updated 8/26/2005 11:31:12 AM ET 2005-08-26T15:31:12

Guest: Freddy Maduro, Paul Reynolds, Art Wood, Rod Wheeler, Ben Presson,

Martha Stewart, Mark Burnett, Fraser Seitel, Christopher Byron, Kim Dillon,

Debra Opri, Matthew Rich

RITA COSBY, HOST:  Hello, everybody.  I‘m Rita Cosby.  Tonight, two big stories that we are following closely, our exclusive visit to Joran Van Der Sloot in prison.

But first, some breaking news.  We‘re tracking Hurricane Katrina, which is battering Florida right now.  Let‘s go live to Jay Gray, who is live on the beach in Ft. Lauderdale.  And I understand, Jay, you‘re actually using a flashlight because you‘ve lost power.  It‘s that bad, huh?

JAY GRAY, NBC CORRESPONDENT:  Yes, Rita.  I can tell you, things have really intensified here.  And that‘s right, all we have left is a flashlight.  All the power (INAUDIBLE) including the power we‘ve been using (INAUDIBLE) the truck.  We‘ve really seen the winds pick up here.  In fact, within the last hour, we‘ve had a gust of (INAUDIBLE) Ft. Lauderdale airport, and there have been winds clocked over 90 miles an hour with Katrina.

This is quite a category 1 storm, especially for this storm, that was expected to just be a tropical storm as it moved ashore.  It kind of lingered off the coast, intensified, a good category 1 hurricane.  Good in the sense that it was gaining power.  Bad in the sense that it is really battering this Florida coast.

There‘s a lot of concern about the rain here.  We are seeing heavy, heavy rain with the back side of this storm, much more rain (INAUDIBLE) of Katrina moved through.  That‘s unusual for these hurricanes.  It‘s very right-side-loaded, at this point, so we‘re seeing a lot of rain in an area that...

COSBY:  And we have to apologize to everybody.  As you can understand, Jay is right in the thick of it, with the storm set to hit there in a few hours.  That‘s why the power is going in and out.  Again, he‘s using his flashlight literally for power.  We‘re going to try get him up later on in the show and bring you in more with that.

And now let‘s go Bill Karins, who is our meteorologist, to give us an update on where the storm is headed.  Is Jay right in the thick of it?

BILL KARINS, NBC METEOROLOGIST:  Yes, I‘ll show you in just a second exactly where Jay‘s located, Rita.  I want to show, currently, over the last 12 hours, the storm rapidly intensified into a hurricane, went right over the top of about Hollywood, Florida, in between Ft. Lauderdale and Miami.

Jay Gray was located right up in here.  If you watch this feeder band on this storm off of Ft. Lauderdale all the way out into the ocean, that‘s the heavy rain that Jay is experiencing.  Actually, south of there, down where the Hurricane Center is located, just south of Miami, already estimates up to 10 inches of rain underneath this bright yellow and orange coloring.  That‘s where the worst flooding is going to occur.

Now the million-dollar question.  Where is this storm heading?  It‘s taken a big shift to the south over the last six hours or so, and that‘s actually troublesome.  Florida‘s a lot wider this way, to the north, than it is to the south.  This storm could be out over the open waters, the warm gulf, by as early as tomorrow morning.  After that, the storm has its eye set on the northern Gulf Coast, the same areas that have been hit over the last couple of years.  Mobile all the way to Pensacola, Panama City to Tallahassee, could possibly be watching category 1, 2, maybe even a major category 3 storm.  We‘ll watch it for you closely here on NBC Weather Plus.

COSBY:  All right, Bill.  Thank you very much.  We appreciate that update.  Keep us posted.  Thank you.

And now to our other big story tonight, everybody.  The controversy is building over our major LIVE AND DIRECT exclusive.  The first video of the man we‘re going to show you here in a moment, Joran Van Der Sloot.  He‘s the main suspect in the disappearance of Natalee Holloway.  As you may know, our LIVE AND DIRECT cameras caught Joran behind bars, and we even spoke to him exclusively.  But the images turned into an international incident, with more developments today.  An Aruban court ruled that even though we didn‘t do anything wrong, we cannot broadcast that particular piece of video.

We sent NBC‘s Michelle Kosinski to the prison in the first place to interview Freddy Maduro.  He is the prison warden there.  Both joining me now live from Aruba.

Michelle, I know it‘s been very eventful the last 24 hours.  Give us the reaction.  I understand some headlines in the newspapers, too, Michelle.

MICHELLE KOSINSKI, NBC CORRESPONDENT:  Yes, there were a few in the local “Papiamento.”  That‘s a local-language newspaper.  One said, “Joran bites off the head of the prison director.”  It was very bold language.  Another headline screamed, “MSNBC fined one million florins,” which is not true.  But then in tiny, tiny letters above that, it said, “if the video airs.”

There are all kinds of conversations going on right now between people, especially on the radio.  The radio is one of the people‘s main sources of information on this island, as much as the local newspapers are.  And we‘re hearing that the airwaves today are full of people commenting.

But a lot of the information out there is just not accurate.  Initially, people thought that we snuck into the prison in some way or that we had a hidden camera or something like that.  Then they found out that wasn‘t true.  In fact, the judge stated explicitly in court that he didn‘t question our integrity and that we had the authority to be there.

Now people are saying, Well, they were just going to broadcast this without getting anyone‘s permission.  Not true, either.  In fact, we never just put video like that on the air.  We didn‘t even have time to have a conversation about, Hey, we have this.  We have the opportunity to get this.  Do we air this?  Let‘s talk to our legal team about it.  Before we even had that conversation, his attorneys were calling us into court.

