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NANCY GRACE

Anna Nicole Smith`s Roller-Coaster

Aired December 28, 2006 - 20:00:00   ET

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


NANCY GRACE, HOST: Multi-millionaire cover girl Anna Nicole Smith -- there should be a whole law school class on her -- wills and estates, paternity law, you name it, with a brand-new baby girl, the sudden death of her 20-year-old son, Daniel, and eviction battle over a Bahamas mansion and a paternity suit to boot. Tonight, a special report on one woman`s whirlwind of legal and emotional drama.
(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: This man, Anna Nicole Smith`s attorney, Howard K. Stern, says he`s the father of her new baby girl.

LARRY KING, HOST, "LARRY KING LIVE": So you are the father?

HOWARD K. STERN, ANNA NICOLE SMITH`S ATTORNEY: Yes, sir.

UNIDENTIFIED FEMALE: But not so fast. Now this man, photographer Larry Birkhead, also says he`s the father, two men fighting in the media, both claiming they`re the father of Anna Nicole Smith`s new baby girl. Quick, somebody call Maury Povich!

UNIDENTIFIED MALE: You are not (INAUDIBLE)

UNIDENTIFIED FEMALE: And Anna Nicole Smith, who has spent the last decade in courts, arguing over her late husband`s estate, may now have to spend even more time in court arguing over who fathered her baby. "Showbiz Tonight" has for you the latest on Anna Nicole`s baby papa drama.

UNIDENTIFIED FEMALE: It`s just so tawdry and horrid and sad.

UNIDENTIFIED FEMALE: Representatives for Larry Birkhead, who describe himself as Anna Nicole Smith`s estranged boyfriend, say they served Anna with court papers in the Bahamas. Anna Nicole went there to give birth to her baby daughter. As you may know, her 20-year-old son, Daniel, died tragically days after his sister was born. TMZ.com`s Harvey Levin has interviewed Larry Birkhead.

HARVEY LEVIN, TMZ.COM: What we`re being told is that he is pulling out all the stops here and is making some pretty shocking allegations against both Anna Nicole Smith and Howard K. Stern.

UNIDENTIFIED FEMALE: In a sealed lawsuit filed in Los Angeles, Birkhead`s reps say they`re asking for drug testing on both mother and child. Birkhead also wants a paternity test, and legal and physical custody pending those drug tests. In a statement to "Showbiz Tonight," Birkhead`s attorneys say, quote, "He is concerned for the health and safety of the child based upon drug issues and manipulation by a third party for purposes contrary to the interests of the child."

LEVIN: Larry Birkhead, from what I know -- and I`ve been talking to him for about three months now -- he wants to have a role in this child`s life. He was telling me for months now that he -- that Anna Nicole moved down to the Bahamas, A, to get away from him, B, to establish residency to make it difficult for him to fight for custody.

UNIDENTIFIED FEMALE: Back in the Bahamas, Anna Nicole and the other man claiming to be her child`s father, Howard K. Stern, are telling a different story. For years, and through her pregnancy, the two presented a platonic relationship, which was on display on her reality show "The Anna Nicole Show."

ANNA NICOLE SMITH: How are you going to kick my ass?

STERN: I think I`m going to beat you.

UNIDENTIFIED FEMALE: But once the baby was born, Stern suddenly started saying he`s the father and proclaiming his undying love for Anna Nicole, like he did on "Larry King Live" recently.

STERN: I`ve loved her for quite some time.

UNIDENTIFIED FEMALE: The two recently had a commitment ceremony in the Bahamas. As for Birkhead`s claims that Stern`s not the dad?

KING: Were DNA tests taken?

STERN: Well, based on -- based on the timing of when the baby was born, there really is no doubt in either of our minds.

UNIDENTIFIED FEMALE: This whole triangle has some wondering who`s telling the truth. TMZ.com`s Harvey Levin tells "Showbiz Tonight" it`s Anna and Howard who are acting suspiciously by not rushing to perform a DNA test.

LEVIN: It makes me think, you know, if Anna Nicole could make Larry Birkhead go away with a DNA test that she would simply do it. And I guess my gut tells me maybe she doesn`t think he will go away if that test is performed and the plot thickens.

UNIDENTIFIED FEMALE: But "Newsweek`s" Nikki Gosten (ph) tells us she`s throwing a skeptical eye on Birkhead.

NIKKI GOSTEN, "NEWSWEEK": You think in the beginning, when you read it, Oh, he wants physical and legal custody. That`s really great. But then it turns out he`s hired his own publicist to announce this. So he`s also got his own agenda.

UNIDENTIFIED FEMALE: Either way, one thing is clear: It didn`t take long for the Anna Nicole story to go from the tragedy of a mother losing a son days after having a daughter back to the crazy media circus we`ve come to associate with Anna Nicole Smith.

