August 02, 2004 12:00 PM

The day after her sentencing, Martha Stewart already seemed to be sowing the seeds for her return. She spent the afternoon surveying her estate in Bedford, N.Y., paying particular attention to the vegetable gardens she had planted and a grove of magnolias that were just taking root. Throughout the tour her cell phone rang incessantly, with friends calling to offer their support. “She is already moving forward,” says longtime chum Memrie Lewis, a landscape architect. “I got the sense she had a real feeling of closure, like she thought a lot of the nightmare was over, that she might actually have a good night’s sleep for the first time.”

Of course, Stewart, 62, wasn’t about to turn over a completely new leaf. After Judge Miriam Cedarbaum sentenced her to the minimum term allowed under federal guidelines—five months in a federal prison camp and five months of house detention, which she will spend at the $15 million Bedford estate—for lying to investigators in the ImClone stock scandal, Stewart sounded more defiant than contrite. The night of the sentencing she told Barbara Walters that “many aspects” of her trial were “not fair.” Earlier in the day, on the steps of the Manhattan federal courthouse, she claimed that all along she had been “more concerned about the well-being of others,” specifically her employees who lost their jobs when her company tanked in the wake of the scandal, than she had been about herself. And she made a point of flashing her trademark resolve. “I’ll be back,” she said outside the court. “I will be back.”

Not that she’s gone anywhere just yet: She will remain free on bail until her appeal is completed, which may take as long as a year. Stewart may also choose to abandon the appeal and do the time in order to move on and stabilize her company’s stock price (which jumped 37 percent at the news of the light sentence). “My company needs me,” she told Larry King in an interview. “I would like this to be over.”

The investigation and the trial clearly have taken their toll on Stewart. “She is at the worst time of her life,” a friend said after the conviction. “She is suffering the loss of her life.” As Stewart said, “I have been choked and almost suffocated to death” for the past two years. She told Walters that the March 5 guilty verdict had so devastated her that that night, her daughter Alexis, 38 (who had fainted on hearing the jury’s decision), tucked her into bed and slept with her. “That’s not really what moms should do,” Stewart said. “But sometimes I guess it’s nice.” Indeed, Stewart has come to rely heavily on Alexis, who runs a yoga studio in Manhattan, as her main confidante. “Alexis has really been there for Martha,” says Salli LaGrone, an antiques dealer and a longtime Stewart friend. “It’s been a terrible ordeal for both of them, but their relationship has really been strengthened by it.

Over the course of the trial and its immediate aftermath, Stewart didn’t go out as much, and she put on weight—as much as 15 to 25 lbs., according to society columnist R. Couri Hay, who often socializes with Martha at parties. “She was taking comfort in comfort foods,” says Hay, “baking brownies and eating them.” The verdict seemed to spark a change: Within a few weeks, Stewart began making a determined effort to get back in shape. She went on a reduced-carb diet that included lots of salads and fresh vegetables. She dialed back the sugar and laid off bread (but continued to eat sushi). She also returned to working out every day. Recently she was spotted Rollerblading and biking in the Hamptons, looking noticeably trimmer. Of course her new regimen hasn’t entailed all sacrifice. At a July party at Calvin Klein’s estate in Southampton, says Hay, he saw Martha “eating caviar throughout the night, all protein,” and simply skipping the blinis.

In recent weeks Stewart has been seen making the rounds of trendy eating spots. The evening of her sentencing she went out to the Matsuri restaurant with Alexis and some friends, dining on oysters and miso-glazed cod and even raising a glass of sake to “good things.” The next night, she got together with her brother George Christiansen and her 89-year-old mother, Martha Kostyra, with whom she cooked bluestone crabs. All the good cheer was not a sign of denial, insists her pal Lewis, but “more of an absolute conviction that somehow she is going to live through this.”

And yet there were moments when Stewart did seem to be glossing over reality. “She appears to be in denial about the seriousness of the charges,” says former SEC prosecutor Robert Heim. “Instead of showing remorse, she is being very dismissive.” She referred to the scandal as a “small personal matter” that had spun out of control, for which she appeared to blame overzealous prosecutors and a rapacious media. During the Walters interview, she even mentioned herself in the same breath with South African civil rights hero Nelson Mandela, who, before becoming his country’s president, had been jailed by the white-supremacist government for 27 years. (She later emphasized she wasn’t comparing herself to the Nobel Peace Prize winner.)

