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CNN Live At Daybreak

Another Blast in Baghdad; Deep Throat Revealed

Aired June 01, 2005 - 06:00   ET

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


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


CAROL COSTELLO, CNN ANCHOR: It is Wednesday, June 1. And one of the biggest mysteries in American history is solved.
DAYBREAK starts right now.

Deep Throat revealed -- we may know his name, but why did he hold off for so long?

Plus, you did the crime, now pray the time. I'll speak to a judge who aims to put criminals on their knees.

And later this hour, online shoppers beware -- you could be paying more and getting less than other customers.

From the Time Warner Center in New York, you're watching DAYBREAK.

And good morning to you.

I'm Carol Costello, along with Chad Myers.

We'll have more on the identity of Deep Throat in just a minute.

Also ahead, as CNN marks 25 years on the air today, we'll revisit one of the most intense mgs of DAYBREAK, the Beslan school tragedy.

But first, now in the news, the U.S. military says a suicide car bombing exploded near a main checkpoint. The blast went off this morning near the Baghdad base that houses U.S. military headquarters and the international airport. Several people were hurt. We'll get to Jane Arraf in just a bit.

Texas police have issued an amber alert for a 12-year-old boy. They believe Dylan Rios was taken on Sunday by his 19-year-old mother. Stephanie Rios had earlier given up custody after authorities accused her of abusing the boy.

A warning for people on the East Coast -- brace yourselves. Today is the first day of hurricane season and Chad says there could be more hurricane activity this year than last -- good morning, Chad.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Carol.

There are a number of reasons for that. A lack of an el nino. Sometimes an el nino will put more upper level winds in the Caribbean area and also in the Atlantic, and that will cause shear that will tear a hurricane apart and not let it degenerate. The waters in the Atlantic are warmer than normal by about two to three degrees. The waters in the Gulf of Mexico are also warmer than normal by about one to three degrees there.

Here is Florida, the southern part of the peninsula, from Cape Coral right to Punta Gorda and up through Sebring and then Orlando would be right up on top of your screen. Look at the significant lightning, thunder, all the way across Alligator Alley and more coming onshore right now.

(WEATHER REPORT)

COSTELLO: Topping the news this hour, another day, another blast in Baghdad. But this time people entering a U.S. military base were the target.

CNN's senior Baghdad correspondent Jane Arraf has been with the U.S. military this morning.

She joins us now live -- Jane, bring us up to date.

JANE ARRAF, CNN CORRESPONDENT: Carol, we're now told by the commanding general of the 3rd Infantry Division that there were 15 people injured in this blast. The only person dead, the suicide bomber. This was at the main checkpoint as you drive into this complex that houses the civilian international airport and the U.S. and coalition military headquarters.

We were on that base and heard that blast this morning, just before 9:00 local time. We thought it was a mortar because the base has come under mortar attack in the past couple of days, but later found out that a suicide bomber managed to drive through somehow, what appeared to be previous checkpoints, and get to that point.

We've been in a ceremony here in Baghdad with Iraqi generals, as well as U.S. military officials, and they say the fact that the bomber was only able to get through that outer checkpoint is an indication that their checks are working. They say this Operation Lightning that's going on with tens of thousands of troops, Iraqis and Americans, throughout the city, is actually cracking down on these suicide bombs -- Carol.

COSTELLO: You say cracking down on suicide bombs.

Have they made arrests? What specifically have they done, Jane?

ARRAF: They have. The latest that we have this morning, and speaking to some of the Iraqi generals just a few minutes ago, was that they have detained 100 suspected insurgents in raids overnight. We were at some of those raids and it was really an interesting process. It was really the first big Iraqi operation, the biggest they have attempted.

They went out in specific neighborhoods, sealed the mosques and went door to door searching in areas where they believe they have come under target. As well as a result of these raids overnight, they say they've rounded up 100 people. Now, again, that doesn't mean that it's 100 who are -- will be found guilty of participating in attacks, but they believe that they are suspected insurgents -- Carol.

COSTELLO: Jane Arraf reporting live from Baghdad this morning.

A mystery of history revealed after more than 30 years. But why is Mark Felt coming forward now to admit that he is, indeed, Deep Throat?

Felt, the number two man at the FBI at the time, tells "Vanity Fair" magazine he was the source for stories that helped bring down the Nixon White House. The "Washington Post" confirms Felt was the highly secretive source in its Watergate investigation.

As for what led the 91-year-old California retiree to come forward now, his grandson shed some light on that.

(BEGIN VIDEO CLIP)

NICK JONES, MARK FELT'S GRANDSON: Mark had expressed reservations in the past about revealing his identity and about whether his actions were appropriate for an FBI man. But as he recently told my mother, I guess people used to think Deep Throat was a criminal, but now they think he's a hero.

Our family believes older people are our national treasure and should be honored and respected in the declining years of their lives. My grandfather is one of those special people and on behalf of the Felt family, we hope you see him as worthy of honor and respect as we do.

(END VIDEO CLIP)

COSTELLO: Let's talk more about the end of this long-time mystery and the Washington guessing game that's gone on for decades.

Live to D.C. and CNN Radio's Dick Uliano.

I mean I can't even imagine what it's like in Washington this morning -- Dick.