So there is some misinformation out there.  And within the next few

days, we expect some of that to be settled just by getting the right facts

I mean, they‘re calling some of these things facts, but they‘re inaccurate.

COSBY:  All right, Michelle.  Well, we very much appreciate it.  Let‘s move on, if we could, to the man who is standing next to you, the warden, Freddy Maduro.  Freddy, first of all, what is the latest in terms of your job status?  I hear that there may be some developments.

FREDDY MADURO, ARUBA PRISON WARDEN:  Delays (ph) on the job status, I may say that I can‘t comment on that, please.  That I cannot comment on that.

COSBY:  I understand, Freddy, you might have been suspended, which I think, if that‘s the case, a lot of people will be outraged because I understand you stand by what you did, correct?

MADURO:  Yes because I didn‘t—I think I didn‘t do anything wrong.  I didn‘t kill anyone.  I didn‘t—I didn‘t steal from anyone.  I thought I did the right thing.  But afterwards, it had a (INAUDIBLE) spinning (ph) -- a spinning effect in my direction.  And I still don‘t know what really went wrong.

COSBY:  Is your—you have been—I understand sort of the way it works under the Aruban system, you‘re just sort of put on leave.  You‘re still—you‘re still being paid.  You still have a job.  But they‘re reviewing it, is that correct?

MADURO:  I still have my job, yes.  Yes.  About the aspect of reviewing, I would rather abstain my comments.

COSBY:  Are you surprised...

MADURO:  It‘s a very touchy subject.

COSBY:  Yes, and I bet.  And you know, I want to just (INAUDIBLE) back you up.  I know that our folks were there.  They said that you were very commendable.  Even the judge said that he didn‘t see anything wrong in the way that things were handled.  And I understand, Freddy, that, you know, you do stand by your actions.  You stand by giving us a tour.  And you don‘t think did you anything wrong.  And a lot of, you know, our folks who were there on the ground with you believe the same thing, correct?

MADURO:  That‘s correct.

COSBY:  What do you make of some of the sort of the discrepancies, you know, coming?  You know, all of a sudden, Joran‘s family rushed to court.  In fact, I want to show, if I could, a quote.  This is actually from Anita Van Der Sloot, who is actually Joran‘s mother.  She said this after the court hearing last night.  She was pretty visceral in her comments just in general.  “Joran has been outlawed, really outlawed.  There‘s no protection for him in prison, and this should be a place when at least he should be safe,” making it sound like, you know, you just sort of left him open and vulnerable.  That wasn‘t the case at all.  That wasn‘t the intention of your bringing in the crew in at all, correct?

MADURO:  That‘s correct.  I had no ill intention of bringing the crew to the section of the youth—the youth section because beside the youth section, I also showed them—showed them, sorry—I also showed them the women‘s section, so just show them the new part of KIA (ph).  I was proud to show them the new part of the KIA because you‘re busy renovating and expanding KIA, the Correctional Institute of Aruba.

COSBY:  And again, Freddy, it‘s my understanding that he just happened to be there, Joran.  Our crew happened to see him.  There was no bad intentions on anyone‘s part, correct?

MADURO:  That‘s correct.  I believe so.  That‘s correct, yes.

COSBY:  Well, Freddy, we do appreciate you being with her, and I hope that your job is not going to be lost.  I hope it‘s just a very temporary review.  And we appreciate you talking with us tonight about the whole situation.  Thank you very, very much.

MADURO:  And...

KOSINSKI:  Rita?

COSBY:  Yes, go ahead.

MADURO:  Yes.  Could I say—could—oh...

COSBY:  Yes.  Go ahead.  We still have you.

MADURO:  No, it‘s gone.

COSBY:  Michelle, go ahead, because we do have both of you up, if...

KOSINSKI:  OK, great.  Sorry, Rita.  He found it to be very important that he wanted to apologize, actually, to a number of different people tonight.  That was one of the reasons he wanted to talk to you tonight, and he agreed to do that.  In fact, he told his bosses that that‘s one thing he wanted to do.  And they said, Yes, that‘s a good idea.  And that was very important for him to say tonight, so...

MADURO:  I want to say that.

COSBY:  Yes, absolutely.  In fact, Michelle...

MADURO:  Can I say that?

COSBY:  ... please tell him to go ahead and say that.

MADURO:  I don‘t hear anything.

MADURO:  Can I say that?

KOSINSKI:  Yes.

MADURO:  OK.  Firstly, I want to express my—my—how will you say?  I want to apologize to the family Van Der Sloot.  I had no ill intention of bringing the son, Joran Van Der Sloot, who‘s incarcerated in the correctional institute, to—no ill intention to make a breach on his freedom of privacy.  I‘m sorry about that.  Paul, I‘m really sorry, too, everything what happened that day.

To my boss, the minister of justice, Mrs. Rudy Croes, yes, I—I don‘t know what really went wrong.  I know you are very angry, but I can repeat this, that I had no ill—no ill intention whatsoever to put you in a bad spot, nor KIA.

I would like to—just a few words to Minister (ph) President—

(INAUDIBLE) of Aruba and the cabinet.  I apologize, and also to all the—my workers who sent—who sent—who called me for moral support.  Thank you very much.

COSBY:  And Mr. Maduro, I don‘t know if you can hear me or not, but I know everybody who‘s been watching heard you loud and clear and understands your sincerity.  And from what everything our crew has said, they certainly agree that there was no malfeasance, no negligence, nothing done improper on your part.  He just happened to be there in the cell, and things just happened.  And we appreciate you being here and speaking out and also putting out your statement.  Thank you, sir, very much.

