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CNN LIVE SUNDAY

Powerball Winner Still Unidentified; Upstate New Yorkers Stock Up on Generators; Outsourcing Port Management Abroad; Bird Flu Fears; Mardi Gras Celebrations Are Scaled-Down; How To Avoid a Tax Audit

Aired February 19, 2006 - 17:59   ET

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


CAROL LIN, CNN ANCHOR: It's 6:00 p.m. in Albany, New York, 5:00 p.m. in New Orleans, and this is CNN LIVE SUNDAY. I'm Carol Lin.
Ahead in this hour, someone somewhere is counting his or her lucky stars today. We are live at the convenience store where they're all abuzz over the news of a winner.

Plus, outsourcing. Port security. Talks that an Arab company based in the Middle East is going to manage some U.S. ports.

And the spread of bird flu. Why Americans should start caring. But first, the headlines.

U.S. Marines now on the scene of the mudslide that wiped out a Philippines village. They're helping overwhelmed rescue and recovery crews there. More than 900 people are still unaccounted for.

The Pentagon now confirms that 10 U.S. service members are dead, after two transport helicopters crashed Friday off the coast of the Africa. Two of those on board survived. The cause of the crash still unknown.

And despite America's worst ever national disaster, New Orleans residents and visitors are refusing to let Mardi Gras season pass uncelebrated. It's cold and rainy there, but the parades are still rolling and the beads are still flying.

Take a gander at these numbers. They made some person or persons very wealthy last night. It's the winning record Powerball lottery combination, and if they haven't fainted by now, somebody is holding the winning ticket. Now that somebody has yet to show his or her lucky face.

But we do know where they bought the ticket, this convenience store in Lincoln, Nebraska. The store's owners are happy too, because they get a chunk of the winnings, a small chunk by comparison. But nobody at the U-Stop store in Lincoln is complaining.

CNN's Jonathan Freed is there right now. Jonathan, when do they think the winner's going to coming forward?

JONATHAN FREED, CNN CORRESPONDENT: Hello, Carol. Well we were talking to the Nebraska Lottery, and they tell us that the winner has up to six months to come forward. Now when the person does at least contact the Lottery Corporation, they're going to be advised, "You know what? You don't want to necessarily rush into this. You want to talk to your banker, if course, you want to talk to your lawyer. You want to talk to your family and your friends, especially those closest to you," because they say that this is not only going to change your life, but the lives of the people immediately around you as well.

Now, that $365 million ticket was bought right here in this store at about ten after 3:00 last Friday afternoon at that register back there. And I am joined now by Mick Mandl who is the owner of this store. Hi, Mick.

MICK MANDL, OWNER, U-STOP STORE: Hi.

FREED: So how has your life changed in the last 24 hours?

MANDL: Well its gotten a lot more exciting.

FREED: I'm sure that it has. Now for awhile there, you told me you thought that you were actually, yourself, going to come into about $3.6 million. Tell me how that went today.

MANDL: When we got here, we talked to the lottery people, and they capped it at $50,000.

FREED: That's because store owners like yourself get one percent of the winnings, right?

MANDL: Yes, one percent, but the cap is at $50,000.

FREED: But you're $50,000 richer today than you were yesterday, right?

MANDL: Yes, that's a good day's work.

FREED: Now you've sort of narrowed it down or helped them narrow it down to perhaps four potential people who bought the ticket.

MANDL: Four or five people that bought the ticket at 3:09.

FREED: And you did that by using your surveillance cameras, right?

MANDL: That's correct.

FREED: So, were any of them regular customers, did you recognize them at all?

MANDL: Well I didn't personally, but a couple of the clerks did.

FREED: So they thought they knew who the person is.

MANDL: Yes.

FREED: So a sense of how regular a customer this person is? Might they show up?

MANDL: A couple of them were real regulars, they thought. FREED: Now you told me that the $50,000 in all of this is going to come in handy. Tell me why.

MANDL: Yes, they're going to -- the major road that goes by our store, they're going to tear the bridge down and rebuild it. It will be closed for a year, so we'll probably lose 95 percent of our vehicle traffic that goes by the store a day.

FREED: So for you, the timing couldn't be better?

MANDL: Yes, it's right.

FREED: All right, well Mick Mandl, thank you very much. Good luck to you and we stand here, Carol, and we wait to see if a person is actually going to show up or take their time before they get their affairs in order.

LIN: Jonathan, does the owner know whether the person did a quick pick and just let the computer pick the numbers, or if they picked the numbers themselves?

FREED: It was, for those of you scoring at home, it was a quick pick. It wasn't birthday's or anything like that.

LIN: Oh.

FREED: You play birthday's, Carol?

LIN: Yes, well you know, there's no science to it. But I mean, just to think of the sheer luck it would take for the computer to come up with your numbers is amazing.