GOSTEN: There`s this dead kid involved. If he wasn`t involved, we`d all just have a laugh, but it`s really sad because there`s now a newborn child`s life involved. And it just seems really just terribly sad.

KING: The world knows her as Anna Nicole Smith. That`s not your given name, though, right? Vicki Lynn Marshall is your -- that`s the birth certificate, right?

SMITH: No, that was married name, actually.

KING: Oh, that`s right. Is Vicki Lynn your real name?

SMITH: (INAUDIBLE) Hogan is my birth certificate name.

KING: Who changed it to Anna Nicole Smith?

SMITH: That`s my other married name. That`s my first married name.

KING: Your first husband was named Smith...

SMITH: Right.

GRACE: ... and your second husband was named Marshall?

SMITH: Right.

KING: Where did Anna Nicole come from?

SMITH: Anna Nicole came from Guess Jeans. Paul Marciano (ph) and me and one of his friends, we were sitting around, coming up with a stage name, and that`s where that came from.

KING: Did Guess Jeans hire you to be their model after the Playmate of the Year or before?

SMITH: Before.

KING: So you went to work for them before Playmate -- before "Playboy" magazine caught on to you?

SMITH: Right.

KING: And Howard, how long have you represented Anna?

STERN: I`ve represented here for about five years.

KING: So you`ve been with her through all this...

STERN: Through a lot of this. A lot of this.

KING: All of this...

STERN: Oh, yes.

KING: Struggle, so to speak.

STERN: Oh, yes.

KING: Let`s go back a little. You had a tough background, didn`t you? You were raised in a -- your parents divorced shortly after your were born. You never went (INAUDIBLE) in 8th grade. It was a tough childhood.

SMITH: I had a time, a tough time.

KING: In Texas.

SMITH: In Texas.

KING: How were you discovered? How did Guess Jeans find you?

SMITH: There was an ad in the paper for "Playboy`s" Playmates, and I went to the ad and took some pictures. And "Playboy" called me and flew me to Los Angeles. And I was on the March cover of 1992, and that was the cover that Paul Marciano saw.

KING: I see. So they saw you when you were on the cover but not when you were Playmate of the Year, right? That`s after.

SMITH: Right. Right.

KING: And they hired you off that?

SMITH: Right.

KING: And were you...

SMITH: It was, like, eight months later.

KING: Were you a model before applying to "Playboy" to take your picture?

SMITH: What?

KING: What made you do that, to -- to...

SMITH: Because I wanted to become a model and an actress. So I thought, Well, here we go. But I chickened out four times before I did that, though. It was really scary.

KING: You did? Were you married at the time?

SMITH: I was not married at the time

KING: Were you divorced?

SMITH: Well, wait a minute. Let me think. I was not divorced at the time. I was still married, but I was separated and we were living -- my husband (INAUDIBLE) Texas and I was living in Houston. I had moved from (INAUDIBLE)

KING: When -- was it tough for you the first time to be photographed?

SMITH: Absolutely. It was...

KING: A little girl from Texas. Don`t happen every day, right?

SMITH: Right.

KING: How did you get through it?

SMITH: They talked to me a lot. They just kind of talked me out of my robe for about 30 minutes. It was about 30 minutes, and (INAUDIBLE)

KING: What did being on the cover mean to you? Other than Paul -- I mean, did it get you a lot of attention, other than the Jeans thing?

SMITH: In my hometown, it did.

KING: Yes. I mean, you were the rage, I guess.

SMITH: Right. Right.

KING: Did you have a child at the time?

SMITH: I had my son Daniel.

KING: How old is he now?

SMITH: He`s 16.

KING: First time I talked with you, I think he was 8 or 9 or 10.

SMITH: Yes, he was a baby.

UNIDENTIFIED FEMALE: The mystery begins here in the Bahamas capital of Nassau, a Caribbean paradise where Anna Nicole had traveled to give birth to her new baby away from the prying eyes of the paparazzi. Her son, Daniel, reportedly flew in to see his new baby sister and went straight to his mother`s room here at Nassau`s Doctors Hospital. A local police official says it was there that tragedy struck. The official tells the Associated Press, quote, "It would appear from our report that the mother had gotten up, saw him in the chair, and he appeared to be sound asleep. She tried to wake him up. He was unresponsive, and she sounded the alarm." Medical personnel reportedly rushed in to try to save him, but were unsuccessful.

A statement on Anna Nicole`s Web site says, quote, "Anna Nicole is absolutely devastated by the loss of her son. He was her pride and joy and an amazing human being."

LEVIN: She really did live a reality show with and without cameras. And this -- this young man who died really was almost her caretaker, in many ways.

UNIDENTIFIED FEMALE: Anna Nicole had Daniel when she was just a teenager, during her short-lived first marriage. On her reality series, "The Anna Nicole Show," the shy teenager with braces was often the target of ribbing from his playful mom.

SMITH: Guess what the loser has to do? I get to put makeup on your face.

