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CNN PEOPLE IN THE NEWS

Profiles of Scott Peterson, Martha Stewart

Aired March 6, 2004 - 11:00   ET

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

ANNOUNCER: Next on PEOPLE IN THE NEWS, America's favorite homemaker convicted and likely headed behind bars.
(BEGIN VIDEO CLIP)

DAVID KELLEY, U.S. ATTORNEY: If you are John Q. Citizen, or Martha Stewart or Peter Bacovich, we're going to go after you.

ROBERT MORVILLO, STEWART'S ATTORNEY: And we are confident that once we get our day in the court of appeals, the conviction will be reversed.

(END VIDEO CLIP)

ANNOUNCER: For the New Jersey native who built a media empire from scratch, a stock scandal becomes a recipe for disaster.

(BEGIN VIDEO CLIP)

JEFFREY TOOBIN, CNN LEGAL ANALYST: This was just a total route. Martha Stewart is almost, almost, certainly going to prison.

(END VIDEO CLIP)

ANNOUNCER: The rise and fall of Martha Stewart.

Then, what appeared to be a perfect marriage becomes the plot for a national murder mystery.

(BEGIN VIDEO CLIP)

SCOTT PETERSON, CHARGED WITH WIFE'S MURDER: I had nothing to do with Laci's disappearance.

(END VIDEO CLIP)

ANNOUNCER: A pregnant wife who was bright and vivacious.

(BEGIN VIDEO CLIP)

ANNE-MARIE O'NEILL, SENIOR EDITOR, "PEOPLE" MAGAZINE: I guess you could call Laci an all-American girl.

(END VIDEO CLIP)

ANNOUNCER: The seemingly ideal husband accused of murdering her.

(BEGIN VIDEO CLIP)

ABBA IMANI, OWNER, PACIFIC CAFE: People really liked him. He was a very likable guy.

(END VIDEO CLIP)

ANNOUNCER: A storybook relationship that ended in a tabloid confession.

(BEGIN VIDEO CLIP)

AMBER FREY, HAD AFFAIR WITH SCOTT PETERSON: We had a romantic relationship.

(END VIDEO CLIP)

ANNOUNCER: Beyond the hype and the headlines, the story behind the relationship of Scott and Laci Peterson. Their stories, now on PEOPLE IN THE NEWS.

PAULA ZAHN, HOST: Hi, welcome to PEOPLE IN THE NEWS. I'm Paula Zahn. For Martha Stewart, it has been two years of trial and tribulation, two years that ultimately came down to a jury of 12. And now, their verdict is in. Here's Sharon Collins.

(BEGIN VIDEOTAPE)

SHARON COLLINS, CNN CORRESPONDENT (voice-over): It wasn't so long ago that domestic diva Martha Stewart was celebrating on the floor of the New York Stock Exchange. October 19, 1999, was a high energy, high profit day for Martha Stewart. At the sound of the bell, her company, Martha Stewart Living OmniMedia went public. Shares doubled and by the end of the trading day, Martha Stewart was a billionaire on paper.

UNIDENTIFIED MALE: It's selling at 38 right now.

COLLINS: She celebrated by serving orange juice and brioche to money-thirsty traders. It was a very Martha moment.

MARTHA STEWART, DOMESTIC DIVA: It's a good thing.

UNIDENTIFIED MALE: Do you stand the prospect of going to jail?

COLLINS: Now, things are much worse for Martha Stewart. After two long years of speculation and a seven-week trial, the verdict is finally in, guilty on all four charges.

TOOBIN: This was a route. I mean this was just a total route. I mean Martha Stewart seemed to have a defensible case going in. But the jury just wasn't buying it at all.

COLLINS: Stewart was convicted Friday on two counts of making false statements, one count of obstruction of justice, and one count of conspiracy. The conviction carried a maximum sentence of up to 20 years in prison and a fine of $1 million.

TOOBIN: Given the overwhelming nature of the verdict and given the federal sentencing guidelines, I think a prison sentence is close to a virtual certainty.

COLLINS: Stewart was found guilty on charges that stemmed from her sale of ImClone stock in 2001, just one day before the FDA decided not to review the company's highly touted cancer drug.

Although the prosecutors were never able to bring the insider trading case against Stewart, they claimed she lied about being tipped off by her stockbroker and co-defendant, Peter Baconovic.

