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Government Investigating Possible Oil Price Manipulation; DNC Panel to Decide Fate of Florida, Michigan

Aired May 29, 2008 - 15:00   ET

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

T.J. HOLMES, CNN ANCHOR: The government is looking into possible price manipulation when it comes to the oil market. That is the word we're just getting a short time ago, that federal investigators -- regulators are, in fact, looking into this.
And what we have learned is that this investigation has been going on actually for quite some time. Specifically, we are talking about the Commodity Futures Trading Commission, saying it has started a probe. And that probe started in December. The purpose of that probe is to investigate the practices surrounding the purchase, transportation, storage and trading of crude oil and related derivative contracts.

Now, again, this is the Commodity Futures Trading Commission, which says this is extremely out of the ordinary for them to release the confidential basis of an actual report. They normally would not tell people that they are investigating. And, in fact, here we are, in May, almost to June. This investigation has been going on since December.

And we are just now learning about it. But they say, according to the commission, that they are taking this extraordinary step of disclosing that they are, in fact, having this investigation, because of the unprecedented market conditions that we are seeing today.

Now, they haven't released a lot of specifics of the ongoing investigation. They say a lot of those will remain confidential. But they are looking at this. They're an enforcement arm and they are focused on ensuring that the markets are properly policed for manipulation and abusive practices.

So, many people for quite some time and all we have seen for quite some time about the oil markets have been saying, well, why isn't somebody looking into this? Is there possible price manipulation? Well, in fact, an investigation has been going on by federal regulators since December looking into this.

And we are just now finding out about it. Our Ali Velshi, we're trying to get him back in front of a camera to talk a little bit more and give us some more perspective about what this means. But a major development -- we're just learning that federal investigators are looking at possible price manipulation, with -- certainly, everybody knows the high price of gas and everybody knows about the record oil prices we're seeing as well.

So, we're trying to get Ali Velshi, business correspondent, back in front of a camera to talk more about this.

Also, this is something else we're launching here. Our Rick Sanchez will be with us for CNN special on the gasoline crunch. It's called "4 Bucks! What's Next? America's Fuel Nightmare." This airs at 8:00 p.m. Eastern Saturday and Sunday nights. Again, that is right here on CNN.

BRIANNA KEILAR, CNN ANCHOR: Thick black smoke fills the sky after a helicopter crashes trying to take off from the roof of a hospital in Grand Rapids, Michigan, this morning.

The pilot and a passenger were hurt, but not badly. And the crash started a fire on the hospital roof. Now, this photo comes to us -- let's see. This photo right now comes to us from a CNN I- Reporter, shows you just how thick the smoke was here.

And actually patients were evacuated from several floors of the hospital as a precaution. But we do know now they are now back in their rooms.

HOLMES: When it came to invading Iraq, President Bush went with his gut, not necessarily with the evidence -- that is the word from the former White House spokesman Scott McClellan.

He is now kicking off a media tour to sell his new book. McClellan says the president decided soon after 9/11 to make an example of Saddam Hussein. And after that came the campaign to justify a war, all this according to McClellan.

He appeared this morning on NBC's "Today Show."

(BEGIN VIDEO CLIP, "THE TODAY SHOW")

SCOTT MCCLELLAN, FORMER WHITE HOUSE PRESS SECRETARY: You get caught up in trying to sell this war to the American people. Paul Wolfowitz went and said publicly that the rationale that we all agreed on that would be the best selling point for this the war was the weapons of mass destruction and obviously the connection to Iraq.

And much of that information was based in what could be substantiated. But at the same time, as we accelerated the buildup to the war, the information that we were talking about became a little more certain than it was. The caveats were dropped. Contradictory intelligence was ignored.

(END VIDEO CLIP)

HOLMES: McClellan says Vice President Cheney -- quote -- "has not served the president well" -- end quote, also that Condoleezza Rice in her role as national security adviser was too accommodating of strong personalities on the foreign policy team.

KEILAR: Some of McClellan's, Scott McClellan's former colleagues have said that he never spoke up at the time that he had concerns. And they wonder why he didn't just quit if he wasn't on board with the Bush administration, such as former White House counselor Dan Bartlett.

