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ANDERSON COOPER 360 DEGREES

Homeland Security Warns Of Terrorist Attacks Near Elections; Former Enron CEO Surrenders To Authorities; Martha Stewarts Motion Denied, Sentencing To Be Held Next Week

Aired July 8, 2004 - 19:00   ET

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


HEIDI COLLINS, HOST: Good evening from New York. I'm Heidi Collins, in for Anderson Cooper.
Renewed terror warnings. Are we ready? And for what?

360 starts right now.

Another warning of a large-scale al Qaeda strike, but based on what? Accusations of playing politics with terror.

He's alive, well, and no doubt has some story to tell. The mystery surrounding a freed Marine deepens.

Martha Stewart's motion for a new trial denied. Judge clears the way for sentencing next week.

Too Much, Too Soon, our special series. Tonight, why are today's teens lusting after labels?

And Cameron Diaz, S&M tape hits the World Wide Web. Pictures Hollywood's highest-paid actress doesn't want the world to see.

ANNOUNCER: Live from New York, this is ANDERSON COOPER 360.

COLLINS: We begin with a question of probability. Does every day that goes by without a terror attack increase the likelihood that one will happen sometime in the near future? And does continuing to raise concerns about possible attacks help prevent them, or simply cause a sort of terror fatigue on the part of the public?

Impossible questions to answer, but certainly part of the complicated formula the Bush administration must deal with in fighting the war on terror.

Today, another alert that left as many questions as answers.

Here's CNN justice correspondent Kelli Arena.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): With the Democratic convention in Boston less than three weeks away, the man in charge of protecting the homeland issued another terror warning.

TOM RIDGE, SECRETARY OF HOMELAND SECURITY: Credible reporting now indicates that al Qaeda is moving forward with its plans to carry out a large-scale attack in the United States in an effort to disrupt our democratic process.

ARENA: Officials say that's exactly what al Qaeda believes it did in Spain. But Ridge says the intelligence about an attack in the United States offers no specific time, place, or method. And he says there are no plans to raise the national threat level.

Critics suggest without specifics, public warnings do not help the public.

MICHAEL GREENBERGER, UNIVERSITY OF MARYLAND: They should avoid the dramatic monthly press conference and have a continuous dialogue with the American people on a much more nonthreatening level that keeps them appraised on a regular basis as to what's being done.

ARENA: Counterterrorism officials say there is intelligence suggesting terrorists are looking to hit transportation systems, like they did in Madrid. And based on past overseas plots, intelligence analysts are particularly concerned about truck bombs, which could be used to target tunnels and bridges.

Officials also say al Qaeda remains very interested in aviation, either targeting aircraft, or using it as a weapon.

RIDGE: These are not conjectures or mythical statements we are making. These are pieces of information that we can trace comfortably to sources that we deem to be credible.

(END VIDEOTAPE)

ARENA: Senior intelligence officials say the U.S. is putting al Qaeda under heavy pressure along the Afghanistan-Pakistan border, where top al Qaeda leaders are believed to be. Officials say intelligence shows those leaders, including Osama bin Laden, continue to give orders directing attacks, Heidi.

COLLINS: Kelli, any additional security measures actually being taken now due to this warning?

ARENA: Oh, absolutely. There was a task force that was set up to deal specifically with this threat, obviously, in both Boston and New York, the site of the two political conventions. There is a great deal of security that's already being put in place and will continue to be put in place. And just nationally, the federal government is urging its state and local partners to up the ante a bit.

COLLINS: All right, very good. Justice correspondent Kelli Arena, thanks so much tonight.

ARENA: You're welcome.

COLLINS: Homeland Security Secretary Tom Ridge says anyone who thinks the terror warning is politically motivated has got it wrong. Yet in Washington, everything is seen through the prism of politics, even more so in an election year, and in a week when the Kerry-Edwards ticket made its debut.

Looking into questions over the timing, CNN White House correspondent Suzanne Malveaux now.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice-over): With the elections just four months away, today's terrorist warning immediately became political fodder for Republicans and Democrats competing to win the upper hand on this volatile issue.

Some Democrats questioned the timing of the announcement. Congressman Robert Wexler of Florida released this statement saying, "Given the fact that the administration chose not to raise the threat level, one cannot help but question whether their aim was to deflect attention from the Kerry-Edwards ticket during their inaugural week."

The White House denied it was using the terrorist update to bolster its wartime president during the election season.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: We have an obligation, regardless of the time of year or what year we are in, to protect the American people and keep them informed about what we are doing to provide for their safety and security.

MALVEAUX: The Kerry campaign used Ridge's remarks to argue the Bush administration wasn't doing enough. It stated, "Our crucial intelligence and military resources are overstretched abroad, and our homeland security effort at home is underfunded and poorly managed."

Democrats briefed by Ridge agreed the al Qaeda threat was serious and credible. But they seized on the warning to blame Republicans for blocking homeland-related legislation in favor of social issues, such as an amendment to ban gay marriage.

