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LOU DOBBS TONIGHT

Fake I.D. Bust; Identity Crisis; Criminal Illegal Aliens; Turning a School Around

Aired May 10, 2005 - 18:00   ET

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


LOU DOBBS, CNN ANCHOR: Tonight, a gaping hole in our national security. Federal agents have seized 1,300 fake badges for 35 different law enforcement agencies, everything from the FBI to the New York City Police Department.
(BEGIN VIDEOTAPE)

ANNOUNCER: Also ahead on LOU DOBBS TONIGHT, new developments in the schoolgirl murders in Illinois.

The federal government's billion-dollar giveaway, help at least for hospitals paying for the high cost of illegal immigration.

And America's bright future. A remarkable turn around for a middle school once on the brink of failure. The school's principal is our guest tonight.

This is LOU DOBBS, for news, debate and opinion, tonight.

(END VIDEOTAPE)

DOBBS: Good evening.

Tonight, an astonishing discovery that reveals how terrorists can easily obtain fake badges for law enforcement agencies. Federal agents have charged a Russian living in New York City with possessing and selling more than 1,300 counterfeit badges. One agent declared that 90 percent of those badges could pass as authentic.

Deborah Feyerick has our report.

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT (voice-over): For federal agents this is one of their biggest fears, the possibility terrorists may buy phony badges intending to pose as real agents.

MARTIN FICKE, FBI SPECIAL AGENT IN CHARGE: It could be devastating for someone to use this to potentially get access to various areas that they would have clearly no reason to be in.

FEYERICK: Special Agent Martin Ficke heads up U.S. Immigration and Customs Enforcement in New York City. He says the counterfeits seized in a Bronx apartment are as good as they come. He even showed us how his own badge, the one on the left, compares.

FICKE: For someone who is not a law enforcement official to see something like this, it's very, very good.

FEYERICK: Agents found more than 1,300 phony badges representing 35 different federal agencies. They include FBI, Air Marshals, Drug Enforcement, Secret Service, Customs, and U.S. Marshals.

JOHN MCCALLUM, U.S. MARSHAL: I was stunned, to be honest with you, when seeing the variety and the amount of -- well, federal identification, which is unusual.

FEYERICK: At least one box of badges was shipped from Taiwan through San Francisco. A Customs agent discovered it and alerted New York agents.

U.S. Marshals arrested Sergio Khorosh, a native Russian living in the U.S. as a permanent resident. Police officials say he's been arrested more than a dozen times in the last 15 years, mostly on weapons charges.

His lawyer calls the badges "collectibles." They sell for about 50 bucks. Also confiscated, several semiautomatic weapons, police radios, NYPD jackets, and packets of marijuana and cocaine. Agents are now scrambling to track down anyone who may have bought the fake badges.

JOSEPH GUCCIONE, U.S. MARSHAL: We don't want people going around impersonating federal officers, especially in today's day of -- with a terrorist threat.

(END VIDEOTAPE)

FEYERICK: In the criminal complaint against Khorosh, agents say he placed an ad on a Web site looking to buy real police and law enforcement badges. No answer yet as to why -- Lou.

DOBBS: Deborah, that is an alarming report if ever there was one. And the fact is -- is there an estimate as to how many badges have been actually produced and shipped?

FEYERICK: No. And it seem as if this guy was in business for a -- for a good many years. He's been in the country for 15 years.

DOBBS: And obviously, because it's so early, no clear understanding as yet as to where any of those badges could have ended up?

FEYERICK: No, but you could have bought one on the Web site.

DOBBS: Deborah, thank you very much. Appreciate it. Deborah Feyerick.

Navy security officers are investigating how an intruder bordered the -- boarded the USS Harry Truman aircraft carrier in England. The aircraft carrier was visiting a British naval base in Portsmouth. The intruder successfully slipped past British guards and boarded a ferry carrying U.S. Navy personnel to the Harry Truman. Officials say the intruder was on the ship for at least a half- hour before he was apprehended. He had apparently no terrorist connections.

Separately, the FBI's investigating reports that a hijacker infiltrated computers serving the U.S. military, government research laboratories, and even NASA. The focus on the investigation is now a 16-year-old in Sweden. Officials say the teenager obtained no significant information; however, he eluded authorities for at least a year.

A legal setback tonight for efforts to stop illegal aliens and potential terrorists from obtaing U.S. driver's licenses. The Supreme Court of New York today ruled that immigration status should not be used to deny licenses to illegal aliens.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): In New York State, a judge ruled it doesn't matter if you are in the country illegally, the Department of Motor Vehicles may not use immigration status to deny a driver's license. That was not what the New York Department of Motor Vehicles wanted to hear.

The DMV argues, "Here in New York, as in most states, the Department of Motor Vehicles is the main source and often the only source of government-issued photo identification of our residents." The agency says anyone who doesn't match up with a Social Security number to prove they are legal residents should have their license revoked.