He notes that Scott McClellan was deputy press secretary when the war in Iraq was being contemplated and thus wouldn't know what the president did or did not consider.

And at a conference on Iraq today in Sweden, Condoleezza Rice, now secretary of state, said this.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: I'm not going to comment on a book that I haven't read, but I will say that the concerns about weapons of mass destruction in Saddam Hussein's Iraq were the fundamental reason for tens -- for dozens of resolutions within the Security Council from the time that Saddam Hussein was expelled from Kuwait in 1991 up until 2003.

(END VIDEO CLIP)

KEILAR: Well, tomorrow, McClellan joins CNN's Wolf Blitzer in "THE SITUATION ROOM." That's at 6:00 p.m. Eastern, 3:00 Pacific, only on CNN.

HOLMES: Well, what do you do? Do you lock them out? Do you let them vote? Do you do something right down the middle?

The Democratic delegates from Florida and Michigan have been a bit of a headache for the party ever since those states jumped the line with their primaries. We may actually get answers some this weekend, when the DNC Rules Committee holds its meeting in Washington.

Meanwhile, Florida Democrats are speaking out.

Our Susan Candiotti is listening to them. She is joining us now from Miami.

Hello again.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Hi, T.J.

And before we get to that, I'm just going to go over a little checklist here. Let's recap about what just happened this week. So far yesterday, we were in Tampa. And we were there when a federal judge there threw out a lawsuit filed by a Democratic Party activist suing the Democratic National Committee, saying they violated the Constitution by denying Florida voters a seat at the table, if you were.

That case got thrown out. But, just about a week ago, the head of the Florida Senate filed another lawsuit, also in federal court in Miami. And that one still hasn't come up yet, arguing more or less the same thing.

Now, today, in Miami, a group of black ministers says it wanted to educate the public and parenthetically the DNC as well to say the only fair thing to do in their opinion is to split the vote 50/50. They say it's the only moral thing to do without disenfranchising nearly two million Floridians who did go to the polls.

(BEGIN VIDEO CLIP)

GARY JOHNSON, FAITH OUTREACH, DEMOCRATIC PARTY: Should it be the majority that decides on how the vote should count or should it be the moral conscience on how it should be counted? Let it be the moral conscience, because there was individuals and candidates that ran in this race that ran a fair race.

(END VIDEO CLIP)

CANDIOTTI: Of course, a fair race and playing nice in politics, sometimes that's hard to do, isn't it, T.J.?

HOLMES: And you say that with a bit of a grin on your face there, Susan Candiotti, there in Miami for us. We appreciate it.

KEILAR: A former American soldier who helped capture Saddam Hussein is running for office in Oklahoma. Retired Lieutenant Colonel Steve Russell is running for a state senate seat as a Republican. Russell says he believes his 21-year-old military career will make him a better public servant.

HOLMES: Well, president Bush is in the heartland today as part of a two-day GOP fund-raising tour. He's in Kansas. But several of the state's major Republican officials are no-shows. With the president's popularity at a record low, the state's two Republican senators and both GOP congressmen cited previous commitments.

KEILAR: The horrors of war. Word today that the number of Army suicides is rising. What is behind this awful trend? And what is the Army doing to turn it around?

HOLMES: And one quarter of the world's proven oil reserves are in Saudi Arabia. But these days, the Saudis are using more of that oil themselves. How that affects you, that's in our "Energy Fix" report.

KEILAR: While most high schoolers are starting their summer vacation right about now, 16-year-old Zac Sunderland is preparing for an adventure he hopes will put him in the record books. You will meet the young man who wants to be the youngest to sail around the world.

(COMMERCIAL BREAK)

HOLMES: Well, gas prices at record highs, motorists shocked, disgusted, and a little upset. Sound familiar? Sound like you?

Well, as Molly Reuter of CNN affiliate KLTV reports, costly gas has been shocking us for quite a while now.

