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Nancy Grace

D.C. Madam Dead of Apparent Suicide

Aired May 01, 2008 - 20:00   ET

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

NANCY GRACE, HOST: Breaking news tonight. As we go to air, Florida police announced the so-called "D.C. madam," the convicted madam of a high- end prostitution ring whose clients included senators, a former deputy secretary of state under Bush, think tank military strategists, corporate CEOs, military officers, lobbyists, International Monetary Fund members, the World Bank members -- she has been found dead, high-priced hooker Deborah Palfrey found dead, ostensibly by hanging, near her mother`s home, handwritten notes pointing to suicide discovered.
Was Palfrey threatening to come forward, naming names of high-end clientele in order to get a lighter deal for herself in court? And with sentencing set down, was foul play involved in the death of a highly publicized "D.C. madam," Deborah Palfrey?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is really a sad, tragic ending to a story that dominated the headlines. A woman known as the "D.C. madam" apparently committed suicide. Deborah Jeane Palfrey was convicted just two weeks ago. You remember she ran a high-priced prostitution ring that catered to D.C.`s elite lawmakers and politicians. She was scheduled to be sentenced in July. But at one point, she told ABC News last year she would never return to prison, not for one day, let alone eight years.

DEBORAH JEANE PALFREY, "D.C. MADAM": I`m facing perhaps the remainder of my life in a federal penitentiary. This is not a misdemeanor crime, by any stretch of the imagination. There`s no thousand-dollar fine, year`s probation, slap on the wrist and wink from the judge as I exit the courtroom. I am looking at 55 years in a federal penitentiary, and at my age, that is virtually a life sentence. Realistically, we estimate between 8 and 15 years. I am also looking at the complete forfeiture of my entire life`s savings and work.

(END VIDEO CLIP)

GRACE: And tonight, Hollywood superstar Rob Lowe and his wife of 17 years locked in a bitter legal battle after not one but now two former nannies file sex harassment lawsuits in California courts, one against Lowe, one against his wife. Is it legit, or is it just a big grab for money? Tonight: Reports surface one of the nannies demanded $1.5 million before even filing suit. Did nanny number two just line up at the gravy train?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Hollywood superstar Rob Lowe and wife Sheryl are being sued for sexual harassment. Court documents reveal the former nannies of the Hollywood actor say Lowe and his wife Sheryl were sexually and verbally abusive to them, causing them severe mental and emotional distress.

UNIDENTIFIED FEMALE: In her lawsuit against the Lowes, the ex-nanny is claiming that Rob Lowe sexually harassed, groped and exposed himself to her over the years she watched the Lowes` two kids.

UNIDENTIFIED FEMALE: I worked for the Lowes from April to November 2007. During that time, I worked in their home four days a week, mostly 14 to 16 hours a day. I traveled with them. I cared for their children. I respected the Lowes and did everything I could to assist in running their home and taking care of the children. Oh, my gosh! When I left, they didn`t give me my paycheck. Oh, my gosh! I was devastated to find out that the Lowes had sued me because she actually called me the week before to offer me my job! I can`t believe she`s doing this to me!

(END VIDEO CLIP)

GRACE: Did you understand any of that? All I know is that one of the nannies asked for $1.5 million before even filing lawsuits.

Good evening. I`m Nancy Grace. I want to thank you for being with us.

In the last hours, the so-called "D.C. madam" found dead -- a clientele of D.C. politicians, lobbyists, employees of NASA, the World Bank, even allegedly a deputy secretary of state under Bush. And with her own sentence looming, was foul play involved?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The victim of an apparent suicide by hanging has been identified as Deborah Jeane Palfrey, 3/18 of `56, by her 76-year-old mother, Blanche Palfrey. Blanche Palfrey had awoken from a nap and began to search the residence for her daughter. When she went outside, she noticed the three-wheel bicycle had been moved that was normally kept in the shed. Upon entering the shed located on the west side of the residence, Blanche Palfrey discovered her daughter, Deborah, had apparently hung herself using a nylon rope from a metal beam on the ceiling of the shed. She then called 911.

UNIDENTIFIED FEMALE: I think all escort services are benign. These are all usually operated by women, to a large extent. There`s no violence. There`s very little, if any, drug activity. There`s very little, if any, fraud. Basically, just a bunch of benign women who wish to make a living. This is not racketeering, by any means. This is running a business.

(END VIDEO CLIP)

GRACE: Straight out to Rory O`Neill, reporter with Metro Networks. Welcome, Rory. What happened?