Back in 2002, New York State ran an analysis of Social Security numbers and found that more than 600,000 numbers didn't have a match. After further investigation, they matched all but 252,000 names.

State officials said it was in the interest of homeland security to take away those licenses if they were traced to illegals. But, Judge Karen Smith ruled, "The DMV cannot be an enforcer for the Department of Homeland Security. It simply lacks the expertise, and, more importantly, has not been empowered by the state legislature to carry out that function."

(END VIDEOTAPE)

PILGRIM: Now, DMV Commissioner Ray Martinez today issued a statement saying, "Verifying Social Security numbers is common sense and a proven way to verify identity." They are going to appeal this decision.

And lawyers today said the judge's ruling will not actually change the rules, at least not yet, Lou, while this is going through the court system. And they do plan on appealing it.

DOBBS: One would think so, because on its face this is patently absurd. With a nation at war in a global war against radical Islamist terrorism, that any state agency does not have the power, indeed the responsibility, to support homeland security is utter madness.

PILGRIM: The New York State officials we talked to today say they are very confident that there is good security with the New York driver's licenses as they exist now, and that this is definitely something that they will appeal.

DOBBS: And Ray Martinez, the commissioner of the Department of Motor Vehicles, has been a stalwart in the fight against phony issuance of driver's licenses. How vigorous his response?

PILGRIM: Yes. He issued a statement today, and everyone we spoke to who are just absorbing this with a little bit of disbelief, I have to add, say that they will appeal this strenuously.

DOBBS: Well, it's -- with all of the focus on the federal judiciary of late, one wonders if there shouldn't be more focus as well on the -- on the state court system. Some odd rulings from time to time there, as well.

Kitty Pilgrim, thank you very much.

The State Department tonight is warning American travelers about continuing drug violence in northern Mexico along the, of course, southern border of the United States with Mexico. The State Department says Americans should be wary of violent criminal activities in areas near the border.

U.S. officials are particularly concerned about the high levels of murders and kidnappings of Americans. More than 30 Americans have been murdered or kidnapped in Mexican border areas over the past eight months alone.

Turning now to the war in Iraq, U.S. Marines today swept through insurgent-controlled areas near the Syrian border. About 1,000 troops are taking part in the offensive, one of the biggest in Iraq in months.

At least three U.S. Marines have been killed in the fighting. More than 100 insurgents killed.

Meanwhile, near Mosul, in northern Iraq, the military has captured 60 insurgents over the past three days. Troops also found a car bomb factory. They seized as well a large quantity of munitions.

President Bush today praised the march toward freedom in Iraq in a speech to 100,000 people in Tbilisi, Georgia. The president declared that Georgia's new democracy is a beacon of liberty, and he said all nations must respect Georgia's sovereignty and territorial integrity. That a clear warning to Russia, which maintains two military bases in the former Soviet republic.

President Bush arrived back in this country just a short time ago. Coming up next, a suspect charged in the brutal murder of two second graders in Illinois. We'll have the latest on this tragic developing story.

Also tonight, why you, the American taxpayer, will now be paying a billion dollars in hospital costs for illegal aliens. That story and more still ahead.

(COMMERCIAL BREAK)

DOBBS: A stunning loophole in our nation's immigration laws is allowing hundreds of dangerous criminal illegal aliens to be set free in neighborhoods all across this country. Immigration officials say illegal aliens who can't be deported are instead released on to the streets of America only to commit violent crimes, including murder and rape, again.

Casey Wian reports from Los Angeles.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Roberto Diaz, a Cuban national, is accused of the stabbing and shooting deaths of his estranged common law wife and her neighbor in Rhode Island last month. Brazilian Kellen Christiano McKinney is charged with murdering John and Mildred Caylor, bible story owners in Raytown, Missouri.

UNIDENTIFIED FEMALE: For someone to come in and commit this type of crime, it's -- it's ridiculous.

WIAN: In Seattle, Vietnamese illegal alien Twan Thai (ph) did time for rape and a brutal beating of his girlfriend, who he has threatened to kill, along with his immigration judge and prosecutor.

All three cases involve violent aliens the government tried to deport but couldn't because their home countries wouldn't take them back.

DAVID VENTURELLA, FMR. ICE OFFICIAL: The removal of an alien from the United States is the end game of immigration enforcement. Yet, our foreign neighbors and allies are refusing to accept their citizens or nationals for deportation.

WIAN: So, incredibly, they joined nearly a thousand other violent criminals released onto the streets of the United States often to commit more crimes.

JONATHAN COHN, JUSTICE DEPARTMENT ATTORNEY: There are roughly 920 aliens, dangerous criminal aliens, in detention who have since been released, who are in the process of being released.