KELLEY: If you are John. Q. Citizen, or Martha Stewart, or Peter Baconovic, we're going to go after you if you make these kinds of lies. Let this case, as all of those cases, send an important message that we will not, and frankly, cannot tolerate dishonesty and corruption.

COLLINS: Stewart still maintains her innocence and stands by her original story despite her conviction. She released a statement shortly after the verdict, which read -- "I will appeal the verdict and continue to fight to clear my name. I believe in the fairness of the judicial system and remain confident that I will ultimately prevail." And her lawyer, Robert Morvillo vows to appeal.

MORVILLO: We are confident that once we get our day in the court of appeals, the conviction will be reversed and Martha Stewart will ultimately be determined not to have to done anything wrong.

COLLINS: For Stewart, the last few years have been long and arduous. CNN legal analyst, Jeffery Toobin, wrote an article for "The New Yorker" after visiting her last year.

TOOBIN: When you're going down Martha Stewart's street in Westport, Connecticut, there's no doubt which house is hers. Not because it's the biggest, but because only one house has all the shrubs wrapped perfectly in burlap.

COLLINS: He was one of the few journalists to sit down with her after her legal troubles surfaced.

TOOBIN: Martha was very careful not to engage in self-pity, and she didn't want to sound angry, but she couldn't quite keep herself from sounding angry. She used words like "puzzled," and "surprised" at the reaction. But there was no doubt in my mind that she's absolutely furious.

COLLINS: Christopher Byron is familiar with the personnel side of Martha Stewart. In his unauthorized biography of Stewart, Byron has catalogued some good things and a lot more downright unpleasant things about his Connecticut neighbor.

CHRISTOPHER BYRON, BIOGRAPHER: She is very, very short-tempered with people and, as she's gotten older, it's gotten more so. Countless sources have told us the same thing that she's extremely difficult to deal with.

COLLINS: But those criticisms don't matter to the millions of Martha followers. The Martha Stewart brand is seen in merchandising, magazines, the Internet, on radio, and television.

STEWART: You use it three times a year.

COLLINS: And, Martha on an American Express commercial showing she can take a joke.

STEWART: But don't just throw away your old credit cards, recycle them. I'm retiling my swimming pool.

COLLINS: By 2000, Martha was the embodiment of the American dream. It was the culmination of a long journey.

Martha's story begins the way millions of American stories have begun with a voyage of courage a century ago. Her Polish grandparents sailed by the Statue of Liberty into New York Harbor in 1906. The new immigrants set up home first in Newark. Later, Edward Kostyra, Martha's father, would move to Nutley, New Jersey, just 20 minutes from Manhattan.

Martha and her five siblings grew up in a modest three-bedroom home. Martha, and everyone else knew who was in charge at 86 Elm Street, her father, Eddie Kostyra.

BYRON: He clearly had a severe drinking problem. He was unable to hold a job for any particular length of time. Martha's friends did not want to go in the Kostyra house because there was constant yelling in there. Martha's ex-husband, Andrew Stewart, referred to him as a Willy Loman figure who just sort of stumbled downhill through life until he finally wound up at the ultimate dead-end job.

COLLINS: Like Willy, Edward Kostyra was a salesman. He had dreamed about being a doctor but ended up commuting to New York City selling pharmaceuticals. A financial failure, Edward Kostyra was a stern father demanding perfection from his children, even in the garden.

STEWART: I remember the first day that I was put out there on the garden path. We had this cobblestone path in our garden and it had weeds in it and he said, "Take out all the grass". I think I was three. So, I stayed out there all day, you know, and I became his pet because of that.

COLLINS: With her father's drive for perfection, Martha also became every teacher's pet at her elementary school. And, in high school, it was more of the same, an A student. Her yearbook quote reads: "I do what I please and I do it with ease."

Coming up next, a nation gets its first look at Martha.

BYRON: Martha was chosen one of "Glamour" magazine's best-dressed college girls of the year.

COLLINS: Martha Stewart carefully creates the picture of perfection when PEOPLE IN THE NEWS continues.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

COLLINS (voice-over): In the 1960s, Martha Kostyra was deep into her studies at Barnard, an elite college in New York City. Just 20 minutes away from her childhood home, it was a world away in sophistication. To help pay school bills, Martha applied and was chosen to appear in "Glamour" magazine's best-dressed college girls of 1961. It was a big break for the small town girl and it got her noticed.

