also maybe the string of celebrity friends who stopped by the courtroom wasn't such a great idea.

TOOBIN: I'm not sure the celebrities mattered that much. But I do think her imperious disposition, not so much in the courtroom, but as portrayed by witness after witness -- I mean, witness after witness talked about how obnoxious she was. The FBI agent who interviewed her, who testified about how when she left the room she said, well, I've got a business to run, if you'll excuse me, or words to that effect. Accumulation of all that kind of obnoxious behavior, combined with very strong evidence that she did what the government said she did, the verdict isn't that much of a surprise. O'BRIEN: How big of a mistake to not put her on the stand? I mean, obviously, hindsight's 20/20. But do you think she could have been compelling enough and human enough to turn the jurors' minds around?

TOOBIN: I don't. I still think it was the right decision to keep her off the stand.

There were so many different things she would have had to explain. So many contradictions of her story with the evidence. Plus, that imperious demeanor, even though they couldn't have got a worse result, obviously, since she was convicted on all counts. Even though she had that terrible result, I still think Robert Morvillo and his team were right to keep her off the stand.

O'BRIEN: We have two seconds to talk about Peter Bacanovic, who almost nobody is talking about. How much time do you think he'll get?

TOOBIN: In the same range. He was convicted of perjury. She was not charged with perjury because she didn't give any sworn statements.

That's an even more serious crime, even though it's four counts. I expect their sentences will be in a similar range, but I do expect both of them will go to federal prison. And neither has much shot at appeal. There are no legal issues here to speak of.

O'BRIEN: That's interesting. It doesn't happen till July. Jeff Toobin, as always, thanks...

TOOBIN: June 17.

O'BRIEN: June, sorry -- 17. Thank you very much, Jeff. Appreciate it.

Of course we want to hear from you. Today's "Buzz" question is this: Do you agree with the verdict in the Martha Stewart case? You can vote now at cnn.com/360. We've got results coming up at the end of the show.

And we are following a number of developing stories right now "Cross Country."

Madison, Wisconsin, and Topeka, Kansas: marriage bans. House lawmakers in both states approved state constitutional amendments banning gay marriage. The measures still need approval form each state Senate before being put on a ballot.

Washington, D.C.: Ashcroft hospitalized. The attorney general, in intensive care, is undergoing treatment for a painful condition called gallstone pancreatitis, or simply inflammation of the pancreas, which doctors say was caused by a gallstone.

Atlanta Georgia: deputy dragged. Take a look at this dramatic dash cam video from a traffic stop. A Georgia highway patrol officer asked a driver to get out of the car, then she takes off into heavy traffic.

He climbs into the car to try to stop the driver. Luckily, the officer wasn't seriously hurt. Police say the driver has a criminal past.

Miami Beach, Florida: fireman to the rescue. Wow, look at this. A boat goes up in flames as firefighters spray it down. The boat then drifts away. A fireman jumps into the water, single-handedly pulling the blazing boat back to shore.

Los Angeles, California: soaring gas prices. Sticker shock for drivers. The average price is $2.20, up 35 cents in the past two weeks alone. And it could goat worse. In a few months, a Shell refinery is shutting down.

And that's a look at some of the stories "Cross Country" tonight.

We're going to have more on the Martha Stewart verdict throughout the hour, including CEOs behind bares, what's it like going from the board room to a prison cell. We'll ask a woman who's been there.

Also, President Bush facing an uphill battle on the economic front. The jobs report that has the White House playing defense. Find out what it means for your paycheck.

Then, hooked on heroin, why more young people are getting strung out on this dangerous drug. It's part of our weeklong series "Addiction in America."

But first, let's take a look at "Inside the Box" at the top story on tonight's network newscasts.

(COMMERCIAL BREAK)

O'BRIEN: Martha Stewart, now a convicted felon and facing serious jail time. A jury today finding her guilty on all four counts against her: conspiracy, obstruction of justice, and making false statements. She says she's going to appeal. We're going to have continuing coverage throughout our hour.

But first, new figures are out on job growth, and the heat is on President Bush. Last month, just 21,000 jobs were created, far short of White House expectations. Adding fuel to the fire, the Democrats' criticism of the president's handling of the economy.

With reaction, here's CNN's White House correspondent, Dana Bash.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): The president's political team was hoping this would be the jobs report they've been waiting for. It wasn't.

