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CNN LARRY KING LIVE

Martha Stewart Gets Ready to Leave Prison

Aired March 3, 2005 - 21:00   ET

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


LARRY KING, HOST: Tonight, Martha Stewart expecting to walk out of federal prison a little over three hours from now, maybe a minute past midnight, after serving five months. We'll get all the latest with CNN's Deborah Feyerick at Alderson federal women's prison in West Virginia, Tanika Ray, correspondent for "Extra," also at the prison, Susan McDougal, the Whitewater convict who served time in federal prison, Henry Blodget of "Slate" magazine -- he covered the entire Martha trial -- Jean Casarez of Court TV -- she's covered Martha from the beginning -- Suze Orman, the best-selling financial expert -- she'll analyze Martha's business position coming out of prison -- and Keith Naughton of "Newsweek," who wrote this week's cover story, "Martha's Last Laugh." They're all next on Larry KING LIVE.
A couple of quick notes. Kirstie Alley was due to be our guest tonight. She will be with us Monday night. And we'll do a live show at midnight. Nancy Grace will host it, as Martha -- you will see Martha being released from prison. That's live at midnight tonight. No repeat.

Let's meet our panel and get right into it. Deborah, what's the latest? Is it definitely going to be a minute after midnight?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, it definitely seems like she's not going to spend a moment in this prison longer than she has to. As a matter of fact, we're being told that she'll be handing in her prison khakis and closing out her commissary account, changing into regular street clothes. And then she's expected to be at the airport sometime between 12:30 and 1:30. And it's about a 35-minute drive here from the gates of Alderson to the Green Valley Briar Valley prison. So it's expected that she will be leaving sometime soon after midnight.

And then there's a plane that's going to be waiting there for her, along with dozens of cameras on board of a flatbed truck that her company has actually rented to accommodate all the members of the media. She will walk to her private plane, everybody looking for a wave or a smile or something that sort of shows a new beginning, but there will be no questions. We will hear from Martha Stewart when she posts something on her web, Marthastewart.com, shortly after she takes off.

KING: Tanika Ray, if her release date is March 4, she can choose her own time of leaving?

TANIKA RAY, "EXTRA": Well, she can't choose it, but they -- it would behoove everybody to get her out of here as soon as possible. We're all waiting. There's actually 30 crews already at the Green Brian airport waiting for her. So I think they're anxious to get her out of here, as well.

KING: Susan McDougal, do you think in five months, anything is learned from this experience?

SUSAN MCDOUGAL, SERVED 21 MONTHS IN PRISON FOR WHITEWATER-RELATED CONVICTION: I think -- I've heard people say that one night, you know, incarcerated that has changed people's lives. You never forget losing your freedom. They call it the slammer because the doors slam all night long, people coming and going. And it's absolutely no peace at all. So I think, yes. I think five months will make a huge change. I've got butterflies in my stomach just thinking about her walking out of there tonight.

KING: What was it like when you walked out?

MCDOUGAL: I was sick at my stomach, you know, just crazy, trembling. I remember the first time I crossed the street, how open everything felt, and just a sense of kind of almost panic. You know, after two years and then walking free, it was really an unbelievable feeling. And the camera crews were all there, and so it was really kind of shocking and frightening to have all of that at once, when you've been in this shut down environment.

KING: Henry Blodget, would you gather it's worse when you think you haven't done anything wrong?

HENRY BLODGET, "SLATE" MAGAZINE: I think, certainly, Martha, in the beginning, that was what she maintained all along. And I think a lot of people were looking for her to come out and apologize profusely, and so forth. I think just the fact that she voluntarily went to prison ahead of the appeal, went through what's obviously, as Susan has said, got to be an incredibly humbling and educational experience, and I think for her, just a very humanizing experience. I think -- I hope people will forgive her for that, for not having come out and saying, I'm sorry, because again, I do think that she still maintains for herself, at least, that she did not commit the crime.

KING: Jean, if she wins her appeal, it's a Pyrrhic victory, right?

JEAN CASAREZ, COURT TV: Well, it is. She's already served the time, though, so that is sort of a moot point. And even though she is a convicted felon, she still could be a director or officer of her corporation. But the appeal will be going forward. But don't forget about the SEC action. That's the civil action. It's stayed right now, but it is still a very viable action the SEC has against Martha.

KING: And she could be fined, right?

CASAREZ: That's right, fined. But even worse than that, they are asking that she forevermore can never be the director or an officer of her corporation. So that is what I'm sure she's very concerned about with that action. KING: Suze Orman, most people, if you run a company and you go to prison or you're on trial -- look at Ebbers and Worldcom -- the company's in trouble. Why is her stock doing so well?

SUZE ORMAN, AUTHOR, "THE MONEY BOOK FOR THE YOUNG, FABULOUS AND BROKE": Her stock's doing so well because people really want to jump on the Martha bandwagon. They look at everything that is going on, they look at "The Apprentice," they look at the daytime show, they look at the fact that Kmart and Sears now are going to merge and she's going to have a distribution outlet for the product placement, most likely her own product that she will be placing on her own show. It is a serious coup on every level, financially speaking. And they also have a feeling that the advertisers, everybody's going to jump back on board as soon as she walks out. It's a good thing, kind of, for the company.