FREED: Quick pick and they bought five, it was one of the five that they bought of the quick picks. They spent five bucks.

LIN: Gosh, I hope we find out soon.

FREED: Not a bad return.

LIN: You bet, what an investment in time, five minutes in the U- Stop store. All right, thanks, Jonathan. Let us know if you hear anything.

FREED: Thanks.

LIN: The other big story, big story, we're covering, the severe weather across the country. Now, take a look at upstate New York. Actually, this is Saratoga Springs. It's locked in a deep freeze. One of several Albany-area communities relying on fireplaces and wood stoves to keep homes habitable. It's the third day since a winter storm knocked out electricity to nearly 200,000 customers in the Northeast. Most of them in New York, 40,000 homes in New Hampshire and nearly that many in Maine. Utility crews are on the job day and night working to restore power.

And this is what those people don't want to hear right now. It may actually be several days before power is restored to some homes. Scott Patterson from our New York affiliate "Capital News 9" reports on the most popular item in many home stores there.

(BEGIN VIDEOTAPE)

SCOTT PATTERSON, CAPITAL NEWS 9 CORRESPONDENT (voice-over): As soon as these Troy-Bilt generators get off the forklift at the Lowe's in Wilton, they're being grabbed right off.

UNIDENTIFIED MALE: A couple of days without power and I had to get a generator. Its hard finding one.

UNIDENTIFIED MALE: You can power up quite a bit with it. You can do a furnace, refrigerators, and lights, whatever you need.

UNIDENTIFIED FEMALE: As a matter of fact, as we pull them out of our receiving department, people are grabbing them and taking them right off the pallets as we're pulling them up through.

PATTERSON: Several hundred generators have been shipped in. Assistant store manager Lori Bogan (ph) says Lowe's has a chain-wide emergency plan for when disasters hit.

UNIDENTIFIED FEMALE: It's like when the hurricane hit down in Louisiana, they actually shipped some stuff out of our stores up here and they coordinated, tried to get as much supplies down to there as possible.

PATTERSON: Now stores around the country are helping those left powerless in the capital region. Lisa Clark (ph) knew it was time to get a generator when the temperature in her house got down to 40.

UNIDENTIFIED FEMALE: We listened to the emergency radio and it says maybe Wednesday. So what do you do? You can't let it get any colder.

PATTERSON: As for those who purchased generators on Saturday, most seemed quite happy.

UNIDENTIFIED MALE: The heating system, mainly, and water pump, hot water heater, refrigerator, of course.

PATTERSON: Kevin Rank (ph) sees the $700 price tag as an investment for the next time Mother Nature decides to blow into the town.

UNIDENTIFIED MALE: I'll tell you what, it's coming, we're going to get it.

PATTERSON: You just never know when. In Wilton, Scott Patterson, Capital News 9.

(END VIDEOTAPE)

LIN: All right, but check out the rest of the country. The deep freeze stretches all the way to Texas, where surprised drivers have been slipping and sliding on ice roads all day. Dallas fire and rescue crews have been busy responding to a few major wrecks, but mostly fender benders. Police report at least five cases of people crashing into fire trucks and ambulances already parked at accident sites.

Is the United States selling its security? Well, outraged lawmakers on both sides of the aisle say yes. It's a reaction to this week's announcement that six of this country's busiest shipping ports will fall under the control of the an overseas company, a company owned by the United Arab Emirates. The ports involved span the East and Gulf Coast. One senator today called it something that definitely needed more investigation. Another said it was out and out wrong. CNN White House correspondent Elaine Quijano has more from Washington.

(BEGIN VIDEOTAPE)

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice-over): Homeland Security Chief Michael Chertoff is defending the Bush administration's decision to approve a deal allowing a state-owned Dubai company, Dubai Parts World to take over operations at six major American ports.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: The general process that has to work before this occurs requires a very thorough review, and where appropriate, necessary conditions or safeguards have to be put into place.

QUIJANO: The ports affected include ports in New York, New Jersey, Philadelphia, Baltimore, Miami, and New Orleans. But both Democratic and Republican lawmakers say that could make Americans less safe.

REP. VITO FOSSELLA (R), NEW YORK: Imagine if today there was an official announcement that Dubai was to take over security at our airports. Would not the American people question why and be somewhat outraged that we were delegate authority and security of our airports to a foreign nation?

QUIJANO: New York Senator Chuck Schumer is calling on President Bush to personally intervene to block the contract.

SEN. CHARLES SCHUMER (D), NEW YORK: Outsourcing the operations of our largest ports to a country with long involvement in terrorism is a Homeland Security accident waiting to happen.