DANIEL WAYNE SMITH: I don`t need that makeup stuff.

SMITH: Then you better win.

UNIDENTIFIED FEMALE: But in reality, Daniel was always her biggest supporter through his mom`s roller-coaster life.

LEVIN: Daniel really was the glue in her life that -- you know, men came and went and jobs came and went, but Daniel was a constant in her life. And a lot of people say Daniel was a stabilizing force.

UNIDENTIFIED FEMALE: In 1995, a 9-year-old Daniel was by Anna Nicole`s side when she buried her 89-year-old husband, oil tycoon J. Howard Marshall. That death kicked off a long legal battle between Anna Nicole and her late husband`s family over his multi-million dollar fortune.

UNIDENTIFIED MALE: Sir, can you please be courteous?

UNIDENTIFIED FEMALE: That battle got even murkier this summer with the U.S. Supreme Court decision that allowed Anna Nicole to continue the lawsuit. And later, another strange twist when her chief nemesis in the lawsuit, her late husband`s 67-year-old son, Pierce Marshall, died in June of an infection.

KING: And how did Daniel handle all of this?

UNIDENTIFIED FEMALE: On "Larry King Live" in 2002, Anna Nicole Smith talked about her son handled his mother`s public fight.

SMITH: He dealt with it very well. He`s -- we`ve always stuck together.

UNIDENTIFIED FEMALE: And now Anna Nicole is preparing to raise her new baby daughter and continue her long court struggle without the love and support of the young man who has been her rock, her one constant for all of her adult life.

LEVIN: This has got to be a tragedy beyond words, that it`s not just losing her son, but it`s losing her compass.

UNIDENTIFIED FEMALE: Anna Nicole Smith`s life has often resembled an outlandish soap opera.

SMITH: What are you talking about?

UNIDENTIFIED FEMALE: But now her soap-opera life has turned into a heartbreaking tragedy. Just three days after giving birth to a baby girl, her only son, 20-year-old, Daniel Wayne Smith, suddenly and mysteriously died, reportedly right before her very eyes.

(END VIDEO CLIP)

GRACE: Next, the delivery of Anna Nicole Smith`s brand-new baby girl leads to an all-out paternity battle in a California courtroom.

(COMMERCIAL BREAK)

GRACE: Cover girl Anna Nicole Smith shoots to stardom as a celebrity cover girl after the death of her billionaire husband, J. Howard Marshall. A huge battle ensues over the estate, making it all the way to the U.S. Supreme Court. By her side, long-time attorney Howard K. Stern. June 2006, Smith announces her pregnancy but not the identity of the father. Ex-boyfriend, photographer Larry Birkhead, says he`s the dad and demands a paternity test.

(BEGIN VIDEO CLIP)

GRACE: Jean (ph), the whole issue is, does this baby -- I believe that the baby`s name is Dannielynn (ph), Dannielynn Hope. Does it belong biologically to -- I believe he`s a photographer -- Larry Birkhead? What`s in it for him, other than getting to see his child grow up? Is there any money in it for him?

UNIDENTIFIED FEMALE: I think there could be because he could ultimately possibly get custody of the child.

GRACE: What?

UNIDENTIFIED FEMALE: Then Anna Nicole could possibly have to pay him.

GRACE: Whoa, whoa, whoa, whoa! Where are you getting that? Why would he get custody?

UNIDENTIFIED FEMALE: Well, Nancy, if she, at some point, he would take her into a court to say that she would not be a fit mother to have her child -- and this is all speculation, of course -- ultimately, he could get custody of that child.

GRACE: Well, his number one exhibit would be the death of Anna Nicole Smith`s son, her young son Daniel. And tonight, let`s not have any piling up on Anna Nicole Smith. There`s absolutely no reason for her to be the butt of people`s humor after what all she`s gone through. But she may be in for the custody fight of a lifetime. Tia Brown and "In Touch Weekly" is covering this. It`s my understanding that this guy who claims he`s the daddy, the amateur photographer, Larry Birkhead, is claiming Anna Nicole Smith engaged in fraud with her lawyer, Howard Stern, to name him the father on the birth certificate. Is that the fraud?

TIA BROWN, "IN TOUCH WEEKLY": Basically, that is the fraud. He`s saying that Anna knew and has known all along that he is the father of the baby, and even Howard has said in the past that based on timing, it is a possibility that Larry is the father. So to purposely take the baby to another country and to become a citizen there and just not allow him to participate in the baby`s life is a form of fraud.

GRACE: Out to Bethany Marshall, psychoanalyst, joining us tonight. Bethany, a lot of legal lawsuits swirling regarding Anna Nicole Smith right now. But we don`t hear her stepping -- stepping up to a microphone, explaining. She`s obviously refusing to do the paternity test, the DNA test. Why?