She modeled for Tareyton cigarettes, was a Breck girl, and made a Lifebuoy soap commercial.

ANNOUNCER: Stop. Now you can odor proof your body.

BYRON: She didn't do her own voice on Lifebuoy though because she still had a Jersey accent, so they did a voice dub for her.

COLLINS: The much-photographed girl from Jersey was about to make a serious change in her life. She tells "Glamour" magazine life pleases her, in particular a young man named Andy.

Years later when Martha published her "Weddings" book, she shared with the world a snapshot of her Andy, the man she married in 1961. Andrew Stewart was a law student and Martha was 19 years old.

After marriage, Martha stepped off the model runway and onto the floor of the New York Stock Exchange. It was the late '60s. The market was strong and Martha's father-in-law, a broker, encouraged her to try her luck. Stewart biographer, Christopher Byron, says Stewart was one of the first females on the floor.

BYRON: She was a stockbroker in a mini skirt and drop-dead blonde looks and did really well.

COLLINS: The next stop for the Stewarts, suburban Connecticut. They slapped down $34,000 for an old house in Westport, renovated it themselves, and dubbed it Turkey Hill Farm. From this meager beginning grew a domestic multimedia corporation.

The company's foundation was scrumptious food. Headquarters was the kitchen at Turkey Hill Farm. Martha, the former model and stock trader, had a new career in mind, catering. She baked breads, whipped up chocolate mousse, and set pretty tables. The former straight A student learned to present the perfect party.

In 1982, Stewart's first book, "Entertaining," the first ever- full color cookbook, was published by Westport's hostess extraordinaire. More than a million copies of the book have sold.

Stewart dedicated the book to her father for instilling in her a love for all things beautiful, and to Alexis, her daughter, for her patience. "Business Week" writer, Diane Brady, says Alexis tolerated quite a lot at Turkey Hill Farm.

DIANE BRADY, ASSOC. EDITOR, "BUSINESSWEEK": Her daughter essentially has told me that there's not 10 seconds when her mother has not thought about the business.

COLLINS: Martha has said Alexis and others have grown accustomed to her jam-packed calendar.

STEWART: They're pretty used to my workaholic schedule and my life is my work and my work is my life.

COLLINS: In 1987, Martha's work and life collided head on. Her marriage was over. Andrew Stewart left Turkey Hill Farm. Six years later, Andy married Robin Fairclaw (ph) once a flower consultant to Martha. Martha had said that for years she blamed herself for the divorce and she wondered what did I do wrong.

For Martha, the only answer was to keep on working, writing more books, and with Time Warner, she created a new magazine, "Martha Stewart Living." On the cover, Martha, inside more Martha, Martha was everywhere. The big questions, would anyone want to buy that much Martha? The answer, a big yes. There were millions of people eager to live in Martha's world.

BRADY: She sort of hit the common nerve in a lot of people. A friend of mine calls it homemaker porn essentially. It's aspiring to a lifestyle that you can't have and it's a fantasy world.

STEWART: Just like people, roses need to be fed and watered.

COLLINS: Almost immediately, Stewart branched out to TV, landing a deal with NBC's "Today Show."

UNIDENTIFIED FEMALE: And, Martha is here this morning with an assortment of beautiful roses and some tips on how to make arrangements for the home from her new magazine "Martha Stewart Living."

COLLINS: Within the first year, Time Warner and Stewart had a weekly show in syndication. The little girl who learned perfection from her stern father was now bringing that perfection to America in every manner possible.

A decade later, this type of synergy is Martha Stewart's blueprint.

STEWART: I am very proud to have this solid shank with the fork head available at K-Mart by Martha Stewart Everyday Garden. This is like incredible for us.

BRADY: The beauty of Martha Stewart to me is that she isn't really a merchandiser, nor is she a publisher. What she essentially is a purveyor of content.

ANNOUNCER: Visit marthastewart.com.

BRADY: She takes every single piece of information that she has. She repackages and re-purposes as many times as she can.

COLLINS: Millions of Martha smiles later and "TIME" magazine declared Stewart one of the most influential people of 1996. She now had all the trappings of fame, including sneering critics.

Writer, Chris Byron, a neighbor of Martha's, says his book has the locals talking loudly.

BYRON: The opinions are so extreme and so polarized. How dare you attack Martha Stewart? She is the living embodiment of all that's wonderful in American womanhood. She gives hope for us all. The other extreme, why are you celebrating a witch? Don't you understand she hasn't paid a bill in this town in 20 years?