WIAN: It's happening because the Supreme Court recently ruled that deportable aliens can only be detained for six months. If the government can't find a country to take them, they must be set free, even if they have a criminal history. TOM HILLIER, FEDERAL PUBLIC DEFENDER: The question is do you just keep them in jail indefinitely even though they have done their time, or come up with some other process? And right now the Supreme Court has said, until you come up with a different process, you can't just indefinitely detain somebody where there's no expectation of deportation.

WIAN: It's up to Congress to come up with legislation that would survive Supreme Court challenges. There have been hearings, but so far no new law. Another suggestion, State Department sanctions against countries that won't accept their own criminal citizens.

(END VIDEOTAPE)

WIAN: In the meantime, local law enforcement and federal immigration officials, the same people who caught these criminals in the first place, are furious that dangerous illegal aliens continue to be set free -- Lou.

DOBBS: Casey, a remarkable story. The fact that governments refuse, what -- what efforts have been made by the U.S. government to insist those governments not refuse?

WIAN: Well, it's very complicated. The State Department does have one stick that they can use, and that's denying visas to the citizens of these countries. There's a law like that already on the books, but State Department officials say that that's difficult because some of the countries, like Cuba, Vietnam, don't care if we don't -- we don't allow their citizens to have visas -- Lou.

DOBBS: Certainly a conundrum facing once again the U.S. Congress, indeed the country, on the issue of illegal immigration.

A new government study of 55,000 illegal aliens arrested in the United States finds that nearly every one had been arrested multiple times on multiple charges. Those 55,000 illegal aliens alone accounted for an astonishing 700,000 criminal offenses since 1990. About half of the charges were for drug or immigration offenses. Twelve percent were for violent offenses, including murder, assault and sex crimes.

The millions of illegal aliens in this country are putting an enormous strain on our nation's hospitals. Amazingly tonight, we can report to you that the federal government is now taking some responsibility for its failure to enforce our immigration laws. The federal government will pay a total of $1 billion to help reimburse some states for the hospital costs of caring for illegal aliens.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Hospitals cannot turn away anyone for emergency care under federal law even if they are in the country illegally. For millions of illegal aliens, the hospital emergency room has become the source for medical care. JAN EMERSON, CALIFORNIA HOSPITAL ASSOCIATION: Here in California, it is our best guestimate that it costs us about $500 million a year to provide care to undocumented immigrants. And in a sense, there has been nobody to pay for that. In another sense, we all pay for it.

SYLVESTER: We all pay in higher health insurance costs and higher taxes. The Department of Health and Human Services will reimburse hospitals $1 billion over the next four years.

California will receive nearly $71 million. Texas, $46 million. Arizona, $45 million. But that is only a fraction of what it costs medical facilities.

Good Samaritan Hospital, Los Angeles, loses $10 million a year on all unreimbursed expenses. The hospital CEO describes the community they are located in as the first stop for newly-arrived illegal immigrants.

ANDY LEEKA, GOOD SAMARITAN HOSPITAL, L.A.: This new law, the new funding by the federal government, is absolutely essential to try to stem those losses.

SYLVESTER: Arizona Senator Jon Kyl sponsored the provision in the Medicare bill that provides for state reimbursement. The law passed in 2003, but the funds were held up over a debate on how far hospitals could question patients about their legal status.

SEN. JON KYL (R), ARIZONA: Bureaucracy grinds slowly. In this case, too slowly, because we're already behind. And it took them a long time to get this process ready so hospitals could begin applying.

SYLVESTER: The ailing hospitals are now grateful for the federal aid, but it's only a small step in the right direction.

(END VIDEOTAPE)

SYLVESTER: Hospital care is only one area where states have to pick up the tab for illegal immigration. Local and state governments spend more than $13 billion a year to incarcerate illegal aliens, and this is on top of the $1.6 billion it costs the federal government -- Lou.

DOBBS: Lisa, the -- the idea that at least a billion dollars will be put forward, but as you've reported, that is frankly a drop in the bucket compared to the expenses that are being born by local and state taxpayers, is there any movement afoot in Congress to expand that reimbursement for medical care for illegal aliens? Or perhaps a novel thought, enforcing our immigration laws to avoid as much of the problem as possible?

SYLVESTER: Well, certainly the hospitals will continue their lobbying effort to make sure that they get more reimbursement. And as they repeatedly said, they said they're very grateful, they're happy to see this, but this is only a very small percentage, and they would like to see that expand. And that's something that Senator Kyl would like to see, as well -- Lou.

DOBBS: And Senator Kyl joined 99 other senators, we've just received word, Lisa, 100 senators voting to affirm the Real I.D. Act. That passing the House last week, and by a vote of 100-0 in the U.S. Senate. Real I.D. is now on its way to becoming law.

Arizona's governor has vetoed a bill that would have made English the official language of the state of Arizona. Governor Janet Napolitano said the legislation does nothing to encourage non-English speakers to learn the language.

A similar measure approved by the Arizona voters 16 years ago was ruled unconstitutional by that state's Supreme Court. Supporters of the bill that Governor Napolitano vetoed say another similar measure now before the state's legislature could go before voters next year.