BETHANY MARSHALL, PSYCHOANALYST: I think she and Howard Stern are what we call complementary narcissists, meaning that they have the unique individual attributes of narcissists, but that`s blossomed once they got together, so they feel that they`re special, unique, above the law. They put each other on a pidestal, but they flagrantly violate the rights of others. I think the most startling example was going through this commitment ceremony while her son was lying in a funeral parlor. She jumped into the ocean while she had -- right after a C-section, risking infection. And she went through hair and makeup for million-dollar pictures while she had a newborn.

So I think it`s really just a pattern of blatant disregard for the rights of others. And at this point, not just Larry Birkhead, but disregard for the rights of her daughter, who needs to know who the father is.

GRACE: And back to Gloria Allred, lawyer and family rights advocate. Gloria, what would be the possible motivation of Anna Nicole Smith hatching up somje fraud scam?

GLORIA ALLRED, FAMILY RIGHTS ADVOCATE: Well, I think that trying to prove fraud, by the way, is going to be very, very difficult. I think the first step is to try to establish paternity and to do that in the family law setting. I don`t know why Anna Nicole Smith is avoiding taking -- having the DNA test done. Maybe she`s emotionally unable to do it. Maybe she`s getting bad advice or maybe she`s afraid of the result. We don`t know the answer. But I think at some point, she`s going to have to provide those tests.

GRACE: Back out to you, Ray Giudice and Renee Rockwell. All of the allegations against her -- what would be the possible motivation for fraud? First to you, Ray.

RAY GIUDICE, DEFENSE ATTORNEY: Well, I think one of the actions of fraud is telling the authorities in the Bahamas that she owns that house to claim permanent residency, where at best, she was either renting the house or it may have been a gift or a transfer waiting to happen. So I actually think that`s the allegation of fraud that the Bahamas are trying to evict her on.

GRACE: Renee?

RENEE ROCKWELL, DEFENSE ATTORNEY: And Nancy, the importance of that is because if she`s not a resident of the Bahamas, then she goes back to the States. And then she`s fair game, and you can have a state court say, Provide that baby for that simple DNA test, and they`ll find out like that.

GRACE: And back to Gloria Allred. Gloria, I still am not clear -- I just prosecuted violent felonies and I`ve never had to deal with a paternity lawsuit in court. What do you have to go and show the judge in order to get the judge to order a paternity test?

ALLRED: Well, of course, first and foremost, a threshold question is jurisdiction. Was she or is she a resident of the state of California? And I think that she was and I think that she is. After that, there are going to have to be some facts which show that Larry, who is the one who is seeking to establish paternity, was -- that he`s going to declare that, in fact, he was with her at the time that the child was conceived.

(END VIDEO CLIP)

GRACE: When we come back, the sudden and shocking death of Anna Nicole`s 20-year-old son, Daniel. Were drugs involved?

(COMMERCIAL BREAK)

GRACE: September 2006, Anna Nicole Smith delivers a baby girl, Dannielynn Hope. Ecstatic and overjoyed, Smith celebrates the new baby girl, but just three days later, tragedy. Her 20-year-old son, Daniel, dies suddenly in the same hospital room while visiting his mom and her baby. Cause of death, a lethal mix of drugs.

(BEGIN VIDEO CLIP)

GRACE: We`ve all seen Anna Nicole Smith from when she was a Guess model to when she became a celebrity star, married a millionaire and took her fight all the way to the U.S. Supreme Court after his death. But now she`s in the headlines in a very, very different way. Her boy, pictured here, passed away in a Bahamas hospital. He was there visiting his mom at the birth of her new baby girl. But now, doubt is cast onto the cause of his death.

Straight out to Dan Wakeford (ph), executive editor with "In Touch Weekly." What is the latest on the investigation into Daniel`s death?

DAN WAKEFORD, "IN TOUCH WEEKLY": Well, the latest is the toxicology reports have -- the early reports have just been released, and they have actually confirmed what "In Touch" actually exclusively reported, that anti-depressants were in his body.

GRACE: Anti-depressants in his body, but to medical examiner and forensic scientist Dr. Jonathan Arden, you could say that I would guess about 80 percent of the people in Manhattan are on anti-depressants, all right? And they`re not falling over in the hospital dead. I don`t see it!

DR. JONATHAN ARDEN, MEDICAL EXAMINER: Well, I don`t see it yet either, Nancy. Many people take many kind of prescription medications, and of course, as you say, they don`t die from those things. We need to know what concentration was in his blood. We need to know what else, if anything else, was in his blood. We have to put together a whole picture here of, Could this be something that was lethal? Could it be in combination with something, or could it be just totally incidental and it has nothing to do with his death whatsoever?

GRACE: Well, he was only 20 years old, and so far, we know that homicide has been ruled out. Suicide has been ruled out. Foul play ruled out. Natural causes ruled out. That only leaves accident. That`s the only other formal cause of death, Dr. Arden.

ARDEN: The only other manner of death that you haven`t mentioned, you`re right, is accident, and of course, that would particularly include any sort of drug-related death if he`s using recreational drugs or if he accidentally takes too much prescription medication.