COLLINS: For many years, Martha used her home in Westport as her TV studio until neighbors rebelled.

BYRON: They went crazy. You were getting 16-wheeler tractor- trailer trucks coming up here. Sometimes there were traffic jams. That's her house right there.

COLLINS: Eventually, the neighborhood became hostile.

BYRON: This is like the DMZ in Beirut. These walls just arose. That next beach over is where we're going to go. People in this area, plenty of them would tell you, yes, she comes down here and walks around here at 4:00 in the morning with her dogs.

BRADY: It's poignant. It's well known that she has all these homes that she lives in alone with her many dogs and pets. And she may have all these houses but I doubt she spends much quality time in them because she's too busy.

COLLINS: Coming up next on PEOPLE IN THE NEWS, Martha stays focused on business but an insider trading investigation wreaks havoc on her image.

TOOBIN: I think she's been stunned at how much joy so many people have taken at her misfortune.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

COLLINS (voice-over): For Martha Stewart, it seems business is everything and everywhere. Stewart has found the road to fortune wherever she has traveled.

BRADY: I think the temptation for any successful entrepreneur is to always go global. COLLINS: Her marketing vision also included K-Mart, a company that has struggled financially since emerging from bankruptcy last year.

STEWART: OK, girls.

COLLINS: Stewart has been associated with K-Mart since 1987 and she's been very successful. Her goal has been to bring affordable style to the masses.

DANIEL KADIEC, SENIOR WRITER, "TIME" MAGAZINE: There's a reason that she was successful and the stuff that she has created, people like.

STEWART: It's good. It's useful. It's appealing. It's attractive and it's cheap.

COLLINS: Even as K-Mart struggled through financial difficulties, Stewart stuck by the company.

STEWART: It's pretty hard to run out on a partner that's down. You know that's not our style.

COLLINS: Now, that she's a convicted criminal, Stewart is hoping people don't run out on her. Friends like Bill Cosby and Rosie O'Donnell were seen at the courthouse showing their support for Stewart during the trial.

The scandal began back in 2002 with a SEC investigation into Stewart's sale of ImClone stock. During the investigation, Stewart told the SEC she had a standing order with her stockbroker, Peter Baconovic, to sell the stock when the price fell to 60. The prosecution claimed that Stewart and Baconovic conspired to come up with that story.

Stewart was finally indicted on charges of conspiracy, making false statements, obstruction of justice and securities fraud in June of 2003. The charge of securities fraud was eventually thrown out of court.

After Stewart was charged, her lawyers issued a statement in which they said -- quote -- "Martha Stewart has done nothing wrong. The accusation that Martha Stewart sold her ImClone shares based on inside information has proven to be false."

Despite her repeated declarations of innocence, the trial has taken a tremendous toll on Stewart.

TOOBIN: Martha Stewart told me that the investigation itself had cost her about $400 million in decline in her stock, legal fees, and lost business opportunities.

COLLINS: Ironic, considering that the sale of her ImClone stock resulted in a gain of less than $50,000.

And now that the jury has found her guilty, this affair could cost Stewart her freedom.

TOOBIN: Given the fact that she was convicted of all four counts against her, that is one thing that is going to -- got to weight heavily in Judge Cedarbaums's considerations. I think a prison sentence is close to a virtual certainty.

COLLINS: But it still unclear what affect the guilty verdict will have on her company, Martha Stewart Living OmniMedia. The verdict sent the stock price plunging 23 percent when the market closed on Friday, a potentially ominous sign for a company, which relies heavily on Stewart's image.

Toobin says Stewart has always been taken aback by the public's reaction to her legal troubles.

TOOBIN: I think she's been stunned at how much joy so many people have taken at her misfortune. She doesn't quite understand that the perfectionism that made her so famous also makes people say, ah, isn't it fun to see someone like that have a big, big problem.

COLLINS: A perfectionism reflected in even the smallest details of Stewart's life.

TOOBIN: Martha doesn't like to talk about how unpleasant things have been, but you can get signals of it in surprising ways. When we sat down to lunch, she had put out these beautiful chopsticks, which I commented on and she said, "You know, in China the person with the thinnest chopsticks has the highest social status" and, of course, I had to get the thinnest chopsticks. Then she paused and said, "That's why people hate me."

