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Martha Stewart Released

Charles Gasparino
Senior Writer, Newsweek and Author,
Friday, March 4, 2005; 11:00 AM

Martha Stewart was released from Alderson Federal Reformatory for Women in Alderson, W. Va., this morning at 12:30 after serving five months for lying to investigators about a stock sale.

"The experience of the last five months in Alderson, West Virginia has been life altering and life affirming. Someday, I hope to have the chance to talk more about all that has happened, the extraordinary people I have met here and all that I have learned," said Stewart in a statement posted on her Web site.


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Complete Coverage:Out of Prison, Martha Stewart May Now Face A Tougher Trial (Post, March 4))

Newsweek senior writer Charles Gasparino was online Friday, March 4, at 11 a.m. ET to discuss the release of Stewart from prison and the future of her business, Martha Stewart Living Omnimedia.

Gasparino contributed to Newsweek's cover story about Stewart: Legal Affairs: Let's Make an Inside Deal (Newsweek, March 7) and is author of

A transcript follows

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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washingtonpost.com: Charles Gasparino, thank you for being with us today to discuss Martha Stewart.

Your Newsweek article mentioned a deal with federal regulators that may or may not enable Stewart to return to her company as CEO. Can you explain?

Charles Gasparino: yes the deal that is being discussed is one that would help martha regain control of the company sooner than expected. the securities and exchange commission is seeking to bar her from running her company as part of its civil insider trading case. but my sources say they are now willing to negotiate something less; the story i broke in newsweek is that they may be willing to let her return after 2-5 years

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Mt. Lebanon, Pa.: Are prisoners routinely released from confinement at midnight?

If not, isn't this exactly the same kind of "I'm above the norms and rules of society" treatment and attitude that got her into that prison to begin with?

BTW: I just finished reading Blood on the Street -- couldn't put it down. Fascinating! All special-class citizens looking for a free ride with the rest of us picking up the tab.

Thanks much. Standard Grade Citizen/Veteran

Charles Gasparino: great question. i spoke to someone last night who said normally federal prisoners are released around 6am.

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Fairfax, Va.: Is the decision the SEC has to make with Martha Stewart a political one?

Charles Gasparino: i dont think so. the SEC wants to get a settlement to make it easier for the agency to crack down on insider trading

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Washington, D.C.: Did she actually get released from prison early? I thought she wasn't supposed to get out until Sunday.

Charles Gasparino: not really they dont release people on sunday

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Arlington, Va.: How does Wall Street view the Martha Stewart news and the fact that her stock has shot up?

Charles Gasparino: wall street believes the reason for the sharp rise in the share price has less to do with the health of her company than it does with technical factors involving the stock. here's the deal: MSO recently posted some very bad financial results, but the news on martha has been good, namely that reality TV shows will boost her fortunes in the long term. in the past many investors bet that her company was going to have more financial problems so they "shorted" the stock, a trading technique that allows an investor to profit when shares decline in value. the investor does this by borrowing shares, immediately selling them, and repaying the borrowed shares with stock when it declines in value. but what happens with the stock rises? the investors must now "cover" their short positions and buy stock to repay what they owe. in the case of martha, there were so many shorts that when the stock spiked a bit after the announcement of her TV shows, the shorts rushed out to buy shares sending the stock dramatically higher. as a result, the recent increase in her stock price has less to do with the company's current financial conditions and more to do with technicalities of the stock market. hope i explained that well enough

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Arlington, Va.: So how much of a fight does she now face to regain her title as domestic diva? It doesn't seem to me as if anyone has stepped into the void she left ...

Charles Gasparino: i don't think she will have much of a fight if she can gain clearance from the SEC the company does, after all, have her name on it

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Fairfax, Va.: I give up -- how does her company's stock go up (and she leaves prison richer) when revenue and income fall in 2004?

Charles Gasparino: i just answered that question--has to do with so many people "shorting" her stock, and then buying shares to "cover" their short positions when the price spikes a bit on the positive news of her TV shows. that sends the stock dramatically higher. has nothing to do with the finances of the company

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SIlver Spring, Md.: Martha was treated unfairly because she is an assertive/aggressive businesswoman. The crime she committed normally does not get jail time. She served time for lying. Also the money involved was very little. There is a clear double standard as it relates to how Ken Lay was treated. I hope Martha goes out and makes billions more.
GO MARTHA!
From a single successful woman

Charles Gasparino: i disagree with this statement. average people go to jail all the time for lying. the fact that she is a high-profile businesswoman is why she's gathered so much attention (and sympathy) as well.

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Washington, D.C.: It seems the tide has swung the other way with Martha Stewart. Now she's seen almost as a pariah. How did this happen? What do you think the average person-in-the-street thinks about her "resurgence"?

Charles Gasparino: i think opinions on martha break down according to class lines. middle income people seem to despise her; rich people, particularly those on wall street who underwrite her company's stock say they like her

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Arlington, Va.: I really doubt that short covering can be explained for a rise in the stock from a low of $9 in July to $34 today. You should probably explain that better. Also, you cite near-term disappointment in financial results ... a lot of the investors are more long-sighted than that.