Coming up next, police announce charges in the case of two second graders who were found stabbed to death in an Illinois park. We'll have a live report for you from Zion, Illinois.

And then, the United Nations is calling upon our federal courts to stop the U.S. Congress from investigating the multibillion-dollar oil-for-food scandal. We'll have reaction from a congressman who is leading the investigation of that case.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: A break in the murders of two second graders in Zion, Illinois. Police there have arrested the father of one of the two young girls found stabbed to death in the park there. The father is now charged with two counts of murder. The suspect was just released from prison, where he had served time on aggravated assault.

Chris Lawrence is live in Zion with the report for us -- Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Lou, in listening to what the state's attorney said, the one thing that really jumped out at me was that he said basically that they believe they can prove who killed these little girls, but they can't answer the question of why. And a lot of people will be asking that question for a long time. The coroner even said there is no rational explanation to explain why these little girls were killed.

When you take a look at their pictures, second graders Krystal Tobias and Laura -- and, excuse me -- Krystal Tobias and Laura Hobbs, they were both in second grade here. Their bodies were found at a park very near to where they both went to school and went to -- and both of them lived.

Right now, the state's attorney, Michael Waller, says the parents, who had been very worried in the last couple days, because they thought possibly there was some random killer out there, they say that these parents should be comforted because they have a person in custody and this was not a random crime. (BEGIN VIDEO CLIP)

MICHAEL WALLER, ILLINOIS STATE ATTORNEY: Well they weren't lured to the area. This isn't a crime committed by a stranger. This is a crime committed by the father of one girl. And he obviously knew the other girl. The murder occurred in the general vicinity of where the bodies were found.

(END VIDEO CLIP)

LAWRENCE: And when we take a look at his background, Jerry Hobbs' background, we have learned that he has a criminal record that goes back some 15 years. It spans everything from possession of marijuana to aggravated assault.

He was convicted just a few years ago. He spent the last two years in prison. And family members tell us he was just released about four weeks ago. And that's when he moved here to Illinois -- Lou.

DOBBS: Chris, thank you very much. A tragic, horrible crime. And we appreciate your report. Thank you.

In California, police are investigating what they say could be a murder-suicide in the deaths of six people found in a home in Riverside County. One of the victims is David McGowan, an investigator for Riverside district -- the Riverside district attorney's office.

Police say the other victims, two women and three children, were found in their beds. All had been shot in the head. Someone inside the house called 911 at 4:33 this morning. The dispatcher who answered the call only heard a gunshot in the background.

Coming up here next, a power struggle between Congress and the United Nations in the oil-for-food scandal. I'll be talking with one of the lawmakers leading the congressional investigation.

Also ahead here tonight, why the latest so-called free trade agreement could put our most important intellectual property at further risk.

And while many of our nation's schools are simply in crisis, one middle school has managed dramatic improvements in reading and math without resources that many say is absolutely necessary and with students with the same background and disadvantages as many others across the nation. The school's principal who's led that success is our guest.

And we'll have your thoughts as well. A great deal more still ahead here.

Stay with us.

(COMMERCIAL BREAK) DOBBS: New developments in the scandal over the United Nations oil-for-food program for Iraq. A federal judge has temporarily blocked a former investigator for the United Nations from handing over key documents to two investigating congressional committees. The chairman of the U.N. investigation into the scandal, Paul Volcker, demanded that restraining order from the federal judge. Volcker declared that he must "protect the credibility" of his inquiry.

Joining me now, the chairman of one of the congressional committees affected by the judge's ruling and leading the investigation into the United Nations scandal, Congressman Christopher Shays, chairman of the Government Reform Subcommittee on National Security.

Mr. Chairman, good to have you with us.

REP. CHRISTOPHER SHAYS (R), CHAIRMAN, GOVERNMENT REFORM SUBCOMMITTEE ON NATIONAL SECURITY: Good to be with you, Lou.

DOBBS: Let me ask you, at this point, a 10-day freeze by a federal judge in this issue. What does it do to your investigation?

SHAYS: Well, I mean, ultimately we're hoping we can work out an arrangement with the U.N. to look at the documents and speak with Mr. Parton, who was the senior counsel who quit. What we're telling the Volcker commission is, their job was to put to rest concerns about the U.N. and the officials at the U.N.'s involvement with the oil-for-food program. They are in the circumstance now where it looks like they are trying to hide information, and yet I understand that, you know, these are in fact stolen documents. So you can understand it, but it's in their best interest ultimately and ours, to have transparency, get the information. They can get on with their investigation. We'll get on with ours.

DOBBS: Getting on with their investigation, it's been going on for just about a year. Your investigation under way, Senator Norm Coleman who is leading from the Senate side that investigation, demanding the resignation of Kofi Annan. At the same time, Robert Parton, the lead investigator for the -- what has been styled the Volcker committee, the International Inquiry Committee, he and his assistant, the lead investigators, resigning in protest over the Volcker report. Doesn't the United States Congress have primacy here in getting an explanation for the American people, who are after all funding a substantial part of the United Nations?