And again, everybody, the Aruban court said that we could not show Joran talking to us from his cell.  But he did speak to everybody soon afterwards in the court hearing.  Remember that Michelle and everybody was a part of—we want to show—this is Joran Van Der Sloot‘s statement.  “When I was sitting in my cell, I saw a cameraman, a sound man and two reporters”—those  were our two reporters, Michelle and also our producer, Demomi Arakowa (ph).  “I know they did not come there especially for me.”  This is Joran‘s words.  “The two ladies were let through the door to go inside by the warden, and I noticed that the reporters had audio recording devices with them.”  And again, that is the statement for Joran Van Der Sloot, of course, commenting, and again saying that he saw the cameras and saw everything else, so basically supporting, indeed, what our reporter and our producer said, as well.

Now let‘s bring in, if we could, a member of Natalee‘s family, her uncle, Paul Reynolds.  He joins us now live.  Paul, I find it ironic that Joran‘s actually saying the same thing.  Meanwhile, her family—you know, his family is basically saying we crossed the line, guerrilla reporters.  Sounds like a pretty clean testament as to what really happened.

PAUL REYNOLDS, NATALEE HOLLOWAY‘S UNCLE:  Well, I think this is just one of those incidents where everyone was operating in good faith.  You know, I think the camera crew wanted to do a story at the prison, and the prison officials were proud to show their facility.  I think everyone was very surprised that they came face to face with Joran.  I don‘t think it was planned.  I don‘t think anyone had any intentions of that.  And you know, it just happened.

And you know, you can see from the words and expressions of the prison official that, you know, they meant no harm.  They had no anticipation of a problem, and you know, operating in good faith.  And you know, I think the prison officials, the media that‘s involved and everyone else is trying to find a way to—you know, to solve this crime, to be cooperative.  And you know, to try to make something out of this that it‘s not I think is inappropriate.

COSBY:  I agree.  And I‘ll tell you, you know, in my heart, Paul, when I just saw the prison warden—we had no idea that he was going to go on camera and also apologize to his bosses, even the minister of the country there.  This is pretty strong stuff.  And you can tell this was not a man who intentionally tried to bring anything in.  It just happened.

REYNOLDS:  Well, we think that, you know, he‘s operating in good faith.  You know, he‘s doing his job.  And that‘s what everyone is doing here.  We‘re just trying to focus on what we need to do, and we just need to solve this crime.  We all need to stick together and get that done.

COSBY:  All right, Paul, if you could stick with us, because we‘re going to have more with you right after the break.

And still ahead, everybody, we‘re going to talk with you—remember that belt that we told you about that a private investigator found near the lighthouse in Aruba, a belt that some say looked a lot like Joran‘s, like the one that he‘s holding up here?  Well, we have a major update on that.  And that is just the beginning of what‘s ahead tonight.

Coming up, exclusive information in the search for a missing model.  Only we‘ve got details on the person her friends call “the stalker.”  He was there when she disappeared.

And Olivia Newton-John‘s boyfriend vanished from a boat.  Could he have fallen over?  For the first time, a passenger tells us, No way.

Did Victoria Gotti lie about having cancer?  Her publicist got so mad, he quit.  He‘ll tell us why LIVE AND DIRECT.

And how is Martha Stewart going to get back on top?  She‘s finally talking and telling me what she‘s got cooking.  It‘s not just hot dogs.  All ahead LIVE AND DIRECT.

(COMMERCIAL BREAK)

COSBY:  And we continue now to talk about our big blockbuster exclusive, our meeting with Joran Van Der Sloot that, of course, the judge in Aruba said we cannot air, and also some big developments on that belt.  Remember we talked about that belt that was found near the lighthouse not too long ago.  It was found by private investigator Art Wood, who is now joining us now live from Aruba.  And we also continue also with Natalee Holloway‘s uncle, Paul Reynolds.

Art, let me first go to you.  What is the latest with the belt?  I understand you have some stunning developments of what happened or what didn‘t happen, actually, with it.

ART WOOD, PRIVATE INVESTIGATOR:  Hi, Rita.  Yes, I went to the police today and talked to chief investigator Roy Tromp.  I wanted to inquire as to whether they had any forensic evidence or anything back on the testing of the belt, and they advised me that they had never sent the belt to Holland, that they had determined amongst theirself at the police department that the belt was too old to have been Joran‘s belt and that, apparently, it was never entered into evidence.

COSBY:  Now, so they never even sent it to Holland, is your understanding, Art?

WOOD:  They told me it was never sent to Holland.

COSBY:  Wow.  Paul Reynolds, what‘s your reaction?  You know as, we

look at this belt, it looks awfully like the belt—and in fact, Art saw

it face to face.  I haven‘t seen it face to face, but Art actually saw it

visibly.  He said it looks very similar to the one that we‘re seeing on the

other side here, in a picture where he‘s holding it up with another guy,

hanging out.  The fact that they didn‘t even send it, even just for testing

what is that—isn‘t it disappointing to you, Paul?

REYNOLDS:  I had not heard that report.

COSBY:  Yes, Art just broke that, actually, just on the air here, right?  Is that sort of stunning to you, Paul, or is that par for the course?

REYNOLDS:  Well, you know, certainly, we would like all the evident to be examined and follow through on that.  I don‘t know what the reasoning was.  You know, I‘d like to find out more about it.  But certainly, we want all evidence to be examined.  We feel it‘s important for the case.