SEN. HILLARY CLINTON (D), NEW YORK: We have two weeks left before we are in recess. Do you think al Qaeda's taking a recess? You know, right now, as we speak, in cafes in Europe and in tents in North Africa and in caves in Afghanistan, they are plotting against us.

(END VIDEOTAPE)

MALVEAUX: A Republican senator shot back, saying it's the Democrats that are playing politics with homeland security. A White House officials say when it comes to issuing these terrorist warnings, it's really a damned if you do, damned if you don't scenario, Heidi.

COLLINS: Suzanne Malveaux, live from the White House tonight. Suzanne, thanks so much.

In Lebanon now, safe and apparently in good health, that's how U.S. officials describe Marine Corporal Wassef Hassoun, who is back in U.S. hands at the American embassy in Beirut. No doubt, Hassoun has a lot of questions to answer after 18 days of mystery and confusion about his fate. For his family, it is a time of relief. Yet the day was not without drama.

With the developments now in West Jordan, Utah, with the Marine's family, CNN's Rusty Dornin. And at the Pentagon, CNN's Jamie McIntyre. We begin, though, in Utah -- Rusty.

RUSTY DORNIN, CNN CORRESPONDENT: Well, you could almost hear a big sigh of relief coming from the house here in West Jordan, Utah. This family really has been to hell and back over the last two weeks and has refused to discuss any reports about Corporal Hassoun until he was back in U.S. hands.

And now that moment has finally arrived.

(BEGIN VIDEOTAPE)

DORNIN (voice-over): The saga of Corporal Wassef Ali Hassoun twisted and turned into one big confusing night...

(END VIDEOTAPE)

DORNIN: Hi. What?

The family, of course, has been not -- they haven't been talking today about what's been going on. They said they will have a press conference here about 6:00 tonight. But as you've heard from some of the reports, he was taken, picked up somewhere in Tripoli, they won't say where, and taken to the U.S. Embassy in Beirut.

Apparently, he -- from -- sources told us he was accompanied by his mother to the embassy there in Beirut. The U.S. military isn't saying anything else right now.

Neighbors around here have, you know, expressed elation about the whole thing, just saying they're so glad that this family's nightmare is finally over. But we are expecting, as I said, the family to come out and make a statement in about an hour. We don't know if they're going to be answering any questions. In the past, it's always been they just made a statement. And I'll tell you, there are a lot of people here with a lot of questions, Heidi.

COLLINS: All right, Rusty, thanks so much for telling us your story without the pictures tonight. We do appreciate that.

Corporal Hassoun has a lot of explaining to do to military investigators. The process is already underway. There is a lot -- there are a lot of theories on the case, including the possibility it was all a hoax.

CNN's senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): Hassoun is now under military control and faces tough questions from Navy criminal investigators over why he left his unit in Fallujah, Iraq, July 20, and what help he got to travel to Tripoli, Lebanon, 500 miles away through Syria, 18 days later.

BRIG. GEN. DAVID RODRIGUEZ, DEPUTY JOINT STAFF OPERATIONS DIRECTOR: The investigation is ongoing, and we don't know how he got there or what went on between the time that he was reported missing from his unit until he got into Lebanon.

MCINTYRE: At first, U.S. sources say the Marine Corps suspected Hassoun, an Arabic speaker working as a military truck driver, wanted to desert to Lebanon, where he was born and still had family. Now Pentagon sources say investigators are also looking into whether the video purporting to show Hassoun captured and threatened with beheading by an obscure Islamic militant group was real or a hoax staged to cover his desertion.

LARRY DI RITA, PENTAGON SPOKESMAN: We have nothing for you on it. We'll just let this situation unfold. And when we've got something to say, we'll say it.

(END VIDEOTAPE)

MCINTYRE: Pentagon officials say Hassoun will be taken to a U.S. military base in Germany, where he'll be giving a medical evaluation and a full debriefing. If he should be charged with desertion, it is a serious offense, punishable, technically, by death, Heidi.

COLLINS: Jamie McIntyre from the Pentagon tonight. Jamie, thank you.

Ken Lay in cuffs. That tops our look at news cross-country tonight. Houston, Texas, a handcuffed Ken Lay entered a federal courthouse this morning to plead not guilty to an 11-count indictment. Among other things, the former Enron chairman stands accused of securities and wire fraud and making false statements. If convicted on all charges, Lay could be sentenced to up to 175 years in prison. Lay denies any wrongdoing.

New York, Martha Stewart denied. A federal judge has turned down the fallen celebrity homemaker's request (audio interrupt). Stewart's lawyers had pinned their hopes on allegations that a prosecution witness had lied on the witness stand. The judge's ruling paved the way for Stewart to be sentenced next week.

Miami, Florida, pilots indicted. The two former America West federal -- America West employees, that is, facing federal charges of being drunk behind the controls of a passenger plane. The two were removed from their taxiing plane and arrested back in July of 2002. The pilots were allegedly drinking in a bar six hours before their flight's scheduled departure.