Only 21,000 new jobs created in February, and January's numbers revised downward ward to 97,000. Bush aides strain to put the best face on a small gain for an enormous political issue. STEPHEN FRIEDMAN, DIRECTOR, NATIONAL ECONOMIC COUNCIL: There have been jobs created since the president's tax package. We're just not at all -- not remotely comfortable with the pace of it.

BASH: Last month, the White House said 2.6 million new jobs would be created in 2004, then backed away from the rosy prediction. The president's Democratic rival used the forecast to attack his economic policies and credibility.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: He thought that he could stand up in front of that sign that says "Mission Accomplished." And he thought none of you would notice what's really happening in America. But we do -- 21,000 jobs in one month, another broken promise.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This economy of ours is strengthening.

BASH: Mr. Bush's campaign message is one of optimism, insisting his tax cuts are making the economy stronger. Now that they have an opponent, the White House is on the counterattack, saying he'd make things worse.

DON EVANS, COMMERCE SECRETARY: John Kerry likes higher taxes. He's voted to raise taxes 350 times. He's already told the American people that he would raise taxes within the first 100 days. If you want to destroy jobs in this country, you raise taxes.

(END VIDEOTAPE)

BASH: Now, the White House is pointing to stock market gains, consumer confidence, and housing starts as evidence that President Bush's plan to cut taxes actually is working. But Democrats are, of course, hammering away at the two million jobs lost on Mr. Bush's watch. So the question, Soledad, is whether or not Mr. Bush can change the subject -- Soledad.

O'BRIEN: We will see. Dana Bash for us this evening. Dana, thanks.

And we are tracking a number of developing stories around the globe right now. Let's check the "UpLink."

Baghdad: fanfare for nothing. A signing ceremony to mark the adoption of a temporary constitution was called off today, much to the surprise of various musicians and a children's choir that were on hand to celebrate the occasion. Apparently, some Shiite members of the Governing Council raised some last-minute objections, forcing a delay until at least next week.

The Hague, Netherlands: motion to dismiss. Some court-appointed advisers to Slobodan Milosevic are asking the U.N. war crimes tribunal to drop genocide charges against the former Yugoslav president, citing a lack of evidence. It's unclear when the panel will rule.

Moscow: stranded in the Arctic. Russian rescuers are en route to a barren region of Norway, hoping to find a group of scientists stranded on a drifting ice flow. The researchers were forced to evacuate their base three days ago when a huge wall of ice suddenly collapsed on top of it.

London: old story, few headlines. Today, Prince Charles made his first public appearance since NBC's broadcast of some audiotapes recorded by Princess Diana. She's heard describing the woes of her marriage, revelations that triggered a scandal when excerpts were first published several years ago. A few British tabloids helped resurrect the story this week, but the major papers ignored it.

And that's a look at tonight's "UpLink."

Coming up this evening, the tragic consequences of heroin. How did such a dangerous drug become popular again with young people? We'll take a closer look as part of the weeklong series, "Addiction in America."

Also tonight, Martha Stewart a convicted felon. But will she end up doing hard time? We're going to take a closer look at what might lie head.

But first, today's "Buzz." Do you agree with the verdict in the Martha Stewart case? Vote now, at cnn.com/360. We've got results coming up at the end of the show.

(COMMERCIAL BREAK)

O'BRIEN: Martha Stewart guilty on all four counts against her. The former CEO and taste-maker now a convicted felon. What will she face if she ends up behind bars? We're going to talk a woman who's been there.

But first, "Addiction in America." As we wrap up our weeklong series, tonight: young and hooked on heroin. It's pure, it's potent. And for this generation of addicts, many not even born when heroin use soared in the '70s, it's cheaper and more available than ever before.

As Anderson Cooper found out, while the faces are younger, the ravages remain the same.

(BEGIN VIDEOTAPE)

RYAN, RECOVERING HEROIN ADDICT: I remember when I was about 11 or 12 I saw this commercial on the TV that said, when I grow up...

UNIDENTIFIED MALE: I want to be a junkie.

RYAN: A personification of a heroin addict is this gross, unwashed, dirty person. And I wasn't that. So that kind of made me feel like I didn't have a problem.

ANDERSON COOPER, CORRESPONDENT (voice-over): Ryan knows the face of heroin all too well. At 18, he is a recovering addict.

RYAN: A heroin addict looks like me. It looks like any typical kid.

COOPER: At 17, Ryan began snorting heroin. Soon after, he started shooting up.