COLLINS: Love her or hate her, Martha Stewart has tied every aspect of her image to her business. At one point, even her daily calendar was turned into a marketing tool.

BYRON: She said to me once that, "My life is 'The Truman Show'" and what she meant by that is I'm always on and from the time I get up in the morning until the time I go to bed, the whole world is watching.

TOOBIN: She said to me, "I've never not been nice to anyone." Look, who among us could even say that? But for her to say it shows that she really, in part, doesn't get how she's viewed in the world.

COLLINS: Now, the world is wondering what will happen next and how Stewart will handle a possible prison sentence.

R. COURL HAY, FRIEND: So, I'm not worried about Martha being able to handle this. I don't think we're going to find Martha, you know, crocheting sheets to crawl out of the window. I think that she'll -- if she does go in, if she loses her appeal that she'll serve it with dignity and grace that she has shown through her trial.

(END VIDEOTAPE)

ZAHN: In a bit of irony, the drug at the center of Martha Stewart's stock trading scandal finally won government approval last month. It shows promise as a last ditch treatment for advanced colon cancer.

ANNOUNCER: Next, loving husband...

(BEGIN VIDEO CLIP)

JAMES AHERN, PROFESSOR, CALIFORNIA POLYTECHNIC STATE UNIVERSITY: A very nice guy, a good guy.

(END VIDEO CLIP)

ANNOUNCER: ...or murderer?

(BEGIN VIDEO CLIP)

TOOBIN: The fact that Peterson was having an affair at the time his wife disappeared, certainly, raised suspicion on him.

(END VIDEO CLIP)

ANNOUNCER: Laci and Scott Peterson's tragic story when PEOPLE IN THE NEWS returns.

(COMMERCIAL BREAK)

(NEWSBREAK)

ZAHN: Welcome back to PEOPLE IN THE NEWS. A mother and unborn child, and a husband charged with double murder, the Laci Peterson case. With jury selection underway in the trial of Scott Peterson, a look now at an all-American family that became a national tragedy. Here is Dave Mattingly.

(BEGIN VIDEOTAPE)

SHARON ROCHA, LACI PETERSON'S MOTHER: I love my daughter so much. I miss her every minute of every day.

DAVID MATTINGLY, CNN CORRESPONDENT (voice-over): It is a story that has captivated the country. A murder mystery played out daily in the media.

TED ROWLANDS, REPORTER, KTVU: People wanted to know where she was, whether she was OK and whether that baby was OK.

MATTINGLY: Each year in the state of California alone, thousands of adult men and women were reported missing, but in the final days of 2002, one of those cases went from an ordinary disappearance to an extraordinary media phenomena that has mesmerized the country.

S. PETERSON: I nothing to do with Laci's disappearance.

TOOBIN: One of the great mysteries about the Peterson case is why the public has responded to it so passionately, because it doesn't have a celebrity involved. No one had heard of these people before, but there is something about it that has grabbed many thousands of people.

MATTINGLY: Twenty-seven-year-old Laci Peterson gone without a trace on Christmas Eve. The media was flooded with images of a beautiful, beaming young woman and the tearful family members desperately seek her return.

UNIDENTIFIED MALE: Laci Denise, if you're hearing dad, we love you very much and we want you home.

MATTINGLY: It just didn't make sense. Laci had a handsome, loving husband, parents, siblings and in-laws who cherished her. Plus, the substitute teacher was eight months pregnant when she suddenly disappeared.

Things had been good for Laci Peterson. She was starting a new chapter in her life in the place where her very first chapter began.

Modesto, California, a mid-sized city with a very small town feel, a place where happiness is spelled out in the welcome sign.

Laci Peterson was born in Modesto on May 4, 1975. Even as a young girl, Laci Denise Rocha had the same sunny disposition that was so familiar in her adulthood.

STACEY BOYERS, CHILDHOOD FRIEND: Laci is always smiling. No matter where we are or what we're doing, she's always bubbly and talkative. And she's usually the center of attention.

MATTINGLY: Laci was into everything and she had no shortage of friends. As a student at Downey High, Laci wasn't your typical angst- ridden rebellious teen, quite the opposite, in fact.

O'NEILL: I guess you could call Laci an all-American girl. You know, she was a cheerleader in high school. She was vivacious. She was outgoing and friendly. Her stepfather used to call her Jabber Jaws because she talked so much.