RORY O`NEILL, METRO NETWORKS: Well, good evening, Nancy. It was around 11:00 o`clock this morning when -- it was the mother of the victim, Blanche Palfrey, who awoke from a nap and went out to the backyard shed and found her daughter there hanging inside. She`s 52 years old. Apparently, she had taken her own life, and police are now going through the documents that she left behind.

GRACE: Why do you say apparently she had taken her own life?

O`NEILL: Well, that`s -- the medical examiner is now investigating what is believed to be a suicide, but they will confirm that. And the medical tests have not yet come back, especially the blood work. They will then make that determination.

GRACE: Also joining us tonight, Neal Augenstein, reporter with WTOP. Neal actually interviewed the "D.C. madam" and covered the trial. Neal, when was her sentencing set?

NEAL AUGENSTEIN, WTOP: Well, her sentencing was rescheduled from July to June 24. She faced a maximum of just over 50 years, but sources on both sides of the case said that she probably would have gotten something between four and six years.

GRACE: So looking at just four years behind bars -- it was a federal case, right, Neal?

AUGENSTEIN: This was the first time that federal prosecutors in D.C. had ever prosecuted anyone in a prostitution-related case using the RICO, or the racketeering laws. So this was a very serious crime that she faced. She was convicted on those charges, as well as the money laundering and conspiracy charges, too.

GRACE: To Bethany Marshall, psychoanalyst and author. Bethany, four years in a federal pen? You know, the federal pen can be a little sweet, kind of like "Club Fit (ph)." And also, Palfrey was no stranger to a jail cell. She had done 18 months back in California, I believe, back in the `80s for prostitution. I mean, four years is not that -- that severe of a sentence, especially in light of what she could have gotten, to take her own life?

BETHANY MARSHALL, PSYCHOANALYST: It`s true, but who knows what she`d been told about this? Who knows if her attorneys were preparing her by saying, Think that you might get the max. Sometimes when you`re really anxious, it binds your ability to think. Sometimes suicidality can be when a person is extremely enraged at other people, and that rage gets flipped and turned back against the self in the form of a suicidal gesture. So this may be inverted rage towards others. And the number one cause of suicidality...

GRACE: Oh, please! Hold on!

MARSHALL: ... is extreme hopelessness.

GRACE: Bethany, Bethany, let`s just think this through for a moment.

MARSHALL: OK, let`s.

GRACE: After sleeping your way through lobbyists and D.C. politicians, come on, after that, I think you can handle anything. After that, I would think a federal penitentiary would be a vacation.

MARSHALL: Yes, but what`s interesting in the ABC interview, she doesn`t seem to be ashamed. So it wouldn`t be the shame component of being found out, it would be more the rage and the injustice. She really doesn`t sound like a woman who feels that she`s done too much wrong. So someone who has an overdeveloped sense of having been wronged can sometimes hurt themselves to get back at other people. As strange as it sounds, it does happen.

GRACE: And another question to Ninnette Sosa. She`s a supervising producer at CNN Radio. She interviewed the "D.C. madam." Ninnette, were any of the Johns ever prosecuted, or was it just her? Did they let -- let`s see, we`ve got Randall Tobias admitted, other politicians, members of think tanks, employees of NASA in her little black book. Did any of them ever get prosecuted?

NINNETTE SOSA, CNN RADIO: Just her. Just her. That was it. And that`s what she was astounded by, also. She used to call her business -- it was just a "mom and mom" shop. And she would always emphasize there were the three levels of how to run an escort business. One is the social services, the fantasy sex, and then there is the prostitution and oral sex side. She insisted she was just about fantasy sex.

GRACE: You became very close to her in working with her during these interviews. What did you learn, Ninnette?

SOSA: I think I learned most is that she really had tenacity. She really stuck by what she said. She was very forthright. She was open. In the various times that I had interviewed her, I didn`t hear doublespeak from her. It was just the way it was, and I would think so. If you`re going to be the person handling 143 women and writing out their schedules, I think you need to be on track. And she was.

GRACE: You know, what did you make of it when you first heard she died, ostensibly by suicide?

SOSA: I -- no way. That was my first -- I was just -- first thought, body double, is it someone else and she`s in the U.K., murder, anything, but not suicide.

GRACE: Joining us right now, special guest Captain Jeffrey Young. He is with the Tarpon Springs Police Department. Captain, thank you for being with us. When were police notified?

CAPT. JEFFREY YOUNG, TARPON SPRINGS POLICE DEPARTMENT: Good evening, Nancy. Thanks for having me.

GRACE: Yes, sir.

YOUNG: They were called out to the residence around 10:52 AM, and they located Ms. Palfrey inside the shed adjacent to the trailer where her mother lives.

GRACE: Captain, what did the officers find at the scene?