RYAN: You wake up, you're shooting up. You're trying to find it for the rest of the day. And the only time that you're actually feeling normal, or even any remote type of happiness is when you're high. Everything else is downhill.

COOPER: Ryan is now four months sober in a treatment program with other teen addicts.

DR. TERRY HORTON, MEDICAL DIRECTOR, PHOENIX HOUSE: Individuals may not have had experience to the ravages of heroin abuse back in the '70s. So there isn't that disincentive. We've seen an increase in heroin use across the board.

COOPER: Heroin is sold by brand name, so addicts develop loyalty. Names like 25 to Life, DOA, Unfinished Business, Tommy Hilfiger, Unabomber, China Cat. The drug is cheap and potent.

(ON CAMERA): When did you shoot up? Like just now?

UNIDENTIFIED MALE: Like 40 minutes ago.

COOPER (voice-over): In Brooklyn, they call this the corner of heroin and addiction. It's a place Carlos has been coming to for years.

(on camera): So you've got to shoot a bag of heroin in the morning just to get up and feel like everyone else does?

CARLOS, HEROIN ADDICT: Yes. And as I wake up in the morning, I've got shoot a bag of heroin, yes. Just so I can get out of the house and make my money.

COOPER (voice-over): Ric Curtis, a professor at John Jay College, and Fernando Soto (ph), a social worker, use their own money to hand out needles, trying to stop the spread of HIV and Hepatitis C.

UNIDENTIFIED MALE: A pack of half cc's here.

RIC CURTIS, CHAIR, ANTHROPOLOGY DEPT., JOHN JAY COLLEGE: But we don't give up on them. We figure that eventually they will give up the drug if we keep after them long enough. And if they fail the first time or the fifth time in rehab, we'll still send them a sixth time or a seventh time until it catches. And it always does, eventually.

COOPER: Anderson Cooper, CNN, New York.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

O'BRIEN (voice-over): Will Martha face club fed? A former federal inmate shares what life is like behind bars. And how will the verdict affect Martha, Incorporated?

(COMMERCIAL BREAK)

O'BRIEN: And now to "Justice Served." Martha Stewart guilty on all four counts. Jurors convict her of obstructing justice, conspiracy, and two counts of lying to investigators. She could get 20 years in prison and be forced to pay a million dollars in fines, all for an illegal sale of stock that saved her $52,000.

One of the jurors had this to say on his way out of court.

(BEGIN VIDEO CLIP)

HARTRIDGE: The first thing we wanted to get clear was we had very important decisions to make. We had people's lives in our hands. Before we made any decisions, we combed the evidence. We talked about it. We wanted to be very sure about this.

If we had enough evidence, it didn't make a difference if Martha got on and said something to the contrary. It didn't phase me one way or the other what she had to say.

(END VIDEO CLIP)

O'BRIEN: Sentencing is now set for early June.

Right now, we want to talk a little bit more about today's verdict and what it means for Martha Stewart. I'm joined by Carolina Buia. She's a correspondent with "Celebrity Justice." And also, "Court TV's" Lisa Bloom.

Nice to see you both.

Lisa, let's start with you. What do you think won the case in the end? He said he didn't need to hear from Martha Stewart to be swayed.

LISA BLOOM, "COURT TV": Well, because Martha didn't testify, closing arguments were all important. And Robert Morvillo simply did not put it away in closing arguments.

Instead, I was shocked listening to his closing argument when he admitted that she made false statements. He said that they were simply mistakes that she forgot. And he admitted for the first time in closing arguments that she sold her ImClone shares because Waksal sold ImClone shares.

Karen Seymour, for the prosecution, on rebuttal, made an enormous issue out of that and said, "Now, for the first time, we're hearing from Martha Stewart? That's the reason?"

And she went through the month of January, all of the meetings and phone calls that Martha Stewart had on this issue and said, "She didn't forget. Smart people sometimes do dumb things."

I thought that was powerful. O'BRIEN: It was just a preponderance of evidence there.

Carolina, you know, Martha Stewart, of course, had this rap. And jurors seemed to agree with this, that she's cold, that she's arrogant. What was her reaction when the verdict was read? You were in the courtroom.

CAROLINA BUIA, "CELEBRITY JUSTICE" CORRESPONDENT: It was almost surreal. She was completely stone faced. She did not flinch once as the judge read every single count, guilty, guilty, guilty, guilty.

She looked straight ahead. And then when she got up, straight ahead. Meanwhile, her daughter was bent over, she was crying, completely shattered. Opposition from her mother.

