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American Morning

National Archives Unveiling Documents Linked to Samuel Alito; Pouring Rain on the West Coast; Red Cross Scammed

Aired December 28, 2005 - 8:59   ET

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

MILES O'BRIEN, CNN ANCHOR: Good morning. I'm Miles O'Brien.
Dozens of homes burned in Texas and Oklahoma in a raging wildfire. Is the worst over? Fire teams watching for more strong winds today.

CAROL COSTELLO, CNN ANCHOR: I'm Carol Costello, in for Soledad.

The West Coast bracing for another pounding. A powerful storm coming ashore today. We are live in San Francisco.

O'BRIEN: And any minute now, another glimpse into Judge Samuel Alito's past as more documents from his career are released on this AMERICAN MORNING.

COSTELLO: And good morning to you. It's a beautiful day here in New York City. I'm sorry about weather in other parts of the country. Pretty nasty.

O'BRIEN: Not so great elsewhere. We're sorry about that.

Let's get right to the news.

Right now we're getting new information, perhaps telling and crucial clues about the man who could fundamentally change the Supreme Court. The National Archives unveiling a raft of documents linked to Supreme Court nominee Samuel Alito.

Elaine Quijano live at the White House with more on this.

Elaine, what is this so-called document dump mean for the Supreme Court nominee?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, what this is really a part of, Miles, is just, again, more documents being released ahead of his confirmation hearing set to take place next month. And we should tell you, of course, these documents are just being made available now. So of course we have not been able to take a look at them.

What I can tell you, though, is that we're expecting to see nearly 300 pages in all, some 17 documents to be released from the National Archives. A Justice Department official tells CNN they appear to be papers from the mid 1980s, the files of several Justice Department officials from the Reagan administration. Now, with previous document releases, those opposed to Judge Alito's nomination have combed through them, they're certain to do that again this time. Liberal groups, particularly, are looking for some ammunition on the issue of abortion.

They say previous papers show Alito is too conservative to be on the high court, but the Bush administration and Samuel Alito himself have contended that views expressed were those of an advocate's work and not necessarily an indication of how he would rule on the bench.

Nevertheless, as I mentioned, all of this setting the stage, if you will, taking place ahead of Samuel Alito's confirmation hearings. Those are set to get under way on January 9 -- Miles.

O'BRIEN: All right. Thank you very much. Elaine Quijano.

Our Bob Franken is actually looking at those documents right now. As you can imagine, it's a lot to digest. As soon as he can share something with us, put it in context for us, we'll do just that -- Carol.

COSTELLO: And we're following a developing story, the fear of more fires in Texas and Oklahoma. Wildfires threatening thousands of people in those states. Dozens of homes burned Tuesday in towns near Oklahoma City. Also, wind gusts prevented helicopters from dumping water on those fires.

Out in Texas, fires destroyed about 50 homes in Cross Plains. That's about 150 miles southwest of Dallas. One death blamed on these fires. At least 12 firefighters were treated for heat exhaustion or inhaling too much smoke.

And out West, on the West Coast, pouring rain. It is expected to come down on soil already saturated. Flood warnings are out in Oregon. High surf advisories for California as far south as San Diego.

Rusty Dornin in San Francisco this morning.

Rusty, I guess the rain -- I can hear the rain coming down. They're calling this...

RUSTY DORNIN, CNN CORRESPONDENT: Yes.

COSTELLO: Go ahead.

DORNIN: Well, it's just the worst part -- this first storm has -- began about an hour ago. It's really been coming down.

There is flood warnings in effect for the rivers, the Napa River, the Petaluma River. So it's really been coming down. But what's also happening is the tide is coming in and we're seeing a lot of big, heavy surf.

Every once in a while we're getting splashes over here. They're expecting swells anywhere from 20 to 25 feet. Of course this is making many of the surfers very happy. But they are concerned about the tourists who walk in this area right below the Golden Gate Bridge, because these waves -- they call them sneaker waves -- do come over and have the potential of sweeping people out to sea.

Up in Washington State, they are getting hit with snow. And Snoqualmie Pass, a lot of problems with traffic up there with truckers and cars. And all sorts of accidents happening from the heavy snowfall.