Washington D.C., ruly aftermath, unruly aftermath, that is, of all things, at a homeland security press conference. Take a look at this. Seems a CBS cameraman and a reporter for the "New York Post" had a slight disagreement that couldn't be resolved through the usual diplomatic niceties. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Hey, hey, hey!

UNIDENTIFIED MALE: What are you doing?

UNIDENTIFIED FEMALE: What's going on here?

UNIDENTIFIED MALE: What are you doing?

(END VIDEO CLIP)

COLLINS: And that's a look at stories cross-country tonight.

360 next, triple homicide at Sam Donaldson's ranch. A 14-year- old under arrest for the murder of his family at the anchorman's home. Find out what happened.

Plus, lusting for labels. Are today's teens trying to buy their way to happiness? Part of our special series, Too Much, Too Soon.

And naughty angel. Cameron Diaz caught in some compromising positions.

But first, your picks, the most popular stories on CNN.com right now.

(COMMERCIAL BREAK)

COLLINS: New details coming out tonight about a dramatic story involving television newsman Sam Donaldson. Donaldson's nose for a story is legendary, but when he came home to one of his ranches in New Mexico, it didn't take his journalistic skill to figure out something was terribly wrong.

CNN's Adaora Udoji now with the story.

(BEGIN VIDEOTAPE)

ADAORA UDOJI, CNN CORRESPONDENT (voice-over): Fourteen-year-old Cody Posey is accused of murdering his father, his stepmother, and his 14-year-old stepsister, Mary Lee (ph). A day after the bodies were found on the sprawling ranch of veteran newsman Sam Donaldson, investigators are piecing together a scenario. They say Posey shot his family with a handgun in their home and dragged their bodies to a shallow grave. Posey's father, Delbert, had managed Donaldson's Chavez Canyon ranch the past two years.

SAM DONALDSON, JOURNALIST: Seemed to be a very happy, well- adjusted family. I never heard them use a cross word at each other or, you know, around us, or the children were always polite and friendly.

UDOJI: Cody, say authorities, was found at a friend's house 15 miles away, taken in for a voluntary interview, then arrested. His attorney did not return CNN's call. Authorities say he's never faced trouble before, that he was set off by a specific event, which they refuse to disclose, and also described a difficult few years. Posey lost his mother and stepfather in separate car wrecks before moving in with his father.

A stunned Donaldson, like others, described him as well mannered.

DONALDSON: Cody was withdrawn, from the standpoint of -- it was Mary Lee who was the sparkler, Cody was a quiet one, but always polite. We would not have had a premonition or an inkling that this could happen.

UDOJI: Posey is scheduled for arraignment on Friday.

Adaora Udoji, CNN, New York.

(END VIDEOTAPE)

COLLINS: New death threats for Saddam Hussein's lawyer. That tops our look at global stories in the uplink. A new videotape surfacing in Iraq, only this time it's a tape with a twist. The hooded men shown say they will behead anyone who tries to defend Saddam Hussein in his upcoming trial. The speaker on the tape says the message is for the Iraqi, Arab, and foreign lawyers who have taken on Hussein's case.

In Samarra, Iraq, northwest of Baghdad, a mortar attack killed five U.S. troops and an Iraqi National Guardsman. Twenty-three others were injured. The total of coalition forces who have now died stands at 999.

Guantanamo Bay, Cuba, U.S. officials have released a Swedish man who has been held for the last two years. He's now being flown back to Sweden. Swedish ministry for public -- for foreign affairs says the release followed intensive discussion with the Americans this spring and summer.

In Beijing, China, U.S. national security adviser Condoleezza Rice has been consulting with the Chinese military chief. Rice was pressing the issue of North Korea's nuclear ambitions, but reports said the Chinese were more interested in discussing Taiwan.

And in Brussels, at the home of NATO, officials declared troops under the NATO banner who have sex with women who are the victims of human trafficking will be punished. The statement said the organization has a, quote, "zero tolerance policy" regarding human trafficking and sex slavery.

And that's tonight's uplink.

360 next, teens trying to buy their way to happiness. Is Paris Hilton the new poster girl for a generation of teenagers? (audio interrupt) series, Too Much, Too Soon.

Also tonight, Martha Stewart facing hard time. Her request for a new trial denied. Find out if she has any legal Hail Marys left. And a little later, (audio interrupt) officials saying it's Osama bin Laden who's behind today's terror warning.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, "CLUELESS")

UNIDENTIFIED MALE: Cher, get in here.

UNIDENTIFIED FEMALE: What's up, Daddy?

UNIDENTIFIED MALE: What the hell is that?

UNIDENTIFIED FEMALE: A dress.

UNIDENTIFIED MALE: Says who?

UNIDENTIFIED FEMALE: Calvin Klein.

UNIDENTIFIED MALE: It looks like underwear.