(BEGIN VIDEOTAPE)

MOLLY REUTER, KLTV REPORTER (voice-over): Signs like these are more than a thing of a past. It's a memory for some that's hard to even remember. Welcome to the summer of 1998, where, yes, gas was under a dollar. Now fast-forward one year, and, at $1.17, your pain at the pump begins.

UNIDENTIFIED FEMALE: My money is short. The other car we're going to be driving takes about $30 almost to fill it up.

REUTER: Wouldn't that be nice now? Gas just went up from there hitting $1.40 in 2000 and then $1.50 in 2001.

UNIDENTIFIED FEMALE: It looked like I was going to have to swing a bank loan to fill up.

REUTER: But, like the saying goes, what goes up must come down, right? In November of 2001, gas dropped back down to just 90 cents.

UNIDENTIFIED MALE: I think it's about time. I think we have been robbed long enough.

REUTER: Well, the oil industry didn't think so. In 2002, gas was back to around $1.30, causing some of you to start thinking of ways to cut back.

UNIDENTIFIED MALE: If it gets up above $1.25, up around $1.30 and so forth, yes, we will curtail our travel, absolutely. We will have to.

REUTER (on camera): What do you wish that gas prices were at?

UNIDENTIFIED MALE: Ten cents a gallon. Who wouldn't wish for that?

REUTER (voice-over): In 2003, the term gas war became popular, as gas stations competed for the lowest price. But that quickly disappeared, as gas prices rose to the $2.00 mark a year later. And then, in the summer of 2005, Hurricane Katrina hit.

UNIDENTIFIED MALE: They need to lower our gas prices. (INAUDIBLE) -- $2.99 is just way too high. It's too high right now.

UNIDENTIFIED MALE: I am wondering how high it's going to go, how the working man is going to be able to afford to even go to work.

REUTER: Some of you did anything you could for a few extra bucks, like pawn your favorite pieces of jewelry.

UNIDENTIFIED FEMALE: It's an item to me and I have got to have the gasoline.

REUTER: or downsize your vehicle, maybe even buy a hybrid.

UNIDENTIFIED MALE: It was $70 to fill up my truck. And that kind of made me think maybe I need to look around for something else.

REUTER: In the beginning of 2007, East Texas saw some relief at the pump, with prices dropping to under $2.00 a gallon. But we all know that didn't last long.

UNIDENTIFIED MALE: It's bad. I can't believe it. UNIDENTIFIED FEMALE: Gas isn't exactly what I want to be spending my money on all the time.

REUTER: But, for many of us, we are. With gas almost a dollar more now than a year ago, words like these...

UNIDENTIFIED FEMALE: It's unreal.

UNIDENTIFIED MALE: Outrageous.

REUTER: ... will not be going away any time soon.

(END VIDEOTAPE)

HOLMES: And, again, that report coming to us from our affiliate KLTV, that affiliate in Texas. And in that particular area, regular gas is just over $3.84 a gallon today.

KEILAR: Now CNN's "Energy Fix."

Today, we're looking at what is behind those rising gas prices. And it is not just limited oil supplies. It's also growing demand. Here now to break this all down for us, CNNMoney.com Poppy Harlow, joining us from the energy desk in New York.

Hi, Poppy.

POPPY HARLOW, CNN CORRESPONDENT: Hi, Brianna.

Well, Congress has been holding hearings about high oil prices recently. We have all heard about that. But you know what? Today, we learned that federal regulators are on the case. They have launched what they're describing as a wide-ranging investigation with a focus on possible price manipulation of prices in the energy futures market.

So, what that really is, is there any manipulation when traders are trading those crude futures? Now, that could be one factor pushing up the prices. But there's also the more basic issue of supply and demand. That's what we're talking about today. We know that OPEC and the other major producers of oil are near their output capacity. So there's not really a lot more oil likely to hit the market any time soon.

And that's why rising demand is such a huge issue. The problem not so much here in the United States. A slowing economy here, soaring, energy prices have really limited that growth here, but not overseas. Now, we have been reporting for quite a while on the rising demand from China, from India because their economies continue to boom.