YOUNG: Well, when they came into the shed there, they did find Deborah Palfrey hanging inside the shed there. Medical personnel were on scene, as well. And at 11:01 AM, she was pronounced deceased.

GRACE: Captain, where had she been just prior to her death?

YOUNG: Earlier in the morning, she was with her mother at the residence. They were conversing in the morning. The mother had advised her that she was tired, and Deborah had said the same thing to her. The mother went and took a nap, and after she awoke from her nap is when she started looking for her daughter.

And she went outside after calling for her inside the residence, not finding her in there, and went outside and noticed the three-wheel bicycle had been moved out of the shed and found that strange and walked inside. And when she opened up the door of this shed, she discovered her daughter.

GRACE: Captain, did the mother state that Palfrey had exhibited any despair, any depression, any angst just before her alleged suicide?

YOUNG: Well, the detectives were with Ms. Palfrey, senior, for a good while. She`s obviously distraught. They`re still trying to put the pieces together with Ms. Palfrey and see why her daughter would feel that she needed to be brought to do this. So they are investigating that, along with the Pinellas County medical examiner`s office, who will be completing an autopsy tomorrow. And they will determine the causation of death.

GRACE: Joining me now is Tom Shamshak. He`s a private investigator joining us out of New York. Tom, there are a lot of people who wanted her to stay quiet.

TOM SHAMSHAK, PRIVATE INVESTIGATOR: True. And given the backdrop of what you`ve talked about, I`m quite certain the crime scene investigation is not going to jump to an immediate determination of the cause and manner of death. I think they`re going to be very methodical and be very, very thorough, looking for fingerprints other than hers on the writing instrument and on the paper, and in looking for injuries about her body to see if there was a struggle.

GRACE: The lines are open. We`re taking your calls live. To Phyllis in Texas. Hi, Phyllis.

UNIDENTIFIED FEMALE: Hi, Nancy. Love your program.

GRACE: Thank you, dear. Thank you for watching and for calling. What`s your question, dear?

UNIDENTIFIED FEMALE: I was wondering if the "D.C. madam" took the names of her clients with her in her death, or if there might be a record of those names somewhere else?

GRACE: Oh, Phyllis, there is a record! What about it, Rory O`Neill?

O`NEILL: ... perhaps the captain can speak more to it, but there were some other diaries that were found around the victim and in the home, and he did mention earlier today that that was part of their investigation. That`s part of the reason the FBI was called in on this case, not just the local authorities. They want to investigate all these possible connections, and really, as was mentioned earlier, dot every "I," cross every "T" to make sure that this is what it appears to be.

GRACE: Neal Augenstein, at one juncture, didn`t she post phone numbers of some of her clients on the Internet?

AUGENSTEIN: Yes, she posted all of the phone numbers at one point. And getting back to number of -- of whether she went to her grave with the names -- now, there are several hundred names of former escorts and customers that have been sealed by the judge in this case. The judge was taken aback during the case by the number of escorts who were called to testify.

At one point, prosecutors wanted to introduce all of her records, in which case, all of the names would have been made public. The judge asked the question, Is there no end to the collateral damage in this case? Prosecutors said, Unfortunately not. The judge did accept that evidence, and it is part of the record. But at the very end of the case, before he announced -- before the verdict was announced, the judge announced that all of those names would be sealed and they would never be revealed.

GRACE: And not one of those customers, all the way to some of the highest echelons in the D.C. power structure -- not one has ever been prosecuted. And now you want to tell me just about a month before she`s set for sentencing to go to the federal penitentiary, that this lady wasn`t still trying to work a deal maybe by using some of those names?

Let`s unleash the lawyers. John Burris, veteran trial lawyer out of San Francisco, Joe Episcopo, also a veteran trial lawyer, out of the Tampa, Florida, area -- yes, please, fix those glasses, Joe!

John Burris, what do you make of it?

JOHN BURRIS, DEFENSE ATTORNEY: Well, certainly, if I`m her lawyer, I`m trying to work as good a deal as I can. And certainly, she has something to trade, names, but more than names, potential testimony, potential witnesses. If the government was really interested in doing -- going after the Johns in this particular case, then she had valuable information. I would have thought, though, that some of that was taking place before. But certainly, she had something to trade. It`s the kind of thing she would get a reduction in terms of her sentence with a judge...

GRACE: Right.

BURRIS: ... when she gave out valuable information.

GRACE: To Eleanor Dixon, veteran felony prosecutor. Eleanor, anything can happen before a sentencing goes down.

ELEANOR DIXON, PROSECUTOR: That`s so true. And she could have tried to play fast and loose with these clients, but there are federal sentencing guidelines which the judge would have to adhere to.