But I don`t think we should be ruling out natural so quickly. There are some natural causes of death that can only be seen under the microscope, so the initial negative autopsy doesn`t completely exclude them yet. And there are even some functional causes of death, such as an arrhythmia. When your electrical rhythm of your heart stops functioning normally, sometimes you feel a little skip of a beat, sometimes it`s something as serious as something that degenerates into a complete heart stoppage, a sudden cardiac arrest. Now, those are the kinds of things that are rare.

GRACE: He`s 20 years old, Dr. Arden! It -- it doesn`t make sense to me that this young man would die of a heart attack.

ARDEN: He wouldn`t die of a true heart attack the way we usually see in older people with coronary artery disease, the hardening of the arteries. There are rare examples, though, of people who are young and healthy who for whatever reason that we can`t see because it`s a functional not an anatomic lesion, sometimes have an arrhythmia that degenerates into heart stoppage withough any kind of obvious cause.

But I`m putting my money more on the chemical causes and the microscopic examination to really tell us what happened to this young boy.

GRACE: And from these videos, you can see what many people have seen for years, this is Anna Nicole Smith`s best friend. Not just her son, but her best friend. He was there beside her for everything. She had him when she was really just a child herself, I believe in her teens.

(END VIDEO CLIP)

GRACE: When we come back, Anna Nicole Smith`s mom speaks out, suspicious her grandson Daniel`s death was no accident.

(COMMERCIAL BREAK)

GRACE: Safe inside her Bahamas seaside mansion, Anna Nicole Smith in great pain over the sudden and unexpected loss of her young son, Daniel. Smith`s mom very upset over that long delay for Daniel`s funeral. And then, stunning allegation: Her grandson`s death, no accident?

(BEGIN VIDEOTAPE)

GRACE: Thank you for being with us, Ms. Arthur. Ms. Arthur, Virgie Arthur, not just Anna Nicole`s mother and the grandmother of young Daniel, also a law enforcement officer for 28 years.

Ms. Arthur, you clearly believe that this death was no accident. Why?

ARTHUR: There wasn`t any sign of Daniel taking any kind of drugs. Other than sleeping pill and an anxiety pill.

GRACE: And, apparently in his bloodstream, there`s seven times the amount expected to find in an anti-depressant. What do you believe is suspicious about these circumstances surrounding his death, Ms. Arthur?

ARTHUR: Seven times as much, why would you need seven times? You only need one overdose. One time is too many, but seven times, that`s kind of like overkill.

GRACE: Another question regarding the methadone. You know from law enforcement, that is one of the most common cures for heroin addiction. People very often become addicted to the methadone itself. So, how would you explain such high levels of Lexpro, Zoloft and methadone in this boy`s bloodstream?

ARTHUR: Somebody had to give it to him. He had to get it from somewhere.

GRACE: I`m reading in "In Touch Weekly" -- and with us tonight the executive editor of that, Dan Wakeford -- Ms. Arthur, in here you say, "It was murder, I know it was, and someone has to pay."

In that room, there were only Daniel Smith by his mother`s side, Anna Nicole Smith, your daughter, and apparently Howard Stern, the lawyer, now proclaiming to be the father of the baby. So, if it wasn`t suicide, that only leaves Anna Nicole and Howard Stern.

ARTHUR: That`s true. There`s only three people in that room. Daniel was one of them.

GRACE: But what could their possible motive be, Ms. Arthur? Why would they want to do this to a young boy?

ARTHUR: I don`t have a clue. I don`t know why. I just know that Danny didn`t kill his self. He did not overdose his self.

GRACE: Take a listen to this.

(BEGIN VIDEO CLIP)

HOWARD K. STERN: Anna woke me up. And this was the next morning. Now, stuff happened through the night, where, you know, at first, I was going to sleep on the floor in between the two beds. There were two hospital beds. And Anna was in the bed closest to the window, and Daniel was in the bed closest to the door. And Daniel at some point said to me that he wasn`t really that tired, so why didn`t I just take the bed and he was going to sit up and watch TV.

And then, at one point, Daniel said to me, "how come I`m so tired?" And, in hindsight, I wish that I had seen -- seen that as some sort of a signal and seen that something wasn`t right.

(END VIDEO CLIP)

GRACE: Ms. Arthur, did Anna Nicole Smith ever call you to tell you Daniel had passed away?

ARTHUR: Yes, she did. She called -- but you couldn`t understand anything she said. Because you could tell she was clearly under some kind of -- of drug, because she was very upset. She was mumbling like a -- like a drunk does, you know, when they mumble. All I got out of it was Daniel`s dead. And then it sounded, you know, it was like she was in the middle of a sentence and the phone hung up. And that`s all I got to hear from her.

GRACE: Do you know Mr. Stern, her lawyer, Howard Stern?