DICK ULIANO, CNN RADIO CORRESPONDENT: Well, it is a fascinating story, Carol, because this has been an ongoing mystery in Washington. In fact, it's interesting, the quote that's used in "Vanity Fair" by Mark Felt. He basically told the lawyer, I'm the guy they used to call Deep Throat.

Well, you know, we still call him Deep Throat in Washington. It was just a few years ago, on the 30th anniversary, in which there was much speculation, continued speculation about who this person was. And it really has been one of Washington's best kept secrets over the years.

COSTELLO: Well, you know, there is still some mystery surrounding this because a lot of people, including John Dean, you know, Nixon's former counsel, he seems to think that Felt could be the central figure, but there were many sources that Woodward and Bernstein had. What's the sentiment on that this morning?

ULIANO: Well, indeed, Dean has indicated he doesn't think that Mark Felt, as the deputy director of the FBI, the number two man, who was involved in the investigation, would have been privy to all the information that was provided to the reporters, Woodward and Bernstein. And he's kind of raised the suggestion that perhaps other FBI agents were involved.

But, you know, the executive editor, the former executive editor of the "Washington Post," Ben Bradlee, who steered the newspaper through this tremendous story of 1974, says look, he was the number two guy at the FBI and that was a pretty good source. And that's why Bradlee, who knew the source -- Woodward and Bernstein had told them the position of the source -- that he was confident that the information that was being printed about the details of Watergate were authentic and were something that the newspaper could go with. Because, after all, the number two guy is a pretty good source.

COSTELLO: A pretty good source. You know, the other thing that John Dean said, because, you know, he went to jail himself on obstruction of justice charges, right?

ULIANO: Yes.

COSTELLO: He said that maybe Mr. Felt is guilty of obstruction of justice, as well.

ULIANO: Carol, also, Chuck Colson, another former White House aide who served time as a felon in Watergate related activities, also says, he says, look, Felt, Mark Felt, as the number two guy at the FBI, had the trust of America's leaders. And to think that he betrayed that trust is hard to fathom.

So you have two sides of the coin here. Now, you have the family, enormously proud of this 91-year-old man, feel that he did so much with so much at risk, that he helped the nation overcome an injustice. And then, on the other hand, you're going to have some people suggesting that he's not a hero.

And I think what it says, really, is that we're going to hear more about this. Presumably we'll hear more from Bob Woodward and Carl Bernstein on the initial contact, how this all developed. So I think we're going to hear some more stories about all of this.

COSTELLO: Oh, definitely so.

I was looking through the "Washington Post" this morning, no article by Woodward or Bernstein. But I'm sure those articles are coming.

Dick Uliano reporting live from Washington this morning.

Still on the subject of politics, no way to know for sure, of course, but the news about Deep Throat might have dominated the dinner table talk when President Bush got together with his former secretary of state, Colin Powell, last night.

Earlier, the president held a Rose Garden news conference where he dismissed a report that compared treatment of terror suspects at GITMO to a Soviet-era gulag.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm aware of the Amnesty International report and it's absurd. It's an absurd allegation. The United States is a country that is -- promotes freedom around the world. Were those accusations made about certain actions by our people that are fully investigated in a transparent way? It's just an absurd allegation.

(END VIDEO CLIP)

COSTELLO: President Bush also said he's pleased with the progress in Iraq and denied any increase in the strength of insurgent attacks.

In the meantime, Iraq's president says former dictator Saddam Hussein could go to trial within two months. The president says Iraq is now working to lay the groundwork for a court to consider war crime charges against Saddam. There's no word on whether other suspects would go on trial first.

Now for a foray into broadcasting. Some 25 years later, we are celebrating an anniversary here at CNN, a quarter century of sharing stories from around the nation and around the world. Yes, this is what it looked like on our very first broadcast, June 1, 1980. And Ted Turner, the founder of CNN, is revealing some of his memories, like when he told top execs before the Iraq war started in 2003 that he would go cover it if nobody else wanted to.

(BEGIN VIDEO CLIP)

TED TURNER, CNN FOUNDER: I'm a believer that a war correspondent is a war correspondent. I read and watched the films of World War 1 and World War 2, where correspondents went with the troops and they got killed all the time. I don't like having -- being killed. But if you'll recall, during the last Iraqi war, when it looked like nobody from CNN was going to go over there, that I volunteered that I would go. They wouldn't accept me. And, besides, they threw all the foreign reporters out -- I shouldn't use that word -- the international reporters out. But I would have gone over there without any problem at all and risked my life personally.

(END VIDEO CLIP)

COSTELLO: We've had the opportunity to be in the middle of so many stories over the years. Some of them began to unfold live on DAYBREAK.

The story of a school hostage stand-off in Russia was one of those stories. It broke our hearts, even as we shared the story with you. (BEGIN VIDEO CLIP)

COSTELLO (voice-over): It was September 1, 2004. Beslan, Russia seemed so close that day because of the children. Thirty-two militants armed with bomb belts and automatic weapons had stormed the school. Every so often during our live coverage, a gunshot would shatter the eerie quiet.

It was difficult for DAYBREAK to cover this live. Frantic parents and journalists were too close. At any time, someone could die on air, and almost did. A photojournalist was hit during our coverage. We pulled away just in time.