SHAYS: Well, Lou, the issue is the immunity with the U.N., but the Volcker commission isn't a criminal investigation, so I don't know particularly what powers his committee has at the U.N. But the bottom line is, we're going to get to the bottom of this. That is -- the truth will be known. It would be nice to have it known sooner rather than later. But it will be known.

One of my recommendations to Mr. Volcker is that he say to Kofi Annan, your son, Kojo, needs to cooperate. And if your son is not willing to cooperate, I think it puts a real cloud over the secretary- general. I think he should resign if his son doesn't cooperate. I think he should tell his son that's what his son is forcing.

DOBBS: And the fact is, that -- and you styled it very nicely, but the truth is that Paul Volcker works for Kofi Annan in this investigation, does he not?

SHAYS: He does, but I mean, he's a man of tremendous integrity. I have -- I really admire him. I just -- the problem is lawyers sometimes can keep you out of jail but they make you look guilty as hell. And he's going a legalistic route, which he may technically be right, but it's not going to provide for the transparency we all need.

DOBBS: I would agree with you. I have personally high regard for Paul Volcker. He has served with distinction for some years as the head of the Federal Reserve. But at the same time with regard and respect -- irrespective, this man has an obligation to truth beyond that to the, frankly in my judgment, to Kofi Annan or the United Nations. And truth here is I think you have styled it very articulately, will only come through transparency, and openness in this investigation has been both slow, suspect and not revealing. Particularly with the Robert Parton, again, the lead investigator, saying that he viewed the Volcker report as an exoneration, an unfounded and unwarranted exoneration of Kofi Annan. That has to trouble you. Do you have evidence that would support Mr. Parton's view?

SHAYS: Well, what I believe is that they -- the investigator -- that Mr. Parton basically took the same evidence and came to a different conclusion. I tend to view this report as not being an exoneration of Kofi Annan and the secretary-general, and I think he was wrong to portray it that way. I think the committee left open the fact they may uncover more information.

But his son needs to cooperate. And the fact that his son won't cooperate is a huge cloud over the secretary-general.

DOBBS: Congressman Christopher Shays. Well, the 10-day clock is ticking along, and we look forward to talking to you further as you move your investigation forward. Thank you very much, sir.

That brings us to the subject of our poll tonight. Do you believe that our federal court should give the United Nations rights superior to those of the United States Congress? Cast your vote, yes or no, at loudobbs.com.

Turning now to another critical issue facing Congress, the Central American Free Trade Agreement. Today, dozens of people from the United States and four other CAFTA countries protested the so- called free trade deal on Capitol Hill. The protesters are part of what's called the "CAFTA We Don't Have To (ph)" tour, which is traveling all around the country this week.

Also today, a group of engineers and technology workers released a report that warns CAFTA will only encourage more intellectual piracy all around the world. Christine Romans has the story.

(BEGIN VIDEOTAPE) CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): In Washington today, disdain for the Central American Free Trade Agreement from a group who knocked down tech industry claims that CAFTA will protect American intellectual property rights.

STAN SORSCHER, SPEEA: From our perspective as engineers, scientists and inventors, the people who create intellectual capital, we have to conclude that CAFTA is just bad policy.

ROMANS: In report called "The Real Pirates of the Caribbean," the group called access to a tiny, $2.5 billion market in Central America a red herring. That market today accounts for only 1.4 percent of all U.S. information technology exports.

The group says it's not the market, it's the cheap labor these companies are after. In doing so, they put American intellectual property rights on the line.

MARCUS COURTNEY, WASHTECH: One of the things we found out is that 10 years after the passage of NAFTA, intellectual piracy in Mexico has tripled between 1992 and 2004. So clearly, if NAFTA didn't do anything to protect intellectual property in Mexico, why do we think CAFTA is going to do any better?

ROMANS: The group argues if technology and entertainment companies want to fight piracy, look to piracy leaders, China and Vietnam. But CAFTA supporters point to tough copyright penalties for consumers of pirated materials, and say U.S. exports will be safer under CAFTA.

RHETT DAWSON, INFO. TECH. INDUSTRY COUNCIL: This agreement specifically would make the intellectual property laws more strict. And it would help in their enforcement. Without it, you wouldn't have any guarantees like that.

(END VIDEOTAPE)

ROMANS: He says CAFTA countries would have to sign the World Intellectual Property Organization Copyright Treaty, and these governments can only use legitimate software, setting an example for their own citizens.

Lou, a subtext of this, as well as inventors are concerned that the big companies are spending so much time and energy trying to protect their intellectual property rights overseas, and at the same time trying to undermine some of the inventors' rights to the big companies. So they say they are trying to have it both ways a little bit.

DOBBS: So you are suggesting that those big U.S. multinationals in particular are looking for a form of protectionism within these trade treaties?