ARTHUR: No, I don`t. I do not know him.

GRACE: What have you been able to learn about the boy`s death?

ARTHUR: Not a whole lot, because after she talked to me that one time, I`ve not been able to talk to her at al. She called the one time and she said, mama, Danny`s dead. That`s all I got out of her, but it was a long rumbling of something. You couldn`t understand a word, and then just mama, Danny`s dead.

GRACE: Ms. Arthur, how long -- where were you a cop? And was it -- is it correct that it was for 28 years?

ARTHUR: Yes. In Harris County. Houston, Texas.

GRACE: So you`re no stranger to criminal investigations. What strikes you as odd about Daniel`s death?

ARTHUR: That he died in a hospital, to start with. People coming in and out, and that there were two other people in that room with him. Somebody should have noticed something.

You know, what was his -- he slept through the whole thing? When you overdose, you usually have some kind of a convulsion. It depends. But how long ago was it that Danny was tested at the normal hospital where he went to have checkups? Was his blood tested there? Did he have, did he show anything in his blood there?

GRACE: Have you tried to get answers from Anna Nicole Smith or Howard Stern?

ARTHUR: Yes. They changed the phone number that they gave me when they first called.

GRACE: Virgie, what is your theory? I know you -- if you believe this is a murder, you`ve got to believe there was a motive.

ARTHUR: OK. Danny wouldn`t take drugs to start with. I don`t believe that for a minute. You could not convince me of that, and he was - - you know, she married that billionaire, Howard Hughes -- I mean, Howard Marshall.

GRACE: A great man.

ARTHUR: Yes. Marshall. He was a very great man. I met him several times. And he told me, you know, that he would take care of Vicki and Daniel. I would never have to worry about them, ever, that he would make sure that they were taken care of.

And I know that Danny had a trust fund. I don`t know if he still has it or if they -- I don`t know what happened, but he did have a trust fund. But if Howard marries Vicki and Daniel`s gone, that leaves Howard and the baby to inherit whatever money she has.

GRACE: On the other hand, though -- and I have always from the very get-go, Ms. Arthur, supported Anna Nicole Smith`s right to her billionaire husband`s money. Whether anybody likes Anna Nicole Smith, whether they think she`s a cover girl, a great beauty or a tramp, he married her, and she is just like every other wife under the eyes of law, and her due is his estate. End of story. I don`t care what her character is or what her perceived morality. Doesn`t matter under the eyes of the law.

In keeping, you mentioned Daniel`s trust fund as a possible motive. She just got a ruling from the U.S. Supreme Court. It looks like she`s going to get Marshall`s money. So, that suddenly makes that trust fund of Daniel`s not so much of a motive anymore.

ARTHUR: No. But now if Howard Stern marries her and she ends up dead, who does the money go to?

GRACE: Oh, I see.

ARTHUR: Because Danny`s not here.

GRACE: Howard Stern, I see, Howard Stern.

ARTHUR: Daniel didn`t take drugs. If he wanted to take drugs, he could have taken all his mother had the whole time she was in -- when she`s been a model. She`s taken all kinds of drugs.

GRACE: Do you know why investigators are questioning his personal doctors? Are they asking, did they give him methadone?

ARTHUR: Well, I hope they are checking. They need to check. And see if he was on anything. But as far as I know, he was never on anything, and if he wanted to be in his teenage years, he could have -- he had a whole assortment of drugs he could have got from his mother.

GRACE: Ms. Arthur, I know -- you haven`t told me this -- but I know you still love Anna Nicole. I know you do.

ARTHUR: Yes, I do.

GRACE: I can just tell, even though you`re concerned about the death of Daniel, I can see that you -- what would you say to her tonight if you could speak to her?

ARTHUR: Vicki Lynn, you know I love you. Always have. And be very careful about who you hang around with, because you may be next.

(END VIDEOTAPE)

GRACE: When we come back, how can a multimillionaire cover girl get evicted? We know she`s got money.

(COMMERCIAL BREAK)

(NEWSBREAK)

GRACE: Already facing a host of troubles since residing in the Bahamas, Anna Nicole Smith now slapped with allegations of fraud and illegally residing in the mansion. An American developer says he`s the real owner of the property and he wants Anna Nicole Smith booted.

(BEGIN VIDEOTAPE)

TIA BROWN, "IN TOUCH WEEKLY": Anna Nicole Smith`s life has turned into a huge soap opera. Larry Birkhead, who`s saying that he`s the father of her daughter, Danilynne, is saying that he demands to have a paternity test for his daughter. He`s petitioned with the Bahamian courts, and he wants Anna and Danilynne to come to the States so he can find out whether he`s the father.

And troubles are also in the Bahamas regarding where she lives. G. Ben Thompson is saying that he is the owner of the million-dollar mansion that she resides in, and owning and residing in that mansion is one of the points necessary for her to have residency in the Bahamas. So she may have to leave the country, as well.