O'BRIEN: Interesting. Martha Stewart's been communicating with her fans via a Web site. She doesn't hold press conferences, but she sends out her message. And it was interesting to see a message right after the verdict came out.

The first message was this: "I'm obviously distressed," it read, "by the jury's verdict, but I continue to take comfort in knowing that I have done nothing wrong and that I have the enduring support of my friends and family."

A couple minutes later, revised the message. "I'm obviously distressed by the jury's verdict. I continue to take comfort in knowing that I have the confidence and enduring support of my friends and family."

Here's what's missing there: "I have done nothing wrong." They took it out. Why?

BLOOM: Hugely significant, Soledad, in a case where a changed phone message resulted in a guilty verdict for her. Now remember, the securities fraud count that ultimately was dismissed, but was based on Martha Stewart saying publicly, "I have done nothing wrong," for her to make ha that mistake today on her Web site, to vet it past her attorneys and her PR people, I'm just shocked.

O'BRIEN: Well, also, it seems like it won't garner you a lot of sympathy when you're moving into the sentencing phase if you sort of say, you know what, hey, whatever the verdict was, it wasn't me. I didn't...

(CROSSTALK)

BUIA: Right. And when the defense is going to ask the judge to be lenient, the prosecution is clearly going to bring that up. Look, she's found guilty, and immediately she admits that she's not innocent.

O'BRIEN: Douglas Faneuil, no one's talked about him for a while. Let's talk about him. His lawyer came out to really address concerns. People saying what's Faneuil's reaction been to all this. Let's listen to a little bit of what his attorney had to say. (BEGIN VIDEO CLIP)

MARK POWERS, DOUG FANEUIL'S ATTORNEY: Doug Faneuil had no interest in the outcome of this case. Doug came forward because he had a conscience and it was the right thing to do. Doug was truthful and he testified as a witness in this case and he looks forward to going on with his life.

(END VIDEO CLIP)

O'BRIEN: His credibility very important. Really, if the prosecution hadn't had a credible witness in Doug Faneuil, their case could have completely crumbled. What happens to him now, do you think?

BLOOM: What happens to him now is he goes on with his life. He's surely has cooperated with the prosecution, lived up to his end of the deal. He surely will not be looking at any prison time. 26 years old at the time of these events, he stood up to Martha Stewart and I think he's vindicated today in court.

O'BRIEN: Do you both think Martha Stewart should have testified? Do you think it would have made a difference? Did we need to hear from Martha Stewart?

BUIA: I know you're going to say yes. I disagree. I think Morvillo made a strategic decision not to put her on the stand because if not, the prosecution was going to grill her, they were going to ask her a lot of questions, make her uncomfortable. She's not in front of cameras showing you how to cook. Here she's being asked on whether she lied and obstructed a government investigation. I think he made the right decision.

Well, I'll tell you, Soledad, at the time, I said if she's guilty, of course, she shouldn't testify because then she'll have to lie under oath and get an upward departure under the federal sentencing guideline. Get a longer sentence. If she's innocent, she should have testified. She needed to explain to the jury all the suspicious circumstances that the prosecution threw up there. The jury never got an explanation. Instead, they only had the prosecution's side of events. So it depends on what she'd have said if she testified.

O'BRIEN: As our legal expert, in five seconds or less, how much time do you think she'll get in the end?

BLOOM: Roughly a year, give or take a couple months. That's what she's looking at.

O'BRIEN: Interesting. As always, ladies, thanks so much, Lisa Bloom and Carolina Buia. Nice to see you.

If Martha Stewart does, in fact, find herself heading to a federal prison some day, she'll not be first executive to trade pinstripes to prison stripes. In fact, she might want to take a few tips from some fellow executive convicts. (BEGIN VIDEOTAPE)

O'BRIEN (voice-over): The man at the center of Martha's mess, ImClone CEO Sam Waksal, wisely asked to serve his seven-year sentence at the Eglin (ph) Federal Prison Camp in Florida. Alas, Waksal ended up at Schoolkill (ph) Federal Prison in Pennsylvania. But Martha could talk shoes with designer Steve Madden, who is serving 41 months at Eglin (ph) for stock fraud. Wherever she goes, chances are she'll have some high power company. Enron's Andrew Fastow is serving a ten- year prison sentence. His colleague, Jeffrey Skilling, has just been indicted. Former Tyco executive Dennis Kozlowski is fighting his case in court.