MATTINGLY: Pretty soon, cooking and gardening joined chatting on the list of favorite Laci pastimes and her green thumb planted her at San Luis Obispo at California Polytechnic State University with a major in horticultural sciences.

There she would meet the man who would become her husband. Scott Peterson was a handsome, athletic California boy from San Diego.

COLLINS: People who knew Scott at high school have described him as a kind of jock, very confident, slightly arrogant and yet still friendly and easy to talk to.

MATTINGLY: The consummate outdoorsman, Scott loved hunting, fishing and golf, but he also had an entrepreneurial spirit. As a student at Cal Poly, Scott made a good impression on his teachers in the agriculture and business department.

AHERN: Very nice guy, a good guy, a capable student, interested beyond just getting grades and interested in knowing people and a good interactor, charming person that could talk well and was interested in what other people had to say, a very likable guy.

MATTINGLY: Scott's agreeable personality worked for him outside the classroom, as well. He parlayed his charm into a part-time job at the Pacific Cafe.

IMANI: His mom and dad were a customer here. They ate here regularly. And then when Scott graduated from high school he came and ate with them a few times and then he asked for a job. He was a very good worker, very responsible, but most importantly, very polite person. People really liked him. He was a very likable guy.

MATTINGLY: One customer in particular took a liking to Scott, fellow Cal Poly student Laci Rocha. After talking to Scott a couple of times, Laci asked a friend who worked at the Pacific Cafe to give Scott her number. He called right away.

RENEE GARZA, CHILDHOOD FRIEND: They're like teenagers in love.

MATTINGLY: That's how most everyone described Laci and Scott. Their relationship turned serious quickly and when Laci said she was bringing her mom to dinner to meet Scott, he went out of his way to impress her.

IMANI: He asked me to make some special appetizer for them. And I did. Some scampi, if I remember right, and he had some flowers on the table.

MATTINGLY: The storybook courtship led to a storybook union.

COLLINS: The wedding was really elaborate. Laci had a big part in planning the wedding. She made sure the flowers were just how she liked them. And she -- it was -- there was a white dress. Him feeding her cake, you know, the full routine. He carried her up the stairs. For a while there, his family thought he that might drop her, but he didn't. So the wedding by all accounts was a big and happy affair.

IMANI: It was a gorgeous day out on the beach, outdoor wedding. Perfect. Everything was just right and a nice couple. They were, like, perfect for each other.

MATTINGLY: It was a picture of perfection that would suddenly be shattered.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ANNOUNCER: We now return to PEOPLE IN THE NEWS.

(BEGIN VIDEOTAPE)

MATTINGLY (voice-over): Laci and Scott Peterson went from ocean front wedded bliss to a shack. The couple wanted to create a hangout spot where students from their alma mater Cal Poly could eat well for cheap. This was a dream they shared and they each took an active role.

BLAKE REED, FRIEND: Scott's an entrepreneur, and he pretty much just built the place up, you know, from the ground up.

CHRISTINE REED, FRIEND: Laci's involvement, too, in the restaurant was significant. She loved to cook. She would go on these trips to France and learn to cook for a week or two and then come back and they kind of both sat down and developed the concept and the menu and then went and found a location.

MATTINGLY: The restaurant soon took off.

When they weren't working, Laci and Scott were out spending time with friends like Blake and Christine Reed. They say this picture taken at a dinner party perfectly summed up the dynamics of their relationship.

B. REED: All of the guys were sitting out in the back porch and we were all smoking cigars and drinking a scotch or whatever and just hanging out and it was all of the guys.

And so somebody wanted to take a picture of all of the guys sitting back there and they were just getting ready to snap the shot and Laci comes behind all of the guys and she wanted to get right in the middle and that's a really good way to describe Laci. She liked -- she was really gregarious and she liked to be in the center of things and be -- you know, she was real comfortable being the center of attention.

C. REED: You know, I never saw Scott feel -- or I never saw the expressions or his behavior never said he was embarrassed by that or angry by that. I mean, he kind of just stood back and smiled and said, "That's my wife."

MATTINGLY: Though surrounded by friends and fulfilled by the success of their restaurant, Laci and Scott decided to move back to Modesto to be closer to Laci's family and to start a family of their own.

O'NEILL: Laci was really excited about getting pregnant. They'd been trying to get pregnant for some time and when she did get pregnant and she got the news she was pregnant she was on the phone at 7 a.m. the next morning, calling her relatives and telling them of the news.