GRACE: But the reality is, in federal court, Eleanor, if you are willing to name names and hand over evidence, those rules are very different. In fact, there are lawyers, aren`t there, Eleanor, who do nothing but work the federal guidelines. If I can get a letter of cooperation, you lose a year. If you can rat out X number of people, you lose another year. If you don`t do it, you gain a year. It`s true, Eleanor.

DIXON: Oh, it`s true. You can go below the guidelines. And I think it`s very interesting that she had all this information, and you know it`s still out there. And the sad thing is, the men aren`t prosecuted for this crime. They`re as guilty as she is.

GRACE: Joe Episcopo, it`s very unusual to me, with so many enemies that this woman, who has managed to prevail for so many years in Washington, suddenly takes her own life?

JOE EPISCOPO, DEFENSE ATTORNEY: Well, you know, I disagree with your shrink. I don`t see rage and injustice here. This is a woman that`s material. Everything in her world is in this world. She doesn`t believe in heaven or hell. It`s here. She did not want to live like that. She killed herself because, in her opinion, there was nothing anyway. She was too old to get back into business and make a living. Even if she had done what we call "rule five" and continued to help the government, she still would have gone to prison. She didn`t want to go to prison. She killed herself not because of rage but because she`s material and everything was taken away from her. Her life ended because this world is all she had.

GRACE: Very quickly, everyone, we are taking your calls live tonight. Let`s go to tonight`s "All Points Bulletin." The manhunt in high gear for a former cop on the run, wanted for the shooting death of a public safety trooper, east Texas, a capital murder warrant out for 37-year-old Brandon Robertson, accused of gunning down Trooper James Scott Burns during a simple traffic stop. Burns leaves behind a wife and a 5-month-old baby girl. Suspect Robertson, 6-2, 250 pounds, red hair, green eyes. Police on the lookout for a `97 blue Dodge Intrepid, Texas plates, a $30,000 reward. If you have info, please call 888-244-0827.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PALFREY: I`m facing perhaps the remainder of my life in a federal penitentiary. This is not a misdemeanor crime, by any stretch of the imagination. There`s no thousand-dollar fine, year`s probation, slap on the wrist and wink from the judge as I exit the courtroom. I am looking at 55 years in a federal penitentiary, and at my age, that is virtually a life sentence. Realistically, we estimate between 8 and 15 years. I am also looking at the complete forfeiture of my entire life`s savings and work.

(END VIDEO CLIP)

GRACE: That`s an interview conducted by CNN producer Ninnette Sosa, who is with us tonight, "D.C. madam" Palfrey found dead near her mother`s home. She is set for sentencing -- it turned out to be between four and six years -- in June. And Ninnette Sosa is not so sure that this was a suicide.

Ninnette, of all the people that we have spoken to, you may have spent more time with her. Why were you so surprised to hear suicide?

SOSA: Because it went against everything that she had discussed. All the way, at the very last five seconds on that interview that you showed at the intro of the show, she even said, Let`s go. Let`s go. They`re not going to take me, this is absurd. She thought it was absurd that she was being harassed the way she was for mail fraud. And then if she didn`t plead guilty, she said, that she would be charged under RICO laws, and so forth. So she went on. And she just was not -- not going to bite.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PALFREY: My case is the only case of its kind ever, ever, we think in the United States, not just in the federal district -- for the District of Columbia, but in the entire United States. Nobody in this country who has run a, quote, unquote, "benign" escort service has ever been charged with racketeering. I mean, racketeering is Tony Soprano territory.

(END VIDEO CLIP)

GRACE: Out to the lines. Betty in Hawaii. Hi, Betty.

UNIDENTIFIED FEMALE: Hi. And congratulations on your beautiful twins.

GRACE: Thank you, dear. What`s your question?

UNIDENTIFIED FEMALE: My question, as an ex-nurse, retired nurse -- isn`t that an odd way for a woman to kill herself, by hanging?

GRACE: To Dr. Zhongxue Hua, a New Jersey medical examiner. It is an unusual way for a woman to commit suicide. It`s usually by poison, carbon monoxide. What do you think, Doctor?

DR. ZHONGXUE HUA, MEDICAL EXAMINER, UNION COUNTY, NJ: It`s -- I mean, it`s unusual, but in a way, it`s fairly common for people choosing different ways to end their life. It`s fairly common, not a daily (ph) practice (ph).

GRACE: To Dr. Bethany Marshall. What, statistically, does it say to you?

MARSHALL: Well, I have something to add about the suicidality that has to do with the hanging, and that is when you see the spectrum of personality disorders that have to do with narcissism, which she certainly could fit into because she felt she was above the law, often they feel that it`s death before dishonor.