KING: Keith Naughton, is this a little bit like that great line in the film, in the theatrical production, "The Producers," when they want to have a bad show and they get a good show and Zero Mostel historically said, "Where did we go right?"

(LAUGHTER)

KING: Was this the best prison sentence ever?

KEITH NAUGHTON, "NEWSWEEK": Well, exactly. What a difference a prison stay makes, huh, Larry? I mean, when you think about how she went in, it was in the darkness of night. None of us got any pictures of her. And now she's coming out, and her people are literally alerting the media so that we can all be there to see her triumphant reemergence as the new and improved Martha. It's a marketing and packaging coup.

KING: Your story was titled "Martha's Last Laugh." Is that on the mark?

NAUGHTON: Yes, this is her third act, I think. You know, the American public loves nothing better than a comeback story. They love a comeuppance, they love a comeback. They're getting both with Martha. And she has this A-list team around her -- Mark Burnett and Donald Trump and Susan Line (ph) -- who are stage-managing her comeback. And it's on every level, as Suze was talking about. It's really a brilliant multi-platform strategy. And we're going to see a lot of Martha in the months to come.

KING: Deborah, what's the media story there? How many? What's it like?

FEYERICK: There are dozens and dozens of cameras here. And you know, one very interesting thing, and that is we were at the airport earlier this afternoon -- they'd initially brought in a small flatbed truck. And when they saw all the cameras that were there, they actually backed that one up and brought in a much larger truck.

But also, there was somebody at the airport, and we recognized him, and couldn't quite put the name to the face. It turns out that it was one of John Kerry's advance men. He had been brought in just to help out, in terms of orchestrating everything that's going on. So everything is being very carefully handled.

And even though, you know, she'll be leaving here still under the cover of darkness, it may be very unlikely that we actually get a shot of her leaving the gates of Alderson, but what we will see is Martha Stewart triumphantly walking to this private plane, just like that moment in "Casablanca" when the two of them walk to the airplane. And she's going to sort of jet off into her future, which is so promising. It's not everybody that walks out of prison, you know, to a multi- million-dollar contract which has got many different levels. So things are good. Things are waiting for her out there.

KING: Tanika, this is not Nelson Mandela.

RAY: No, it's not.

(LAUGHTER)

KING: But it's being marketing, isn't it?

RAY: Definitely. I'm actually excited. I have to say, before all this happened, Martha Stewart was just another rich woman who made a great business deal. Now I'm kind of inspired by her, I have to be honest. It's bittersweet for people who live in Alderson, West Virginia. They all really, really like her. Actually, the driver who brought me here for the show today said, unsolicited, I'm really going to miss Martha and said he's droven -- he's driven Mark Burnett here four times, Alexis, her daughter, here five times. He really feels like he's a part of the family, so -- they have signs all over this town, "Martha, we're going to miss you." "Martha, my dear, the end is near. Oh, happy day." So it's not Nelson Mandela, but it's big times for Martha Stewart.

KING: We'll be back with more. We'll also be including your phone calls. Don't go away.

(BEGIN VIDEO CLIP - JULY 16, 2004)

MARTHA STEWART, MARTHA STEWART LIVING OMNIMEDIA: Whatever I have to do in the next few months, I hope the months go by quickly. I'm used to all kinds of hard work, as you know, and I'm not afraid. I'm not afraid whatsoever.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP - SEPTEMBER 15, 2004)

STEWART: I was walking in front of the General Motors building the other day, and there were a group of well-dressed businessmen standing outside. And they looked at me, recognized me and said, Oh, she's out already! Well, I hope that my time goes as fast as that.

(END VIDEO CLIP)

(COMMERCIAL BREAK) KING: ... entrance to the prison nobody knew until five months ago, and it now has become immortalized with San Quentin, Alcatraz and other famous prisons in America, the best-known prison on this March 3 leading into March 4 for the release of Martha Stewart.

She gets 48 hours, Susan McDougal, of work release every week, and then she wears a bracelet. Does that seem generous?

MCDOUGAL: No, it's pretty much standard. You know, I could work anywhere, you know, I wanted to work. Unfortunately, I didn't have a job, so that wasn't available to me when I got out. So I was at home a lot more. But it's available to anyone who has a job. They encourage you to work.

KING: Did you wear a bracelet?

MCDOUGAL: I did. I did. You know, a funny thing that happened -- I went to the doctor and the doctor -- I was talking about Kenneth Starr and Whitewater and all of these political things, and the doctor wasn't answering me. And all of a sudden, he whispers in this small voice, Can they hear us? Pointing at the ankle bracelet. I always thought that was so funny. It's huge, that box that you wear on your ankle. I had never realized it was so big.

