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Martha's night out probed
Probation officers confirm they're looking into whether Time dinner violated house arrest terms.
April 25, 2005: 4:29 PM EDT
Martha Stewart attended a dinner celebration of Time magazine's
Martha Stewart attended a dinner celebration of Time magazine's "100 Most Influential People" issue, a possible violation of her probation.

NEW YORK (CNN/Money) - Federal probation officials confirmed Monday that Martha Stewart is being investigated for a possible violation of the terms of her house arrest by attending a magazine gala in New York City last week.

Stewart, the founder of Martha Stewart Living Omnimedia, is serving five months under home detention following her criminal conviction a year ago on charges related to a personal stock sale. Stewart, 63, must wear an electronic ankle bracelet at all times and is allowed to leave her upstate New York home for up to 48 hours a week, for work or other pre-approved reasons.

The investigation stems from Stewart's attendance last week at a dinner celebration of Time magazine's "100 Most Influential People" issue, which recognizes the domestic diva. Time and CNN/Money are owned by Time Warner.

Chris Stanton, the chief probation officer of the Southern District of New York, confirmed to CNN that an investigation is underway.

"We are looking into whether Martha Stewart violated the conditions of her release," said Stanton. He also said that Stewart was cleared to attend the event ahead of time. A call from the New York Post, which first reported the story Sunday, prompted the inquiry.

It's not clear why probation officials are now questioning whether they should have approved Stewart's attendance at the Time event.

In a statement, Martha Stewart Living defended Stewart's social calendar for helping "build momentum" for the company as it attempts to rebound from two consecutive years of losses.

"Having Martha present at industry events where she is honored and recognized for her achievements...is valuable to us," the statement read.

Stewart could be disciplined if she is found to have violated her probation. She could be denied all travel until August, when her home confinement is scheduled to end. There's also the remote possibility that she could be sent back to prison.

Stewart was released in early March from a minimum-security prison in West Virginia known as "Camp Cupcake."

Any curtailment of Stewart's movements could be bad for Martha Stewart Living, the company she found and ran until her indictment on charges she lied to government investigators about her well-timed sale of ImClone Systems (Research) stock in late 2001.

Martha Stewart Living (up $0.14 to $20.34, Research), which will report first-quarter results Tuesday morning, has struggled to recover from a steep drop in advertising revenue and other business woes connected to its founder's legal case. A turnaround plan now in place at the company hinges in large part on Stewart and her ability to resurrect her image.

As such, Stewart has been a regular lately at major New York media events lately. Earlier this month, she attended the National Magazine Awards, where two Martha Stewart Living publications won top honors at the event. Stewart's attendance there is apparently not a part of the current inquiry.

Stewart can work as much as she wants from home. But Martha Stewart Living says it needs more from its founder.

CEO Susan Lyne recently joined in a request to release Stewart early or else to allow her to spend up to 80 hours a week outside of her home so she could meet with key advertisers and work on two new television projects for the fall.

A federal judge turned down Stewart's bid.

Stewart has denied throughout her case that she broke the law. A ruling on her appeal is pending.

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