QUIJANO: According to the 9/11 commission report, at least one hijacker drew money from bank accounts based in the UAE to help fund operations. And the commission noted one of the hijackers, Marwan al- Shehhi, was from the UAE. But the Bush administration calls the United Arab Emirates a leading partner in the fight against terrorism.

And Chertoff says there are other factors to consider.

CHERTOFF: Certainly Congress is welcome to look at this and can get classified briefings. You know, we have to balance the paramount urgency of security against the fact that we still want to have a robust global trading system.

QUIJANO: But some who lost loved ones on 9/11, like Peter Gadiel, who held a news conference Sunday, say the administration's move doesn't make sense to them.

PETER GADIEL, SON KILLED IN WORLD TRADE CENTER: If the secretary can assure us that he knows every single person in that company that will be involved with this operation and knows them personally and can vouch for them, maybe I'd take his word for it. But I'd like to see him perhaps outsource the Secret Service to Dubai. Would the president feel comfortable if that happened? You know, he seems to be willing to expose the rest of the country to this kind of danger but when the president has this company doing his protective service, then I'll have confidence in them.

(END VIDEOTAPE)

QUIJANO: Now the company, D.P. World could not be reached for comment. In the meantime, Republican Senator Lindsey Graham is calling the administration's decision, quote, "unbelievably tone-deaf politically."

Last week Democratic Senators Clinton and Robert Menendez said they were working on legislation to ban foreign state-owned companies from controlling operations at U.S. ports. Carol?

LIN: Elaine, thank you. CNN is your security headquarters. So stay tuned day and night for the most reliable news about your security.

Now hope evaporates in the southern Philippines. Rescue workers say the chances of finding any more survivors from Friday's mudslide are almost nil. U.S. Marines have arrived to help. They're providing clean drinking water and medicines. The troops were diverted from planned exercises with the Philippine military.

Now so far, 72 bodies have been recovered, 35 people are injured. And more than 900 people are still listed as missing. CNN's Hugh Riminton is there.

(BEGIN VIDEOTAPE)

HUGH RIMINTON, CNN CORRESPONDENT (voice-over): The U.S. Marines have arrived. An advanced group of 30 men flying to the mountain face. The stated aim still to find survivors.

JEFF O'DONNELL, U.S. MARINE CORPS: There's been some indications that there still may be some people that may be alive, some movement. So we're going to get over, try and help out with the local Filipinos as much as we can to try and start digging.

RIMINTON: But the mountain has given up no living soul since the day of the disaster. And even American tech might is of little use for the task ahead.

EDWARD RUSHING, U.S. MARINE CORPS: What that means for us is heavy equipment is a no-go as of right now because it rains daily, so our excavation is going to have to be in other terms.

RIMINTON (on camera): Shovels, men?

RUSHING: Yes, sir.

RIMINTON: To walk in this debris, it is very difficult not to be pessimistic about the prospects of finding anyone alive underneath all of this. It is simply awe-inspiring, the force that was generated as that mountainside behind cascaded down here onto the river flats, taking this village away. Just even in the least dangerous parts of this landslide, there are pots of quicksand, you sink immediately up to your waist. It's the most difficult task imaginable for searches, even though they say that they still believe they can find people alive somewhere underneath this morass.

(voice-over): The dangerous, pain-staking work is done mainly by Filipinos. All human life is dwarfed in this arena death. The focus is at the school where sounds of tapping were reported where 240 children disappeared.

But specialists listening equipment has heard nothing, nor can the dogs smell life or even death, where the school was. It now lies 28 meters, almost 100 feet under mud, rocks and rubble.

TED ESGUERRA, MOUNTAIN RESCUE SPECIALIST: The chances of survival are so nil because it's a loose soil. It has no pores, therefore oxygen is impossible in this kind of situation.

RIMINTON: It is treacherous when it is dry. It is a potential death trap each time is rains. The doctor says offering hope now is just being cruel to the families.

ESGUERRA: I would like to say, say prayers for the families. That they have passed.

RIMINTON: We met Juan Garcia Saturday when he was identifying the body of his wife; his four children are still missing. Now he is part of the rescue effort, acting as a guide.

JUAN GARCIA (Translator): Today for the first time, I accept that there is just no hope. The mud is too deep. It's painful.

RIMINTON: He is one of the few people who knew this village intimately, who is still alive today.

Hugh Riminton, CNN, South Leyte, the Philippines.

(END VIDEOTAPE)

LIN: Anger erupts in Turkey. Tens of thousands take to the streets. The controversy over the cartoons isn't going away.

UNIDENTIFIED MALE: Are we prepared? Most of the experts say we're not prepared.

LIN: Could the Web be the next target of a terrorist attack? The U.S. government thinks so. And the consequences could be catastrophic.