GRACE: OK, we`ve run out of time. Quickly, on the stats I asked you about?

MARSHALL: Oh, with the -- I don`t know specifically the stats about that.

GRACE: Everyone, death by hanging with -- can be isolated down to race, gender, age.

When we come back, Hollywood superstar Rob Lowe headed to court.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

UNIDENTIFIED REPORTER: Two former nannies are suing Hollywood star Rob Lowe. In court documents, both nannies are claiming sexual harassment at the hands of Lowe and wife Sheryl Lowe, alleging inappropriate sexual contact and other explicit sexual behavior. The Lowes have also sued both nannies saying nanny Jessica Gibson threatened to spread lies about the couple if they didn`t pay up and conspiring to leak false rumors and accusations against the Tinseltown couple.

UNIDENTIFIED REPORTER: In her lawsuit against the Lowes, the ex-nanny is claiming that Rob Lowe sexually harassed, groped, and exposed himself to her over the years she watched the Lowes` two kids.

(END VIDEOTAPE)

GRACE: Is it legit? Or is it just a big grab for money?

Out to Michael Yo with E! Newsradio on XM and Sirius.

Michael, fill me in.

MICHAEL YO, HOST, E! RADIO ON XM AND SIRIUS: Here`s the deal. Well, first Jessica Gibson, she turns in a claim to Rob Lowe`s lawyers and say, "I want $1.5 million." They`re calling it hush money. Instead of Rob Lowe dealing with this.

GRACE: Wait, whoa, whoa, whoa. Hold on. Who is calling it hush money?

YO: Well, Rob Lowe`s people is calling it hush money.

GRACE: OK.

YO: Jessica Gibson is just saying, hey, I want $1.5 million. Here`s what`s going on.

GRACE: Or what? I want $1.5 million or what?

YO: Or I`m going to come out with these claims. Now that`s what Rob Lowe is saying. His team is saying, she said if I don`t get what I want, the 1.5, I`m going to come out with all these claims.

GRACE: OK.

YO: Rob Lowe is saying, OK, he`s taking this, and he`s taking the winds out of her sail by going on the "Huffington Post" and posting a blog about this saying he`s being extorted and blackmailed for money. And here`s the honest truth about it. Even if he would have paid the hush money, if this story would have broke, it would have made him looked guilty. So he had to do something. And this is how everything started with nanny number one.

So that where we are right now.

Today, nanny number two files her claim. Now the one thing about Rob Lowe, why I`m on the fence on this, is Rob Lowe said, he went after Jessica Gibson, but then he put Laura Boyce in the mix, too, right at the beginning. She didn`t even file a claim against him. He just threw her name in there and the chef`s. So it almost like he was very defensive at the beginning like, oh I know some other claims are going to come.

And that`s why I`m kind of questionable about Rob. And with nanny number two, she put in a claim and saying she was sexually harassed, too. Rob Lowe saying it was breach of contract, you know, confidential...

GRACE: Sexually harassed in what manner, Kelly Zinc, with CelebTV.com?

KELLY ZINC, CELEBTV.COM: Good evening, Nancy. The interesting thing about Laura Boyce and why the claims don`t exactly match up is because Laura`s claiming that she was only sexually harassed by Sheryl, Rob Lowe`s wife, where Jessica said she was sexually harassed by both of them, that Sheryl was walking around naked, and Rob was touching her inappropriately.

GRACE: OK. Wait, wait, wait, wait. Let me get this straight. We got two nannies, Laura Boyce and Jessica Gibson.

ZINC: Correct.

GRACE: Both claim sexual harassment. Laura Boyce claims it against Rob Lowe`s wife. Gibson claims it against both. Yes, no, Kelly Zinc?

ZINC: You are correct, Nancy.

GRACE: OK. Back to Boyce. Boyce is filing a sex harassment claim against the wife for what?

ZINC: Well, she`s saying that Sheryl said many inappropriate things, especially against her boyfriend, who is an NBA player, an African-American gentleman, and she`s claiming that Sheryl used the N word, that Sheryl was being inappropriate, pulling out sexual objects and all around being completely inappropriate with her.

GRACE: OK. And what`s the crux of the claim by Jessica Gibson, Kelly?

ZINC: Jessica Gibson is saying that Rob Lowe touched her inappropriately, put his hand down her pants, and that Sheryl walked around naked in front of her and said sexually suggestive things.

GRACE: Joining me right now is a special guest, the lawyer for the nannies, Gloria Allred.