And now the biggest producers of oil are also becoming really big consumers of it as well. "The Wall Street Journal" reports today the top producers in the Middle East -- we're talking about Saudi Arabia, the United Arab Emirates, Iran, Kuwait, Iraq and Qatar -- are all significantly boosting their internal usage of oil and natural gas. And you know what that means. That leaves less for export to us and to the rest of the world -- Brianna.

KEILAR: Is this really something new, Poppy? Is this something we should really be keeping an eye on?

HARLOW: Yes, well, obviously, it did not happen overnight. But it really has developed pretty quickly. And unlike growth in China and India, it comes as a bit of a surprise.

"The Journal" says, since 2004, the Saudis have increased their domestic consumption by 23 percent. And the Energy Department here says those Mideast producers that I named are actually using a whopping 318,000 barrels of oil, additional oil per day from what we saw just a year ago.

Now, all of that means they have less to export. And even though their production has remained about the same or gone up, their export has fallen by 2.5 percent since last year -- Brianna.

KEILAR: And, bottom line, I imagine this is not good for us, right, what this means for us?

HARLOW: Of course it doesn't. Of course, most people think of oil, they think of gas. So, no, it's not good for us to have more expensive gas. And the tighter supplies are most certainly going to mean just that.

And even though crude oil futures are down sharply today -- they're trading right now around $127 a barrel -- they're still not far from that record high that was set last week.

But what's critical here, those prices are more than double what we saw just a year ago. And a number of analysts, Brianna, say we really haven't seen anything yesterday. Goldman Sachs recently forecast crude oil could climb to $200 a barrel by the end of next year. And I don't even want to think about what that is going to mean for you guys at the pump.

KEILAR: Yes. I remember when I first heard that, an astounding number indeed.

CNNMoney.com's Poppy Harlow, thanks.

HOLMES: Well, political hardball, it can win elections. Just ask Barack Obama. He used it to win his first race back in Illinois. Our Drew Griffin takes a closer look here.

KEILAR: The horrors of war, word today that the number of Army suicides rising. What is behind this awful trend and what is the Army doing to turn it around?

(COMMERCIAL BREAK)

KEILAR: More now on this hour's breaking news, a government probe into the possible manipulation of crude oil prices. Word comes on a day that the national average price of regular unleaded gas passes $3.95 a gallon.

CNN senior business correspondent Ali Velshi joining us from New York to explain more about what is going on here -- Ali.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Brianna, this is very interesting.

For months we have been hearing from politicians, particularly those candidates running for office. Hillary Clinton has brought up investigating about whether there's manipulation in the market for trading oil. Now, oil, unlike a stock, trades in different places. Much of the world's oil or at least the light sweet crude that we talk about trades in the United States on NYMEX. About a quarter of it trades on another exchange that is not under government control or government oversight here in the United States.

Now, there's a body in the United States, an agency that regulates the trading that goes on here. It's called Commodity Futures Trading Commission, the CFTC. Today, they announced that they have been investigating possible manipulation in the oil market for the last six months.

They started this investigation in December of 2007, when oil, by the way, was only $96 a barrel. And they say they have been conducting this investigation since then. They have made it public because of the environment, because of the trading environment that we're in right now, quite possibly in response to the fact that people have been calling for an investigation.

Now, we have been in contact with the CFTC. We have been trying to get more information out of them. They have for now decided that they're leaving it with that comment, that they're conducting an investigation. Typically, those are confidential, and that they're going to continue with their investigation. But they have not given us details about who they're investigating, what they're investigating, who possibly -- who could have possibly been manipulating the oil market, if they have any reason to believe there is manipulation or whether they have just responded to the fact that oil price haves been going up.

Brianna, by way of a little background, now oil trading today a little under $127. That's fairly significantly down. That's down over $4.00 a barrel. But a lot of people think that speculation, meaning people buying and selling oil who don't use the oil, people who buy and sell it just to make money, probably accounts for a significant portion of that price.

Some people saying that the real price of oil could be as low as $60 -- that's what Hillary Clinton says -- all the way to $100. So, there could be a lot of that that's just trading. That doesn't necessarily mean it's illegal. It doesn't mean it's manipulation.