CHRIS LAWRENCE, CNN CORRESPONDENT: I'm Chris Lawrence live in the French Quarter where Mardi Gras parades are bringing an incredible amount of energy back here to New Orleans. There you go. You'll have all the energy and all that story coming up.

LIN: Who was that? You're watching CNN LIVE SUNDAY, stay with us.

(COMMERCIAL BREAK)

LIN: No end in sight. All over the globe the cartoon protests rage on. This weekend, demonstrators took to the streets in Istanbul, Islamabad, Jakarta and Baqubah. Denmark, where the cartoons first appeared, has pulled its ambassador out of Pakistan. Officials are urging all Danes to leave.

Now let's check on some of the other big stories around the world with CNN's Anand Naidoo. Anand, what's up?

ANAND NAIDOO, CNN ANCHOR: Carol, first off to the Middle East, and Israel is tightening the screws on Hamas. The acting prime minister, Ehud Olmert, says Israel will have no contacts with any Palestinian government in which Hamas plays a role. The Israeli cabinet also decided it will immediately stop the transfer of funds to the Palestinian Authority. Now, Hamas is considered a terrorist organization by Israel, the United States, and several other countries, including the E.U. But it was democratically elected by the Palestinian people.

Meanwhile, the U.S. secretary of state, Condoleezza Rice, is also trying to turn up the heat on Hamas. She heads off to meeting in Egypt, Saudi Arabia and the United Arab Emirates. While in the region, she will try to lobby those governments to deny aid to a Hamas-led Palestinian government. But analysts say she'll likely face stiff resistance from those countries. Many of those nations are angered by Washington's support for Israel.

In Iraq, shootings and bombings leave nine people dead, most of them members of the Iraqi army or security forces. An Iraqi soldier and two police officers were killed in separate shootings in Baghdad. Two civilians died in a car bombing near the entrance to the Green Zone. And a senior police officer and two other people were killed in an explosion in Kirkuk.

Here we are, Carol, clear proof that there is plenty of life after 60. Mick Jagger prancing around like a teenager on stage in Brazil. The Rolling Stones, the real veterans of rock, treated a million fans to free, that's F-R-E-E, free, rock and rock spectacle on Rio's famed Copacabana Beach. And despite fears of violence, there were no incidents. Rio has a reputation for being violent. But no incidents and all of that thanks to the deployment of more than 6,000 police. That's it for me, Carol.

LIN: Wow, Anand, you a Stones man, I bet?

NAIDOO: Yes, you guessed that?

LIN: All right, thanks very much, Anand. Well they're nicknamed the British Oscars, although I'm sure the Brits will hate us for calling it that. Move stars and filmmakers and other assorted glitterati were on hand this evening for the annual BAFTA Awards, when Britain honors the best in film. Now "Brokeback Mountain" already a hot favorite for the Oscars, was the big winner. The story of two gay cowboys took four awards. Best actor went to Philip Hoffman for "Capote" and best actress to Reese Witherspoon for her role in "Walk the Line." Congratulations.

It is a killer. And it's spreading like wildfire. Is now the time to become afraid? Up next, bird flu fears. When will it fly to America?

And a California controversy. Some say that the state is tough on crime. But a newly-discovered loophole for sexual predators indicates that is not so. Details ahead.

(COMMERCIAL BREAK)

LIN: India is taking measures against the spread of bird flu in poultry, 300,000 birds will be killed. Preliminary tests show eight Indian birds have the bird flu. Final tests to determine if its the deadly H5N1 strain, will be performed next week.

Now, France has set up a two-mile protection zone around the spot where bird flu was found in a wild duck. Tests confirm the dead fowl was carrying the deadly H5N1 strain. France is the E.U.'s top poultry producer.

So far, bird flu has now made its way into Nigeria, Africa's most-populous nation. Hundreds of thousands of chickens have already been culled there. Millions more are facing destruction. Still, some poultry farmers say the government is not doing enough to head off a potential catastrophe.

So the news about the bird flu is alarming and we have watched it spread now across Asia, into the Middle East, Europe and Africa. Is the virus flying out of control? Dr. Lynn Lawry is a scientist with the International Medical Corps, a non-profit group that tries to stop disease in places where there is no viable healthcare system. Dr. Lawry, straight forward, answer the question so many people want to know when they see these stories. Is bird flu on its way here to the United States?

LYNN LAWRY, INTERNATIONAL MEDICAL CORPS: I think it's pretty clear that it is a pandemic within the birds and that now that it has hit the migration routes into Africa, that it is likely it will affect the birds all over the world.

LIN: Do you have any idea the timing of it arriving here in the United States?

LAWRY: I don't think it's easy to predict the timing, but it is easy to know that if you can cull the birds, in other words, if you can contain it within birds, you can stop the spread. The problem is making sure that when you ask a farmer who is economically dependent on having these birds that he actually kills them and doesn't put them back into the market.

