Article published Wednesday, June 30, 2004, at Los Angeles Times.

CNNfn STREET SWEEP: Perspective On Stewart's Sentencing & Appeal

03:00 PM Eastern Standard Time

July 16, 2004 Friday

Transcript # 071603cb.l06

SECTION: Business

LENGTH: 851 words

HEADLINE: Perspective On Stewart's Sentencing & Appeal, CNNfn

GUESTS: Frank Razzano, John Lott

BYLINE: Susan lisovicz

BODY: SUSAN LISOVICZ, CNNfn ANCHOR, STREET SWEEP: Martha Stewart now will focus her appeal as Chris was just mentioning. Joining us now to talk about that and her sentencing today are two experts in white-collar crime. Frank Razzano is an attorney with Dickstein, Shapiro, Morin, Oshinsky. And John Lott is resident scholar at the American Enterprise Institute. Welcome to both of you.



LISOVICZ: John, I want to start with you, because the way I understand it, isyou actually helped write the sentencing guidelines that were used in the federal courthouse today, yet you think that these were not fair at all as they applied or as they were hand down to Martha Stewart, can you explain?

LOTT: I mean, I think there are two issues here. The first one is this is a very unusual case. Very rarely have prosecutor going after somebody because they misled investigators. This isn't perjury, she didn't lie under oath. That is a minor thing, the main thing that you're talking about is the actual sentences because the point of the guidelines was to try to make sure that it's two people who committed the same crime would face essentially the same penalty, but the guidelines focused on prison sentence lengths and ignored all of the other types of penalties.

We've seen on your show and you have been talking about the fact that she is not going to be able to serve as a corporate officer for publicly traded company in the future. There are other fines that have been mentioned that the SEC may be bringing up and civil cases that she is going to be having to face. She could easily be facing losses that are going to be totaling over $300 million plus dollars.

LISOVICZ: But you know Frank, she is different than you and I and most peoplein that she is a multimillionaire and she certainly by that, she was able to getvery wise counsel, many, many lawyers, in fact. Did they not inform her of the most basic, basic law which is if you're going to talk to the government that you should tell the government the truth?

RAZZANO: The problem was not with the lawyers who took her to trial, the problem was at the very outset of the case when she originally talked to the government. The lawyers apparently counseled her to talk. It's a very difficult situation. When you have a client who comes you ask the client what did you do and if the client says did I nothing and I'm innocent of the charges, you as lawyer you tend to believe your client and these lawyers walked Martha Stewart in to testify.

There are other lawyers who believe that at any time you have any insider trading inquiry that the best thing to do is to assert your constitutional rights under the Fifth Amendment and not testify. That is very hard for a CEO todo in a public company.

LISOVICZ: Especially when that CEO is an entrepreneur and founded that company. They play by their own rules often time.

John, we don't have that much time, but I want to talk to you about that appeal, even though you think it's an unfair sentence that she has been penalized, Martha Stewart has been penalized in so many ways, beyond the penalties, imposed today. What about the appeal? Why not just get it over with serve the five months, do the probation. What's your feeling on that?

LOTT: I mean, there's a lot at stake here. If there's some way that she can win on the appeal then a lot of these additional penalties that we're talking about in terms of -- that go with being a convicted felon, not being able to serve as a corporate officer would go away. There's a lot at stake there. I don't blame her for trying, I don't hold out huge hope.

LISOVICZ: Frank, do you think she has a case for an appeal?

RAZZANO: Yes. I honestly do. This is a very unusual case. You have two instances of alleged perjury here, one --

LOTT: It is not perjury. She didn't lie under oath.

RAZZANO: No. You didn't let me finish. There are two allegations of perjury by Larry Stewart.


RAZZANO: He was indicted for that perjury. He testified at that trial. There were also allegations that one of the jurors made a misstatement. While it is very difficult to overturn any criminal case on appeal, in fact I think the statistics are less than 5 percent of all criminal cases are reversed on appeal. I think these are two very substantial issues. She has also hired one of the best appellate attorneys in the United States. So while it is a long shot, it's a shot that I think anyone would want to take in order to clear her name.

LISOVICZ: Which is priceless.

RAZZANO: That is right.

LISOVICZ: John Lott Jr. resident scholar at American Enterprise Institute. Frank Razzano, attorney with Dickstein, Shapiro, Morin, Oshinsky. Obviously to be continued. We thank you for your insight and expertise.

LOTT: Thank you.

RAZZANO: Thank you.

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