Gloria, it`s great to see you. I`ve got a question right off the bat. Is it true that one of the nannies wanted $1.5 million before the lawsuit was even filed?

GLORIA ALLRED, ATTORNEY FOR BOTH NANNIES SUING ROB LOWE: Well, I think that allegation goes back to Jessica, when she was represented by another attorney. And I was not representing her, nor was my law firm representing her at that time. So we have no comment on that. I personally have never spoken to her prior counsel.

GRACE: Well, I know you`ve spoken to her. I know, Gloria Allred, you`ve won a lot of case in court. I know you know this case like the back of your hand. And by you telling me, no comment, Michael Yo, that means you`re dead on. They asked for the 1.5 million before a lawsuit was filed. Yes, no?

YO: I believe so, yes. I mean any time anybody in the press says no comment, you know what that means. I mean it`s obviously she came out with this, and Rob Lowe, he turned it around real quick. He had to take the winds out of her sail or she was going to have a claim against him.

GRACE: Out to the lines. Vivian in Indiana, hi, Vivian.

VIVIAN, INDIANA RESIDENT: Hi.

GRACE: What`s your question, dear?

VIVIAN: If she was being harassed, why did she stay? And she reminds me of Susan Smith after she drowned her children. She`s not sincere with her crying.

GRACE: Gloria Allred, now before you strike a jury, take a listen to what Vivian in Indiana is saying about the demeanor of your client. Gloria, is it true that one of your clients -- I believe it was Gibson -- would leave and then come back, and then she`d leave and then she come back. Left their employment twice before the final time she left for the third time. Is that true?

ALLRED: Well, that`s true. She quit. I might add neither nanny was ever fired by the Lowes. They left. They resigned. Both of them resigned. We say that`s being forced out, constructively terminated is the legal term. But -- so the point is this, though. The reason they stayed is because they both loved the children, they both needed the job, and they both hoped that things would get better.

But guess what? It never did, and they just simply couldn`t take it anymore, Nancy.

GRACE: OK. Here`s another -- OK, that`s you know, Gloria, you think like a trial lawyer. You figure out what the other side is going to say, and you get ready with your preemptive strike before they can say it. So you know you got a problem with one of your nannies leaving and coming back and leaving and coming back, then wanting $1.5 million before the lawsuit. So if it`s so bad, why did she keep coming back?

You`ve got another problem and that -- these e-mails that Jessica Gibson sends saying, "Thank you so much. I`m really sorry I left. You`re wonderful. You`ve done so much for me. It`s all on me that I`m leaving." And then she files a lawsuit. Ouch.

ALLRED: Well, that`s not a problem for us at all, Nancy. And the reason is this. She was attempting to appease them. She was afraid of what they might do if they got angry. And guess what? Her worst fear, and, of course, Laura Boyce`s worst fear, was justified, because look what happened when they did get angry.

GRACE: Whoa, whoa, whoa.

ALLRED: When she was.

GRACE: She was the one that wanted $1 million first. I guess they did get mad. I`d get mad, too.

ALLRED: Well, when she did go to an attorney, when the attorney attempted to resolve the matter, when the attorney presented a copy of the lawsuit that might be filed, what the Lowes did was, through their attorney, they went out and did this so-called preemptive strike. Perhaps some people believe -- hoping to deter the nannies from filing against them, hoping to intimidate them.

Guess what? It didn`t work. We`ve now filed against the Lowes for retaliation against a person who was protesting sexual harassment and -- alleging abuse of process against them as well. And so that now has added another cause of action to our lawsuit because an employee has a right to protest sexual harassment without being trashed in the media, without having a lawsuit being filed against them.

GRACE: Out to the lines. Sean in Alabama. Hi, Sean.

SEAN, ALABAMA RESIDENT: Hey, how are you doing, Nancy?

GRACE: I`m good, dear.

SEAN: Congratulations on the twins.

GRACE: Man, I still can`t believe it happened to me. What`s your question, dear?

SEAN: The question is, you know, sexual harassment is the easiest thing to get money for nowadays and get charges brought against people in the workplace. You ever think that this was the quickest way for two people working for this guy to get quick, easy money off of him?

GRACE: Oh, yes. I`ve thought of it. And back to you, Gloria Allred -- everybody, Gloria, high profile lawyer out of California, is representing both of these nannies. How come the second nanny didn`t come forward until she found out the first nanny filed a lawsuit?

ALLRED: Well, actually, that`s not really the way things happened.

GRACE: OK.

ALLRED: The way things happened is Laura Boyce, the second nanny, resigned finally. She couldn`t take it. And the reasons are stated in the lawsuit about that last phone call. And in -- then she didn`t hear from them for five months. Suddenly she gets a call from Sheryl Lowe, which is in our lawsuit, asking her to come back and work for them, or does she want to work for a friend of Sheryl Lowe`s as a nanny?