Correspondent Ryan Chilcote tried to make sense of it.

RYAN CHILCOTE, CNN CORRESPONDENT: This is horrific. We just saw what -- I was about five yards away. We saw what appeared -- there's not helicopters in the sky. This is not good. This is precipitating very quickly.

COSTELLO: But emotionally, nothing could prepare us for what happened to the children. I remember how puzzled I was when kids began running from the school half naked. We later learned they'd stripped because it was deadly hot inside. We didn't figure it out then. We were more concerned with the bullets coming from the school. The hostage takers were shooting at the fleeing children.

UNIDENTIFIED CHILD: We were standing there and they began shooting. We thought it was one of the parents shooting. Then these guys ran out, these Chechens, surrounded us and began shooting in the air. Then we started to run away.

COSTELLO: It ended badly. Forty-eight hours after the siege began, Russian commandos tried to raid the school gym. The terrorists set off their bombs and opened fire. When the smoke cleared, 335 hostages were dead, half of them children.

(END VIDEO CLIP)

COSTELLO: And we hope you'll join us for a special anniversary presentation tonight, "Defining Moments: 25 Stories That Touched Our Lives." You'll hear behind-the-scenes details about CNN's coverage of world events. Plus, hear from newsmakers and some of the biggest stories of the past quarter century.

Still to come this hour on DAYBREAK, some people had a hunch about W. Mark Felt all along. I'll talk to a Watergate watcher who called up the man known as Deep Throat long before these latest revelations.

Enron's accounting firm off the hook. The Supreme Court deals a blow to the corporate fighting Feds.

And I'll talk to a judge who has an alternative for people convicted in his courtroom. He's sentenced them to church.

But first, here's a look at what else is making news this Wednesday.

(COMMERCIAL BREAK)

COSTELLO: Still to come on DAYBREAK, follow-up -- help is on the way for America's horses of the wild, wild West.

And got vacation on the brain? We'll show you what posh new place you could stay, or at least dream about.

We're back in 60 seconds.

(COMMERCIAL BREAK)

COSTELLO: Good morning, Atlanta, Georgia.

It's not a very nice day there. Chad says it's raining. And as you can see, it's very, very foggy. But good morning anyway.

Your news, money, weather and sports.

It's 6:18 Eastern.

Here's what's all new this morning.

A deep secret has been revealed. Former FBI official Mark Felt says he was the Watergate whistleblower known as Deep Throat. Felt's grandson calls him a great hero.

In money news, college students get ready to pay more for your student loans. The federal loan rate for those loans set to rise nearly 2 full percentage points. That will happen on July 1.

In culture, "Will and Grace" star Megan Mullally trades in prime time for day time. Mullally, who plays Karen Walker on the popular sitcom, will do a daytime talk show next year for NBC.

In sports, the Detroit Pistons beat "The Heat" to square up the Eastern Conference finals at two games apiece. Game five tomorrow night in Miami.

To the Forecast Center and Chad.

MYERS: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: That's a look at the latest headlines for you this morning.

Now a follow-up to a story we have long been covering. Some wild horses could soon be galloping toward a new home. The For Motor Company is pledging money to find home for mustangs that were rounded up on federal land out West. The company's move follows the April slaughter of 41 wild horses at an Illinois meat plant. The animals had been rounded up and sold by the government, which was not aware they were being resold for slaughter. (BEGIN VIDEO CLIP)

ZIAD OJAKLI, FORD VICE PRESIDENT: We're hopeful that this is a first step, a private-public partnership where we could do our small part in stepping up to the plate. We feel like over 40 years, the Mustang has given us a lot. The Mustang is probably one of our most successful automobiles. It still is today. And this is a small way we could do something to pay something back.

(END VIDEO CLIP)

COSTELLO: Horse buyers now have to sign a statement saying they will not resell the horses for slaughter.

Still to come on DAYBREAK, sentenced to a seat in the pew. One judge decides the cell block may not be the best place for some inmates.

And the runaway bride pays a pretty penny. That does not solve all of her problems, not by a long shot.

But first, we want to say good morning to San Antonio, Texas. It's nasty there, too, with lightning.

DAYBREAK will be right back.

(COMMERCIAL BREAK)

COSTELLO: Time now for a little "Business Buzz."

It pays to get booted out of the big -- booted out of Sony. The CEO and three other top executives are getting a retirement package worth a combined total of $7 million. For the first time, the company will be led by a non-Japanese CEO.

More trouble for AIG, the huge insurance company. The company says it overstated its new income for the past five years by nearly $4 billion. New York regulators filed a civil lawsuit against the company last week. Its former top execs are accused of orchestrating an accounting scheme to boost the company's stock price.

Call it the battle over broadband. SBC Communications is dropping its price for high speed Internet access to $14.95 a month. Customers have to sign a one year contact to get the new price. SBC's price is now cheaper than some popular dial-up options.

The accounting firm ruined by the Enron scandal wins a legal battle with the government.

Carrie Lee joins us with more.

Does this mean Arthur Andersen is completely off the hook?