And just in time for all of them, Forbes.com has published its list of the most desirable prisons. They are Eglin Federal Prison Camp in Fort Walton, Florida. The term "Club Fed" was coined for this place. It's famous for its vocational training programs and team sports.

Nellis (ph) Federal Prison Camp in North Las Vegas with a state of the art gym and air-conditioned dorms. Morgantown Correctional Institute in West Virginia which offers classes in leatherwork, wood carving, and art. And Allenwood Federal Prison in Pennsylvania known for its diverse inmate population and music classes.

Or she might follow in the footsteps of some past offenders. Hotel queen Leona Helmsley served her 21-month tax evasion sentence at the Federal Medical Center in Lexington, Kentucky. Junk bond king Ivan Boesky did nearly two years at a Long Park Federal Prison in California. And Michael Milken served 22 months of a ten-year sentence in Pleasanton, California. In the end, her new home will be decided by the Federal Department of Corrections.

(END VIDEOTAPE)

O'BRIEN: What's it really like to be an inmate in a federal prison? Karen Bond was a former attorney, also a federal prison inmate. She now works for the Nonprofit Federal Prison Policy Project. She joins us this evening from Columbus, Ohio. Nice to see you. Thanks, Karen, for being our guest this evening.

You were convicted of securities fraud and served 38 months in a minimum security federal prison. Give me a sense of what it was like on the inside. What were conditions like?

KAREN BOND, FED. PRISON POLICY PROJECT: Well, they're not what "Forbes" portrays. First of all, "Forbes" had to have not asked any of the prisoners what their opinion was on the five best places to serve in prison. There's no "Club Fed." There's no room service. There are no tennis courts. There are no swimming pools. There are no games. It's a very stark atmosphere, very harsh atmosphere, and not one that is going to be very conducive to a person's health if she goes in with the attitude that Martha Stewart has right now.

O'BRIEN: Emotionally, in your own case I have to imagine that it was a horrible experience and very humiliating, as well. What was it like for you that first day when you left freedom to go behind bars?

BOND: Terrifying. Absolutely terrifying. To walk into that prison, be met with a guard holding a gun, hear the gate clang behind you, to be stripped of all your possessions, literally, fingerprinted, photographed, have nothing but my wedding ring. They let me keep that. My medication for my seizures was basically tossed in the trash can. It's very hard. To leave my family and to see them on the other side of the fence, it's a nightmare I'll never get over.

O'BRIEN: You say there's no "Club Fed." Many people, of course, say, well, you know, there are often no prison bars. It's a cushy environment. Give me a sense of how bad it can get in a minimum security prison. Many people think it's a walk in the park.

BOND: I heard earlier one of the judges say that Martha needed to do lose her rich bitch attitude. That's exactly right. It isn't a walk in the park. I'm sure you probably have photographs of where I was assaulted in prison. I had a fractured shoulder, a concussion, and this is the "Club Fed" where Leona Helmsley did her time also. So it's a very real possibility that you could be in danger in these "Club Feds" that "Forbes" is so fond of touting.

O'BRIEN: You spent four months in the hospital in that prison recovering from this beating. Give me the sense of the circumstances around this.

BOND: I was assaulted by a prisoner and her cohorts who simply didn't like white-collar prisoners. They had been carrying on their illegal activities inside the prison, selling drugs. There was plenty of illegal drugs available. They thought that the white-collar professionals had provided the administration, had snitched on them, essentially. So they decided to teach us a lesson, to shut us up. And what you see in the photographs, a fractured shoulder, the bruises, that's what happened.

O'BRIEN: Martha Stewart, do you think she's at more risk or less risk of something like that happening to her, because of her celebrity status?

BOND: Well, let me tell you something, the guards don't care if you're a celebrity. They don't care who you are. You are a number. You will be assigned eight digits and that's who you are. I don't care what your name is. She's going to be at risk if she's in the general population. That's all there is to it.

O'BRIEN: What advice do you have for her? It looks as if she's going to serve some time. No one's clear exactly how much yet. What advice would you give her?

BOND: The time between now and when she reports to prison, cherish it, spend all the time she can with her daughter and her mother because once she gets to prison, there's not going to be much opportunity to have your family close to you.

O'BRIEN: Karen Bond is with the Federal Prison Policy Project now. Karen, thank you for sharing some of your insight. It's truly fascinating. Appreciate it.

Could Martha Stewart's company be doomed? What's going to happen to her TV show and the rest of her empire? The potential fallout just ahead.