ROMANS: They are fighting for their best interests on all fronts.

DOBBS: I see. Well, how surprising. I'm sure the national interest will show up somewhere in the priorities.

ROMANS: We hope so.

DOBBS: I think it's fascinating, in the U.S. -- in "The Wall Street Journal" today Mr. Portman, our new trade czar, saying that we need CAFTA because it will make us more capable of competing with China, which is some of the most tortured reasoning I have seen in some time. It's a pretty tough contest, because there's a lot of tortured reasoning coming out of the Trade Representative's Office.

ROMANS: You want to take on China, take on China. Don't do it through Honduras, Mexico, the Dominican Republic. That's what these people would say.

DOBBS: And I couldn't agree with them or you more. Christine Romans, thanks.

Coming up next, American students fighting to have the same rights as illegal aliens in this country. Their lead attorney is our guest next.

And then, one principal who deserves an A-plus and our admiration for reforming his public school. Principal Truett Abbott will be here to tell us how he turned around his school from one of the worst to one of the best. And guess what? It didn't take a lot of money, either. Stay with us for that remarkable story.

(COMMERCIAL BREAK)

DOBBS: This, just in. CNN has learned of a major security breach during President Bush's visit to the former Soviet republic of Georgia. President Bush returned to the White House tonight. Elaine Quijano has the report from the White House. Elaine?

ELAINE QUIJANO, WHITE HOUSE CORRESPONDENT: Hello to you, Lou.

Important to emphasize here, what we are learning about comes to us from the Secret Service, who says that this is a report given to them by security authorities in the country of Georgia. The information that Secret Service Spokesman Jim Macken (ph) has passed along is that after the president departed the country of Georgia, that they were notified -- Secret Service was notified -- by host country security authorities that there had been some kind of incident involving what has been described as a hand grenade, thrown approximately 100 feet within the stage during President Bush's speech in Tbilisi, Georgia.

Now, the device apparently hit an individual, according to the report, fell to the ground. It was recognized, apparently, by the Georgian security authorities who are on the ground there, and they picked it up and took it away. And this is all according, again, to the host country security authorities.

Now, the Secret Service says that they will be investigating, of course, as well as members of the FBI, the State Department, and the host country authorities, looking further into the report. But, Lou, important to emphasize right now, they say they have not, at this particular point, been able to verify. They haven't necessarily been able to take a look at this for themselves. They say that they were only notified about this a couple of hours after President Bush actually left the country of Georgia, but that information coming into us just a short time ago, Lou.

DOBBS: A peculiar story. So, this information, coming to CNN from the Secret Service, and the Secret Service did not know about this until informed, apparently, by the Georgian government and Georgian authorities, upon the president's departure from Georgia, is that correct?

QUIJANO: That is correct. They tell us that they did not learn about this until the president had already left the country. The president arrived here at the White House just a short time ago. The officials who were with the president, asked about this, simply referring all of the inquiries to the Secret Service, and that is the extent of the information that they are providing right now. Lou?

DOBBS: Thank you very much. Elaine Quijano, reporting from the White House.

Turning now to a legal battle that could have national implications, a battle that started today in U.S. district court in Topeka, Kansas. A group of college students is suing to stop illegal aliens from receiving in-state tuition rates, a benefit denied many American citizens. The group of out-of-state students say granting illegal aliens in-state tuition is unconstitutional. Kris Kobach, former counsel to attorney general John Ashcroft on immigration and border security - he is the lead attorney representing the American students in this case -- joining us now from Topeka, Kansas.

At this juncture, Kris, how do you feel about the presentation?

KRIS KOBACH, UNIV. OF MO, KANSAS CITY LAW SCHOOL: I think it went well today. The court spent all day looking at this issue and spent most of the time looking at the federal statutes that make this Kansas law, giving in-state tuition to illegal aliens, illegal under federal law. So, that's good. The more time the court spends looking at these statutes, the more there is to find.

DOBBS: And, the relief that these students that you are representing, that they seek specifically?

KOBACH: They seek the relief -- they seek two forms of relief. One is that the statute be declared null and void because it conflicts with federal law, so it doesn't operate in the future. They also seek to be to be compensated for the past school year because section 505 of that 1996 congressional statute that we've talked about before, that section says that they are entitled to the same reduced tuition that any illegal alien is given, and so they are seeking to be compensated for that.

DOBBS: To be clear, the 1996 immigration law expressly and clearly says that any state giving in-state tuition to illegal aliens or others must provide that to all citizens of this country who would seek to be admitted to the university. Correct?

KOBACH: That's correct, and in addition to that, there are five other violations of federal immigration law that this Kansas statute -- this Kansas statute represents. So, it is in violation of federal law in six different ways total, plus there's an equal protection claim here.

DOBBS: The next step...

KOBACH: One of the other ways you might be...

DOBBS: Yes, go ahead.