KING: Doesn't it constantly remind you you are a felon?

MCDOUGAL: You know, I was not bothered by that, but I think it shows everyone else. It shows everyone in the community that sees you. If you go to -- you're allowed to go to church, you're allowed to go to work, to the doctor. And everyone who sees you says, That woman is, you know, out of prison.

KING: Henry Blodget is a contributor to "Slate" magazine. You covered the Stewart case. But you were a former securities analyst for Merrill-Lynch, accused of civil securities fraud. You settled that, no admission to allegations, but agreed to be permanently barred from working in the securities industry and paying a multi-million dollar kind of disengagement.

During that period of time, did you feel, one, you were under some sort of harassment, and two, did you fear going to prison?

BLODGET: Well, I can't really talk about my own experience in detail, but I can say, certainly, having watched Martha go through this, I mean, her situation was obviously much more serious. It was a criminal situation, full trial and all that. But just an incredible stressful experience. And I think, certainly, watching what Martha said right after the conviction, where she really seemed like her life was over, and so forth -- I mean, it is just a brutal experience. And you have to learn that the rest of your life, you're going to carry this black mark around that you have to get used to, and so forth.

So again, without talking about my own details, I can say my respect for Martha Stewart is just enormous, given what she has gone through, the way she's handled it and now, hopefully, coming out and really resuming what she's been doing. KING: But there was a lot of stress, right?

BLODGET: It's enormously stressful, even in my situation, which, again, was a lot less serious.

KING: Jean Casarez, unlike most defendants in America, even though we're supposed to presume innocence, that's not generally the case, Martha Stewart is popular. Wouldn't you say that's true?

CASAREZ: Oh, I think...

KING: She's a popular prisoner.

CASAREZ: I think she's very popular. I was just discussing with the panel -- I may be an attorney, I work for Court TV, but I've got every Martha Stewart recipe she ever put out, you know, and for the rest of my life, I'll be trying them. So I think she's extremely popular.

But what I think is interesting about the 48 hours at her house arrest -- it's to work. She can go out in 48 hours during the course of a week to work, for medical or dental appointments, religious activities, but also for food shopping, which I think is so interesting because she has hired a chef to come to her home. So obviously, she may not partake in that. But there is a possibility that she will even be able to go out of state during these next five months, so long as it is authorized by the probation department and it's for a work-related purpose.

KING: Business-wise, Suze, what would you bet -- and I know the magazine has been down, right?

ORMAN: Magazine has been down. Obviously, when this happened, the advertisers said, Bye-bye. The television people said, Bye-bye. And then when good old Mark came in and said, You know what, Martha, we're going to support you, Donald Trump said, Let's do this, everybody, as I said earlier, you will see come back to her. And the revenues will go back up. You'll see her very prominently placed. She deservedly should be prominently placed. She is the brand. They never really should have backed away from her in my opinion. But that's all right. And it's going to be a financial coup.

With that said, however, Larry, you have to understand, from the day that Martha went into prison, that stock has gone from essentially $16 a share to almost $38 a share. She has made $660 million. She has made about $4.5 million for every day she has been in prison. So people have to be very careful about jumping on this bandwagon because the stock already has done tremendously, and the finances haven't yet caught up to what the stock has done to perform.

KING: Keith Naughton, do you think the stock is helped by emotions, the fact that we like her?

NAUGHTON: Oh, absolutely. She has changed, in our view. She's been humanized by this experience. She now looks repentant. Going to jail voluntarily instead of remaining free on appeal made her appear contrite. So and then while she was in there, she made friends with the inmates. She didn't keep her distance. She was swapping microwave cooking tips. She was teaching classes on how to start your own business. She was teaching yoga classes. She helped one young woman reconnect with her family. In fact, the prisoners liked her so much, they returned the favor. When the paparazzi would hover around Alderson, they would crowd around her to block their cameras.

KING: Was she popular with the guards, the warden, the officials?

RAY: She was an excellent worker, cleaning the administration building. Her lawyer was telling me she did plenty of scrubbing, right down to the toilets. She was teaching people how to use the waxing machine properly. So you know, she brought the domestic arts right into prison, and that made her popular with both staff and the other inmates.

KING: Deborah, do you think she'll make it a cause now, we'll see a Martha Stewart book on what it's like to be in prison?

FEYERICK: Well, there was some speculation that, in fact, she was writing a book, reports that she would get up early in the morning at about 6:00 o'clock and go to the library and start typing on a typewriter. So she's definitely been collecting notes. The questions is, what is she going to use those notes for?

She was also really an outspoken critic of the mandatory sentencing guidelines. And this was really interesting. She set up a Web site -- on her Web site, she put out an e-mail saying that, you know, some of the women in there just didn't deserve the kind of sentences that they were being given. And she asked America to try to reform these. Now, the courts came in and they said, in fact, mandatory sentencing is not fair. It raised a lot of hopes here at Alderson that maybe, in fact, some women would be able to renegotiate their sentences. But for those who took a plea deal, it just turned off all expectation, all possibility of any sort of an appeal of sentence.