Plus, the lighter side of politics. Who is funnier, the left or the right?

(COMMERCIAL BREAK)

O'BRIEN: More now on the courtroom stunner. Martha Stewart found guilty on all counts of her obstruction of justice trial. The verdict could be devastating to her multibillion dollar company. She's the face, the image of the company and now she's a convicted criminal. CNN contributor and "Fortune" editor at large Andy Serwer reports on an empire in limbo.

(BEGIN VIDEOTAPE)

ANDY SERWER, CNN CORRESPONDENT: It's legal name was Martha Stewart Living Omnimedia, but it was dubbed Martha, inc., and that summed it all up, an empire built around the home making diva. The company was created in 1997 to encompass all of Martha's businesses, and at its height, there were many: four magazines in a weekly syndicated column, a series of more than 30 books, a syndicated TV show, plus three cable shows, a direct mail catalog business and a lucrative partnership with K-Mart.

Martha Stewart wasn't just chairman and CEO of Omnimedia, she was its raison d'etre. In 1999, the initial public offering was one of the most successful ever made on Wall Street. It made Martha Stewart a billionaire.

By the end of 2002, Omnimedia posted earnings of $295 million. The reason Omnimedia was successful and also why it started to slide, Martha Stewart. She was indicted on charges of obstruction of justice last June 4 and resigned as Chairman and CEO of the company a short time later. Last year company revenue fell 20 percent. And once more today on Wall Street, Omnimedia stock followed Martha Stewart's fate, both went down.

(END VIDEOTAPE)

O'BRIEN: And Andy Serwer is with me. Let's talk a little bit about the story of the stock, because you've given us the story of Martha Stewart. What happened today?

SERWER: Well, it was really a wild ride on Wall Street today. The stock opened up around $13 and change and traded around there until around 2:00. At that point, rumors started circulating on Wall Street that a verdict was coming out. Some people, perhaps, anticipated it was going to be positive in Martha Stewart's favor and the stock spiked up, all the way up to about $17. It also could be short sellers getting squeezed. But in any event, the stock went to $17. At that point, the verdict was announced. Obviously, huge selling pressure came to bear at that point. But the stock -- trading was halted for about 20 to 30 minutes, Soledad, and at that point, the stock plunged all the way from $17, you can see there, down to below $11, a 35 percent drop in the afternoon.

O'BRIEN: Clearly, the company officials are very worried. They had a meeting. What are they doing.

SERWER: There was an announcement from Martha Stewart Omnimedia today. They say they were saddened and distressed by the verdict. Obviously, they're going to be discussing where they go at this point. They must have contingency plans, but it's a very difficult situation.

O'BRIEN: The other problem is the amount of time. I mean, obviously, stocks have this pressure over time and she's not going to be sentenced until the middle of June, some point. What kind of role do you think that will have?

SERWER: See, I think time is the real enemy for Martha Stewart and the company right now, Soledad. This could really drag on for a matter of years. You have the sentencing, possibly an appeal, possibly jail time. And the different parts of the company could suffer. I think the magazine and the television shows suffer the most. The towels, the sheets in K-Mart and the furniture maybe not quite as much. Real question about this company and whether or not it can survive.

O'BRIEN: Do you think the verdict makes it more likely that the company will be sold?

SERWER: I think that's an option that they'll have to pursue. But the problem is, who would buy this company right now? It could well be that someone would want to take a flyer. It's a very powerful brand. But I think it's really damaged goods, tainted goods right now. So finding someone to buy the company will be tough. I think they're going to have to work it out on their own. So that's going be very difficult for them.

O'BRIEN: Martha Stewart is no longer the CEO of her company. So, if she goes to prison and it's looking like she will, can she keep her job when she gets out?

SERWER: Well, my understanding is she probably could, because she's chief creative officer and I believe that governance would say that she can't be the CEO of a public company if convicted. But that's sort of a title she could probably keep. As a board member, that's an open question. Again a lot of this subject to legal scrutiny.

O'BRIEN: Was there any ripple effect in the other stocks outside of Martha Stewart's stock, from what happened with their verdict?

SERWER: There was one stock that took a bit of a hit today as well, Soledad, that would be K-Mart which obviously relies a lot on this brand to drive their business. And, of course, K-Mart has all kinds of problems of its own. So not a good season for them either.

O'BRIEN: Andy Serwer, thanks as always.

SERWER: You're welcome.

O'BRIEN: So how can Martha, inc., save its image? A look at that is just ahead.