(END VIDEO CLIP)

COLLINS: Of course. Well, big-name fashions, the only way to go. A clip there from the movie "Clueless." For many of today's teens, fashion does come first, and money is no object. After all, today's teens have a lot more green than past generations.

CNN's Jason Bellini reports on the inspiration behind the spending sprees. It's part of our special series, Too Much, Too Soon.

(BEGIN VIDEOTAPE)

JASON BELLINI, CNN CORRESPONDENT (voice-over): Rich or not, today's teens make a beeline to brands. Not just any brand. Alexis Palladino wants to have exactly what the young celebs are wearing.

ALEXIS PALLADINO, YOUNG SHOPPER: The stories on E! about all the movie stars who have Prada bags and stuff.

BELLINI: She admires Paris Hilton, the hotel heiress in "The Simple Life."

(BEGIN VIDEO CLIP, "THE SIMPLE LIFE")

UNIDENTIFIED MALE: Have you ever had a real job?

UNIDENTIFIED FEMALE: No.

UNIDENTIFIED FEMALE: No.

(END VIDEO CLIP)

BELLINI: She's like many young people fascinated by today's shows like MTV's "Rich Girls."

(BEGIN VIDEO CLIP, "RICH GIRLS," MTV)

UNIDENTIFIED FEMALE: People pay money for clothes, OK? But shouldn't it be, like, a free necessity, like water, because you need it?

(END VIDEO CLIP)

BELLINI: Who say, That's what I want to be.

(on camera): You're 12 years old. How important is it to have the right bag when you go to school?

PALLADINO: Oh, it's really important.

BELLINI: Why?

PALLADINO: Well, because if you have, like, a wrong bag or, like, an ugly bag, people will make fun of you and stuff.

LESLIE LANGSAM, SAKS FIFTH AVENUE: They're $200.

BELLINI (voice-over): Leslie Langsam of Saks Fifth Avenue sees teens every day for whom must-haves really are must-haves.

(on camera): Do you ever see sticker shock on the faces of kids?

LANGSAM: Oh, sure, but that doesn't stop them from buying.

BELLINI (voice-over): Last year, U.S. teens spent $175 billion, up about 25 percent in five years. An author of the book "Affluenza" argues that the spending gone wild is a societal epidemic.

JOHN DE GRAAF, AUTHOR, "AFFLUENZA: THE ALL-CONSUMING EPIDEMIC": This virus has struck deep into the heart of American youth that there's a real sense that the good life is the goods life for kids.

BELLINI: Alexis says seventh-graders at her school are branded by the brands they buy. The rich kids benefit.

(on camera): Are they the more popular kids too?

PALLADINO: They are.

BELLINI: The rich kids are?

PALLADINO: Yes.

BELLINI: Why?

PALLADINO: I don't know. It's just how it is.

BELLINI (voice-over): John De Graaf suggests the following prescription for fighting "Affluenza." Parents should teach their children media literacy, to be aware of manipulation of their tastes by marketers.

Make children masters of money. Place emphasis on saving money and spending wisely.

Protect the plastic. Keep the credit card in an envelope with questions, like, Do I really need this?

There's no easy remedy, especially when ostentatious teen role models portray money as no object.

Mark Jacob boots, $550. Chanel bag, $1,000.

(on camera): Why does a 10-year-old need a Prada bag?

PALLADINO: I don't know, it's just fun to have.

BELLINI (voice-over): Carrying a Prada purse to middle school, priceless.

Jason Bellini, CNN, New York.

(END VIDEOTAPE)

COLLINS: I don't have a Prada bag.

Well, we will wrap up our special series, Too Much, Too Soon tomorrow with developing too fast, puberty at the age of 7. Experts are trying to figure out why some children are becoming adults way too fast.

Another warning of a large-scale al Qaeda strike, but based on what? Accusations of playing politics with terror.

Martha Stewart's motion for a new trial denied. Judge clears the way for sentencing next week.

And Cameron Diaz' S&M tape hits the World Wide Web. Pictures Hollywood's highest-paid actress doesn't want the world to see.

360 continues.

(COMMERCIAL BREAK)

COLLINS: Let's check some of tonight's top stories. Here's the reset.

Washington, stop the clock and change the vote. Republican House leaders kept open a vote on a repealing part of the PATRIOT Act today, as they arm-twisted Congressmen to support their position. The measure was an effort to block the government's power to investigate people's reading habits. The bill was apparently headed for victory until the parliamentary maneuver. One Republican Congressman said, quote, "You win some, and some get stolen."

Washington, George Tenet takes off. Today was the CIA director's last day on the job. At a farewell ceremony, Tenet told the agency their work will be judged well in the future. Tenet is the second- longest-serving chief at the agency. Chicago, Illinois, Bush is on the ballot. The state of Illinois has fixed a legislative problem that might have kept President Bush's name off the ballot there in November. Because the Republican convention is being held so late in the year, at least nine states had to change their policy to make sure the president and vice president were included in the choices. It has to do with each state's definition of legal candidacy.

