Toobin Tells Martha's Side Of The Story

Martha Stewart is talking again, this time to Jeffrey Toobin in an exclusive interview for The New Yorker magazine.

Stewart hasn't given an interview since her appearance on The Early Show last June 25. Why him? And why now?

"I think she and some of the people around her were sick of the way she was getting beaten up every day, or almost every day in the press," Toobin tells The Early Show co-anchor Harry Smith. "You know, the jokes, abuse, bad publicity. A lot of people thinking she's guilty. She has a story to tell. She told it to me."

The advice she has been getting is the usual that lawyers defending those suspected of crimes usually offer, notes Toobin. "Keep your mouth shut; keep your head down. But I think there were other people around her who said, 'Look, there is another side to this story, and you've got to get it out there.'"

In its Saturday editions, New York's Daily News says Martha Stewart is "begging for mercy" and reports that her lawyers met with Manhattan U.S. Attorney Jim Comey last week to ask him not to file criminal charges against her.

The private session took place Thursday in Comey's downtown Manhattan offices overlooking the Brooklyn Bridge, according to three News sources familiar with the matter.

Two sources tell the News that Stewart's attorneys, including high-profile lawyer Robert Morvillo, made the last-ditch move after federal securities regulators warned Stewart they were ready to file civil charges against her.

The lawyers tried to persuade Comey that it would be sufficient punishment for Stewart to pay a civil fine and that filing criminal charges - given how little she had gained from the deal - would be overkill, the sources said.

Defense lawyers often request a meeting with prosecutors when they fear or know their client is about to be charged, the newspaper explains.

Only two things are well known about her story, Toobin says. She sold her Imclone shares and the stock plunged the next day.

The News says Stewart's legal troubles began Dec. 27, 2001, when she sold 3,928 shares of ImClone Systems stock worth $228,000. As a result, the multimillionaire - who runs Martha Stewart Living Omnimedia - avoided losses of $45,000.

But that sale made her the official celebrity target in an FBI probe of her friend, ImClone founder Sam Waksal, who has pleaded guilty to tipping off his daughter and father in the ImClone affair.

Waksal knew the government was about to shoot down ImClone's anti-cancer drug, Erbitux. After Waksal tipped them off, his relatives sold every share they had a day before the Food and Drug Administration made its announcement. The stock then collapsed.

But Toobin notes that Stewart had sold lots of stocks during November and December.

"She was clearing her desk, important point in her factor. Also another very controversial point in her story is that she claims she always wanted to sell the stock at 60, regardless of what else was going on," Toobin says. "There is a document with 60 written on it. There's also another person, her business manager, who corroborates her story of wanting to sell at 60."

A former prosecutor, Toobin says that based on what he has seen, it is a weak case against her. Though Stewart did not put a stop loss order, he says, as a former stockbroker she kept an eye on what she owned.

"And she says, 'Look, I am someone who knows how to trade stocks. I keep in touch with my stocks, I keep in touch with my broker, that's how I chose to sell stocks, there's no crime,'" Toobin says.

Stewart was questioned by the FBI about her ImClone sale in April. She denied wrongdoing, insisting she got no insider information before she sold, the News adds.

Since then, her stockbroker's assistant, Douglas Faneuil, contradicted her account. Faneuil has pleaded guilty to a misdemeanor and is cooperating with the FBI, the News reports. Marvin Smilon, a Comey spokesman, declined to comment.

Stewart's spokeswoman, Susan Magrino, also declined to comment. Morvillo did not return calls from the News seeking comment.

"This was an $80,000 stock purchase," Toobin notes. "In a year in which her company went public, making her a billionaire for a while. She no longer is. And it was a small part of her portfolio. Yet she did keep an eye on it. In part, also, because Sam Waksal, the head of ImClone, was a good friend of hers. That's just the kind of person she is."

The Securities and Exchange Commission recently decided to file a civil lawsuit against Stewart that could result in about $120,000 in fines, News sources said.

That would leave Comey's criminal probe as the final question to be resolved.

In insider-trading cases, the SEC usually pursues civil remedies in concert with the prosectors' criminal probe.

If Comey decides to press the matter and the grand jury votes to indict, the SEC would file its charges simultaneously, one News source says.

Personally, Stewart is not having a pity party, Toobin notes, referring to their encounter.

"You could see it sort of between the lines. When she sat down to lunch, there were these really exquisite silver chopsticks in front of me. We were eating Chinese food. And I said, 'Boy, these are beautiful.' She said, 'In China, the people with the highest social status have the thinnest chopsticks.' She said, 'Of course, I had to get the thinnest one.' And then she paused and said, 'That's why people hate me.'"

And she has paid considerably for it, Toobin reports, "She said $400 million, all told, that's a lot of money. Most of it is in decline of her stock. But it's also legal fees, lost business opportunities. She's paid a considerable price, regardless of what happens in this case."