SUSAN CAUDILLO, SCOTT PETERSON'S SISTER: She and Scott were just thrilled about the coming of their baby boy and everything in their life that they had planned for the past five years and their marriage was coming. This was a big event for them and everything was going wonderfully.

MATTINGLY: Which is why it was so stunning when Scott called family members on December 24, saying he had just come home from a fishing trip and couldn't find Laci anywhere.

JACKIE PETERSON, SCOTT PETERSON'S MOTHER: They were all ready for Christmas, their presents wrapped, their plans laid and they had a little free time. And it's just like Laci to let Scott go do something he wanted to do, and she wanted to do a little more shopping privately, so that was their agreement and it was only for a few hours. It should have been fine.

MATTINGLY: But it wasn't fine. Hours passed with no sign of Laci. The family sprang into action, pleading for help on the airwaves and putting Laci's picture on every tree, lamppost and window in sight.

ROWLANDS: When Laci was missing, literally thousands of people who didn't know her came out to help search for this missing woman and they started to know her.

MATTINGLY: Laci's family, her parents, her brother and sister, as well as Scott's parents, became familiar faces.

ROCHA: I'd like to make a plea to the person or persons who have my daughter.

MATTINGLY: They appeared on television night and day. Noticeably absent, her husband Scott.

ROWLANDS: When someone's going through this you don't know how they're going to react, but normally you've got a father or a spouse or a family member of a missing person who wants media coverage, who wants the picture out there, the flyers, wants to do interviews, wants to really do anything to get help to find this person.

And with Scott it was a little different story where he was real standoffish; didn't want us to take his picture, didn't want us to interview him.

MATTINGLY: Slowly, people began to question Scott's demeanor.

TOOBIN: For better or worse, the public seems to have kind of a script in mind for how bereaved relatives ought to behave and he didn't follow that script. He was not quite sad enough.

MATTINGLY: Modesto police also seemed to think something about Scott wasn't right. He wasn't named a suspect, but he wasn't ruled out either. Police repeatedly questioned him and searched the home he shared with Laci. But the people who knew him best ignored all that whispering.

LEE PETERSON, SCOTT PETERSON'S FATHER: If you knew Scott as far as him being implicated it's just a non-issue.

O'NEILL: Laci's mother, Sharon, told us that she was calling Scott every day. They were speaking on the phone and she was telling him that they loved him and not to worry.

MATTINGLY: With Laci missing for one full week, the family and the town of Modesto came out on New Year's Eve for a candlelight vigil. Scott Peterson raised eyebrows and got stares of disbelief as he laughed and joked with friends and even took a cell phone call while the rest of the family was in tears.

That, combined with frequent out of town, overnight trips and his steadfast refusal to speak publicly, turned Scott into a villain in the media.

But it only got worse. When PEOPLE IN THE NEWS continues, a potential motive for murder surfaces.

FREY: I met Scott Peterson November 20, 2002. I was introduced to him. I was told he was unmarried.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

MATTINGLY (voice-over): Nearly one month after the disappearance of Laci Peterson, a shocking revelation.

KIM PETERSON, ROCHA FAMILY SPOKESPERSON: Approximately two weeks ago, Ron Grantski, Laci's stepfather, asked Scott if he had a girlfriend. Scott told him no and Ron believed him. Now, however, they believe that he has lied to them about this and possibly other things, as well.

MATTINGLY: At first, Scott continued to deny the affair, but a press conference with the other woman, Amber Frey, erased all doubts.

FREY: Scott told me he was not married. We did have a romantic relationship. When I discovered he was involved in the -- the Laci Peterson disappearance case, I immediately contacted the Modesto Police Department.

TOOBIN: The fact that Peterson was having an affair at the time his wife disappeared certainly raised suspicion on him and obviously gave him a motive for murder.

MATTINGLY: It was also the turning point in Scott's relationship with Laci's family.

TOOBIN: That was the moment when they went from being largely supportive of Scott to neutral to hostile.

MATTINGLY: Engulfed in a torrent of bad press, Scott Peterson agreed to what he had resisted for so long, on-camera interviews, but it had to be on his terms.

ROWLANDS: He called me on the phone the night before and said no lights, just one camera guy. I just want it to be a simple interview. He said I'd like to see the questions you want to ask me.

I've never had anybody ask me that before, so it was a definite situation where he was in control and he didn't want to say anything that quite frankly, would, I think, make him look bad.