Obviously, she must have thought she was a great nanny. And then when she didn`t respond to that, a week later she finds that a lawsuit is filed against herself. Why? Perhaps because the Lowes were then becoming aware that Laura Boyce`s allegation about why she left the Lowes was included in the lawsuit that the Lowes` attorney saw, Nancy.

And so now, perhaps they got angry at her, then they filed a lawsuit against her, perhaps thinking that both nannies wouldn`t be able to find a lawyer to represent them, wouldn`t be able to afford to fight the rich, the powerful, the famous, the Lowes.

GRACE: They already knew they had a lawyer. They already knew they had a lawyer. The lawyer had approached them for over $1 million.

They got some problems, Eleanor.

ELEANOR DIXON, PROSECUTOR: Oh I totally agree. Where`s the sexual harassment? They weren`t -- the nannies weren`t required to do anything to keep their job, at least not sexually.

(BEGIN VIDEO CLIP)

LAURA BOYCE, ROB LOWE`S FORMER NANNY: When they left, they didn`t pay me my paycheck. Oh, my gosh, it was devastating to find out that the Lowes had sued me because she actually had called me the week before to offer me a job. I can`t believe she`s doing this to me.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(NEWSBREAK)

(BEGIN VIDEO CLIP)

BOYCE: I worked for the Lowes from April to November of 2007. During that time I worked in their home four days a week, mostly 14 to 16 hours a day. I traveled with them. I cared for their children. I respected the Lowes and did everything I could to assist in running their home and taking care of the children. Oh, my gosh.

I left because I could no longer take Miss Lowe`s conduct towards me at all. When I left, they didn`t pay me my paycheck. Oh, my gosh, I was devastated to find out that the Lowes had sued me because she actually called me the week before and offered me my job. I can`t believe she`s doing this to me.

(END VIDEO CLIP)

GRACE: Both sides squaring off for legal battle. Superstar Rob Lowe and his wife of 17 years versus two former nannies claiming sexual harassment.

Let`s unleash the lawyers. Eleanor Dixon, John Burris, Joe Episcopo.

To you, Eleanor Dixon, lurking in the background is a case that goes way back all the way to the `80s. Lowe was about 24 years old, in Atlanta for the Democratic national convention, picked up two women at a bar, went back to a hotel, have sex, they videotaped it. One was underage. He never pled guilty. In fact, as I recall I was in the D.A.`s office at that time. I begged to prosecute the case.

The elected district attorney said no. And he got, I believe, pretrial intervention, did a little community service. There was a civil settlement, a money settlement, out of court. And that was the end of it.

That`s video from FOX and "A Current Affair" of the 1988 sex tape scandal. It nearly cost Lowe his career, but it didn`t. He made a comeback. So my legal question, Eleanor, I don`t think that`s going to be relevant. I think that Lowe`s attorneys can keep that out if this goes to trial.

DIXON: Unfortunately, you may be right because there you had consensual sex even though one of the people was underage. But that`s a criminal charge, Nancy. It has nothing to do with the civil suit. And certainly, as you said, he`s changed since then. He`s a different person.

GRACE: Out to the lines. Gary in Indiana. Hi, Gary.

GARY, INDIANA RESIDENT: Hi, how are you?

GRACE: I`m good, dear. What`s your question?

GARY: Actually two real quick. Why is it so common nowadays that people file claims before or after the fact instead of during the act?

GRACE: OK. And your second question?

GARY: If I was the one making, say, $50,000, $60,000, $70,000 a year, I wonder what the odds would be that I`d be getting sued for the same thing.

GRACE: That`s a really good point, Gary in Indiana.

You know, why is it, John Burris, you hear of deep pockets always getting sued for claims like this. Of course, you hear it in other contexts. Maybe it`s because we only hear of high profile ones, John?

JOHN BURRIS, DEFENSE ATTORNEY: Well, it`s true. I mean, these cases go on all the time. But at the end of the day, any lawyer who takes the case has to know whether there`s going to be any money, deep pockets, if you will. That doesn`t mean these cases aren`t occurring all the time.

Sexual harassment does occur in the workplace, hostile work environment, all these things occur. But you don`t hear about them as much, and they don`t get sued in lawsuits on an ongoing basis because there may not be any money in a small environment so...

GRACE: And to Joe Episcopo.

BURRIS: That`s the reality.

GRACE: To part two of that question. I`ll throw this one to Episcopo out of Tampa. Do you think the fact that the claim was not contemporaneous with the act, at the same time as the act, will hurt? And why wasn`t there ever a police report? Will that hurt, Joe?