LIN: Or people who are starving in Nigeria who are going into these pits and taking these dead birds out and eating them?

LAWRY: Right. And that is what one of the problems with this is that we've got so many different countries involved, all with different cultural traditions as well as economic issues and we can't treat it one way all over the world.

LIN: Now you emphasized birds. Right, the bird flu, H5N1, has been mostly found in birds, and yet nearly 100 people have died from bird flu. How is that? Who's most vulnerable?

LAWRY: Right now it's not really clear who's most vulnerable. We do know that the people that have contracted it are those who are chicken and duck farmers. And what we don't know a lot about is how -- what the cultural traditions were in those areas that preceded them contracting it.

It could have been that they drank duck blood. There are some countries where they drink duck blood. Or it could have been where that they culled the herd and then didn't wash their hands before they got rid of the birds.

LIN: And is it fair and would you agree, that some of these countries simply do not have the capacity to contain this virus? I mean, for as many birds as they try to burn, is there a trust in the medical community in places like Nigeria and India and parts of the Middle East have the will and the capacity -- China even -- to stop this thing in its track?

LAWRY: You know, International Medical Corps works in more than 20 countries around the world and we have 20 different programs with 20 different issues. And it is not easy for some countries to handle this. They don't have the infrastructure, they don't have the messaging that they need to be able to get the word out to the farmers. Many of these areas are rural and trying to get to these rural areas is difficult. So, no, you don't have the infrastructure and many countries to contain it, much less prevent it and treat it.

LIN: So what's going to happen, Dr. Lawry, the day that the first bird in the United States is tested positive for H5N1?

LAWRY: I would hope that it wouldn't be pure panic. I think there will be some panic. We tend to react, as opposed to be proactive, but I do think that it will be much easier for us to contain the disease in birds in the U.S. than it is some place in Nigeria or many other countries around the world.

LIN: Dr. Lawry, frightening times, but we'll see what happens. Once again, contained to birds for the most part so far, important to note. Appreciate it.

LAWRY: Thank you.

LIN: Well, in New Orleans, the party is on. That battered city is gearing up for Mardi Gras. But not everyone is happy about it.

And do you remember these? Unused FEMA trailers as far as the eye can see. Well today, Homeland Security Michael Chertoff tells CNN what's going to happen to them.

UNIDENTIFIED FEMALE: The random factor. The IRS randomly chooses who it wants to audit.

LIN: And if you want to make sure you're not one of those people who gets audited, you've got to watch this piece. It's tax time. We've got the tips you'll need. You're watching CNN LIVE SUNDAY.

(COMMERCIAL BREAK)

LIN: "Now in the News."

The U.S. has sent in the Marines to help find victims of the devastating mudslide in the Philippines. So far, 72 bodies have been found. The Red Cross has a list of more than 900 people still missing.

And several lawmakers are questioning a deal that gives management of six major U.S. ports to a company based in the United Arab Emirates. The Bush administration says the country is a key ally in the war on terror, but some lawmakers say the Gulf nation is not free of terrorists ties.

Winter weather has a large part of the nation in an icy grip. Thousands of customers are without power from Michigan to Maine. Five people have died and those deaths are blamed on the storms and the bitterly cold weather.

Lottery official, well, they say there's one winning ticket in yesterday's record $365 million Powerball jackpot. The winning ticket was sold in this store in Lincoln, Nebraska. No, not to that woman. They still don't know who the winner is yet.

Welcome back.

The crowds are small, but Mardi Gras is back in New Orleans. Now despite New Orleans' many hardships, many residents attending the parade say Mardi Gras is an important part of the city's heritage. CNN's Chris Lawrence has been enjoying all the Mardi Gras festivities. He joins me now live from New Orleans with the latest from there.

Chris, no beads. I guess that's a good sign for a journalist.

LAWRENCE: Yes, I guess. I'm taking it easy right now. I've got to ease myself into Mardi Gras, Carol.

You know, it's a little quieter now. Things quieted down. But, boy, there was such an incredible amount of energy here in the French Quarter today. Not the drunken revelry of Bourbon Street, but this was thousands of families coming out here to enjoy themselves with their animals.

Take a look. This is the Barkus parade. And it certainly lived up to its name. Any kind of dog you can think of. From poodles and pugs, to Schnauzer, Great Danes, Alaskan Huskies. They were all parading through the streets of New Orleans today. Barkus is in its 14th year. The theme this year was "The Wizard of Paws: There's No Place Like Home." Certainly a lot of people in New Orleans feel that.

And there's another aspect of this as well. You know there was a lot of human suffering after Hurricane Katrina. A lot of animals were hurt or misplaced during the storm. The money that this parade raised is all going to animal welfare groups to try to provide for some of those animals.