COSBY:  You bet.  And you know, good news is also, Paul—I want to show—if we have some pictures and some things from Birmingham because tonight, there was a beautiful fund-raiser, an auction, basically, silent auction, with a number of items, lots of funds, lots of proceeds going to Natalee for the search, some amazing things, some actors.  What was it, Sting, the singer, I thought, donated a signed guitar.  Courteney Cox from the TV show “Friends” also helping out.

How do you feel, Paul, knowing that all these folks are now getting involved?  And do you hope it‘s going to keep continued pressure in getting the search for Natalee?

REYNOLDS:  Oh, just every day, I‘m amazed at, you know, how people have taken this tragedy to heart and how they‘ve participated and donated, you know, their time and efforts and money and—it‘s a wonderful feeling to see that kind of support.  And you know, we‘re seeing that in Mountain Brook.  We‘re seeing that all across the United States.  And you know, we‘re seeing it in Aruba.  You know, every one that we come across is supportive, is gracious.  You know, it‘s—it‘s a testament to the spirit of mankind, and you know, it‘s just a huge help to our family.

COSBY:  You bet.  Well, we‘re all with you.  And Paul, we hope you get some answers soon.  And Art, keep us posted if you hear any more on the belt and any other developments.  You‘re doing a great job there on the ground, and we appreciate it, both of you.

REYNOLDS:  Thank you.

WOOD:  Thank you, Rita.  And God bless you, Paul.

REYNOLDS:  Bye, Art.

COSBY:  All right.  Thanks, guys, very much.

And now to the case of another missing woman.  We have some new information that no one else has in the search for a missing model and Ohio State University student Julie Popovich.  Joining me now LIVE AND DIRECT is Rod Wheeler.  He‘s a former homicide investigator, but he‘s also an OSU alumni.  And on the phone with us is Ben Presson with the university newspaper.  Right now, he‘s at a prayer vigil on campus for Julie.

Rod, let me start with you because you‘ve uncovered some amazing stuff just in the short time you‘ve been there.  Tell us about some of these suspicious guys.  It‘s not just one stalker, I understand, it‘s stalkers that had been seen around the bar where Julie was.

ROD WHEELER, FORMER HOMICIDE DETECTIVE:  That‘s right, Rita.  You know, I‘ve been all over this case for the past couple of days that I‘ve been here in Columbus, Ohio.  And what I‘ve learned has been very interesting, actually.  I actually went down to the exact spot where Julie was last seen at the bar, Ledo‘s bar, or Ledo‘s Lounge is what it is.  And I started talking to people in the area.  I come to find out that there had been a guy, a particular individual standing across the street, directly across the street from where the bar is located, kind of like casing out the joint, is what we call it in law enforcement.  This guy was kind of watching, stalking the place, so to speak.

So I got to talking to people in the area, and I come to find out that this same guy, Rita, had been there for, like, the past couple of weeks, just kind of casing the joint.  So of course, we turned that information over to the Columbus police.  The good news is that we got a good description of this individual.  We also got the car information.

Now, here‘s the thing.  Maybe this guy had nothing to do with this case, but you never know.  It‘s information like that that can be very critical, the missing link in solving a case like this.

COSBY:  You bet.  And another thing that could be another key element, Rod, is this ID that was found, sort of an ID that she may have been using that night, found right by the reservoir.  I understand that there‘s some massive searches going on, understandably, right there.  What are you hearing?

WHEELER:  That‘s right.  As a matter of fact, Rita, I actually went down to that actual reservoir where the Columbus police officers were today.  They were very helpful in terms of just kind of showing me the area, but they couldn‘t, of course, give me any detail as to the actual investigation.

But I can tell you there was no reason—from what I‘ve learned so far, there was no reason that that identification should have been at that reservoir.  Obviously, Julie had never been there, from what I understand, and nor had the woman whose ID that actually belonged to, which was a friend of Julie‘s, that I come to find out.  She had never been there before.  So obviously, that‘s very suspicious.  And that‘s the reason why there was actually three, Rita, three police diving teams today at that reservoir, just diving in the water, looking for evidence and things like that.

COSBY:  And that‘s a big deal, by your standards, don‘t you think, Rod?

WHEELER:  Absolutely.  Most police departments, if they don‘t have anything in particular, they‘re not going to spend that kind of manpower diving for evidence.  They had actually three teams, I‘d say about 10 to 12 officers there, diving in the water while there I was today, looking for evidence.

COSBY:  That‘s a big deal.  Let me bring in, if I could, Ben.  I think he‘s on the phone with us.  He‘s actually at the vigil.  We were looking at some pictures just a little bit ago, Ben, of Julie, just beautiful woman, stunning woman.  What are her friends saying tonight at the vigil?  And we‘re looking at some pictures that we actually just got in.

BEN PRESSON, OHIO STATE UNIV. NEWSPAPER:  Right, Rita.  Actually, I talked to Peggy White (ph), the mom, just a little bit ago.  It wasn‘t actually me, it was some of the people at “The Lantern” who are helping me out.  And the question was, How have you felt the past two weeks?  And she responded, I‘ve just been thinking about how someone‘s taking here, that someone has her, that someone has hurt her.

And I actually talked to a couple of the uncles, and we asked one of the uncles, we said, Well, what would you say to the person who has her, if, indeed, someone does have her?  And he actually said, Do you realize how much misery you have caused so many people?

So right now, there‘s about 100 people gathered in a circle.  They‘ve all lit candles.  They‘re talking a little bit about Julie right now.  It‘s both grief and hope here.  They‘ve been passing out ribbons.  They‘ve been passing out fliers.  They‘ve been hugging each other.  And it‘s really somber yet hopeful that maybe Julie will be found soon.

COSBY:  Ben, is there any concern—you know, as I think of the time of year it is now, school‘s going to be starting up soon.  People worried?