And you know, one way that her editor describes some of the women in there is they're very nice women. In fact, they're probably potential Kmart shoppers. So -- tried to make it seem, basically, like it was an unfortunate situation that had happened.

KING: Tanika, you think she'll make prison reform a cause?

RAY: I hope so. I hope she doesn't leave these prison gates and never look back. Basically, she has so many things on her plate. No. 1 priority, we hear, is to spend quiet quality time with her mom and her daughter. So she definitely has her priorities in order. It's one of those vacations that life hands you that probably did Martha some good.

The thing about Trump, Mark Burnett -- I speak to Trump weekly. He's very, very excited about working with Martha Stewart. The things that they have in common? They're all winners. They love to work with winners. And they're all survivors. Mark Burnett's been there. He's started off as a nanny in LA and made a huge dynamo of himself. Trump, we all know about his financial woes, and now Martha, the comeback triumvirate.

KING: We'll take a break and be back with more. We'll be including your phone calls. And now we're about 2 hours and 40 minutes away. Don't go away.

(BEGIN VIDEO CLIP - JULY 19, 2004)

In your letter to the judge, you offered an explanation for the sale. You said, It was not because I was secretly tipped but because I set a price, made a profit when it was sold, which happens every day in America, right? So the question is obvious, why you?

STEWART: Well, we don't know.

KING: Why do you think you?

STEWART: Many people have said that it is because I am a woman. Many people have said it is because I am a business person, a successful business person. But -- maybe so. I don't know for sure. I think...

KING: What do you think?

STEWART: I don't know. I think it was a combination and a coincidence. And I think that even though the government says there's no such thing as coincidence, I think there is coincidence in this world.

KING: So it just -- the breaks didn't fall.

STEWART: Well, they fell in the wrong place, didn't they.

KING: From your standpoint...

(CROSSTALK)

STEWART: Oh, yes, indeed.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PAULA ZAHN, HOST, CNN'S "PEOPLE IN THE NEWS" (voice-over): In this exclusive footage, a revealing look at Martha inside prison. Here's Martha cheerfully welcoming friends upon their arrival. Here again, chatting it up with visitor after visitor. Friends say gone is the aloof, high-strung Martha they used to know.

(END VIDEO CLIP)

KING: All that on a special edition of "PEOPLE IN THE NEWS" that'll air immediately following this program, hosted by Paula Zahn. Susan McDougal, even though it's only five months, what's the toughest part of adjusting?

MCDOUGAL: You know, I don't think I really had a tough part. I know I felt a little scared of being out in the open because you're so controlled. Everywhere you walk is, you know, cordoned off. You are always in small spaces. And suddenly, the world is wide open. It was a scary feeling, though. I can remember going to the plane, walking out of the prison and having that pit of my stomach, like, What happens next, feeling.

It's not easy to walk out, but it's exhilarating, you know? It's a wonderful thing. And your family's waiting for you, and they're all crying and happy. And it takes two or three days just to realize that you're not dreaming. I used to wake up and think I was home, you know, and wake up and be in the jail. And so you have to really get used to the fact that you're really home.

KING: Henry Blodget, should she discuss her business openly? Should she say -- do a press conference and tell what they're going to do with the company?

BLODGET: At the airport tonight? Probably not.

KING: No, I...

BLODGET: But over time, absolutely.

KING: Yes.

BLODGET: Yes. Definitely. I mean, I think that -- they've done a lot of good with the business. They stabilized the business. It was a business that was really falling apart, and they've stabilized it. You've obviously had a lot of advertisers that went running away because they didn't want to associate with a criminal. And now they may well want to associate themselves with this big comeback story. So you could have a real piling-on there, which would be great. So I think, certainly, soon, Martha should definitely come out on behalf of the company.

KING: Jean Casarez, as an attorney, does her appeal have a shot?

CASAREZ: Well, that's a good question. The appeal is based on several things, but one involved the jurors, one juror lying about an arrest that he had, saying he didn't have it. And the judge would not allow a new trial, saying that it was irrelevant, that he still probably would not have been dismissed from the jury. And another thin that the jurors discussed in the jury room about her handbag and things like that, and the judge also thought that was irrelevant. I don't think the appeal will have success, in the end.

KING: Suze Orman, will "Apprentice 2" -- I guess we'll call it that -- help the business?

ORMAN: "Apprentice 2," if you're going to call it that, is seriously going to help the business. Think about this. The difference between "The Apprentice" with Donald Trump and "The Apprentice" with Martha is that people pay Donald to go on his show for product placement. If that product does really well, it doesn't help Donald, it helps the company who manufactured the product.

Here we are, Martha manufacturing her own product, a furniture line, possibly a clothes line, bed lines, cooking lines -- hey, with Sears, she can even have washing machines. Everything could be done around these products on the show. And if they hit, where do they go to buy them? To the stores that she sells them to! So it is a tremendous boon for her, financially speaking, for this new TV show to hit.