CARRIE LEE, CNN CORRESPONDENT: Well, I wouldn't say that, Carol. I mean the company is really a shell of what it used to be. You know, it used to have over 28,000 employees. Now they have a couple of hundred. So a little late in the game here. But this is a symbolic victory for the company. And what's happening is the Supreme Court has thrown out the June, 2002 conviction of Arthur Andersen in a document shredding case involving Enron. Everyone probably remembers this four years ago. The justices ruled unanimously that the jury instructions in the trial were too vague for jurors to determine correctly whether Andersen obstructed justice.

Now the case goes back to the lower courts. There won't necessarily be another trial, though. So we'll have to wait and see.

Arthur Andersen, by the way, was ruined by its role in the Enron scandal. At one time, as we were saying, over 28,000 employees handling top corporate audits. Now it has about 200 employees, most of whom are dealing with these legal matters. Andersen was the auditor, of course, for Enron during the financial mismanagement that led to the company's collapse in late 2001.

After Enron started imploding, Andersen ramped up its document shredding policy, destroying tens of thousands of Enron related papers. So that's the crux of this whole case.

So we'll see. This is going to go to the lower courts. We'll see if there's a new trial. No guarantees.

COSTELLO: Interesting.

LEE: Yes.

COSTELLO: A quick look at the futures?

LEE: The futures looking up a bit for today's session after some selling yesterday. A lot of people are waiting for the big jobs report on Friday. That's going to be the real econ story for the week.

COSTELLO: Yes, that always affects the stock market, no matter which way it turns.

LEE: Absolutely does. It's a big one.

COSTELLO: Yes.

Thank you, Carrie Lee.

In Kentucky, a novel way to punish those who get busted for drugs -- send them to church. Laurel County Judge Michael Caperton, a devout Christian, says it's a way to help drug and alcohol offenders find spiritual guidance. Civil rights leaders say it's a violation of church and state.

Let's head live to London, Kentucky now and the judge himself, Judge Caperton.

Good morning, Judge.

MICHAEL CAPERTON, DISTRICT JUDGE: Good morning. COSTELLO: Tell us more about your idea.

CAPERTON: Well, it's somewhat simple. If you have a repeat offender -- of course, in district court I handle misdemeanors. That's your lower cases, your public intoxication, your possession of marijuana, drug paraphernalia, etc., prescriptions in proper container. And if you've had a prior charge of that sort or a drug/alcohol charge, then I'll sentence you to some period of time in jail. I'll purge that time on the condition that you either seek drug and alcohol evaluation and treatment from some counseling facility or attend worship services of your choice.

COSTELLO: So what do you hope that they will find at worship services, if they choose to do that?

CAPERTON: Well, I think that we've all -- we would all agree that people who attend worship services have fewer drug and alcohol problems. I think that drug and alcohol is used as a crutch for something missing or for some problem in your life and if that worship service fills that void or corrects that problem or acts as a therapeutic effect, then it'll help people and it'll help people's lives.

COSTELLO: Well, Judge, I understand that a lot of people think that spirituality can solve problems. But probably most experts would agree that if you have a drug problem, rehab would be the best step.

CAPERTON: Well, we've tried a lot of rehab up here and at the edge of east Kentucky or in east Kentucky, it appears our drug problem is getting worse and it doesn't appear -- it's not keeping up with the escalating use of drug/alcohol, as best we see.

COSTELLO: Well, let me read you a quote from David Freedman. He's a lawyer for the American Civil Liberties Union in Kentucky. He says: "The judge is saying that those willing to go to worship services can avoid jail in the same way that those who decline to go cannot. That strays from government neutrality toward religion."

CAPERTON: Are you asking me to comment on his comment?

COSTELLO: I am, indeed.

CAPERTON: Well, I think he's incorrect because, actually, I'm saying you could go to one choice you have is drug/alcohol evaluation and treatment. And if you don't want to choose that, there's a cost associated with it. You have a -- you can choose a worship service, which is no cost associated.

COSTELLO: Yes, but let's face it, Judge, if I'm before you and you say well, you can either go to drug rehab, go to jail or go to church, I'd be going to church even if I didn't want to find spiritual guidance.

CAPERTON: Well, why wouldn't you go to the drug/alcohol evaluation? You could do a drug/alcohol evaluation and an evaluator tell you you have no problems. And if they tell you that, that satisfies the requirement.

COSTELLO: Well, I guess I'm saying that would be somewhat of an easier sentence to me, to go to church, because I could go there just to go there, not looking for anything spiritual whatsoever.

CAPERTON: Well, if you go there and you don't get anything out of it, then perhaps the program wouldn't work for you.

COSTELLO: When their sentence is done -- let's say that they take your, this sentence of going to church. Do they have to prove anything to you when they come back to your court?

CAPERTON: Well, all they would have to do, if you do the drug/alcohol evaluation, of course the evaluator will give you a slip of paper showing you were there and you have no problem. If you do the treatment, they'll give you a completion of treatment or a statement that you have ongoing treatment. And if you go to church or a worship service -- I like worship service, you can use the word church -- then the pastor or whoever conducts the service can sign off on it and say you were there for 10 services.

COSTELLO: And that'll do it?

CAPERTON: And that'll do it.

COSTELLO: Laurel County Judge Michael Caperton joining us live on DAYBREAK this morning.

Thank you, sir.

In the next half hour of DAYBREAK, in the movies he lurked in smoke-filled shadows. Now the smoke surrounding Deep Throat has cleared.