A slightly different story when you cross town into St. Bernard Parish. But again, this is what people here told us about what this parade meant, not only to the animals, but to the city as a whole.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: To see it happy and healthy again is wonderful. Still got a long way to go and I hope and pray for everybody and their families.

UNIDENTIFIED MALE: It's phenomenal. It's just -- I can't believe how many dogs. How many different breeds I saw today. It's just amazing.

UNIDENTIFIED FEMALE: It's good to see these dogs because a lot of them were from Katrina and have been reunited.

(END VIDEO CLIP)

LAWRENCE: Yes, across town in St. Bernard Parish, a smaller crowd there. But just the fact that they held the parade at all is really something to talk about because, you know, massive property damage there. A lot of families who lived there had to be relocated. But the Knights of Nemesis had decided long before the storm hit that they were going to have their first parade in St. Bernard Parish. They did not let the storm stop them today.

Fifteen floats. Families were out there listening to the music, getting the beads thrown their way. They're hoping that a lot of the resident who had to be evacuated and who have not come back to St. Bernard Parish, that this gave them as an excuse to come back, at least for just this one day.

Carol.

LIN: A happy day. Thanks, Chris.

Well, as people along the Gulf Coast try to recover from last year's hurricanes, the questions remain about the government's ability to help. Now one example. More than 10,000 trailer homes purchased by FEMA and parked in Hope, Arkansas, well, they sit unoccupied 450 miles from the coast. Homeland Security Chief Michael Chertoff insists they will be used eventually.

(BEGIN VIDEO CLIP)

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: There are about 10,000 mobile homes in this field in Hope.

WOLF BLITZER, CNN ANCHOR: At a cost of, what, $300 million?

CHERTOFF: Well, that's the purchase price. Now they will eventually be used. Some of them will be used with respect to areas of the Gulf that are not in a flood plain. Some of them have been used with respect to wildfires, people who lost their homes to wildfires in Oklahoma and Texas. Some will be used in hurricanes season this year. For example, in we have hurricanes in Florida or other places where there's wind damage but not flood damage. So this is not going to go to waste.

(END VIDEO CLIP)

LIN: FEMA managers acknowledge that some of the trailer homes parked in Arkansas are sagging under their own weight but they insist that all of the mobile homes will be used in the future.

Now more on Katrina recovery efforts tonight on "CNN PRESENTS: Saving My Town," the fight for Bay St. Louis begins at 8:00 Eastern. Our Kathleen Koch returns to her hometown of Bay St. Louis, Mississippi. It is a personal look at one community's attempts to rebuild.

Other news across America now.

Now, what are the odds of this happening? This is Las Vegas. Not exactly the strip, but close enough, covered with white stuff. Perhaps now you can just ski from one casino to another.

And in Florida, police use stop sticks to blow out the tires of this SUV and capture a car-jacking suspect. Shots were fired but no one was hurt.

And busted in California. Police recover 40 pounds of stolen explosives. Hundreds of electric detonators were also found. They were reported missing from a Fresno lab on Thursday. One man has been arrested.

Terrorists trying to disrupt the American economy might launch future attacks in cyber space. Gary Nurenberg reports that the worry of Homeland Security officials who staged a simulated assault called cyberstorm to see if the country is indeed ready.

(BEGIN VIDEOTAPE)

GARY NURENBERG, CNN CORRESPONDENT, (voice over): Say special forces and the image of hardened fighter's and the war on terror pops readily to mind. But special forces of a different kind recently invaded the secure basement of Secret Service headquarters in Washington to stage another kind of assault, a simulated cyber attack. ALEX WELLEN, CNN CYBERCRIME ANALYST: Are we prepared? Most of the experts say we're not prepared.

NURENBERG: In the larger cyber exercise yet, more than 100 experts from seven cabinet level agencies, foreign governments and corporations like Microsoft and Symantec simulated the kind of cyber attack that experts believe hackers, anarchists or terrorists might be planning.

WELLEN: We haven't seen what they call a Pearl Harbor, a cyber Pearl Harbor, to date. But we know that they are capable of hitting different parts of our finance or different parts of our transportation and emergency systems.

NURENBERG: The exercise was called cyberstorm. Participants simulated online attacks on power grids, banking, finance and retail computer system, health care records and programs that control traffic on the land and in the air.

UNIDENTIFIED MALE: Exercises like these are good. They teach us what the limitations are, responses, and how we can do better.

NURENBERG: The computers used in the $300 million exercise were carefully segregate from the real online world to make sure the simulated attack didn't, by mistake, become real.

Planners know a successful attack could have a devastating effect on the economy.

UNIDENTIFIED MALE: Because, you know, think about it, the Internet and Internet activities are the backbone of our modern economy.