KING: Keith Naughton, is there any down side?

NAUGHTON: Well, the thing is, she can get a huge audience initially. Some of the TV people I talked to said she might get over 30 million people for her first "Apprentice" show, which is huge. The question is, Can she sustain it? People will all tune in to see the new Martha, but if she doesn't have that X factor, that ability to get the joke, to not take herself too seriously, the sorts of things that she was criticized for in the past, frankly -- if we don't see a new Martha that shows a new humanity and a new sense of humor, then I think people will quickly tune out.

KING: Keith, should she say, "You're fired"?

NAUGHTON: Well, she's not going to say "You're fired." Donald Trump made that very clear to me, and so did Burnett. And you know, that may conjure up sort of the bad Martha that we all remember. But how will she get rid of the guests each week?

KING: Yes.

RAY: You know, are they flambeed? What are they? So...

KING: How about, Good-bye, here's a doily?

(LAUGHTER)

RAY: There you go! You know, a lovely parting gift. So we don't know exactly, but she is definitely going to show somebody the door. Burnett told me she's not going to do it in a kitchen, either, which I thought would have made sense, but he thought that would be an insult to a woman who built a multi-million-dollar corporation. So she's going to do it in something other than a boardroom. She's going to say something other than "You're fired." But she is still going to get rid of somebody every week.

KING: And what is the name of the show, by the way?

NAUGHTON: It's called "The Apprentice: Martha Stewart."

KING: We'll take a break and be back and go to your phone calls. We'll reintroduce the panel, as well. Don't go away.

(BEGIN VIDEO CLIP - SEPTEMBER 15, 2004) STEWART: I have labored long and hard to build this company, and I love the company, my colleagues and what we create very much. I cannot bear any longer the prolonged suffering while I and my legal team await vindication in the next step of the legal process, the appeal. And although I and my attorneys firmly believe in the strength of that appeal, recent delays and extensions have now made it abundantly clear that my appeal will not be heard until some time next year. So I have decided to serve my sentence now, to put this nightmare behind me and get on with my life and living as soon as possible.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Alderson Prison in Alderson, West Virginia where Martha Stewart will be released in about three and a half hours, a little less than that maybe. Head out to the airport about 30 minutes away and then fly to upstate -- well, not upstate, it's a little north of New York City, Bedford, where she'll spend the next few months under house arrest with 48 hours out each week.

Our panel at Alderson Prison are Deborah Feyerick of CNN and Tanika Ray of Extra. In Little Rock is Susan McDougal, who served prison time for civil contempt and Whitewater related fraud charges, author of the best seller "The Woman Who Wouldn't Talk." In New York is Henry Bloget contributor to Slate magazine who covered the Martha Stewart case, including the trial and the sentencing.

Jean Casarez is a Court TV correspondent. She's in New York. Also in New York, Suze Orman, the reknowned expert on personal finance, New York Times best-selling author and Emmy winning TV host. Her newest book is "The Money Book For the Young Fabulous and Broke."

And Keith Naughton of Newsweek magazine who wrote the current cover story "Martha's Last Laugh: After Prison She's Thinner, Wealthier and Ready for Primetime."

Let's go to calls. San Diego, hello.

CALLER: Hi, Larry. It's always a pleasure to watch you.

KING: Thank you.

CALLER: I'd like my question to be directed at Ms. McDougal.

KING: Sure.

CALLER: Do you feel that it's -- why were you so willing to put Martha Stewart on the pedestal just because she spent 5 years in federal prison. You spent 21.

MCDOUGAL: 22. I think it was because it was a pretty gutsy move with appeals out there. And being the that person she is she said, you know what? I owe this time and I'm going to do this time. I think people respect that. I know that when you do the time, it's very hard time, it's very hard time. And it's a hard thing to just say I'm going to take myself to jail now. And I respect that. And I think it's a good thing.

We also respect her, because she's made a ton of money working hard all of her life. It wasn't given to her. No one helped her do it. She did it, you know, with her own hands, and I respect that as well. I think you can put her on a pedestal, just for those two things, if nothing else.

KING: But when you're very rich, Henry, and something happens to you, why a pedestal? Why not envy?

BLODGET: I think Martha has suffered in a way from huge envy. And certainly people have picked on her or things that just sound incredibly petty next to what she's accomplished. So certainly, that was her big public relations issue before all this happened.

And now it will be interesting to see what happens now because she has been, as Keith said earlier, very humanized, obviously a humbling experience. People have seen a side of her that nobody has seen before publicly. So, it will be interesting to see whether that has had an affect on her public image.

KING: California, hello.

CALLER: Hi, Larry. Thanks for taking my call.

KING: Sure.

CALLER: My question, too, is for Susan McDougal. I wonder, Susan, do you feel the investigations, such as the ones that put you and Martha Stewart in jail are totally gender biased? I'm thinking of Ken Lay and the Arthur Anderson guy and all those wonderful people, and Tyco and Arthur Anderson and Enron come to my mind.