PRESSON:  One of the things that I‘ve been doing as I‘ve been covering this case is I‘ve been talking to students, saying, How have you changed what you‘ve been doing the last—in the last couple of months, because, as you know, there‘s been a crime advisory here.  There‘s been 20 armed robberies or so around campus, and then this.  And people have said, Hey, I‘ve been making sure that my cell phone‘s been charged.  I‘ve been making sure that I have a ride home.

And this has really brought awareness to the fact that this wasn‘t just a beautiful white girl who hat was missing on campus, this is someone who disappeared from a community.  OSU is diverse, has people from many backgrounds, socioeconomic statuses, races, ethnic groups.  And people aren‘t here because Julie White is—Julie Popovich is someone who is missing and just happened to be a beautiful young woman, but she is actually someone who‘s part of this very diverse OSU community, and people are genuinely concerned.

COSBY:  Oh, it seems that there‘s a lot of love there and a lot of support for her especially.  Ben, thank you, and thank you for bringing us those pictures, which we just turned around real quickly.  We‘ll be talking with you soon.  And our prayers are with everybody there.

Let‘s go back to Rod.  Real quick, Rod, there‘s also another missing woman, Ashley—what is it, Ashley Lyn Howley.  Do you believe that there‘s any tie?  This is a woman who was missing, what, a year ago?

WHEELER:  Yes.  You never know.  I mean, that‘s always a possibility.  I can tell you that what the police department is doing right now are looking at all of their missing persons that have occurred over the past year, trying to see if there‘s any pattern or anything like that that would, you know, of course, connect some of these cases together.

Rita, let me just say one more real quick thing about Julie that I found out today.  Julie was not as intoxicated when she was at that bar as people have made it to sound like.  She had a couple of drinks that night.  I talked to some actual friends that were there, but she was not totally intoxicated.  So that tells us it‘s a good possibility that somebody could have put some kind of a drug in her drink and could have caused harm to her.

COSBY:  All right.  Or even grabbed her outside or something, Rod. 

Thank you very much, Rod.

WHEELER:  That‘s right.

COSBY:  Good work.  Keep us posted, everybody.

And we have a major development in the disappearance of Olivia Newton-John‘s boyfriend, exclusive details that may finally shed some light on that case.  Our friends at “America‘s Most Wanted” obtained this exclusive footage that you‘re looking at now.  This is from inside the boat where Patrick McDermott was last seen.  We are bringing it to you first.  It shows just how close the quarters were in that boat, which raises a lot of new questions as to why no one seems to have seen Patrick McDermott disappear off the boat.

Plus, for the first time, we are hearing from a passenger on the boat when Patrick vanished.  His name is Bill.  He told us, quote, “Patrick could not have gone off the vessel without being seen, impossible because of how you exit the boat.”  He further told us, quote, “I don‘t believe Patrick McDermott fell overboard because, as a general rule, there is always someone on deck day and night with crew members.”

And we plan to have that passenger on LIVE AND DIRECT tomorrow night and some more details on the case.

Still ahead, everybody, tonight: Does she have cancer or not?  Victoria Gotti‘s publicist tells us why he abruptly quit after being by her side for so many years.  What really happened?

And next: Martha Stewart is finally talking about getting back to business.  Find out what she told me about her plan to get back on top.

Plus, we‘re watching Hurricane Katrina as it moves onto the Florida coastline.  Keep it right here.  We‘ve got some breaking news.  Details LIVE AND DIRECT.

(COMMERCIAL BREAK)

COSBY:  And she‘s back.  Martha Stewart is only days away from ending her home confinement.  And today, with good humor, she actually showed off her ankle bracelet, which will come off next Wednesday. 

Today, she and mega TV producer Mark Burnett unveiled her two new TV shows which are going to start next month on NBC.  One is called “Martha.”  It‘s a daytime talk show.  The other is called “The Apprentice:  Martha Stewart.”

Well, I had the chance to talk to Martha and Mark Burnett about these big projects and also how she‘s doing. 

(BEGIN VIDEOTAPE)

MARTHA STEWART, HOST, “THE APPRENTICE:  MARTHA STEWART”:  About September, two great openings.  The “Martha” show and “The Apprentice: 

Martha Stewart,” thanks in part to my friend here, Mark Burnett. 

COSBY:  Yes, I‘d say you‘re in really good company here. 

STEWART:  So much fun working with him.  And a real professional, a real pioneer. 

COSBY:  Why did you decide to get back into TV?  Was this just something you love and you knew so well?

STEWART:  I never left TV.  You know, TV left me a little bit.  I had always planned to continue our daily show.  And this way, we‘re continuing slightly differently with a live audience in New York City, instead of in Westport, Connecticut.  It‘s daily.  I‘m really looking forward to the kinds of guests we‘re going to have and the audience especially. 

COSBY:  Yes, a live audience.  That‘s going to be different.  Is that exciting for you? 

STEWART:  Yes, well, it‘s immediate, immediate reaction to what you‘re doing.  And I‘m so excited about that. 

COSBY:  You stuck by Martha Stewart through it all.  You really believed in her.  Why were you so excited about being a part of this project? 

MARK BURNETT, TELEVISION PRODUCER:  You know, honestly, it was so obvious to me.  I kept seeing her on television in the news that there was a problem with Martha, legal problem, business problem.  And I kept thinking, “It doesn‘t seem that serious to me.  I think everyone‘s got it wrong.” 

But she was undervalued in her personal stock, her company stock.  And it just seemed so obvious to me.  As a naturalized American, you know what Americans love?  Comeback stories and underdogs.  It turned Martha into an underdog, which now everybody loves the idea of. 