KOBACH: Well -- well, one of the other ways you might be interested in, is the SEVIS system. After the first terrorist attacks of 1993 on the World Trade Center, Congress created a registration system for foreign students. This Kansas law effectively creates a new classification and says illegal aliens don't need to be registered in that system, and that is a threat to our national security.

DOBBS: And the next step in your case, Kris?

KOBACH: Well, this case will be decided by the federal direct judge here, and it will, presumably, be appealed to the 10th circuit, regardless of what happens here, regardless of who wins.

DOBBS: Kris Kobach...

KOBACH: The 10th Circuit U.S. Court of Appeals.

DOBBS: Kris Kobach, we thank you for joining us as we continue to follow this important case. Thank you, sir.

KOBACH: You -- you're welcome.

DOBBS: Still ahead, success in education. We don't talk much about success in this country when it comes to education, but, success, there is. Tonight, we'll be focusing on how one middle school principal changed the lives of his students forever.

And we focus on Social Security and national security, but my guest tonight is focusing on energy security, very critical issue. She says it is in fact our biggest challenge. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Public education in this country is under assault and too many of our schools are failing far too many of our students nationwide. But tonight we wanted to bring you what we think is a remarkable success story. My guest has turned one of Georgia's worst- performing public middle schools into one of Georgia's best, and he's accomplished this with little money and very few resources. We visited the school last month and were so impressed, in fact, that we asked Principal Truett Abbott of Warren County Middle School to join us here on the broadcast.

Good to have you with us.

TRUETT ABBOTT, PRINCIPAL, WARREN COUNTY MIDDLE SCHOOL: Good to be here, Lou.

I want to ask you, if I may, to start out, because there are a broad myths in public education, as you very well know. I'm sure that a lot of people are already thinking, well, Principal Abbott, Warren County, must have a bunch of high-income, already well-tutored and schooled white students, and that it isn't a very diverse place, and doesn't face economic challenges like much of the country. But we'd all be very wrong in that assumption, wouldn't we?

ABBOTT: Yes, we would. The jobs have moved out of Warren County in the last 10 years, as a matter of fact. We have a student population that's 92 percent African-American, and all of our students are on 100 percent free and reduced lunch, which indicates that it's not a high-income neighborhood. And they are beginning to -- our students are beginning to be successful and we're very proud.

DOBBS: Well, let's -- let's show everyone just what success means and -- I love that, striving for excellence. Here's what has been accomplished at Warren Middle School, if we could see that projected up on the screen.

In 2000, 28 percent of your middle schoolers were passing the state writing test. This year, 86 percent of those schoolers passed. Now, that is very impressive.

In mathematics, in 2000, only 14 percent of eighth graders passed that test. In 2004, 88 percent. That's remarkable progress.

We're hearing, across the country, that we need more money, that we need more resources. Do you have more money? Is that the difference? Was it more resources? What turned around your school?

ABBOTT: The state has reduced the funding in all the counties in Georgia for three years in a row. So, we haven't had more money, we've had to do with less money. The significant changes have been that we discovered that our students could not coming into the middle school could not read higher than a third great level, and they were coming to sixth grade. So we found a phonetic program, phonographic, it is called, that we could use in the classrooms to remediate the students so they could begin to read the textbooks all across the curriculum.

DOBBS: Now, do I hear you correctly principal Abbott, saying, that they hadn't been taught to read through phonics through elementary school?

ABBOTT: Well, I'm not sure what kind of programs were used for the children in elementary school, but they were not working. Now, it's true that elementary school is much better now. Our whole system has changed. And our elementary school is also raising the test scores and becoming successful. So it's not an isolated thing but our scores are remarkable. DOBBS: Without question. Focusing on reading, providing, if you will, support for reading that hadn't been given in the elementary school, as these students you have just taught have moved into your school. That has an impressive impact, but what about mathematics?

ABBOTT: Well, our math program teachers said that -- that the students were not able to read well enough to read the word problems, and about 60 percent of the tests is word problems where they have to read high level and do critical thinking. And they couldn't do it, and so they couldn't understand the concepts of the teachers were teaching.

DOBBS: Let me -- let me ask you this. We'd like to put up what you had described as the principals for your success. I want everybody to see this. If we could see those, and tell us about each one of these. Beginning with phonics -- required students to read 25 books. My goodness.

ABBOTT: Yes. And in addition to the phonetic program we did start requiring students to read 25 books. And we tested them on the computer to see that they did successfully read the books.

DOBBS: Study prior math tests to improve the scores.

ABBOTT: The teachers do that. We look at all the individual tests of the students.

DOBBS: And I want to hit quickly, because we're just about out of time. Separate middle schoolers from high schoolers.

ABBOTT: We were in one building, so they were all mingling together. And it was a very bad situation.

DOBBS: You got the parents involved, it's the last one. You rewarded students for performance. You made class times longer. You're fighting a national -- national trend, which is to make time shorter and to reduce homework. Have you...