KING: Well, they're all going on trial. But Susan, do you think it's gender based.

MCDOUGAL: You know, I think they've done studies that show there is a gender bias. Juries are gender biassed. Sentencing judges are gender biased. Women get longer sentences than men for the same crimes.

Women are supposed to be nice people who don't get into trouble, especially for women like Martha Stewart and myself that came from middle class backgrounds. And propel expect us to not get into trouble. And when we do, they want us to pay a high price for it.

But, you know, again, to answer that question of the caller before, I've seen murderers, I've been in lock-up with them, who would have sold their mother not to have gone one night into lockup. People are frightened to death of it.

And when you think about it, what is the most frightening thing you can think of than be at somebody else's mercy 24 hours a day. And I have seen some horrible things behind bars. And that woman said I will go and I'll do my time. And I honor her for that.

KING: Jean Casarez, do you think it's rougher on women in the American judicial system?

CASAREZ: You know, probably yes. But Martha Stewart got the minimum sentence. She got 10 months. And the fact is that she is now going to do a homebound situation. So, I think that many people, probably that envy you're talking about, once she begins that homebound situation, she'll be going here and there and I bet that will be very controversial in the minds of many. But it will be within the bounds of her probation. So, I think you can't get away from that envy.

But in answer to your question, probably generally speaking, yes.

KING: You think so, Tanika?

RAY: Absolutely. I think that people will forgive her. I think people love her and she'll get away with making that come back. And it is tougher on women. And I hope that she has a powerful voice. I hope she does stand up for the rights of prisoners.

KING: Ormand Beach, Florida, hello.

CALLER: Yes. Martha Stewart spent 5 months in prison, yet Ken Lay of Enron has avoided going to trial for 3 years. Does anyone on the panel think Martha was used as a scapegoat, or a diversion from the real corporate crooks?

KING: Suze?

ORMAN: You know, I don't think that she was used as a diversion. I think the case against the Enrons, the Worldcoms are so complicated, so far more complicated than what really happened with Martha that they were simply taking their time to really gather the evidence so that when they did go to court that these guys, if they go away, they're going to go away not for ten months, not for three years, they are going to go away so long that Martha Stewart might not be here anymore, in a certain level, by the time they get out.

So, I think that's why they're taking so long with those cases, not Martha being a diversion for them at all.

KING: Who wants -- Yeah, go ahead.

MCDOUGAL: I was going to say, I do think that prosecutors can't bear to have a high-profile person like Martha Stewart and not prosecute them. It makes their lives, it makes their careers. It's a high-profile case as you've seen in many of the high-profile cases, it makes the prosecutor's life. Martha Stewart's case was going to be used to do that. It was strictly prosecuted because of who she was. You don't see anyone else getting prosecuted for those same crimes.

KING: Keith Naughton, what about the comparison to the Ken Lay's. NAUGHTON: Even if Martha Stewart was treated unfairly, moved to the head of the line in all these corporate crime trials, it is now, perversely, working in her favor. She's Martha the martyr now, because it does seem so unfair. And that's fueling her comeback.

CASAREZ: Larry.

KING: I don't know who's speaking.

CASAREZ: This is Jean. Larry, on the other flip side of the coin, Martha Stewart did lie to federal investigators. Two times she went before him. She had every opportunity to explain herself and she didn't. So, from the standpoint of the federal prosecutor, what are they supposed to do? Are they supposed to let those lies happen and do nothing about them?

MCDOUGAL: Jean, if we prosecuted everyone who lied to a prosecutor, you would be walking empty streets, because it happens all the time. And you have to know that Martha Stewart went to the head of the line because she was Martha Stewart. She was an uppitidy woman. She was a big name. And it was going to be a big case, because nobody liked her.And they were going to put her in jail. And the world was going to applaud them.

And as the other guest said, it flipped on them. And now Martha has won. And I'm very glad of that.

KING: Deborah, would you agree that, say, if Ken Lay had been sentenced to prison and was being released tonight, you would not be there?

FEYERICK: Oh, we would definitely not be here. There's a lot of celebrity associated with Martha Stewart. She has surrounded herself with it for really her whole life. And that's one of the reasons we're here. There's just intense interest. And even when you think nobody's going to care, nobody's going to listen, the truth is, everybody listens, everybody asks me about Martha Stewart, what's happening with Martha Stewart, just as a reporter, because they know I cover it.

So yeah, there's just intense interest in this woman. And now they want to see, is she going to do well? The media was there when she fell. Now the question is, can she really build up and promise or deliver what's being promised around her image?

KING: We'll take a break. Again, Kirstie Allie was due to be our guest tonight. She'll be our guest Monday night. There will be a live edition of LARRY KING LIVE at midnight Eastern, 9:00 Pacific, with Nancy Grace and the whole panel, and you'll watch Martha being released from prison. And don't forget, at the top of the hour, 10:00 Eastern, 7:00 Pacific, the Paula Zahn special "PEOPLE IN THE NEWS" with never-before-seen shots of Martha behind bars.