And it was just very obvious to me.  And when I got know Martha, she was so warm, engaging and funny, my kind of person.  We laugh all the time.  And I‘ve realized, all you have to do is let Martha be Martha.  It‘s not a new Martha.  It‘s the same Martha.

COSBY:  Now, you‘re doing the “Martha” show, the daytime show, but you‘re also doing “The Apprentice.”  What are you looking for in the perfect apprentice, because you‘ve got high standards?

STEWART:  Well, I‘m looking for someone who has creative thinking, a good business mind, the ability to work under pressure, someone who is circumspect, someone who can come up with that big idea that will make a difference in a big company.  That‘s what I‘m looking for, a real apprentice. 

COSBY:  How hard was it to hone down on just a few? 

BURNETT:  It was very hard.  You know something...

COSBY:  You‘ve been down this road before, right?

BURNETT:  You know what‘s very interesting—and I‘ve told no one this—is that, during the casting, I tried a little trick on people and said, “I don‘t think I can put you on the Martha show, how about the Donald show?

And everybody on this show said, “No, I‘d rather not do it.  I just want to work for Martha.”  And that‘s how I knew they wanted this company.  It‘s not a reality show to me.  It‘s a documentary about people applying for a job. 

COSBY:  What do you think people can learn from you, both professionally but also personally? 

STEWART:  On “The Apprentice,” I think they can learn a lot.  And I think they will learn a lot watching this show.  The way it‘s been put together is a—almost like going to a very fine business school, because you learn about connecting with your customer.  You learn about having the big idea.  You learn about picking an A team. 

You learn a lot of very, very good business advice and lessons.  So I think people are going to tune in for that.  You want your master‘s in business?  Come to “The Apprentice:  Martha Stewart.” 

COSBY:  That‘s a good pitch.  That‘s an effective pitch. 

BURNETT:  That‘s true. 

COSBY:  What about personally, too, because you‘ve had your ups and downs.  And a lot of people say we‘re going to see an even better and even bigger Martha coming back.  Is this a more successful Martha Stewart?  In your experience, how has that shaped you personally? 

STEWART:  We want so much to have a good time, to build our business, to look to the future.  And what the last two years taught me is, always look ahead.  Don‘t look back. 

COSBY:  Are we going to see an even bigger and even better Martha Stewart? 

STEWART:  Oh, certainly and absolutely.  That‘s what we‘re working for. 

COSBY:  You sound like Arnold Schwarzenegger when you left the court, “I‘ll be back.” 

STEWART:  Oh, no. 

(LAUGHTER)

COSBY:  Is the best ahead? 

STEWART:  The best is yet to come. 

(END VIDEOTAPE)

COSBY:  And joining me now is Christopher Byron.  He‘s the author of “Martha, Inc.:  The Incredible Story of Martha Stewart Living Omnimedia.”  He is also a “New York Post” columnist and also Fraser Seitel.  He‘s the author of “The Practice of Public Relations” and president of Emerald Partners.

Fraser, is this the ultimate comeback you think? 

FRASER SEITEL, AUTHOR, “THE PRACTICE OF PUBLIC RELATIONS”:  This is Martha Stewart—her P.R. redemption tour is in high gear.  She had a press conference today.  And her stock went up 12 percent.  She‘s got a Sirius satellite radio show for $30 million.  The ankle bracelet comes off next week.  She‘s got momentum, Martha mo, and so far, so good. 

COSBY:  And Fraser, the other thing she‘s showed us, there‘s a book.  I didn‘t mention that.  She‘s got a book coming out called “Martha Rules,” which comes out actually in October.  So is this sort of one of the biggest sort of planned, sort of unveiling, re-unveiling that you‘ve seen, Fraser? 

SEITEL:  It‘s an inspired public relations strategy, Rita, because what she‘s done is she‘s confronted everything.  She‘s confronted the questions.  She‘s going to feature prison segments on the show.  She hasn‘t ducked.  She hasn‘t hid. 

It‘s precisely the opposite strategy than she took at her trial, where she had nothing to say, and her lawyers counseled her to shut up.  This is a much better P.R. strategy. 

COSBY:  Christopher, do you agree? 

CHRISTOPHER BYRON, AUTHOR, “MARTHA, INC.”:  Well, I certainly agree that she‘s taking a victory lap here.  There‘s no question about it.  This has been a masterful P.R. campaign.  And it‘s hitting on all eight cylinders, in that sense. 

I‘m not entirely sure, though, that she‘s confronted the problems that got her in this mess in the first place.  I don‘t see any evidence of that. 

COSBY:  Do you think, though, Christopher—one of the things that I saw, because I had the chance to talk with her, I‘ve seen her a number of times.  Today, she seemed much more relaxed, seemed more at ease, seemed able to laugh at herself.  It seemed much more sort of natural. 

Maybe she‘s, you know, grown a bit.  I mean, this experience has got to change someone.  But she seems very genuine, I thought. 

BYRON:  Well, you were there in the room with her.  You‘re the best judge of that.  I‘m not sure that being able to be at ease in this kind of a situation is evidence of personal growth, but she‘s definitely good under pressure. 

She‘s always been good under pressure.  And there‘s a lot of pressure on her right now.  She‘s got a lot of irons in the fire on this one.  And she‘s handling it quite well. 

COSBY:  And Fraser, closing thoughts?  You got 10 seconds. 

SEITEL:  Well, I think what she‘s got to do is this.  She‘s got to stay human.  She‘s got to show humility.  What Chris said it true.  She‘s got to acknowledge her error. 