One thing preventing her from apologizing outright for her actions is the possibility of an appeal. She hired lawyer Walter Dellinger, an appellate specialist, who voiced optimism that she would get a new trial. But most outside experts see little chance that an appeal will succeed. Trial Judge Cedarbaum has already ruled that the alleged perjury by a government expert witness did not affect the outcome. Indeed, many legal observers believe Stewart caught a huge break by drawing her modest sentence. “My bet is the judge looked at the totality of what was going on here,” says Stanley Twardy Jr., a former federal prosecutor from Connecticut now in private practice. “Martha Stewart’s image is very important to her, and it is tarnished—probably forever—and I think the judge took that into account.” Adds Brad Bennett, a white-collar defense attorney in Washington, D.C.:”The advice I would give her is to say, ‘It’s time to put all this behind me, stop paying the lawyers, and start thinking about what I’m going to do five months from now when I get out.’ She should recognize she’s gotten a great result.”

Assuming that she does wind up in prison, she will have to banish any notion of seeing herself as a victim. “The people who have the most difficult time in prison are the people that continue to fight it,” says Herb Hoelter, a sentencing expert hired by Stewart to guide her through the legal and correctional maze. “It has been a very, very difficult verdict for her to accept. That makes the sentencing process that much harder.” As an example of how white-collar types should do time, Hoelter points to the case of Alfred Taubman, the former Sotheby’s chairman, who used his 10 months in a federal facility for price fixing to better himself. “He lost like 40 or 50 lbs., got in great physical condition and read a lot of books,” says Hoelter.

There is reason to believe that that message is sinking in a bit with Stewart. The day after her sentencing she talked to friends about what she will do if she winds up behind bars. Topping her list: learning Italian, reading books and writing. “If prison turns out to be part of her life,” says Memrie Lewis, “she is already planning ways to make it positive.” In her chat with King, Stewart said she would like to write a how-to book on surviving the legal system. “Not that, you know, it’s going to be a big bestseller,” she said. “But for anybody who has to go through this process, there should be some guidelines.” Although she has admitted that she has not done much research on life behind bars, “if and when it comes time to go to jail,” says friend Susan Warburg, “believe me, Martha will know everything there is to know about it.”

There is much to know. For starters, she will likely be sent to the minimum-security federal camp in Danbury, Conn. The first day, prisoners are subjected to a strip search. The new arrivals are allowed to bring only a few personal items with them, including a wedding band, a religious medallion, one pair of earrings, five books and a watch with a value of up to $100. During the day inmates are required to wear khaki uniforms with an elastic waistband plus black steel-toed boots. At night and on the weekends they can slip into sweats and soft shoes. Each month they get 300 minutes of phone time, and can buy $290 worth of goods, such as cans of tuna, at the commissary. The most desirable jobs, like working in the library, are doled out to those with seniority, meaning that Stewart would likely end up landscaping, working in the kitchen or cleaning bathrooms 7½ hours a day. “I remember thinking, ‘Is there not one soft spot in this place?’ ” says Susan McDougal, 49, who spent a month and a half in a similar facility for contempt in the Whitewater investigation. “Could they not have a cushion on anything?”

Though Danbury is a minimum-security facility, there is nothing genteel about it. Roughly two-thirds of the inmates are there for drugs, and only about two percent are white-collar criminals convicted of embezzlement and the like. Prisoners stay either in a large dorm divided into two-person cubicles with bunkbeds or in smaller rooms with a half-dozen or so others. “It was really stark,” says McDougal. “There were a lot of young women from the street there. There was a lot of screaming all night across the room.”

The unwritten rules of such prisons are simple but crucial. At mealtime, for instance, inmates have unofficial seats that are never to be used by others. “When you first get there, you’re like, ‘Where do I go?’ ” says McDougal. “It’s kind of like high school.” David Novak, 42, who served almost a year in a federal camp for mail fraud and who now advises clients on the best ways to get by in prison, warns that many white-collar criminals make the mistake of trying to befriend the staff. “An inmate should never be seen speaking with a staff member alone,” says Novak. “People will assume you’re tattling on other inmates.”

Once Stewart is out of prison, her time at her Bedford house is likely to come as a major relief. Unlike the prison camp, where any kind of business dealing is forbidden, Stewart will be allowed out 48 hours a week to tend to her media empire, though she may have to wear an electronic ankle monitor. What’s more, she’ll have the opportunity to fulfill a long-held dream of developing the 153-acre estate as a working farm, complete with chickens, pigs, goats and horses. “Being confined to home is like a blessing for her,” says her close friend Charlotte Beers. “Her home has always been her laboratory.” Ironically, if the sentence is indeed carried out, America’s queen of domesticity might find a measure of contentment—but where else?—in a gilded cage of her own making.

Bill Hewitt. Sharon Cotliar in New York City and Jennifer Longley in Massachusetts

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