Charles Gasparino: sorry if you don't want to accept my explanation. that's what every sophisticated investor on wall street tells me. if you don't believe me, i cant help you

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Dayton, Ohio: What role does her daughter play in her company? Does she have other children?

Charles Gasparino: she has one child (her daughter) and most people believe she doesn't have the background to run the company

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Kenilworth, Ill.: I am so tired of people beating up on us wealthy folks. Yes, I happen to be closer to the billionaire category than millionaire, but my life is relatively hard. People don't realize that just because you have so much, all the homes, Bentleys, trips around the world, prestige, etc., etc. doesn't mean our lives are any easier than anyone else's. Can people just leave Martha alone? Being cooped up at home for months on end even in a fine home like hers in N.Y., doesn't mean she won't have her personal challenges. Just try to see the other side of the coin. We're all human.

Charles Gasparino: is this question a joke? keep in mind most federal inmates don't leave jail in a private jet

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Alexandria. Va.: Will the merging of Sears and Kmart be a good thing for Stewart's business?

Charles Gasparino: its hard to say. there will be more outlets to sell her stuff, but will people want to buy something that's endorsed by a convicted felon? that's still an open question and its the reason why the stock price is probably over valued

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Knoxville, Tenn.: Isn't it amazing how Martha Stewart has been tried - convicted - served her time and yet we are still waiting to see Ken Lay make an appearance in a courtroom other than a one day walk thru.

Charles Gasparino: there is an irony to some of this, including the fact that Worldcom's former ceo bernie ebbers could walk and martha has spent time behind bars

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Washington, D.C.: Did Martha Stewart set a good example by serving her time without a lot of fanfare? What will her image be now?

Charles Gasparino: i think there's been tremendous fanfare

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Washington, D.C.: So what are the restrictions on Martha Stewart now that she's home? What can she do and not do?

Charles Gasparino: not sure. it's all up to her parole officer who will set the conditions. one thing i know is that under the terms of her home confinement she cant drink alcohol. she's technically still a federal prisoner

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Why did Martha start her time prior to appeal?: Why do you think that Martha started serving her time prior to appeal? If her conviction is overturned, will she get money from the feds for the time that she spent in jail? or just vindication?

Charles Gasparino: basically it was a business decision. the faster she did her jail, the better it was for the company which had to deal with the uncertainty of her appeal

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Adelphi, Md.: Will her business be run differently now?

Charles Gasparino: it's already run differently. new CEO and new people on the board.

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Washington, D.C.: What are the terms of her home confinement? I thought I read that she is allowed out for 48 hours a week and has restrictions on how many hours she can spend doing certain activities (gardening, exercising, meetings in N.Y.) I mean can she actually leave her property? Do regular people who are on home confinement get to do things like go grocery shopping?

As a side ... I love Martha and think she really is a domestic goddess! Rock on Martha!

Charles Gasparino: i think i answered this but, but unlike average people in home confinement, she's confined to a mansion

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New York, N.Y.: Average people may go to jail for lying but Martha is not comparable to the average person -- she's comparable to CEOs like Ken Lay et. al., none of whom were treated as harshly as she was. I hope her sentence eventually gets overturned -- it's appalling that the Lays of the world can waltz away from jail after stiffing hundreds out of their retirement savings, while Martha gets the hammer for a picayune offense.

Signed,
A very middle class woman who loves what Martha stands for.

Charles Gasparino: you should check your facts. lay is going on trial. he's been charged and could go to jail for much longer than martha

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Anonymous: Could you explain what Martha's situation will be like under house arrest (if that is even an appropriate term)? What will she be allowed to do? How long?

Charles Gasparino: i think i answered this one but its up to her parole officer. i know she cant drink alcohol

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Washington, D.C.: That ankle monitor. Will she not be able to remove it? Will it be somehow locked onto her leg?

Charles Gasparino: i think its locked for the duration of the 5 mos and it checked by her parole officer periodically

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Bethesda, Md.: Will will her financial analysts be now? Were all her business people who were with her at the time dismissed? Who will give her finance advice now?

Charles Gasparino: can u clarify

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Long Beach, Calif.: In addition to her necessary position on the matter, her silence must have given or increased her cache on Wall Street. Did it? And if it did, does it represent any value to the company?

Charles Gasparino: i don't think it mattered one way or the other. one other thing: she hasn't been totally silent

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Washington, D.C.: How do you feel about your magazine's depiction of Martha Stewart on the cover? It's a doctored picture, I understand, with her head on another's body. Is this journalistically right to do?

Charles Gasparino: we did disclose inside that it was essentially an illustration. my view is that we should have been more clear about the situation. we're sorry if we mislead anyone

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Bethesda, Md.: I mean will she have any of the financial advisers that were with her before her conviction or will she be hiring new people to give her money and investment advice?

Charles Gasparino: i'm sure she will have a new broker since he's in jail. is that what u mean?

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Oakton, Va.: Regardless if she can be CEO, Martha Stewart holds a large equity position in her company, whose stock price has gone from $15 a share when all this started, to $34 today. I think she'll be okay.

Charles Gasparino: i think you're right

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Charles Gasparino: thanks for the questions see u next time

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