We'll be back with more calls right after this.

(BEGIN VIDEO CLIP) KING: Sacramento, hello.

CALLER: Yes, Martha, I would like to ask you, if you do have to do jail time and you come out, do you -- will you bring some of your ideas from jail to your show, and will you do your show again yourself or will someone else do it for you?

STEWART: Wouldn't it be better, wouldn't it really be better if I could take my ideas from my show to jail? I think that that might be a better thing. What do you think, Larry?

KING: People make jokes. Are you going to re-do the jail?

STEWART: Larry, it's not a joking matter.

KING: No, it's not a joke.

STEWART: It's not.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

STEWART: I hope, too, that I will be able to begin serving my sentence in the very near future, because I would like to be back as early in March as possible in order to plant the new spring garden and to truly get things growing again.

(END VIDEO CLIP)

KING: We're back. Lexington, Kentucky, hello.

CALLER: Hello, Larry. How are you?

KING: Fine.

CALLER: I have a question here. You answered my question earlier about Martha doing prison reform. So I'd like to ask Ms. McDougal a question. How come prosecutors -- if Martha is vindicated in the future, how will prosecutors make that up to her? Will they be able to? Will they have to make that up to her in any way for ruining a part of her life in the time that she's gone to jail and now she's going to do home incarceration?

KING: How do you give it back to her, Susan?

MCDOUGAL: No, they won't, and you can't sue a prosecutor for doing his job in the course of his job going forward. It's almost impossible to regain any of that. You know, I went on trial twice with Kenneth Starr, and now he's making millions making speeches, even though he was absolutely dead wrong about Clinton and me.

You never get that time back, you never get the life that you had back. I lost everything I had, and I would never be able to have that back again. And Jim McDougal is dead.

So how do you get that back when they're wrong? Hopefully you get good prosecutors, and there are a lot of them. But I do think in this case, it is an egregious case of prosecution because this woman was famous, and every one of the callers in is smarter than all of us, because they get it. Just like they got a lot of what went on with me.

KING: But Henry, we're learning also that she -- you can take a negative and make it a positive. She can actually use this as a plus in her life.

BLODGET: She is extraordinary at that. When you look at her life, and I'm not an expert on Martha's life, but I read a couple of the hatchet job biographies and so forth, if you look at what she grew up with and what she did with that, and the way she looks back at that, her true gift is just making lemonade out of lemons. And here she's done it again. Certainly with the news and reports that have come out of prison, and if she can now take this and make it into what it seems like she's going to make it into, it's extraordinary. And I think if nothing else, people can really learn from that.

Initially, she felt incredibly put upon, and it was all unfair. Now she's turning it to her advantage and making something with it.

KING: Vancouver, British Columbia, hello.

CALLER: Yes, my question is for Suze Orman. I'm just wondering how many people lost money that bought the same stock as Martha Stewart but weren't tipped off to sell it because it was going to plummet? And I'm also wondering why so many people believe that she didn't do anything wrong, when if they would have had the same stock, they would have lost money, because they wouldn't have had the inside information Martha Stewart did. And why do they think that is fair?

KING: Well, that's why she went to jail, but Suze, why is she getting plaudits when in fact she did something that other people lost money?

ORMAN: You know, you really have to look at the actual loss that happened to Martha with that stock. If she had just waited one day and then sold, maybe her loss would have been $50,000. She only had 4,000 shares. It wasn't that big of a deal. If she had held on to the stock, she would have made so much money because the stock went all the way down, the stock got (UNINTELLIGIBLE). So the people never really lost money as it went down if they held on to it. They would have made so much money, because that stock came all the way back.

The thing that you have to understand is that what Martha did didn't hurt anybody. Who cares if she sold? She didn't cause the stock to go down. The stock went down because they didn't get approval for their drug Erbitux, or however you say it. So it was -- when really -- when you listen to Susan McDougal, she's right. Martha, in my opinion, should not have gone to jail. It was absolutely ridiculous. She never caused anybody any harm financially speaking, at all. It wasn't because of her. But in the long run, if she hadn't done anything and if nobody had done anything with that stock, including Sam Waksal, who's sitting for seven years or something, they all would have made a serious fortune.

KING: Keith, do you agree with that?

NAUGHTON: Yeah, you know, the stock came back. The ImClone stock came back. And when Martha was sentenced last summer, and her stock at that time was plummeting below $10 a share, Erbitux -- or rather ImClone stock was up around $70. Well, she sold at 58. So if she would have held on, not only would she have avoided this whole mess, she would have made money.

KING: We'll be back with our remaining moments and some more phone calls. Don't forget, "PEOPLE IN THE NEWS" with Paula Zahn at the top of the hour, a look at Martha inside prison. Don't go away.

(BEGIN VIDEO CLIP)

KING: Monterey, California, hello.

CALLER: Hello.

KING: Hi.