Also, up in the Sierra, they're also expecting about two feet of snow from this storm and from the next two or three storms that will be hitting over the next couple of days. And, of course, that's making the new year's holiday skiers very happy. But when they turn around and come home on that Sunday or that Monday, it's expected to be a nightmare -- Carol.

COSTELLO: Can't even imagine. Thank you very much.

Rusty Dornin reporting live for us in San Francisco this morning.

Let's get more on the weather and when all this might end. Jacqui Jeras is at the CNN Center.

Good morning.

JACQUI JERAS, CNN METEOROLOGIST: Good morning, Carol.

(WEATHER REPORT)

O'BRIEN: OK. Thank you, Jacqui.

The Red Cross vowing to tighten control over its local chapters in the wake of a huge Hurricane Katrina scandal. As we first reported to you on Tuesday, some former temp workers working for the Red Cross among dozens of people accused of scamming the organization out of hundreds of thousands of dollars.

Kareen Wynter is in Bakersfield, California, where a lot of this occurred, apparently.

Kareen, how did this fraud work?

KAREEN WYNTER, CNN CORRESPONDENT: Good morning, Miles.

Federal investigators say this was quite an elaborate scheme in that these temp workers really had a lot of power at their fingertips. That's because it was a simple process.

All Katrina evacuees had to do when they called into what used to be a call center behind me here -- the program ended -- these tem workers would simply have to take the person's name, their address and birth date. And once they verified it, they would issue a claim number that would be turned into local Western Unions for cash.

Officials say once these contract workers, about 22 of them, figured out they could manipulate the system, so to speak, they started setting up fake accounts. And they also enlisted the help, according to these indictments, Miles, of family members and friends who were also roped into this scheme, bringing the total number here of indictments to 49 -- Miles.

O'BRIEN: All right. How did they finally get caught?

WYNTER: Well, the FBI had a lot of help from Western Union branches here in the area. In fact, one store manager I spoke with yesterday said he saw the same man coming in not once, not twice, but three times to collect money. And that's when they alerted authorities.

But the American Red Cross also says that it did an audit and noticed that there were a high number of transactions coming out of this Bakersfield area when they said that there were only a certain number of Katrina evacuees. So that tipped them off, Miles.

You also had a chance to speak with the interim president of the Red Cross this morning, who said that there were checks and balances in place here, that were safeguards to catch this type of crime.

(BEGIN VIDEO CLIP)

JACK MCGUIRE, AMERICAN RED CROSS: You know, in fact, the entire system that we put together did not exist prior to Hurricane Katrina. This was put together to respond to the huge size of that effort. But when we designed it, we did look at fraud. We did look at how to build protection into that both in terms how to screen people to make sure they were worthy, but then to be able to look back afterwards and ensure that the money was properly given out.

(END VIDEO CLIP)

WYNTER: Miles, the Red Cross says it take this type of alleged crime very seriously. In fact, it doesn't want to deter donors out there that it treats donors as actual investors.

O'BRIEN: Kareen, what about the possibility of more indictments?

WYNTER: Well, it's not over. Federal agents say they are now focusing on the Los Angeles area, also cities here in California, as well as outside the state, where they believe thousands of transactions may have taken place. They are not putting a timeline on it, however, so we're keeping on top of this.

O'BRIEN: Kareen Wynter for us in Bakersfield.

Thank you very much.

In just a few moments we'll talk to the U.S. attorney who's handling that case. Stay with us for that -- Carol.

COSTELLO: The United Nations says the elections in Iraq were transparent and legitimate and there is no need for a do-over. The announcement coming just a short time ago from Baghdad. Early results suggest Iraq's religious party has a strong lead, and that's causing mass protests from secular groups who took to the streets again this morning. There had been more than 1,500 complaints about the elections. Final results expected next week.

The head of the New Orleans police says tasers are not the answer. His comments come amid criticism that officers used excessive force in a deadly confrontation.

Dramatic video shows police surrounding 38-year-old Anthony Hayes. They say he lunged at them with a three-inch-long knife and they were forced to shoot. The police superintendent says tasering the man would not necessarily have prevented his death.

(BEGIN VIDEO CLIP)

SUPT. WARREN RILEY, NEW ORLEANS POLICE: We are not totally comfortable with tasers yet. And it has not been proven. What has been -- what has occurred is that well over 140, 150 people have died as a result of that. So that is not necessarily the solution.