NURENBERG: Exactly the kind of target al Qaeda has indicated it wants to strike. And the net may be venerable.

SEN. JOE LIEBERMAN: We've taken some steps to protect ourselves from cyber attack. We've got to do more.

NURENBERG: A May 2005 government accountability office study concludes the Department of Homeland Security "can not effectively function as the cybersecurity focal point intended by law and national policy." This month's cyberstorm exercise is part of the effort to improve. The plan is to publish results this summer.

Gary Nurenberg, CNN, Washington.

(END VIDEOTAPE)

LIN: CNN is your security headquarters. Stay tuned day and night for the most reliable news about your security.

All right. We found some outrage in California after a newspaper there finds a loophole in the law allowing sexual predators to evade treatment. Up next, Marc Klaas joins me about what can be done.

(COMMERCIAL BREAK)

(WEATHER REPORT)

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JOSEPH SMITH, CONVICTED MURDERER: Every day I think what about I did and I beg God for forgiveness. I will continue to think about the pain I caused for the rest of my life. Judge Owens, I do not ask for mercy for myself. As you have heard, there have been many times that I did not care whether I lived or died. The only reason that I can see to ask you to give me a lighter sentence is for the sake of my family. I do not want to see my children hurt any further.

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LIN: Well, 11-year-old Carlie Brucia is no longer with us, but as you just heard, the man who killed her wants to live. His plea came during last week's sentencing hearing. The jury has recommended death but that decision is up to the judge who will announce his decision next month. You'll remember that Smith's abduction of Carlie two years ago at a Sarasota car wash was videotaped by a security camera. Her body was found a few days later after a massive search.

Now the Carlie Brucia case is in Florida, but sexual predators like Joseph Smith are everywhere. Now California thought it had come up with a tough approach to the problem, but it turns out there is a serious loophole. Marc Klaas has been on the forefront of this issue since losing his own daughter Polly (ph) to a sex predator. He is with us tonight from San Francisco to explain the treatment loophole.

Marc, from what I understand, this involves sexual predators. People who have been convicted twice of a sex crime. All right. They go to Atascadero State Hospital. How is it that these guys are getting out without any treatment?

MARC KLAAS, BEYONDMISSING.COM: Well, they're civilly committed, Carol, and that means that they have turned out from their sentences but they're still considered to be a threat to society. I believe 18 states have civil commitment laws, but in California there's a review every two years to determine if these guys still deserve to be behind bars. What they have found out, the predators have found out, is that they have a better chance of being released under the recommendation of a psychiatrist or a judge than they have of being released by going through the very strict sexual predator program. Which means that if they are released within two, four or six years, that they're released back into society with no supervision whatsoever because they have served out their full-terms. This is a very dangerous situation.

LIN: So how can it be that they're sentenced to this state facility but they can just refuse treatment? I mean essentially they can con a psychiatrist to say that, oh, I'm not going to attack again?

KLAAS: Well, they can con. I mean you just saw Joseph Smith. He was trying to con a judge. These guys are so narcissistic and so glib that they're able to parrot back. Whatever it is that the person there talking to wants to hear so that the judges or the psychiatrists are then able to parade them before society and say, look at all the great work I've done with this individual.

LIN: Well, we had an assembly (ph) person on this issue but she had to cancel.

KLAAS: Right.

LIN: So, Marc, we are getting one side of the story and I'm trying to understand why the California legislature is not closing this loophole and not making that treatment mandatory?

KLAAS: Well, there's a couple of things going on. Number one, you need -- there's two things that have to happen before this can be addressed in California. Number one, you neat elected official who will make this a top priority. Now I don't want to point any fingers, but neither the governor nor our attorney general has ever really made the safety of children a top priority, which I believe is unfortunate because I don't know that there's any other public duty that they can do that's more important than that.

Secondly, you have to close the loopholes. There are a variety of things that can be done, Carol. You can take this two-year limit and change it to five years. That's going to change the whole atmosphere for these guys totally. We need stronger sentences for these guys. If they've been convicted twice, they should never be allowed back into society.

LIN: Well, Marc, do you believe that treatment can even work anyway?

KLAAS: Oh, no, no, no, no.

LIN: So what difference does it make?

KLAAS: Well, treatment is . . .

LIN: So the fact that they've got to just stay behind bars. They've got to lengthen these sentences. There shouldn't be a review after two years, five years, whatever, especially if they've been convicted twice. I mean those are two families who have been violated.

KLAAS: Well, probably it's a lot more than two families. You have to remember, these guys aren't convicted every time they commit one of these crimes.

You're absolutely correct, we need much stronger sentences. There's no question about that. If you're going to have civil commitment, they're going to have to have a review at some point because you're going to find a lot of constitutional lawyers who are going to say that it's a double jeopardy to continue to hold them after they've serve out their sentence.