And do you think you're in tune when it comes to online shopping? Think again.

You are watching DAYBREAK for a Wednesday morning.

(COMMERCIAL BREAK)

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Aired June 1, 2005 - 06:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: It is Wednesday, June 1. And one of the biggest mysteries in American history is solved.
DAYBREAK starts right now.

Deep Throat revealed -- we may know his name, but why did he hold off for so long?

Plus, you did the crime, now pray the time. I'll speak to a judge who aims to put criminals on their knees.

And later this hour, online shoppers beware -- you could be paying more and getting less than other customers.

From the Time Warner Center in New York, you're watching DAYBREAK.

And good morning to you.

I'm Carol Costello, along with Chad Myers.

We'll have more on the identity of Deep Throat in just a minute.

Also ahead, as CNN marks 25 years on the air today, we'll revisit one of the most intense mgs of DAYBREAK, the Beslan school tragedy.

But first, now in the news, the U.S. military says a suicide car bombing exploded near a main checkpoint. The blast went off this morning near the Baghdad base that houses U.S. military headquarters and the international airport. Several people were hurt. We'll get to Jane Arraf in just a bit.

Texas police have issued an amber alert for a 12-year-old boy. They believe Dylan Rios was taken on Sunday by his 19-year-old mother. Stephanie Rios had earlier given up custody after authorities accused her of abusing the boy.

A warning for people on the East Coast -- brace yourselves. Today is the first day of hurricane season and Chad says there could be more hurricane activity this year than last -- good morning, Chad.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Carol.

There are a number of reasons for that. A lack of an el nino. Sometimes an el nino will put more upper level winds in the Caribbean area and also in the Atlantic, and that will cause shear that will tear a hurricane apart and not let it degenerate. The waters in the Atlantic are warmer than normal by about two to three degrees. The waters in the Gulf of Mexico are also warmer than normal by about one to three degrees there.

Here is Florida, the southern part of the peninsula, from Cape Coral right to Punta Gorda and up through Sebring and then Orlando would be right up on top of your screen. Look at the significant lightning, thunder, all the way across Alligator Alley and more coming onshore right now.

(WEATHER REPORT)

COSTELLO: Topping the news this hour, another day, another blast in Baghdad. But this time people entering a U.S. military base were the target.

CNN's senior Baghdad correspondent Jane Arraf has been with the U.S. military this morning.

She joins us now live -- Jane, bring us up to date.

JANE ARRAF, CNN CORRESPONDENT: Carol, we're now told by the commanding general of the 3rd Infantry Division that there were 15 people injured in this blast. The only person dead, the suicide bomber. This was at the main checkpoint as you drive into this complex that houses the civilian international airport and the U.S. and coalition military headquarters.

We were on that base and heard that blast this morning, just before 9:00 local time. We thought it was a mortar because the base has come under mortar attack in the past couple of days, but later found out that a suicide bomber managed to drive through somehow, what appeared to be previous checkpoints, and get to that point.

We've been in a ceremony here in Baghdad with Iraqi generals, as well as U.S. military officials, and they say the fact that the bomber was only able to get through that outer checkpoint is an indication that their checks are working. They say this Operation Lightning that's going on with tens of thousands of troops, Iraqis and Americans, throughout the city, is actually cracking down on these suicide bombs -- Carol.

COSTELLO: You say cracking down on suicide bombs.

Have they made arrests? What specifically have they done, Jane?

ARRAF: They have. The latest that we have this morning, and speaking to some of the Iraqi generals just a few minutes ago, was that they have detained 100 suspected insurgents in raids overnight. We were at some of those raids and it was really an interesting process. It was really the first big Iraqi operation, the biggest they have attempted.

They went out in specific neighborhoods, sealed the mosques and went door to door searching in areas where they believe they have come under target. As well as a result of these raids overnight, they say they've rounded up 100 people. Now, again, that doesn't mean that it's 100 who are -- will be found guilty of participating in attacks, but they believe that they are suspected insurgents -- Carol.

COSTELLO: Jane Arraf reporting live from Baghdad this morning.

A mystery of history revealed after more than 30 years. But why is Mark Felt coming forward now to admit that he is, indeed, Deep Throat?

Felt, the number two man at the FBI at the time, tells "Vanity Fair" magazine he was the source for stories that helped bring down the Nixon White House. The "Washington Post" confirms Felt was the highly secretive source in its Watergate investigation.

As for what led the 91-year-old California retiree to come forward now, his grandson shed some light on that.

(BEGIN VIDEO CLIP)

NICK JONES, MARK FELT'S GRANDSON: Mark had expressed reservations in the past about revealing his identity and about whether his actions were appropriate for an FBI man. But as he recently told my mother, I guess people used to think Deep Throat was a criminal, but now they think he's a hero.

Our family believes older people are our national treasure and should be honored and respected in the declining years of their lives. My grandfather is one of those special people and on behalf of the Felt family, we hope you see him as worthy of honor and respect as we do.

(END VIDEO CLIP)

COSTELLO: Let's talk more about the end of this long-time mystery and the Washington guessing game that's gone on for decades.

Live to D.C. and CNN Radio's Dick Uliano.

I mean I can't even imagine what it's like in Washington this morning -- Dick.