JOE EPISCOPO, DEFENSE ATTORNEY: All that`s going to hurt and so are those phony crocodile tears. But let me tell you this, the preemptive strike is low. Lawyers don`t take cases to sue people like Laura and Jessica. They have no money. You can`t win anything. So he did a preemptive strike. The counterclaim, the sex harassment, only mentions the wife. So Rob Lowe`s past is not only irrelevant, it`s immaterial. It doesn`t come up.

GRACE: To Gloria Allred -- everybody, you know, Gloria Allred, high profile lawyer joining us out of L.A. Gloria, did either of the women -- they claim -- one of them claims that Rob Lowe exposed himself, that he didn`t have any clothes on, that he improperly touched them. Did they ever call the police?

ALLRED: No.

GRACE: Why?

ALLRED: Well, again, they were afraid of losing their jobs. And by the way, the allegation that Laura Boyce made in the lawsuit which we filed for her yesterday is only against Sheryl Lowe. On the other hand, we are also suing Rob Lowe because he is also an employer, and therefore responsible for sexual harassment in his workplace. But Jessica Gibson`s lawsuit is alleging actions by Rob Lowe against her.

GRACE: To Bethany Marshall, psychoanalyst and author of "Deal Breakers," Bethany, part of the claim is that Rob Lowe`s wife Sheryl would walk around without her clothes on in her home. And I`m just wondering if the barrier between being a nanny and being a family member or relative or friend got blurred and she walked around without her clothes on. I don`t think there was anybody on this panel that hasn`t paraded through their living room without their clothes on at one point or the other.

BETHANY MARSHALL, PSYCHOANALYST, AUTHOR OF "DEALBREAKERS": I think we have to acknowledge, in this very intimate setting, taking care of children, bringing someone into your home, it would be easy to blur the boundaries between a professional relationship and a personal relationship. But when I think of Gibson and Boyce, I don`t know them, but I also wonder if they interpreted events very negatively, felt diminished, snubbed, enviousness in fact didn`t motivate some of this as well.

GRACE: But, Eleanor, when you bring someone into your home for employment purposes, it`s not like you`re walking through your own den anymore. You are an employer, and that is a place of employment.

MARSHALL: Yes. But what we have here is not necessarily sexual harassment. It sounds like just daily living, and they didn`t require her to walk around naked.

(COMMERCIAL BREAK)

GRACE: After weeks and weeks on the hunt for parents who inspire, thank you to each and every one of you for your entries. We received thousands. We`re close to selecting the winner, and we plan to feature that winner on a Mother`s Day special May 11, 8:00 p.m. sharp Eastern.

And now tonight`s final extraordinary parent.

(BEGIN VIDEOTAPE)

ALICIA MAUTER, DIAGNOSED WITH BREAST CANCER: I think the word freak had came to mind. I`d never look like the same person ever again.

UNIDENTIFIED REPORTER: Alicia Mauter was shocked when the doctors delivered the devastating diagnosis. The young single mother to 10-year- old daughter Lexy had breast cancer. After a double mastectomy, Alicia had difficulty adjusting to her new body. But she found hope in the sport of body building.

MAUTER: I remember getting a subscription to some magazines that were all about working out and fitness and diet. And I thought, well, you know, I`ve come this far. I`ll just try.

UNIDENTIFIED REPORTER: Alicia began to train and compete, but then love entered the picture and took a bizarre twist. Shortly into her courtship with Jim Mauter, he confided to her that he was dying of kidney failure. Alicia insisted on being tested as a potential donor, and miraculously they matched.

MAUTER: He made a choice and decided if I wanted to save his life, and accept the fact I`d never compete, I`ll never step on stage and give up the dreams of ever, ever body building or doing figure fitness.

UNIDENTIFIED REPORTER: The decision was simple. Alicia had to save Jim`s life. Today the couple who have since married is doing well.

MAUTER: Fighting breast cancer changed my life and it made me realize that, you know, life is short.

(END VIDEOTAPE)

GRACE: What a story.

Let`s stop and remember Army Specialist David Stelmat, 27, Littleton, New Hampshire, killed Iraq. A combat medic, also served Afghanistan. Loved helping others, making friends, laughing, outdoors, skiing, hiking, dreamed of being a physician`s assistant. Leaves behind parents Mary Ann and David, four siblings, and girlfriend Joanna.

David Stelmat, American hero.

Thanks to our guests, but especially to you for inviting us into your homes. I`ll see you tomorrow night at 8 o`clock sharp Eastern. And until then, good night, friend.

END