GRACE: Now, I don`t understand why she would have to leave the country just because she`s not granted residency, Tia.

BROWN: Because for residency laws in the Bahamas, there are several requirements. Some of them include having a certain amount of property. It has to be worth at least $500,000. You have to prove that you`re financially independent and you can sustain yourself. And you also have to have good moral character.

These are some of the things that they request in the petition for residency and to become a citizen, I guess, in the Bahamas. And they`re basically saying that Anna has defrauded the system, and they`d like to revoke her residency.

GRACE: Out to Art Harris, investigative journalist. I`ve got a real problem with anyone stating that just because you can`t buy a house for $500,000, you can`t have residency.

ART HARRIS, INVESTIGATIVE JOURNALIST: That`s right, Nancy. In fact, you know, I was curious, you know, what would it take for me to get residency in the Bahamas? So I called a few real estate agents down there and they said, "No problem. You know, Come down here. You can actually stay here for up to eight months free and just, you know, fly back to Florida for 24 hours, then come on back, and the clock starts ticking again, or pay $1,000 and you can stay for a year without having to fly out of the country."

Now, in Anna Nicole`s case, you know, she is trying to do his permanency -- permanent residency status by buying a house for more than a half million dollars. But you know what? That`s not a big issue. I don`t see why she can`t just leave the country, come back. She can stay in a hotel there for as long as she wants. That`s what this...

GRACE: OK, wait. Let`s get back to the issue of buying the house. Hasn`t the owner of the home stated that somehow she has defrauded him, as well?

HARRIS: Now, the owner claims -- you know, a South Carolina real estate developer, that, you know, he sold the house to her. She had agreed to sign mortgage papers, failed to do so, and he wants her evicted. Anna Nicole -- there are reports that she says it was a gift. He says, "No way, I don`t have that kind of money. I did this as a favor."

And oh, by the way, he also claims that he had a fling with Anna Nicole and she announced to him that he was the daddy. But, oops, he then told her that he`d had a vasectomy. So a couple days later, he`s claiming that she admitted to him that, yes, indeed, Larry Birkhead is the father. Nancy, it just -- it gets stranger and stranger.

JANE VELEZ-MITCHELL, GUEST HOST: What is on the horizon for Anna Nicole Smith? Tonight, she is holed up in Horizons, the name of the seaside mansion in the Bahamas that she`s been calling home.

The problem is, a former friend says he`s the real owner, and he`s gotten a default judgment in his favor as part of his battle to evict her. Now, the clock is ticking, but does Anna Nicole Smith have some tricks up her sleeve?

Or investigative journalist, Pat Lalama, is it possible we will soon see footage of Anna Nicole Smith literally being unceremoniously dragged into the street with her belongings in tow? Because, Pat, you know the paparazzi have got to be staking out that mansion.

PAT LALAMA, INVESTIGATIVE JOURNALIST: Oh, my gosh, can you imagine? Well, actually, there is a little bit of new information on this. I have learned that she has asked the courts for 90 days, that she said, "Oh, you know, I made a big mistake, and I didn`t really understand, and so I`m asking for 90 days."

But apparently Mr. Thomson is back in that same court or arena saying, "No, I did everything I was supposed to do." Now, ultimately -- and this happens here in the states, as you know -- if you don`t follow court orders, you can be removed. What they will do is lock up the house.

VELEZ-MITCHELL: One of the fascinating things about this that`s hard to keep track of is that all of the controversies swirling around Anna Nicole Smith are kind of intertwined. The house is intertwined with the paternity test, because she wants to stay in the Bahamas so she can`t be forced to come back to the United States to have a paternity test on her newborn baby, which the L.A. photographer wants.

And the man who owns the house is a former boyfriend, and he is also connected into the paternity battle, because he claims that she once told him he was the father. I mean, it`s really absolutely astounding the complexity of the drama that Anna Nicole Smith gets into.

Paul Batista, defense attorney, they want her out, they want her out now. They say they got a default judgment. TMZ got the document. We`ve seen it; it looks very legit. He`s written a letter to Anna Nicole Smith and Howard K. Stern, saying, "Get out. Get out tonight. You have 48 hours since the default judgment," and that would be right now. They should be packing their bags and leaving. They say they don`t have to.

What`s the process? I mean, default judgment is not the same as an eviction notice; those are two different things.

PAUL BATISTA, DEFENSE ATTORNEY: Absolutely, Jane. You know, she`s either a lawyer`s dream or a lawyer`s nightmare, Anna Nicole Smith. When you`re sued anywhere, you have to answer the complaint. She apparently had until a specific date to file an answer to the complaint, meaning a written document put in the court.

And for whatever reasons -- again, it may well be her narcissism, it may be bad legal advice -- she let that date slip by, but she does have the right, she does have the right to go back into court and ask to be excused from the default judgment. And a judge has to make that determination.