A reminder today that none of us is immune to terror. Another alert from the Bush administration. Al Qaeda is planning a large- scale attack on the U.S. in an effort to disrupt the democratic process before the November presidential election. Some Democrats are questioning the timing of this latest alert. Is it justified?

Joining me from Washington, Susan Neely. She's the assistant secretary for public affairs for the homeland -- department of homeland security, that is.

Ms. Neely, thanks so much for being here.

SUSAN NEELY, DEPARTMENT OF HOMELAND SECURITY: My pleasure.

COLLINS: Want to begin with some of the words that Secretary Tom Ridge talked about this morning. Did not offer a who, what, why, where, or when today. What was the point of this morning's warning?

NEELY: Well, what the secretary said is that we have new credible reporting that gives us a better picture of what we've known for a while, that al Qaeda would like to attack the U.S. again. And what this reporting is telling us is that they are planning a large- scale attack to disrupt our democratic processes, the election.

COLLINS: What's the American public supposed to do with that?

NEELY: Well, what the (UNINTELLIGIBLE) American public needs to know is, is what we know, which was, we are at an elevated risk of a terrorist attack. What they also should know is that there are smart people all over the country in every single community working hard to increase the protections that are in place for us. And we are a lot safer today than we have been at any time in the last couple of years.

COLLINS: How so?

NEELY: Well, one of the things that the secretary and vice president unveiled today is a new homeland security operations center, which allows us -- we now have connectivity to all 50 states and 50 major urban areas. Which means in real time, 24/7, we have this kind of national nerve center that allows us to find out what's happening in the country and give direction where we need other protection around our critical infrastructure, around the things that make this -- and systems that make this country go.

And information is our best weapon in the war on terrorism because that's what allows us to disrupt and deter the terrorists and we unveiled a new capability today that didn't exist before September 11, and it's one of the many tools that will allow us to keep this country safer.

COLLINS: But do you believe the American public is getting enough information?

NEELY: Well, I share the public's frustration. As a mother, I'd like to know more, too. What we all want to know is time, place, and method. I can tell you we're actively working to find that out. And we look at threat information every day, and every day we're smarter about what they're trying to do.

That being said, what we know from looking at their websites, from different kinds of reporting, from really studying all of their movements and knowing what their intent is, that they are preparing and planning and intend to launch an attack on this country. That's what we can tell you. Again, we can also tell you that people are working very hard to disrupt and stop that from happening.

COLLINS: No doubt they are. Obviously, if you say you understand the frustration of the American public, it's probably safe to say that, because we have heard so many warnings similar to this, there becomes this possible terror fatigue where people hear another alert, and then maybe they really don't hear another alert because they don't know what to do.

NEELY: Well, I can tell you that, certainly, the senators, the members of the U.S. Senate who were a part of the classified briefing this morning like Senator Daschle, I can tell you the mayor of Boston and the governor of Massachusetts and thousands of police are getting ready for the Democratic convention.

They're listening closely, and they're all working to do something about it, as are the 50 homeland security advisers in all the states around the country. So it's important that the professionals hear this message and that they get the information, because they're the people that can really do something about it. It certainly makes me feel better as a citizen, as an American. But also as a citizen, I want to know when we are at greater risk. That allows me to be alert. That allows me to be vigilant, and the citizens' help matters.

COLLINS: Greater risk but no increase to the terror threat level, just to be clear?

NEELY: We've been at an elevated risk of terrorist attack. We continue to be at an elevated risk of terrorist attack, but what Secretary Ridge was telling the public today is that we are -- we've got better information about what that risk means and that people are responding to that risk that can do something about it.

And, again, please don't diminish that vigilance and citizens reporting suspicious packages. That was one of the outcomes of Madrid. They interviewed passengers in that station. They saw backpacks that were unattended. You report those kinds of things to authorities. You really can help.

COLLINS: We really really would never diminish that. Ms. Susan Neely, we certainly appreciate your time tonight from the Department of Homeland Security. Thank you so much.

NEELY: Thank you very much.

COLLINS: And joining me now from Boston, Jim Walsh, a terrorism expert at the Kennedy School of Government Harvard University.

Mr. Walsh, thanks for being here. I want to begin the same way with you. No specifics about time, method, geographic location. This what you wanted to hear from a warning?

JIM WALSH, TERRORISM EXPERT: It's exactly the thing you don't want to hear in a warning. All the studies show that if you put out warnings that are vague and you don't tell people what they can do in their personal lives about it, what you end up doing is increasing anxiety.

My concern is not that we'll have complacency or what's called the "boy who cries wolf" syndrome. My concern is that there are millions of Americans out there who hear these warnings. They don't know what to make of them. There's no more information in today's warning than the warning that was given by Attorney General Ashcroft a month ago. No specifics and they don't tell people what to do other than being vigilant. What happens is, as we learned from 9/11, there are psychological consequences. People get more anxious, they get more fearful, which is, of course, what the terrorists are trying to do in the first place.