And most of all, she‘s got to lighten up.  She‘s got to show a new side.  Mark Burnett said not a new Martha.  I say absolutely, softer, kinder, gentler Martha Stewart, and she can come all the way back. 

COSBY:  All right, guys.  That‘s going to have to be the last word. 

Thank you, both, very much. 

And coming up, another powerful woman, this one in a lot of trouble now.  Victoria Gotti, she claims she had cancer.  But some say it was all a sick sham.  You won‘t believe what her former P.R. guy says.  He joins me LIVE & DIRECT. 

And a TV weathercaster caught in her own storm, caught on tape shoplifting.  Here‘s a tape.  She‘s going to tells us why she thinks she should not have lost her job over it.  That‘s coming up on LIVE & DIRECT.  Some good stuff coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

KIM DILLON, FORMER KTVK TV HOST:  Record high.  Glad we don‘t have this for our guest, 101, that was back in 1989.  This morning, we had a low of 71 degrees.  Right now, it is 91 at the airport. 

(END VIDEO CLIP)

COSBY:  And that was TV personality Kim Dillon.  As a meteorologist and also popular morning show host, Kim predicted a lot of sunny days for folks out in Phoenix, Arizona.  But her station, KTVK, fired her after learning she was arrested for shoplifting at a local department store.  And it was all caught on tape.

And I‘m joined now by Kim and her attorney, and one of our favorites, Deb Opri, joining the show. 

Kim, tell us real briefly what happened the day that you were arrested.  I know we‘ve got the video on surveillance here.  We want to show that.  But just describe real briefly what happened. 

DILLON:  I was in a daze that entire day, Rita.  We had just gotten back from a vacation, stayed up the entire night the night before, very overtired, went into Dillard‘s to make some returns and try some things on.  And I had started my fertility treatments the night before, very stressed out. 

COSBY:  And you took out, as we‘ve seen on videotape, what was it, $400 worth of merchandise? 

DILLON:  Yes.  Yes. 

COSBY:  And you were also on medication.  Tell us about that. 

DILLON:  Yes, I want to make it clear:  I did not intentionally take this out of Dillard‘s at all, not at all.  The whole night was just a blur.  That afternoon at work was a blur, as well. 

COSBY:  Now, what do you say to people who say the medication‘s just an excuse?  A lot of people are on medication, but they don‘t shoplift. 

DILLON:  It‘s not an excuse at all.  Again, that is not myself.  I don‘t need to shoplift.  My husband and I do very, very well.  I still have not been changed with anything, and yet I have been terminated by my station. 

COSBY:  And in fact, your station was quick to run the video that we‘re showing on the other side of the screen.  This is the surveillance tape.  Were you surprised, this is a place you work for, and it seems, you know, from the account, I understand they were pretty quick to get it on the air?

DILLON:  Yes.  They‘re the only ones to air it so far.  It breaks my heart.  I was really encouraged to resign, pushed hard to resign.  And the next day is when the tape came out, when I didn‘t resign.  I didn‘t resign because I did not intentionally take this out of Dillard‘s.  People know me in there.  I‘m always in there shopping. 

COSBY:  And, Kim, again, they were the only station to air it, not the other stations, because Phoenix is a big market.  There‘s a lot of stations there. 

DILLON:  That‘s correct.  That‘s right.  And again, it‘s just—it‘s heartbreaking. 

COSBY:  Now, Deb, as her attorney, what do you make of this?  I mean, I know, as an anchor, you know, when you‘re on a station, you sign a contract, you say you‘re not going to do anything that defames or sets bad standards.  But is there something you can go after here? 

DEBRA OPRI, DEFENSE ATTORNEY:  Well, they call it a morals clause.  And interestingly enough, the employer had given her until 3:00 p.m. on August 23rd to resign.  They said, “If you don‘t resign, we‘re terminating you.”  And we basically communicated and said she‘s not resigning.  She didn‘t knowingly do these things.  And she hasn‘t even been formally charged.  Give her some breathing room.  Let her find out where she stands in the criminal law jurisdiction. 

They didn‘t.  The very next day, they got a hold of that tape.  It‘s an invasion of privacy.  It‘s defamation.  It is slander.  And they showed that tape.  And they‘re going to be held accountable for it, because they‘re placing this young woman, who has no prior criminal history, who has a fantastic career in Phoenix.

They basically forced her to go out publicly and have to defend herself.  Now, listen...

COSBY:  Yes, go ahead real quick, Deb, please.

OPRI:  Well, the bottom line is this:  She‘s not holding the security personnel at Dillard‘s responsible.  She figures they‘re doing their job.  And you know, she‘s saying, “Let the system work.  But don‘t jump the gun and let me have a reasonable chance to have it determined whether they‘re going to charge me or not.” 

Her employer has jumped the gun and, unfortunately, they‘re liable right now.  They should never have terminated her.  That morals clause, in and of itself, was too broad and too overused too quickly. 

COSBY:  And, Kim, what are you doing now?  And how worried are you that this is going to ruin your reputation, something you worked your whole life for this?  What are you doing right now? 

DILLON:  Rita, I‘m just very worried about it.  I love my hometown.  Born and raised here.  Right now, I‘m staying close with my family.  And I‘ve had so many colleagues from the station come out and just hold my hand through this whole thing.  I think people know my reputation.  My integrity is everything to me, everything. 

COSBY:  Well, good luck to you, too.  And please keep us posted, both of you, on this case, please. 

DILLON:  Thanks, Rita.

COSBY:  I do think it is surprising that that station is the only one to run the videotape.  It was a story.  You would think the other stations would be running it, as well. 

Both of you, thank you very much.  We appreciate it. 