ABBOTT: I felt that with -- if our teachers were good in doing the right things in the classrooms, we increased the core class time by 50 percent, that we would obviously make great gains. And that's proven to be true. We involved our parents, especially, to help us to make discipline work. And that was a big part of it, making discipline work.

DOBBS: Well, we congratulate you on what is a remarkable success. You and all of the teachers, and of course, all of the students and the parents of those students at Warren Middle School. We thank you for being (INAUDIBLE)

ABBOTT: They're all very proud, Lou.

DOBBS: Well, they ought to be. We're proud of you. Thank you.

Coming up here at the top of the hour on CNN, "ANDERSON COOPER 360." Anderson has a preview for us -- Anderson. COOPER: Lou, thanks very much.

We're going to be following the breaking news out of the White House about a grenade that apparently made its way to within a few hundred feet of President Bush during his visit to Georgia. Details are few right now, but it's got a lot of people asking some very serious questions about how it could possibly have happened.

Plus an arrest is made in the tragic case of those little girls found stabbed to death in Illinois. One of the girls' father has been charged. The community has a lot of questions. They are holding a town meeting. We're going to take you there live. All that and more, of course, at he top hour, Lou.

DOBBS: Thank you very much, Anderson. Look forward to it.

My next guest is encouraging the nation's youth to embrace what she calls our biggest challenge in this country, energy security. Also we'll have the results of "Tonight's Poll." Stay with us.

(COMMERCIAL BREAK)

DOBBS: My next guest was here just a few weeks ago saying our country needs to focus on how to encourage young Americans to study math and science. The space race, the Cold War served as a focal point early -- earlier for the generation. Now, Shirley Ann Jackson says the focal point should be what she calls energy security. Dr. Jackson is the president of a Rensselaer Polytechnic Institute, Chairman of the American Association for the Advancement of Science. Great to have you with us.

DR. SHIRLEY ANN JACKSON, PRES. RENSSELAER POLYTECHNIC INST.: I'm delighted to be here.

DOBBS: What can we do most immediately to encourage our young people to focus on math and science, and to become excited about creating solutions in energy?

JACKSON: Well, we have to value science and engineering, science and math. Value those who do it. We need to hold up Sergey Brin and Larry Page as heroes. We need to engage young people where they are. Whether it's starting with the basics as your previous guest described.

DOBBS: Right.

JACKSON: Or whether it is engaging them because they're in a media-rich environment.

DOBBS: Do we need more leadership out of Washington? I know you're leading a number of efforts. Is it time for President Bush to get up on a bully pulpit and say, let's go. Let's find the solution to energy. I'm not talking about legislation. I'm not talking about anything else. Let's go get them at every level we can and get people excited? JACKSON: It takes national leadership to create the kind of consensus and focus that we need to re-energize the interest in this country in science and math. And yes, it takes Congressional leadership, national leadership, and emanating from the White House. The president has put a bill before the Congress. We need to inspire the people and inspire our young people.

DOBBS: You're talking about the energy bill.

JACKSON: Yes.

DOBBS: And while the president acknowledges it won't have a short-term effect on high gasoline prices, nor will simply turning education around, but it's an exciting prospect. How do we get the idea of valuing mathematics and natural sciences back into our classrooms and in the hearts and minds of our young people?

JACKSON: I think we need to have the focus. As I've said, I think energy security is the focus. We need to talk about what those challenges are and hold up the heroes, those who have made a difference, because they are in science and engineering.

DOBBS: At the local school level, at the state level, what can be done to get that focus on mathematics and natural sciences?

JACKSON: I think we have to elevate the teaching of science and math. We have to work with teachers with the introduction of science and math in the classroom. Excite young people. Have them as excited about robotics competitions as about sports competitions. And we have to support them all the way through their educational process.

DOBBS: And when we talk about these things it sounds so easy. Yet, we just heard -- Principal Abbott, Dr. Jackson, talk about what he did at a middle school. Which -- and he makes me, I'll tell you frankly, I think he's one of the heroes in public education for doing what he did.

Why can't we come to a consensus on what is required in our public schools, which are the pride of this country? And to turn around these test scores and eliminate all this nonsense about people being un -- incapable of learning?

JACKSON: It requires national leadership to drive consensus, a hard problem to work on, and people who believe in it. And holding up Mr. Abbott as a hero. Meeting people, meeting students where they are at the basic level, at the advanced level.

DOBBS: Dr. Jackson, as always, it's fun talking with you. And it's great to hear leadership on the issue. Dr. Shirley Ann Jackson, thanks.

JACKSON: Thank you very much.

DOBBS: Quickly, the results of our polls, 89 percent of you do not think our federal courts should be giving United Nations rights superior to those of the U.S. Congress, 11 percent disagreeing. We thank you for being with us tonight. For all of us here good night from New York. "ANDERSON COOPER 360" is about to begin.

END

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