CALLER: My question is about the house arrest portion.

KING: Yeah.

CALLER: If she does serve prison and then has five months of house arrest, is she allowed to run her company then?

KING: Good question.

STEWART: Oh, OK. Well, I will be able to work...

KING: Out of the house.

STEWART: ... on house arrest, yes. I was granted, I think, 48 hours a week out of the house.

KING: Or you can go to work.

STEWART: Yes, so that's good.

KING: So you can work and you can run the company.

STEWART: Well, run the company, work at the company, whatever it is.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) STEWART: The only way to reclaim my life and the quality of life of all of those related to me with certainty, now, is to serve my sentence, surrender to the authorities, so that I can quickly return as soon as possible to the life and the work that I love.

(END VIDEO CLIP)

KING: And that return will happen in a little over two hours from now. Pleasanton, California, hello.

CALLER: Yes, good evening. I'm really excited because I happen to be a fan of Martha, so I'm really excited she's getting out tonight. My question is, I know that her daughter and her are really close. Can anyone tell me how often her daughter did go visit her? Thank you.

KING: Deborah Feyerick, do you know how often her daughter went?

FEYERICK: We understand that the daughter visited her almost every weekend, actually. She really has been with her mother throughout this entire ordeal. There was a point in their relationship when they were not as close, some even use the word estranged. But during the trial, Alexis Stewart was always by her side. Came down to Alderson with her to make sure she checked in OK, and then left. She visited her. They've played Scrabble. She's been here on the visiting days. So she's really been a great source of strength and support for her mom.

KING: And Tanika, she's had a lot of visits, hasn't she?

RAY: Lots of visitors. Not only Mark Burnett, who's working out some business dealings with her, but some members of her executive staff. Her daughter, it did wonders for their relationship. And we applaud them for that. But they've been keeping business as usual here at Alderson. Even though, she hasn't been technically allowed to keep business going, it's been happening. We know that Martha is going to be just fine once she leaves these gates.

KING: Glenville, Ohio, hello.

CALLER: Good evening.

KING:

CALLER: My question is for the entire panel.

KING: Sure.

CALLER: And I am just asking, I guess I don't understand why everyone is so excited that she is getting out of prison when she committed a federal offense, and should really serve more time than what she's done.

KING: Jean, an opposite viewpoint.

CASAREZ: That's right, an opposite viewpoint. Well, she is going to continue to serve her prison sentence with home confinement, so she's not finished yet. And she's going to be under probation for 19 months after the 10-month sentence is concluded. And that means she has to visit a probation office. And remember, for the next two years, a probation officer can make unexpected visits to her home or to her work, any time they want to. So, it's not just a free ride in the future for her.

KING: Henry, did the sentence fit the crime?

BLODGET: The sentence fit the crime in that that is the mandatory sentence. And so, if anyone can be sentenced to that, Martha Stewart should be sentenced to that. I think one could certainly argue whether lying or what she was accused of in an unsworn, untranscribed interview, she did not commit perjury. She did wasn't charged with. Maybe the sentence was harsh, but certainly relative to a lot of the other mandatory sentences, it actually seems down right reasonable.

NAUGHTON: You know, Larry...

KING: Yes, go ahead.

NAUGHTON: There is an interesting what might have been scenario here too. When the Judge Cederbaum, when she sentenced her, indicated that she felt Martha suffered enough and gave her the absolute lowest sentence within the sentencing guidelines, the five months in prison, and five months under house arrest. Well, of course, since then the Supreme Court has thrown out those sentencing guidelines. So, you have to wonder, a judge who was already sympathetic to her, would she have given her prison time at all?

MCDOUGAL: And let's think how smart it is to put Martha Stewart in prison. I mean, why should we pay to have Martha Stewart put in prison? Is she really a danger to society? Is that why we did it? Was it to punish her and make her a better person when she gets out? Maybe that will be that, you know, she is a little humbler, that she has met women. And she feels a little more that, you know, she has a heart for them. And maybe that's true. Is she really going to be that different? I think the whole idea of putting someone is who is non-violent who could be good for society in prison is a stupid idea.

KING: And Suze, based on the calls tonight, they're running about nine to one in her favor. I guess, that's about the national thinking isn't it?

(CROSSTALK)

MCDOUGAL: I think that -- Oh, I'm sorry, I thought you said Susan.

KING: Yes, Suze. I said Suze, but go ahead. Suze Orman, running out of time.

ORMAN: That is the thinking. People really love her. They do not think, in my opinion, that this was a fair thing that happened. They don't like that maybe she lied, but they don't think she should have been sent to prison for it.

KING: Thank you all very much. Deborahah Feyerick, Tanika Ray, Susan McDougal, Henry Blodget, Jean Casarez, Suze Orman, and Keith Naughton. Stay tuned now for a special "People in the News" hosted by Paula Zahn showing Martha Stewart, things you've never seen before in prison. And then there'll be a live LARRY KING LIVE. Two hours from now. Thanks for joining us, good night.

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