DICK ULIANO, CNN RADIO CORRESPONDENT: Well, it is a fascinating story, Carol, because this has been an ongoing mystery in Washington. In fact, it's interesting, the quote that's used in "Vanity Fair" by Mark Felt. He basically told the lawyer, I'm the guy they used to call Deep Throat.

Well, you know, we still call him Deep Throat in Washington. It was just a few years ago, on the 30th anniversary, in which there was much speculation, continued speculation about who this person was. And it really has been one of Washington's best kept secrets over the years.

COSTELLO: Well, you know, there is still some mystery surrounding this because a lot of people, including John Dean, you know, Nixon's former counsel, he seems to think that Felt could be the central figure, but there were many sources that Woodward and Bernstein had. What's the sentiment on that this morning?

ULIANO: Well, indeed, Dean has indicated he doesn't think that Mark Felt, as the deputy director of the FBI, the number two man, who was involved in the investigation, would have been privy to all the information that was provided to the reporters, Woodward and Bernstein. And he's kind of raised the suggestion that perhaps other FBI agents were involved.

But, you know, the executive editor, the former executive editor of the "Washington Post," Ben Bradlee, who steered the newspaper through this tremendous story of 1974, says look, he was the number two guy at the FBI and that was a pretty good source. And that's why Bradlee, who knew the source -- Woodward and Bernstein had told them the position of the source -- that he was confident that the information that was being printed about the details of Watergate were authentic and were something that the newspaper could go with. Because, after all, the number two guy is a pretty good source.

COSTELLO: A pretty good source. You know, the other thing that John Dean said, because, you know, he went to jail himself on obstruction of justice charges, right?

ULIANO: Yes.

COSTELLO: He said that maybe Mr. Felt is guilty of obstruction of justice, as well.

ULIANO: Carol, also, Chuck Colson, another former White House aide who served time as a felon in Watergate related activities, also says, he says, look, Felt, Mark Felt, as the number two guy at the FBI, had the trust of America's leaders. And to think that he betrayed that trust is hard to fathom.

So you have two sides of the coin here. Now, you have the family, enormously proud of this 91-year-old man, feel that he did so much with so much at risk, that he helped the nation overcome an injustice. And then, on the other hand, you're going to have some people suggesting that he's not a hero.

And I think what it says, really, is that we're going to hear more about this. Presumably we'll hear more from Bob Woodward and Carl Bernstein on the initial contact, how this all developed. So I think we're going to hear some more stories about all of this.

COSTELLO: Oh, definitely so.

I was looking through the "Washington Post" this morning, no article by Woodward or Bernstein. But I'm sure those articles are coming.

Dick Uliano reporting live from Washington this morning.

Still on the subject of politics, no way to know for sure, of course, but the news about Deep Throat might have dominated the dinner table talk when President Bush got together with his former secretary of state, Colin Powell, last night.

Earlier, the president held a Rose Garden news conference where he dismissed a report that compared treatment of terror suspects at GITMO to a Soviet-era gulag.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm aware of the Amnesty International report and it's absurd. It's an absurd allegation. The United States is a country that is -- promotes freedom around the world. Were those accusations made about certain actions by our people that are fully investigated in a transparent way? It's just an absurd allegation.

(END VIDEO CLIP)

COSTELLO: President Bush also said he's pleased with the progress in Iraq and denied any increase in the strength of insurgent attacks.

In the meantime, Iraq's president says former dictator Saddam Hussein could go to trial within two months. The president says Iraq is now working to lay the groundwork for a court to consider war crime charges against Saddam. There's no word on whether other suspects would go on trial first.

Now for a foray into broadcasting. Some 25 years later, we are celebrating an anniversary here at CNN, a quarter century of sharing stories from around the nation and around the world. Yes, this is what it looked like on our very first broadcast, June 1, 1980. And Ted Turner, the founder of CNN, is revealing some of his memories, like when he told top execs before the Iraq war started in 2003 that he would go cover it if nobody else wanted to.

(BEGIN VIDEO CLIP)

TED TURNER, CNN FOUNDER: I'm a believer that a war correspondent is a war correspondent. I read and watched the films of World War 1 and World War 2, where correspondents went with the troops and they got killed all the time. I don't like having -- being killed. But if you'll recall, during the last Iraqi war, when it looked like nobody from CNN was going to go over there, that I volunteered that I would go. They wouldn't accept me. And, besides, they threw all the foreign reporters out -- I shouldn't use that word -- the international reporters out. But I would have gone over there without any problem at all and risked my life personally.

(END VIDEO CLIP)

COSTELLO: We've had the opportunity to be in the middle of so many stories over the years. Some of them began to unfold live on DAYBREAK.

The story of a school hostage stand-off in Russia was one of those stories. It broke our hearts, even as we shared the story with you. (BEGIN VIDEO CLIP)

COSTELLO (voice-over): It was September 1, 2004. Beslan, Russia seemed so close that day because of the children. Thirty-two militants armed with bomb belts and automatic weapons had stormed the school. Every so often during our live coverage, a gunshot would shatter the eerie quiet.

It was difficult for DAYBREAK to cover this live. Frantic parents and journalists were too close. At any time, someone could die on air, and almost did. A photojournalist was hit during our coverage. We pulled away just in time.