Also, voters wanted, laughter wanted. The candidates work their charm, turning to humor. But does it work for all of them?

Plus Pete Rose is being inducted into -- well, we'll tell you in "The Current."

(COMMERCIAL BREAK)

O'BRIEN: So how does the company bearing Martha Stewart's name go about salvaging its reputation. Joining us this evening with some advice is Samatha Ettus. She's the president of Ettus Media Management here in New York.

Nice to see you. Thanks for being with us.

How devastating do you think this is for this company? Of course, it's very unusual to have the person herself, Martha Stewart, very intertwined with the company.

SAMANTHA ETTUS, ETTUS MEDIA MANAGEMENT: Sure. It's a very unusual situation. And I don't know that there's any precedent for it. So, everything we're going to talk about it really guessing. I mean, I think that right now is not a happy day at the company. That said, she's going to appeal. She's maintaining her innocence. And right before the announcement, her stock price went up.

I think that for awhile the company is going to take a hit. Investors do not like uncertainty, and there's going to be uncertainty for awhile.

O'BRIEN: What are some of the big questions that have to be asked about whether this brand can be salvaged at all?

ETTUS: You have to think about how durable is this brand? And in her case, the brand is quite durable. I mean, she has a lot of legs to stand on. This company is no longer just about Martha Stewart. She actually has a number of entities underneath that. And a lot of people have not talked about or focused on. But I think we'll see a lot more of them. Her wedding brand is very big and can grow even more and her food brand as well.

O'BRIEN: The problem with that, though is that you have a woman who embodies perfection. Now, very likely, heading off to a federal prison. That's kind of hard to juxtapose when you're trying to sell this brand to the public. Can -- do they have to cut Martha Stewart out of the company to essentially survive as a brand?

ETTUS: Well, any employee, if they went to prison would have to resign. So we're going to assume that if she is in prison I don't think you can resurrect your brand from prison. I think that her challenges will just be insurmountable. But if she stays out of jail, then I think she'll be the comeback kid. I mean, America loves to see people fall and then rise again. Look at Robert Downey Jr., Bill Clinton. I mean, there is an endless number. Marion Berry, even. There are so many examples of the comeback kid. People like to -- people identify with brands that fall.

O'BRIEN: Do you think even if she does go to prison, there's an opportunity to rehabilitate her image, being cold and arrogant, as some of the jurors seemed to clearly believe?

ETTUS: Well, it will certainly be humbling. I mean, it's going to be a lot of damage control that Sharon Patrick, the CEO, is going to have to do. And she's already been prepared for this. I mean, I think they've been spending a lot of time strategizing. And Martha is a brand that did embody perfection, but that also turned a lot of people off. So in some ways, that could be used in her favor now that people identify with someone who has struggled and survived.

O'BRIEN: We will see. Samantha Ettus, thanks. Appreciate it.

ETTUS: Thanks for having me.

O'BRIEN: Time to check in now on pop news in tonight's "Current." Expect to see less of Celine Dion in Chrysler ads. A spokesman for the car maker says they want the ads to move in an exciting new direction, but insists it has nothing to do with Celine as a person. Well, as a singer, that might be a different story.

World Wrestling Entertainment is inducting Pete Rose into the Hall of Fame. Sure, it's not Cooperstown, but those who know Charlie Hustle think he might feel right at home surrounded by people who make a career out of cheating.

Things turned ugly at a Florida retirement community center when a couple of senior citizens got into a fight. Take a look at this. The fight was over mandatory membership at a country club. Though some say it really started with some unkind words about "Matlock."

Martin Scorsese is setting his sights on yet another gang movie, this time it's set in Hong Kong, about a cop who infiltrates a violent Chinese gang. Reports say Brad Pitt is going to star. It's only fitting, of course, he's got such classic Chinese looks.

The U.S. Comedy Arts Festival is going on this weekend in Aspen, Colorado. No joke. It is going to have panel discussions on political humor. And that got us thinking. Who is funnier, the left or the right? Here's Anderson Cooper with more on this type of raw politics.

(BEGIN VIDEOTAPE)

DAVID LETTERMAN, HOST, "THE LATE SHOW WITH DAVID LETTERMAN": And the number one reason I, Joe Lieberman, would make a great president?

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: Look at me. Do you honestly think there will be a sex scandal?

COOPER (voice-over): Being funny in politics is no joke. Candidates know if they can come off as humorous, likable, voters may like them at the polls.