(END VIDEO CLIP)

COSTELLO: Much more on this story still to come. We'll take you live to New Orleans later this hour.

A report out this morning of a plea deal in the Enron case. Former chief accounting officer Richard Causey expected to testify against top executives in exchange for a lighter prison sentence. Founder Ken Lay and former CEO Jeffrey Skilling are set to go on trial next month.

And for years he made us want to eat the doughnuts. Michael Vale, the "Time to make the doughnuts" guy, has died.

Vale played the Dunkin' Donuts pitch man, Fred the Baker, for 15 years. His family says he died of complications from diabetes. Michael Vale was 83 years old.

Loved those commercials.

O'BRIEN: It's still part of the lexicon, "Time to make the doughnuts."

COSTELLO: Yes, I can still hear it clear as day.

O'BRIEN: I think I say it every morning at about 4:00 a.m.

Coming up, more on that alleged scam that bilked the Red Cross out of hundreds of thousands of dollars. What tipped the authorities? We'll ask the prosecutor in the case.

COSTELLO: Also, the biggest medical breakthroughs of 2005, including the first-ever prosthetic arm controlled by your brain.

O'BRIEN: And later, remember that dog we rescued after Hurricane Rita? Remember this scene? One of our producers took her home. There's quite a twist to the story. It's kind of two happy ending stories.

Stay with us for more AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: More on that Red Cross scam now.

As we've been telling you, the Red Cross temporary workers were the focus of an investigation by the U.S. attorney in Sacramento. More indictments are expected in that case.

Forty-nine people have already been implicated in the scheme. Essentially, temp workers at a call center misdirecting funds that was aimed at Katrina victims into their own hands or their friends' hands.

Joining us from Sacramento, California, is the U.S. attorney there, McGregor Scott.

MCGREGOR SCOTT, U.S. ATTORNEY: Good morning.

O'BRIEN: Mr. Scott, this is a bigger scheme than we have already reported. Tell us how many more indictments are expected.

SCOTT: Well, we cannot put a specific number to it. But in the weeks ahead, we anticipate that we will perhaps indict twice as many people as we have so far to date.

There's no way to put a particular or a concrete number to that. It all depends on how the investigation continues to unfold.

O'BRIEN: All right. Does this indicate that additional call centers, additional temp workers are involved? Or is this just additional accomplices as part of this original plot that was uncovered?

SCOTT: I really don't want to go into the particulars of a pending ongoing investigation at this point. But we anticipate that we'll be able to publicly announce the results of that investigation in short order.

O'BRIEN: Apparently, investigators became savvy to this whole thing because there was a disproportionate number of distributions, more distributions in Bakersfield than would be appropriate for the number of refugees there. Take it from there. How did it go from there?

SCOTT: That's exactly right. As I understand it, the Red Cross actually itself undertook an internal audit and determined that there was a grossly disproportionate number of persons claiming to be Katrina victims having relocated to the greater Bakersfield area.

They then contacted the local FBI office, which undertook and opened an investigation. And after a little bit of leg work, determined, in fact, there was something going on here. The FBI then got all over this investigation, allocated major resources to it, and it has led from there. And we are where we are today with 49 persons indicted and many more anticipated.

O'BRIEN: All right. So it began with an internal investigation of the Red Cross. And just a little while ago we had the acting president and CEO of the Red Cross on. He said this proves that the system works. Would you concur?

SCOTT: Well, I want to give the Red Cross the benefit of the doubt on the situation. They were in the position of having to allocate a whole lot of money to a whole lot of people in a very short period of time.

They did establish some checks on the system to prevent fraud. But unfortunately, as we now know, those checks were not sufficient to prevent this fraud from occurring.

Now, the significance of that as we go forward is that agencies like the Red Cross learn from this process and figure out what to do so that we can prevent this type of thing from occurring in the future.

O'BRIEN: Well, let's talk about that. What could be done given the scale of this?

You know, you're talking about $1.3, $1.4 billion, a million refugees desperately in need of money. It would be very difficult to, you know, go through the full process of vetting every last individual and get this money out in a timely way.