MATTINGLY: And when it came time to speak he chose his words carefully.

S. PETERSON: I had nothing to do with Laci's disappearance. Even if you think I did, think about Laci.

MATTINGLY: He seemed the most emotional when speaking of the empty nursery for the baby they had decided to name Connor.

S. PETERSON: The nursery's ready for him. That door is closed. I can't look, you know? All of the little itty-bitty clothes and all of those wonderful things we have for him.

MATTINGLY: But public reaction was mixed.

ROWLANDS: I think that people thought he was guilty, and I think seeing him in his sort of pat answers and his reluctancy to really open up didn't help him.

TOOBIN: And then he started doing things like trying to sell Laci's car. Actions that seemed inconsistent with a grieving relative and more consistent with a criminal suspect.

MATTINGLY: The downward spiral continued for Scott Peterson, but the darkest days were just ahead.

On April 13, just miles away from where Scott said he was fishing on Christmas Eve, the body of a fetus washed up on the shores of San Francisco Bay, followed by the partial remains of a woman.

The question on everyone's mind, could this be Laci Peterson and baby Connor?

Claiming Scott was a flight risk; the Modesto police didn't wait to find out. Just days after the bodies were discovered he was arrested near a posh golf course in San Diego, just an hour away from the Mexican border.

Despite appearances, the Peterson family stayed strong and supportive.

L. PETERSON: They made a rush to judgment because of all of the media pressure, I believe, and politics. And he's in there, he should not be and we're going to find out who did it.

MATTINGLY: But the attorney general disagreed, calling the case a slam-dunk. And the state of California said it would seek the death penalty against Scott Peterson.

After DNA results confirmed their worst fears, that the bodies that washed up were indeed Laci and her baby, Laci's family held one final heart-wrenching press conference.

ROCHA: I literally get sick to my stomach when I allow myself to think about what may have happened to them. No parent should have to think about the way their child was murdered.

RON GRANTSKI, LACI PETERSON'S STEPFATHER: I know all of you would like for us to say something about Scott, but we're not going to do that. We owe it to Laci to let the courts bring the facts out.

MATTINGLY: The family took the high road and refused to publicly discuss their feelings towards Scott.

TOOBIN: Anyone who has followed the case at all closely can see that the Rocha family, Laci's family, has gone pretty much over to outright hostility to Scott, even though they have never said the words publicly, "We think Scott did it."

MATTINGLY: The defense tried to provide alternative theories.

MARK GERAGOS, SCOTT PETERSON'S ATTORNEY: We know that there are specific individuals who have information that relate to this -- to the kidnapping and the abduction and the murder. And we're asking that you come forward and we'll do everything possible to protect you.

TOOBIN: A cult murder. A random murder. A kidnapping. That gives the public something to think about except the obvious possibility, which is that her husband did it.

MATTINGLY: The defense had also worked hard to remind potential jurors that their client had a perfectly clean record.

ROWLANDS: He has a history of cheating, which is coming out, but as far as could he be responsible for this? There was nothing in his past and especially in the beginning, people were ready to stand up for this guy and say yes, he's acting strange, but believe us, he's a great guy.

MATTINGLY: The prosecution has largely kept quiet, allowing the circumstantial evidence to speak for itself. But in court documents filed recently, the prosecution made it clear that they believe Scott Peterson's extramarital affairs drove him to murder.

TOOBIN: The prosecution will undoubtedly focus on a basic appeal to common sense, which is who else could have done this? Who else had the motive? The opportunity?

MATTINGLY: But the prosecution still has to prove guilt beyond a reasonable doubt.

TOOBIN: This case is not a slam-dunk, at least not in terms of the evidence that's public. There is no murder weapon. There is no eyewitness. There is no time of death established. Those are all things that the defense can explore.

MATTINGLY: In the meantime, two families are left to grieve the loss of Laci Peterson and her unborn son, Connor. Forced to wonder how their loved ones came to their deaths in a watery grave, so close to home.

(END VIDEOTAPE) ZAHN: Scott Peterson's murder trial is expected to last as long as five months.

That's it for this edition of PEOPLE IN THE NEWS. Coming up next week, the making of a pair of American Idols, Ruben Studdard and Clay Aiken. I'm Paula Zahn. Thanks so much for joining us, hope you'll be back with us next week.

ANNOUNCER: For more celebrity news, pick up a copy of "People" magazine this week.

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