JON STEWART, HOST, "DAILY SHOW": Aren't you already in the race? Why do you have to announce it?

SEN. JOHN EDWARDS (D), NORTH CAROLINA: Well, I don't know if you've been following the polls, but I think it will actually be news to most people that I'm running for president of the United States.

COOPER: But humor is a tricky business. Some politicians are natural.

REV. AL SHARPTON (D), PRESIDENTIAL CANDIDATE: Governor Dean, don't be hard on yourself about hootin' and hollerin'. If I'd spent the money you did and got 18 percent, I'd still be hollering in Iowa.

COOPER: Others try and fail.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: Because I love this quote. It's from Mahatma Gandhi. He ran a gas station down in St. Louis for a couple of years.

COOPER: Some politicos use comedy writers. But the laughs they don't want is when they trip up.

On the Republican side, Bob Dole is funny. Bitingly sarcastic.

UNIDENTIFIED MALE: Senator Dole, speaking of your tax plan, do you still think that's a good idea, the 15 percent across the board tax cut?

ROBERT DOLE (R), FORMER PRESIDENTIAL CANDIDATE: Oh, yes, and you'll be eligible. And so will the former president, yes.

COOPER: President Bush uses humor to take the sting out of an attack.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Candidates are an interesting group, with diverse opinions. For tax cuts, and against them. In favor of liberating Iraq, and opposed to it. And that's just one senator from Massachusetts.

COOPER: Of all the Democratic candidates, Al Sharpton is by far the funniest.

SHARPTON: Probably the best person I met in the campaign to party with, Mrs. Kerry. I'm sorry.

COOPER: Perhaps that's why Sharpton's still in the race.

(END VIDEOTAPE)

O'BRIEN: Anderson's at that festival right now. Next Monday, we're going to get a full report on just who made him laugh and whose humor fell a little bit flat.

Coming up this evening, the courthouse craze.

But first, today's buzz. Do you agree with the verdict in the Martha Stewart case? Vote now at cnn.com/360. We've got results when we come back.

(COMMERCIAL BREAK)

O'BRIEN: It's time now for "The Buzz." Earlier, we asked, do agree with the verdict in the Martha Stewart case? More than 58,000 people have voted. Sixty-three percent voted yes, 37 percent voted no. This is not a scientific poll, just your "Buzz."

Well, what a Friday it's been, America anxiously awaiting the verdict in the Martha Stewart trial. Ever wonder how the media get you the verdict at home when no cameras are actually allowed in the courtroom? Jeanne Moos shows us the verdict signals.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): All eyes were on the courthouse door when the equivalent of Paul Revere appeared. Instead of one if by land, this one upraised arm meant guilty. Like a coach sending signals to his team -- and though these may look like sports fans, they too were signaling, and all of those numbered signs stood for criminal counts. Red for guilty.

UNIDENTIFIED MALE: Count one, guilty.

MOOS: It may look like they were judging skating, but this was how the judgment against Martha was flashed to TV reporters trying to beat the competition. No wonder one network got it wrong at first.

UNIDENTIFIED FEMALE: Not guilty? Martha, one, is guilty.

MOOS: The media signals were so sophisticated they could have made it into one of Martha's publications, "Organizing Good Things," but the only good thing for defendant Peter Bacanovic was a single green sign amid the red.

CHRIS HUNTINGTON, CNNFN CORRESPONDENT: He's not guilty, apparently, on his -- on the count regarding making a false document.

DOUG GANLEY, PRODUCER, CNN: The verdict was read, the doors burst open, people go sprinting out.

DANIELLE MELCHIONE, PRODUCTION ASSISTANT, CNNFN: It was complete mayhem. I've never run so fast in my life. A couple of girls were ready to trip me.

MOOS: The most vigorous signalers were the scarf wavers, waving sinfully red scarves. All we can tell you is they work for Fox News Channel. They would not reveal their system or their scarves of a different color if the verdict had been not guilty?

One waver worried she'd become a media joke, but who needs a scarf? The guilty verdict was written all over her face.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

O'BRIEN: And that wraps it up for "ANDERSON COOPER 360" tonight. Anderson is going to be back on Monday. I'm Soledad O'Brien. Have a great weekend. I'll see you bright and early on Monday morning at 7:00 a.m. Eastern time for "AMERICAN MORNING." Stay tuned now for "PAULA ZAHN NOW." The full hour on the Martha Stewart verdict. Have a great night, everybody.

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

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