COLLINS: But Mr. Walsh, if the administration, the Homeland Security Department, in particular, has this information what they deem to be credible, they can't keep it to themselves, can they?

WALSH: I think certainly Americans have a right to be updated. They have a right to know that there's new and credible information. But what we have here is a mixed signal. My complaint is not about talking to the American public. My complaint is the way this message is being put out. It's not being put out in a way that's constructive.

COLLINS: We are learning a little something new tonight. Senior intelligence officials are saying that Osama bin Laden and his number two, a man you are very familiar with, Ayman al Zawahiri, are directing these latest threats. What does that indicate to you? These guys still have quite a bit of power.

WALSH: It does. And I think, if that's true, it is important and indicative. It means to me the we're not going to have -- that if they are involved, that it's more likely the attacks would be large- scale attacks. Remember al Qaeda is, the core organization has consistently been interested in spectacular attacks. We can draw distinction between al Zawahiri and bin Laden on the one hand and people like al Zarqawi and the splinter groups in the Middle East who have really carried out smaller scale attacks on soft targets.

It seems to me, if it true that bin Laden is focusing on hitting the U.S., it is more likely than unlikely that they're going to launch what would be a major operation. COLLINS: Jim Walsh tonight. Certainly do appreciate your thoughts as well. From Harvard University. International security expert coming to us from Boston. Thanks. Nice to see you again.

And earlier, CNN's chief international correspondent Christiane Amanpour sat down with former President Bill Clinton to talk about America's security problems. The 42nd president discussed his national security priorities at the time he left office. He also shared his impressions of the then incoming administration's perspective in the critical months before 9/11.

(BEGIN VIDEOTAPE)

BILL CLINTON, FMR. PRESIDENT OF THE UNITED STATES: I said I know that your people have concluded, and I've read your statements, that Saddam Hussein and missile defense are the two big security issues.

And so, I said, this has nothing to do with my being a Democrat and your being a Republican, I just -- my -- I believe objectively -- I've been reading this for eight years, I've been watching this -- I think by far your biggest problem is bin Laden and al Qaeda. And it's my great regret that I didn't get him; I tried.

And I said the second problem, by far, is the absence of a peace process in the Middle East because that's fueling all this.

And the third problem is the continuing tension between India and Pakistan because they've both got nuclear weapons. And the Pakistani military is full of people who have ties to the Taliban and, by extension, to al Qaeda.

Then, I would rank North Korea and then Iraq. I said that's just my opinion.

So, I didn't blame him for not saying anything, because I had presented him with a very different world view than he had been getting from these other folks. So, I didn't think it was that he didn't pay attention; I just think he thought -- he might have thought it wasn't prudent for him to say I disagree or I agree.

(END VIDEO CLIP)

COLLINS: Christiane's full interview with former President Clinton can be seen this evening on "NEWSNIGHT" with Aaron Brown.

Today's buzz now is this. "Do terror alerts have more to do with security or politics?" Log on to CNN.com/360 to vote. Results coming up at the end of the show.

Next on 360, a senator's tearful plea for a suicide bill named in memory of his own son.

Plus, Martha Stewart appeal denied. What will she face next?

And a little later, the Cameron Diaz movie she wished never got out. A kinky S&M video. (COMMERCIAL BREAK)

COLLINS: A rare and highly poignant moment on the Senate floor today. For a few moments, all that could be heard were the sobs of a grieving father. Senator Gordon Smith, an Oregon Republican. The tears came as he introduced a youth suicide prevention bill named after his own son, who took his life in his college apartment last September, one day before his 22nd birthday.

(BEGIN VIDEO CLIP)

SEN. GORDON SMITH, (R) OREGON: Most of you can probably discern by now that my emotions are still somewhat tender. I didn't volunteer to be a champion of this issue, but it arose out of the personal experience of being a parent who lost a child to mental illness and suicide.

Last September, Sharon and I lost our son, Garrett Lee Smith, to a long battle that he suffered from mental illness. He suffered emotional pain that I cannot begin to comprehend. And he ultimately sought relief by taking his life.

While Sharon and I think about Garrett every day and mourn his loss, we take solace in the time we had with Garrett and say to all those who suffer the loss of loved ones, the very best anecdote for grief is gratitude that you had your loved one for a time on Earth.

Sharon and I have committed ourselves, each in our own way, to preserving Garrett's memory by trying to help others. So that other families and children do not suffer a similar fate.

Sharon and I adopted Garrett a few days after his birth. He was a beautiful child. A handsome baby boy.

(END VIDEO CLIP)

COLLINS: A brave, brave man. Senator Gordon Smith will talk more about his crusade for the Youth Suicide Prevention Bill. You can watch that tomorrow night on 360.

Teresa Heinz Kerry has led an extraordinary life. She never hesitates to speak her mind. This year her bold free-wheeling personality is sure to factor into the raw politics of the presidential campaign. CNN's Judy Woodruff reports.