SCOTT: Well, I think the key -- the key point, the choke point on this, to use a military term, on this particular operation was to ensure that the private firm that they contracted with to establish and operate the call center did a sufficient background investigation on their employees. Obviously, in a circumstance where you're essentially trusting persons with a whole lot of money, I mean, literally millions of dollars, you've got to do a better job of ensuring that the people who are responsible for handing that money out in an appropriate way have been properly background and vetted by the agency that you have hired to operate the call center.

O'BRIEN: So looking forward here on this investigation, what sorts of charges and penalties might people who are indicted face here?

SCOTT: Well, the principal federal charge that we are using in this particular investigation is wire fraud. And that is because the actual fraud is perpetrated by the Red Cross wiring money to a local Western Union store, and then that money is being picked up fraudulently by friends and relatives of workers at the call centers.

So it is wire fraud that's our principal charge.

O'BRIEN: And what sorts of penalties do those charges carry?

SCOTT: You know, it really varies. And that varies on three factors.

Number one, was the person what we call a leader or a major participant in the fraud? Were they an employee handing out this money? Were they a leader in the fraud scam? That's the first thing.

The second thing is the amount of money that they were personally responsible for stealing from the Red Cross. Much of our federal sentencing structure in this type of crime is based on the actual dollar amounts that were taken.

And the third factor that's involved is the person's prior criminal record, if any. And those three factors dictate the type of sentence.

O'BRIEN: Final thought, will that money -- will you ever get that money back? I know you'll try for restitution. But this is, you know, hard-earned money that people donated, hoping it would help Katrina victims.

SCOTT: That's absolutely right. And be assured when we obtain sentences on these cases, as we've already gained seven convictions -- and we're going to continue to convict people as we go along on this thing -- we are going to ensure that the courts order restitution in the full amounts that were stolen from good-hearted American citizens who were simply donating to the Red Cross to help their fellow citizens in a time of need.

O'BRIEN: U.S. attorney McGregor Scott of Sacramento.

Thank you very much.

SCOTT: Thank you.

O'BRIEN: Carol.

COSTELLO: Your morning "House Call" is coming up next. Some of the biggest health breakthroughs of the year, including a new device to zap away zits. We're not kidding.

Stick around.

(COMMERCIAL BREAK)

COSTELLO: Some tremendous breakthroughs in 2005. "Popular Science" magazine searches for the best of the best, including top New advances in personal health care.

Mark Jannot of "Popular Science" is here to tell us all about them.

Welcome.

MARK JANNOT, EDITOR, "POPULAR SCIENCE": Thanks, Carol.

COSTELLO: These are amazing items. First of all, tell us how you came up with the best of the best. JANNOT: Well, every year we select our best of what's new, which is 100 top technologies of the year that really can transform your life, my life, people's lives. And...

COSTELLO: Talk about transforming your life, this first item is just incredible.

JANNOT: It is.

COSTELLO: It's a prosthetic arm. And you can actually -- it actually gets signals from your brain.

JANNOT: It's the Neuro-Controlled Bionic Arm. So we're entering, you know, Steve Austin territory here.

COSTELLO: Yes, it's like "The Six Million Dollar Man."

JANNOT: It's the first prosthetic that will take signals from your brain and control the arm like a natural arm. Jesse Sullivan, who's the only person so far fitted for this thing, has electrodes planted in his chest that receive the natural brain signals and then send them to a computer in the arm that, you know, makes it have the natural motion.

COSTELLO: I'm looking at the picture here. And it's just absolutely amazing.

JANNOT: Yes. He said the day that he first used it was the best moment since his accident that had cost him his arm in the first place.

COSTELLO: There's also something with the knee, too, that they've developed. Tell us about it.

JANNOT: Right. That's the Ossur POWER KNEE. This is the first motorized prosthetic with its own brain, essentially.

This is a knee that is -- that synchs up with the healthy leg. They put sensors all around the healthy leg to measure pressure and motion 1,300 times a second and then wirelessly send that information this to this prosthetic so that it can stay in sync with the healthy leg.

COSTELLO: With the healthy knee. So we're seeing the man walking there, and he's walking very smoothly.

JANNOT: Yes. It's absolutely far more smooth motion than any other prosthetic up until now.

COSTELLO: That's unbelievable.

OK. Let's get to the more mundane inventions, shall we?

JANNOT: Well, none of this is really mundane.

COSTELLO: None of these can really equal those. JANNOT: Well, that's true.