LIN: All right. Well, on a point of outrage, the Sacramento B (ph) conducted an investigation of 54 offenders who left Atascadero. Eleven are back in custody, including one guy who molested two girls when he was babysitting them. I mean it's just crazy, Marc. Just crazy.

KLAAS: Yes, it is. It's absolutely insane.

LIN: All right, Marc Klaas, I appreciate the time. Thank you.

KLAAS: Sure.

LIN: Well, it can be tough and tedious and downright painful and you're probably putting it off as long as possible. Yep, it's tax time. So up next, we're going to give you tips on how to avoid an audit.

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LIN: When you or your loved one is sick, really sick, who has the time or the wherewithal to figure out if you've got of the best doctor or whether your doctor is even right or the test results or whatever? So some people are paying to have the experts do it for them. Those experts are called health coaches and for a price they'll make sure you get the best medicine that money can buy.

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LIN, (voice over): For big bucks, Pinnacle Care will make your appointments, even go with you. Clients have their cases reviewed by Pinnacle's own physician board. That's why Kevin Cassidy signed up. He believes insurance alone is not enough.

KEVIN CASSIDY, PINNACLE CARE SUBSCRIBER: Eighty percent of the time you're going to a doctor, everything's fine. Then 20 percent of the dime it's a disaster. And the reason it's a disaster is because we don't know.

LIN: There's no way to actually prove that companies like Pinnacle Care can deliver better health care because doctors typically see the sickest patients first regardless of who refers them. But companies like Pinnacle Care are tapping into consumer frustration and selling convenience to those willing to pay for it.

UNIDENTIFIED FEMALE: Oh, this is a lot of room.

LIN: But critics say that's a dangerous sign for healthcare in America.

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LIN: And you'll find out why when you see my full story tomorrow on CNN's "AMERICAN MORNING" beginning at 6:00 a.m. Eastern.

Now finally, getting even with the tax man. Now we've all seen the ads on TV, play less tax and avoid an audit. Well with less than two months to go until tax day 2006, we thought we'd talk to the experts and find out how to pay only what you owe. Adaora Udoji reports.

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ADAORA UDOJI, CNN CORRESPONDENT, (voice over): Alaya McLendon's getting a jump on tax day this year, filing her dreaded return long before the looming April 15th deadline.

ALAYA MCLENDON, COLUMBIA UNIVERSITY LAW STUDENT: My friends are all doing it. So I'm really just the bandwagon jumper, you know, spring break is coming up.

UDOJI: She's a Columbia University law student and every penny counts, so she turned to some experts. Alaya's also part of a booming trend of people filing electronically or using computer software to put together their returns. Taxpayers broke records in 2005. For the first time, a majority, nearly 70 million out of 133 million, filed electronically. A number that's expected to keep rising.

But what about audits which sends shudders across the country? Does using computer software or electronic filing up your chances? No, says tax lawyer Donna Levalley. IRS red flags, she says, stay the same.

DONNA LEVALLEY, TAX SPECIALIST: They have three favorite categories that they look at for audits, cash businesses because they have ability to manipulate their income more than W-2 people, people who make over $125,000 or more because, well, auditing them and rejecting those deductions creates a larger stream of revenue, and people who claim they get earned income tax credit. Because, unfortunately, there's a lot of fraud in the program.

UDOJI: But there are ways to minimize the risk, she says. For starters, make sure you sign your return. As crazy as it sounds, many people forget. Be sure to put down the correct social security number. And make sure the math is right. Many software and online services guarantee the math, as do tax specialists like the ones Alaya is using.

MCLENDON: It makes more sense actually to come in and have someone do it and then there are really guarantees. And if I mess up, there's no one but me to blame.

UDOJI: But you can do it all right, say the experts, and still get audited.

WILMA HAYES, H&R BLOCK: The random factor. The IRS randomly choose whose it wants to audit.

UDOJI: At the end of the day, they say, honestly is the best defense. Report all your income and have receipts for everything. So no matter how you file, you'll make the IRS happy.

Adaora Udoji, CNN, New York.

(END VIDEOTAPE) LIN: There is much more ahead on CNN this evening. Coming up at 7:00 Eastern, another hour of today's top stories. And at 8:00 p.m., "CNN PRESENTS: Saving My Town" the fight for Bay St. Louis. And 9:00 Eastern, "LARRY KING WEEKEND." And tonight Larry's guest, legendary journalist Bob Woodward and Carl Bernstein.

And I'll be back at 10:00 Eastern. Tonight, you are going to meet a woman who says her family is the mafia family in the TV series "The Sopranos" and she is suing to prove it. The hour's headlines when I come back and then "CNN PRESENTS."

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