And everybody at home, we did try to reach out to Kim‘s former employer, KTVK, for comment.  They did not return our calls. 

And speaking of weathering a storm, the latest from Florida where Hurricane Katrina is pounding the coast.  And Victoria Gotti‘s cancer scare.  Is it for real?  The whole thing has her former publicist saying it is making him sick.  He joins me now LIVE & DIRECT. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

VICTORIA GOTTI, “GROWING UP GOTTI”:  I had surgery, and I feel great. 

I am 1,000 percent well. 

(END VIDEO CLIP)

COSBY:  So does Victoria Gotti have cancer or not?  Well, you just heard what she told CNBC‘s Donny Deutsch on Monday.  But on Sunday, she told the “New York Daily News” that she had battled breast cancer.  And then by Wednesday, the rival newspaper, the “New York Post,” said it was all just one big sham. 

Then today, there was this.  “The Post” says that it was all designed to get publicity for her reality show.  Well, her publicist for seven long years, who worked tirelessly with her, Matt Rich, says the whole thing just made him sick and he even quit. 

And he joins me now here to set the record straight. 

How tough was it for you?  Here, you are her publicist designed to sort of, you know, control what gets out and what doesn‘t get out.  You see those headlines.  If we can put those up, the headlines that came out in the last few days.  How mad were you when you saw those headlines, how frustrated? 

MATTHEW RICH, VICTORIA GOTTI‘S FORMER PUBLICIST:  Certainly, I wasn‘t mad.  I was, at first, concerned.  And I was to say that I had absolutely nothing to do with the “Daily News” interview.  I hadn‘t been consulted. 

COSBY:  You didn‘t even know it was coming out, right? 

RICH:  After church on Sunday, I opened the paper, and that‘s what I read.  And if I had been consulted, I would certainly have said no.  There are a lot of great things about Victoria, and let‘s put those forward.  Let‘s not pursue a strategy like that. 

COSBY:  Were you surprised that, here, you obviously had a very good relationship with her.  You clearly had a lot of mutual respect, seven years.  She didn‘t go to check with you, and before she came out with something that would clearly make some headlines.

RICH:  Ms. Gotti has her own—she‘s a journalist, and she has her own relationship.  She‘s a good friend of Joanna Molloy, a very respected journalist, Joanna is.  And you know, she‘s perfectly free to have any discussion she wants with any of them. 

COSBY:  What do you think happened here?  What do you think the real story is? 

RICH:  I don‘t know. 

COSBY:  You don‘t know?

RICH:  I don‘t know. 

COSBY:  Have you talked to her?  Have you had a chance to talk with her? 

RICH:  No, I haven‘t. 

COSBY:  Why did you quit? 

RICH:  When a publicist loses confidence with a client, there‘s no other road except to resign the account. 

COSBY:  Was it a mutual decision, because she even came out and said -

was it, I think, in the “Post”—where she said she fired you. 

RICH:  She most certainly did not. 

COSBY:  How does that feel? 

RICH:  You know, people can say whatever they like.  Everyone in our industry knows the truth. 

COSBY:  What is Victoria Gotti like?  You know, I‘ve had her on my show a few times as a guest. 

RICH:  She‘s big-hearted...

COSBY:  You still have a big smile after all of this.  I think that‘s lovely about you, still smiling.  You quit, obviously, because of differences, but, look, you still obviously have a big heart there. 

RICH:  She has a big heart.  She‘s generous, you know?  I can say that I walk away from my experience with her with my head held high.  Everything we worked on together, every project, every story, every adventure, you know, our office and I conducted with dignity and with pride.  And I really do wish her well on every level. 

COSBY:  And real quickly, if you were still her publicist now, what were you advise her? 

RICH:  I guess I‘d advise her to do some breast cancer ads. 

COSBY:  Yes, just to do something—make something positive out of this. 

All right.  Thank you very much. 

RICH:  Thank you, Rita. 

COSBY:  We appreciate you being here, especially under tough circumstances.  Thanks so much. 

RICH:  Thanks a lot. 

COSBY:  Thank you. 

And still ahead, everybody, we‘re going to be taking you back to Florida, where Hurricane Katrina is already carving a deadly path.  We‘re going to have some new details on that, when we come back.

(COMMERCIAL BREAK)  

COSBY:  And some breaking news right now.  This is video that we just got in at this hour.  At least two people are dead, killed by Hurricane Katrina. 

Both of them, we are told, were killed by falling trees, which is often the case during a lot of powerful hurricanes.  We‘re also told that Florida Power and Light is saying now that more than a million customers are without power right now. 

The Category 1 storm made landfall just a short time ago at the Miami-Dade, Broward County line, with sustained winds, we‘re told, of up to 80 miles an hour and also a lot of rain.  We‘re told about up to 20 inches of rain and also 5.9 million, almost 6 million Florida residents may ultimately be affected. 

Again, we‘re told it just hit landfall just a little bit ago.  And, again, just a Category 1 at this point, which is the lower end of the scale, but, of course, that could still bring a lot of rain and a lot of heavy winds, as we are seeing right now. 

And we have another big show, of course, tomorrow night, everybody.  A dramatic story of sibling rivalry, tied to a murder trial that‘s going on right now.  How two brothers are being torn about as they see their mother behind bars, accused of killing their own father.  That‘s coming up tomorrow night.

And that does it for me.  Let‘s now go to Lisa Daniels, who‘s filling in for Joe.

LISA DANIELS, HOST:  All right.  Thanks so much, Rita.

Good evening, everybody.  I‘m Lisa Daniels, in tonight for Joe.

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

END   

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