COSTELLO: But let's start with this one, the Zeno Acne Zapper.

JANNOT: Well, now, if you have an acne problem, this is hardly mundane. This is a new product that is the most effective over-the- counter acne treatment.

You turn it on. And then you put it up to your -- it uses heat to zap around zits, actually. Heat is like Kryptonite to...

COSTELLO: OK. Let me put it on my hand.

JANNOT: So you put it on the zit for two and a half minutes. It's 119 degrees. You'll see it -- you'll feel it heating up here.

COSTELLO: It's 119 degrees?

JANNOT: It goes up to 119 degrees for two and a half minutes.

COSTELLO: Oh, I feel it.

JANNOT: And it breaks down the bacteria that cause the inflammation. And within 24 hours the zit goes away.

COSTELLO: So essentially it burns it from your skin.

JANNOT: Yes, exactly. Ouch!

COSTELLO: That's pretty amazing.

OK. The next one we want to talk about is the Body Bug (ph), because that is one of my favorites.

JANNOT: Well, this is like having a personal trainer strapped to your triceps. You put it right up here on your tricep, your right tricep. It's got four different sensors in it that figure out how many calories you're burning, whether you wear it throughout the day or just during exercise.

And then you upload it to their Web site and it will tell you your calories burned versus the calories that you took in during the day. And, you know, it makes it much more easy to lose weight.

COSTELLO: Here, let's show our viewers once again. Which camera -- there it is -- just to show them what it looks like.

JANNOT: It's very small.

COSTELLO: So, you know, you're always on the treadmill running and they give you that readout and you know it's wrong.

JANNOT: Right, exactly. It's nowhere near as accurate. This is accurate to about 92 percent, which is as accurate as you can get with actual lab test that are much more extensive and expensive than that.

COSTELLO: Very cool.

Let's talk about this one, because this could really make a difference in so many people's lives. The diabetic inhaler.

JANNOT: Now, this is incredible, yes. This is the Exuberant (ph) from Pfizer, which is the first inhalable insulin. And it's like a gun, as I think we were saying.

You -- it will save millions of diabetics from having to take their insulin with a shot. Well, I guess it's not working now. But it...

COSTELLO: It is disturbing, frankly.

JANNOT: It would look like a vapor and then you would suck it in through here. But it will save millions of people from having to use a shot, and it may make it a lot easier for other people who are afraid of shots to get on insulin, which they should. It's the first medicine to use the extraordinary surface area of the lung to get medicine to the bloodstream.

COSTELLO: And this really works, because I know a lot of diabetics might be, you know, kind of loathe to use it because you want to make sure that you're getting your insulin.

JANNOT: No, no, absolutely. This has been approved by an FDA panel. They expect full FDA approval some time in 2006.

COSTELLO: That's terrific.

OK. Let's move on to the LifeStraw.

JANNOT: Well, this is an amazing device. It looks like a flute, but it's a straw that you can use to get drinkable water for an entire year. A single person can drink for a year through this straw.

It has three different filters in it to filter out dirt and bacteria and viruses. More than 99 percent of bacteria and viruses. So there's more than a billion people worldwide that do not have drinkable water, and this thing is $5 and gets you drinkable water for a year.

COSTELLO: So you can get a glass of water out of a stream, put it in, and it will purify the water?

JANNOT: Yes.

COSTELLO: Wow.

JANNOT: It takes a lot of effort, I've heard, to, like, suck it through all those filters. But obviously it's worth it if you don't have drinkable water otherwise.

COSTELLO: Absolutely. Fascinating stuff.

Thank you so much for joining us this morning. JANNOT: Thank you, Carol.

COSTELLO: Mark Jannot of "Popular Science" magazine.

Back to you, Miles.

O'BRIEN: Coming up, we'll talk to three brothers. Like a lot of folks, they say their dad taught them right from wrong. Well, so, how hard was it to turn him in for a string of bank robberies? We'll ask them ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Good morning. 9:30 on the East Coast. Good to have you with us.

COSTELLO: It certainly is. It's 9:29 Eastern Time. Let's get right to the news.

The mayor of Milwaukee, Wisconsin, asking for the public's health in solving a vicious street attack. People say a man honked at a group of teenagers trying to get them to move out of the street. Instead, the group surrounded his car, dragged the man out and brutally beat him.

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