VELEZ-MITCHELL: You know, Pat, it`s amazing, Pat Brown, criminal profiler. I think that either Anna Nicole Smith could get a law degree at this point or she`s got a svengali that many believe is Howard K. Stern himself basically making all the chess moves for her.

What do you think? Because it doesn`t seem to make sense. He is a lawyer. He says that they had the sales agreement and the conveyance documents to prove it they own that house, and yet the Monday deadline to show those to the court came up, and they reportedly did not show up with any paperwork.

PAT BROWN, CRIMINAL PROFILER: Well, I think they`re both opportunists, and they`re using each other -- we don`t know what the reason they`re using each other for is, but they`ve got their reasons.

And, you know, as far as Anna Nicole goes, with a narcissistic personality, you`re always looking for the answer, and the answer could be anything you come up with next. It`s not necessarily logical, but it`s likely attention-getting that you love to seek. You just grab for the next thing, and, if that doesn`t work, you lie here. And if that doesn`t work, you steal there. And if that doesn`t work, cheat.

It really doesn`t matter, because you have no ethics or morals, so she just may be rolling onto maybe the next opportunity or next man, whatever she`s got in front of her.

VELEZ-MITCHELL: Well, Lisa Pinto, former New York state prosecutor and journalist, you have observed many interesting people in action. What would you say? Is she the mistress of her own actions, or is she being sort of manipulated by a puppet master who is guiding her moves and, let`s face it, not giving her good advice? I mean, she`s on a downward spiral here.

LISA PINTO, FORMER PROSECUTOR: Yes, but he wasn`t there when she was 26-year-old dating the wealthy multimillionaire, so I think she`s had her own interests at heart from the beginning and managed this nonsense pretty well.

But I wonder what the first sonogram on this new baby is going to go for? What, a half a million for "InTouch Weekly"? I mean, this is such a disgrace -- I speak as a mother now. When I think about this little baby, who has a right to know who her father is, where he is, visit him, get to know him, have a relationship with him.

If he is Mr. Stern, then that could be shown and proved. And if it`s Mr. Birkhead, he should be able to at least have visitations and possibly sue for custody.

VELEZ-MITCHELL: Yes, I mean, you make a very good point, because if Howard K. Stern is the daddy and they`re so sure about it, why do you have to fear a paternity test, right?

PINTO: Why do you have to fear any of this? Why can`t you show up in the courthouse in the Bahamas with your attorney who lives in the master bedroom with you and show this deed to the court? One is suspicious, if it exists.

(COMMERCIAL BREAK)

GRACE: A solid year of legal drama for millionaire widow Anna Nicole Smith.

(BEGIN VIDEOTAPE)

ALEX GOEN, CEO TRIMSPA: Celebrities have a difficult life. I mean, Anna Nicole, she can`t really make friends, because friends will very quickly try to take advantage of her. And it could very well be what`s happening here. I`m not saying that that`s necessarily the case. I`m just saying that that`s seems to be the pattern that has happened to Anna over and over and over again.

There`s two sides to every story. And, I did -- I`ve known Anna and Howard for quite a while. I`ve never heard of Lori Payne. This is a sealed court document.

Basically, there`s two sides that could have released this document. I don`t think it could have been Howard Stern`s side, because Howard or Anna`s side, they would not release this document. So you`ll have to wonder, why would a sealed document in a confidential matter be issued to the press?

I`ve never seen Daniel take anything. As a matter of fact, if anything, he had a deep hatred for any kinds of drugs, because, as is widely reported, Anna Nicole did have some challenges back eight to 10 years ago. And it was Daniel that really saved Anna`s life, or at least that`s what Anna and that`s what Howard says, so it`s quite surprising.

BOBBY TRENDY, ANNA NICOLE SMITH`S DECORATOR: There`s so much drama around Anna and them, if it wasn`t for bad luck, they wouldn`t have any at all. I don`t know who the father is.

I understand Anna`s being evicted from Mr. Thompson`s home in the Bahamas. You know, she said it was a gift. Honey, I wouldn`t even give one of my Christian Louboutin shoes away, much less a million-dollar home.

It seems to me that they were just squatting there. I know Howard wants everything free all the time. That`s in his nature, but it doesn`t work with properties, honey. That`s trespassing, not squatting.

People ask me all the time if Anna took drugs in front of me. I`ve never seen her take any. If she did them and lots of them, she probably did them before I got there. Maybe she didn`t want to share. I don`t do any, so maybe they felt uncomfortable doing them around me.

I understand that judge in Los Angeles wants Anna to come back and do the paternity test. Why hide? It`s going to come out sooner or later, that information. Just come back, Anna. Do it.

(END VIDEO CLIP)

GRACE: Thanks for being with us tonight for this NANCY GRACE special on the legal whirlwind surrounding Anna Nicole Smith. NANCY GRACE signing off again for tonight. See you right here tomorrow night, 8:00 sharp Eastern, and until then, good night, friend.

END

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