(BEGIN VIDEOTAPE)

JUDY WOODRUFF, CNN CORRESPONDENT (voice-over): In the school of political wives, you have your controversial Hillary's.

HILLARY CLINTON, FRM. FIRST LADY: No budget, no controls.

WOODRUFF: Your glamorous Jackies.

JACKIE KENNEDY, FRM. FIRST LADY: There seems to be such a shortage of schools and of teachers. WOODRUFF: Your demure Lauras.

LAURA BUSH, FIRST LADY: Well, I still love to read.

WOODRUFF: And then there's Teresa. And Teresa breaks the mold.

TERESA HEINZ KERRY, WIFE OF SEN. JOHN KERRY: I was shy in the beginning.

WOODRUFF: Maybe, but not anymore. Teresa Heinz Kerry, who married John in 1995, but just last year added Kerry to her name, always outspoken and in five languages too.

HEINZ KERRY: Buenos dias, (UNINTELLIGIBLE).

WOODRUFF: Hard to package, impossible to reign in, she defies convention. Wife to two Senators, one Republican, the other a Democrat. Mother of three sons she stayed home to raise. Heir to her first husband's ketchup fortune, administrator of a philanthropic empire some estimates put at nearly a billion dollars. John Kerry calls her a lot of woman, and he's right.

KERRY: And everywhere she goes, people fall in love with Teresa.

WOODRUFF: But some in the Senator's corner worry his wife speaks her mind a little too much, like when she said she'd maim her husband if he strayed. Or when she raved about Botox. Or when she suggested Hillary Clinton should have undergone a cabinet level Senate confirmation before tackling healthcare as first lady. But her maverick ways could win points for her husband. He's constantly battling criticism he's too cautious and too stiff.

She's a political original. When "Family Circle" asked the candidate's wives for cookie recipes, Laura Bush offered up traditional oatmeal chocolate chunk. Teresa's choice? pumpkin spice. Different, to be sure. An acquired taste perhaps. But it is the flavor of raw politics. Judy Woodruff, CNN.

(END VIDEOTAPE)

COLLINS: Martha Stewart headed for the slammer? Her latest appeal for a new trial denied. Next on 360. What could she face at her sentencing just days away?

Also tonight, the video Cameron Diaz did not want made public.

And a little later, a little boy's struggle against leukemia and how his paintings are giving him inspiration to fight back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LARRY KING, HOST LARRY KING LIVE: Martha, the toughest part of all of this for you personally has been? What's the hardest part of this ordeal? MARTHA STEWART, FRM. CEO MARTHA'S INC: Well, sort of coming to a screeching halt, having to deal with something extremely unpleasant, something that saddens and disheartens me, and something that is very, very difficult not only for me, but for everyone I work with, my family, my friends. That's the hard part.

(END VIDEO CLIP)

COLLINS: When Martha Stewart had to put her life on hold last year, she probably was hoping that a day like today would never come. But this morning, in a New York courtroom, it did. The federal judge said for a second time that Martha Stewart will not get a new trial, and the ruling clears the way for Stewart to be sentenced next week.

For tonight's "Justice Served," CNN senior legal analyst Jeffrey Toobin joins me now.

You wrote -- did an interview and wrote an article for the "New Yorker" shortly after the scandal broke with Martha Stewart. Did you think that this day was ever something that she imagined?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: You know, I don't think so. Martha is a woman who is used to shaping her environment, not being shaped by it.

COLLINS: Controlling it.

TOOBIN: Controlling it. I mean, that is, after all, what she's famous for, literally: furniture, clothing -- not clothing, but, you know, interior decorating, gardens.

And you know, even when I talked to her, she described her reaction as kind of puzzled and surprised. But you could see not so far beneath the surface that she was utterly enraged by the whole situation. She was furious.

And she lied to me about the situation, just like she lied to the federal prosecutors. So, I have to say I am not terribly sympathetic at this point.

COLLINS: I bet you aren't. Some of us have suggested, though, that she could possibly get community service. Do you think there's any chance of that?

TOOBIN: I think it's very unlikely. The federal sentencing guidelines are usually pretty easy to apply. It's clear in a situation like this, as I figure them out -- and I've tested my conclusion with others -- 10 to 16 months in prison is almost certainly the range she's going to face. And that makes her not eligible for some sort of sentence that doesn't include prison.

COLLINS: Well, you wrote in your article, one of the things you wrote was, "Though some may view her as an over-the-top caricature, the Martha Stewart persona is no act."

What struck you about her personality? TOOBIN: Well, you know, the enthusiasm for the Martha Stewart stuff -- for sheets, for pillowcases, for her insight. The story that I remember so well is that she sort of gets that she's a joke to some people...

COLLINS: I was going to say I hear you laughing.

TOOBIN: But she doesn't. There was a moment -- she served this very elaborate Chinese lunch, and I admired these silver chopsticks that she had. And she said, "You know, the thinner the chopsticks, the higher the social status." And she said...

COLLINS: Really?