Correspondent Ryan Chilcote tried to make sense of it.

RYAN CHILCOTE, CNN CORRESPONDENT: This is horrific. We just saw what -- I was about five yards away. We saw what appeared -- there's not helicopters in the sky. This is not good. This is precipitating very quickly.

COSTELLO: But emotionally, nothing could prepare us for what happened to the children. I remember how puzzled I was when kids began running from the school half naked. We later learned they'd stripped because it was deadly hot inside. We didn't figure it out then. We were more concerned with the bullets coming from the school. The hostage takers were shooting at the fleeing children.

UNIDENTIFIED CHILD: We were standing there and they began shooting. We thought it was one of the parents shooting. Then these guys ran out, these Chechens, surrounded us and began shooting in the air. Then we started to run away.

COSTELLO: It ended badly. Forty-eight hours after the siege began, Russian commandos tried to raid the school gym. The terrorists set off their bombs and opened fire. When the smoke cleared, 335 hostages were dead, half of them children.

(END VIDEO CLIP)

COSTELLO: And we hope you'll join us for a special anniversary presentation tonight, "Defining Moments: 25 Stories That Touched Our Lives." You'll hear behind-the-scenes details about CNN's coverage of world events. Plus, hear from newsmakers and some of the biggest stories of the past quarter century.

Still to come this hour on DAYBREAK, some people had a hunch about W. Mark Felt all along. I'll talk to a Watergate watcher who called up the man known as Deep Throat long before these latest revelations.

Enron's accounting firm off the hook. The Supreme Court deals a blow to the corporate fighting Feds.

And I'll talk to a judge who has an alternative for people convicted in his courtroom. He's sentenced them to church.

But first, here's a look at what else is making news this Wednesday.

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COSTELLO: Still to come on DAYBREAK, follow-up -- help is on the way for America's horses of the wild, wild West.

And got vacation on the brain? We'll show you what posh new place you could stay, or at least dream about.

We're back in 60 seconds.

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COSTELLO: Good morning, Atlanta, Georgia.

It's not a very nice day there. Chad says it's raining. And as you can see, it's very, very foggy. But good morning anyway.

Your news, money, weather and sports.

It's 6:18 Eastern.

Here's what's all new this morning.

A deep secret has been revealed. Former FBI official Mark Felt says he was the Watergate whistleblower known as Deep Throat. Felt's grandson calls him a great hero.

In money news, college students get ready to pay more for your student loans. The federal loan rate for those loans set to rise nearly 2 full percentage points. That will happen on July 1.

In culture, "Will and Grace" star Megan Mullally trades in prime time for day time. Mullally, who plays Karen Walker on the popular sitcom, will do a daytime talk show next year for NBC.

In sports, the Detroit Pistons beat "The Heat" to square up the Eastern Conference finals at two games apiece. Game five tomorrow night in Miami.

To the Forecast Center and Chad.

MYERS: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: That's a look at the latest headlines for you this morning.

Now a follow-up to a story we have long been covering. Some wild horses could soon be galloping toward a new home. The For Motor Company is pledging money to find home for mustangs that were rounded up on federal land out West. The company's move follows the April slaughter of 41 wild horses at an Illinois meat plant. The animals had been rounded up and sold by the government, which was not aware they were being resold for slaughter. (BEGIN VIDEO CLIP)

ZIAD OJAKLI, FORD VICE PRESIDENT: We're hopeful that this is a first step, a private-public partnership where we could do our small part in stepping up to the plate. We feel like over 40 years, the Mustang has given us a lot. The Mustang is probably one of our most successful automobiles. It still is today. And this is a small way we could do something to pay something back.

(END VIDEO CLIP)

COSTELLO: Horse buyers now have to sign a statement saying they will not resell the horses for slaughter.

Still to come on DAYBREAK, sentenced to a seat in the pew. One judge decides the cell block may not be the best place for some inmates.

And the runaway bride pays a pretty penny. That does not solve all of her problems, not by a long shot.

But first, we want to say good morning to San Antonio, Texas. It's nasty there, too, with lightning.

DAYBREAK will be right back.

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COSTELLO: Time now for a little "Business Buzz."

It pays to get booted out of the big -- booted out of Sony. The CEO and three other top executives are getting a retirement package worth a combined total of $7 million. For the first time, the company will be led by a non-Japanese CEO.

More trouble for AIG, the huge insurance company. The company says it overstated its new income for the past five years by nearly $4 billion. New York regulators filed a civil lawsuit against the company last week. Its former top execs are accused of orchestrating an accounting scheme to boost the company's stock price.

Call it the battle over broadband. SBC Communications is dropping its price for high speed Internet access to $14.95 a month. Customers have to sign a one year contact to get the new price. SBC's price is now cheaper than some popular dial-up options.

The accounting firm ruined by the Enron scandal wins a legal battle with the government.

Carrie Lee joins us with more.

Does this mean Arthur Andersen is completely off the hook?

CARRIE LEE, CNN CORRESPONDENT: Well, I wouldn't say that, Carol. I mean the company is really a shell of what it used to be. You know, it used to have over 28,000 employees. Now they have a couple of hundred. So a little late in the game here. But this is a symbolic victory for the company. And what's happening is the Supreme Court has thrown out the June, 2002 conviction of Arthur Andersen in a document shredding case involving Enron. Everyone probably remembers this four years ago. The justices ruled unanimously that the jury instructions in the trial were too vague for jurors to determine correctly whether Andersen obstructed justice.