TOOBIN: ... "Of course I had to get the -- I have to get the thinnest there are." And then, she paused and said, "That's why people hate me."

And you know what? It sort of is why people hate her, because she does sort of turn it on all the time. But you know, I came in admiring that. I thought, you know, this is a woman who created a business out of nothing...

COLLINS: Sure.

TOOBIN: ... who triumphed in a man's world. The problem was, as I sat through that trial, I saw that she was just completely guilty of the charges she was facing, and she lied to the prosecutors like she lied to me.

COLLINS: We'll see what happens with the sentence very shortly.

TOOBIN: Next Friday. It's going to be quite a day.

COLLINS: All right. I bet we'll talk again then.

TOOBIN: I hope so.

COLLINS: Jeffrey Toobin, thanks so much tonight.

TOOBIN: OK.

COLLINS: It seems like relatively simple advice: Never let anyone take pictures of you that you don't want to be seen -- particularly if you're naked; especially if you have ambitions of one day being a famous actress. Someone should have told Cameron Diaz.

Here's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Think of it as candid Cameron. Uh-oh, what's being billed as Cameron Diaz's S&M movie is on the Internet.

For copyright and taste reasons, I got to see the 30-minute video, but we can't show much on TV. Diaz was 19-years-old at the time, long before family friendly roles like the voice of Princess Fiona in...

CAMERON DIAZ, ACTRESS: Shrek!

MOOS: ...came along.

MIKE MYERS, ACTOR: You're not exactly what I expected.

DIAZ: Maybe you shouldn't judge people before you get to know them.

MOOS: Now we're getting to know Cameron in a new light.

(on camera): But this is not like the Paris Hilton videotape -- I mean, at least she's not having sex.

(voice-over): Paris Hilton's was hard-core action with her then boyfriend, while Diaz posed topless with another woman dragging around a hooded guy in chains.

(on camera): What that -- what?

(voice-over): The photographer, John Rutter, faces charges, including attempted grand theft and forgery for trying to sell the photos. Last year, Diaz accused Rutter of demanding she pay him $3 million not to make the pictures public.

A Web site called Scandal Inc. says it acquired the rights to the video. You may gasp at the price -- $39.95 to view the video.

A Diaz spokesman says, "We will not be commenting at this time." Instead of posing for photographers on the red carpet, she's destined to be called on the carpet for taking directions like this.

UNIDENTIFIED MALE: Go, go, go, go...

MOOS (on camera): Stop, stop, stop, stop, stop.

(voice-over): Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

COLLINS: Jeanne Moos and those facial expressions get me every time.

Next, on 360, art from the heart: A four-year-old boy and his amazing paintings. How his talent could actually help save his life.

But first, today's "Buzz": Do terror alerts have more to do with security or politics? Results when we come back.

(COMMERCIAL BREAK)

COLLINS: Time now for "The Buzz." Earlier we asked: Do terror alerts have more to do with security or politics? 8% said security; 92% voted for politics. Not a scientific poll, here, but it is your "Buzz."

A California artist is making a name for himself. He's never attended art school, let alone kindergarten. Yet, some of his artwork has sold for thousands of dollars. For the little boy, each brush stroke may also be a strike against a disease threatening his life.

(BEGIN VIDEOTAPE)

(voice-over): This is the portrait of an artist as a young man -- a very young man, age four.

PARKER FRITSCH, LEUKEMIA PATIENT: This one over here is dogs watching people.

COLLINS: Parker Fritsch's abstract paintings are on exhibit at California's Fresno Art Museum; a show of unusual talent, a talent that could help save his life.

MELISSA FRITSCH, PARKER'S MOTHER: He has a little monster disease in him that's trying to get the best of him. We're hoping to not let it.

COLLINS: Melissa Fritsch, Parker's mother, is alluding to her son's rare and aggressive form of Leukemia, which he's been battling for more than half his life, forcing him to endure a rigorous and debilitating chemotherapy.

M. FRITSCH: Because of the chemo, it does make him cranky and whatnot. So, there's probably one good day out of 10 where he's going to paint.

COLLINS: Despite their health insurance, Parker's parents are facing mounting medical bills -- money they couldn't raise without parker's help. One piece of his artwork has already been sold for $7,500. Others will soon be auctioned to help raise the estimated $250,000 cost of a possible bone marrow transplant.

M. FRITSCH: He's on drugs that they just don't even know if they're going to work.

COLLINS: Parker was one of the first children put on Gleevec, a drug the family hopes will keep him from needing the transplant.

Meanwhile, mom and dad dream of the day when they no longer have to wake each morning filled with worry. But until that time, Parker's art remains a bright celebration of life, hope, and -- as this painting is aptly named -- "Courage."

(END VIDEOTAPE)

(on camera): We wish them all our very best.

Thanks for watching, everybody. I'm Heidi Collins. I'll see you tomorrow morning on "AMERICAN MORNING."

Up next, "PAULA ZAHN NOW." TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


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