Now the case goes back to the lower courts. There won't necessarily be another trial, though. So we'll have to wait and see.

Arthur Andersen, by the way, was ruined by its role in the Enron scandal. At one time, as we were saying, over 28,000 employees handling top corporate audits. Now it has about 200 employees, most of whom are dealing with these legal matters. Andersen was the auditor, of course, for Enron during the financial mismanagement that led to the company's collapse in late 2001.

After Enron started imploding, Andersen ramped up its document shredding policy, destroying tens of thousands of Enron related papers. So that's the crux of this whole case.

So we'll see. This is going to go to the lower courts. We'll see if there's a new trial. No guarantees.

COSTELLO: Interesting.

LEE: Yes.

COSTELLO: A quick look at the futures?

LEE: The futures looking up a bit for today's session after some selling yesterday. A lot of people are waiting for the big jobs report on Friday. That's going to be the real econ story for the week.

COSTELLO: Yes, that always affects the stock market, no matter which way it turns.

LEE: Absolutely does. It's a big one.

COSTELLO: Yes.

Thank you, Carrie Lee.

In Kentucky, a novel way to punish those who get busted for drugs -- send them to church. Laurel County Judge Michael Caperton, a devout Christian, says it's a way to help drug and alcohol offenders find spiritual guidance. Civil rights leaders say it's a violation of church and state.

Let's head live to London, Kentucky now and the judge himself, Judge Caperton.

Good morning, Judge.

MICHAEL CAPERTON, DISTRICT JUDGE: Good morning. COSTELLO: Tell us more about your idea.

CAPERTON: Well, it's somewhat simple. If you have a repeat offender -- of course, in district court I handle misdemeanors. That's your lower cases, your public intoxication, your possession of marijuana, drug paraphernalia, etc., prescriptions in proper container. And if you've had a prior charge of that sort or a drug/alcohol charge, then I'll sentence you to some period of time in jail. I'll purge that time on the condition that you either seek drug and alcohol evaluation and treatment from some counseling facility or attend worship services of your choice.

COSTELLO: So what do you hope that they will find at worship services, if they choose to do that?

CAPERTON: Well, I think that we've all -- we would all agree that people who attend worship services have fewer drug and alcohol problems. I think that drug and alcohol is used as a crutch for something missing or for some problem in your life and if that worship service fills that void or corrects that problem or acts as a therapeutic effect, then it'll help people and it'll help people's lives.

COSTELLO: Well, Judge, I understand that a lot of people think that spirituality can solve problems. But probably most experts would agree that if you have a drug problem, rehab would be the best step.

CAPERTON: Well, we've tried a lot of rehab up here and at the edge of east Kentucky or in east Kentucky, it appears our drug problem is getting worse and it doesn't appear -- it's not keeping up with the escalating use of drug/alcohol, as best we see.

COSTELLO: Well, let me read you a quote from David Freedman. He's a lawyer for the American Civil Liberties Union in Kentucky. He says: "The judge is saying that those willing to go to worship services can avoid jail in the same way that those who decline to go cannot. That strays from government neutrality toward religion."

CAPERTON: Are you asking me to comment on his comment?

COSTELLO: I am, indeed.

CAPERTON: Well, I think he's incorrect because, actually, I'm saying you could go to one choice you have is drug/alcohol evaluation and treatment. And if you don't want to choose that, there's a cost associated with it. You have a -- you can choose a worship service, which is no cost associated.

COSTELLO: Yes, but let's face it, Judge, if I'm before you and you say well, you can either go to drug rehab, go to jail or go to church, I'd be going to church even if I didn't want to find spiritual guidance.

CAPERTON: Well, why wouldn't you go to the drug/alcohol evaluation? You could do a drug/alcohol evaluation and an evaluator tell you you have no problems. And if they tell you that, that satisfies the requirement.

COSTELLO: Well, I guess I'm saying that would be somewhat of an easier sentence to me, to go to church, because I could go there just to go there, not looking for anything spiritual whatsoever.

CAPERTON: Well, if you go there and you don't get anything out of it, then perhaps the program wouldn't work for you.

COSTELLO: When their sentence is done -- let's say that they take your, this sentence of going to church. Do they have to prove anything to you when they come back to your court?

CAPERTON: Well, all they would have to do, if you do the drug/alcohol evaluation, of course the evaluator will give you a slip of paper showing you were there and you have no problem. If you do the treatment, they'll give you a completion of treatment or a statement that you have ongoing treatment. And if you go to church or a worship service -- I like worship service, you can use the word church -- then the pastor or whoever conducts the service can sign off on it and say you were there for 10 services.

COSTELLO: And that'll do it?

CAPERTON: And that'll do it.

COSTELLO: Laurel County Judge Michael Caperton joining us live on DAYBREAK this morning.

Thank you, sir.

In the next half hour of DAYBREAK, in the movies he lurked in smoke-filled shadows. Now the smoke surrounding Deep Throat has cleared.

And do you think you're in tune when it comes to online shopping? Think again.

You are watching DAYBREAK for a Wednesday morning.

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