So, we don't know what the CFTC is investigating. But they have disclosed that they have been investigating oil trading now for six months. We're working to get more information out of them as to what possibly could be under investigation. KEILAR: And I see here that the CFTC announced today that it's also reached an agreement with the United Kingdom financial services authority, ICE Futures Europe. What is this? Is this because it's a global activity, they need more cooperation?

(CROSSTALK)

VELSHI: About three-quarters of the oil that is traded, the U.S.-type of oil, West Texas Intermediate, is traded at NYMEX in New York. We have been on the floor at NYMEX before.

About a quarter of it is traded through ICE, which is this other exchange, and it's governed earned by the United Kingdom. What these two governments -- these two agencies have agreed to do is cooperate, give each other more information more frequently, so that there's some sense of, are there very large trades being executed? Who might be behind the trades?

It is -- there's a lot more going on in the oil market than one would think we have a handle on. And that's part of the problem. There's a lot of trading that goes on without anybody watching it. Again, Brianna, it doesn't mean anything is wrong or anybody is doing anything wrong. But what these two agencies are saying is we want to exchange information more fully, so we can at least see if there's a trend. Does it look like something might be going on that needs further investigation?

So, two things that they have announced. One is this agreement with the U.K. to more closely monitor oil trading around the world, and number two, specifically the investigation into possible manipulation in the oil trading market.

KEILAR: Senior business correspondent Ali Velshi -- thanks, Ali.

VELSHI: OK.

(BUSINESS REPORT)

HOLMES: And, again, speaking, still, on the economy, join our Rick Sanchez for a CNN special on the gasoline crunch, "4 Bucks! What's Next? America's Fuel Nightmare." That airs at 8:00 p.m. Eastern Saturday and Sunday nights right here on CNN.

(WEATHER UPDATE)

HOLMES: You like candy, chocolates, soft drinks? Well, they're all terrible for your teeth. But a new development in dental care could make them a little less damaging.

Richard Lui has today's "Next Big Thing."

(BEGIN VIDEOTAPE)

RICHARD LUI, CNN CORRESPONDENT (voice-over): Your dentist probably told you to lay off the candy or you could face the dreaded drill. DR. JOSEPH GOSCILO, DENTIST: Dental cavities affect over 90 percent of the population in one form or another.

LUI: But chew on this, a new line of gum by Cadbury Adams called by Trident Xtra Care claims it can make teeth stronger with the use of recaldent, a milk protein that remineralizes teeth by delivering phosphates and calcium to the tooth surface, where cavities form.

GOSCILO: We haven't had anything aside from fluoride that would help strengthen the teeth. But something now that would help remineralize is truly a leap forward in preventive care.

LUI: Dr. Daniel Chan with the School of Dentistry at the Medical College of Georgia likes the idea of adding recaldent and other anti- cavity substances to gum. But he says that chewing sugarless gum alone can also be good for your teeth.

PROF. DANIEL CHAN, MEDICAL COLLEGE OF GEORGIA: It increases salvation, essentially, is the basic mechanism. And by the action of chewing, you're forcing the saliva to go in between teeth and to reach the area that is most prone to decay.

LIU: Earlier this year, an anti-cavity lollipop was introduced by a scientist at UCLA.

So perhaps the next big thing in oral health may not be what's in your toothpaste, but what's in your sweets.

Richard Lui, CNN.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

KEILAR: Playing by the rules -- Democrats in Florida and Michigan didn't, so they're being stripped of their delegates -- at least for now, that is. Sticking to the rules is something Democratic frontrunner Barack Obama is very familiar with. That is how he won his first race for public office, in fact.

CNN's Special Investigations Unit correspondent, Drew Griffin, has taken a closer look at that race.

And he's joining us now from Washington to explain it to us -- hi, Drew.

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT: Hi, Brianna.

Yes, it's a look back at that first ever state senate race in Illinois. And what Barack Obama did in 1996 was use the campaign rules, not the votes, to win. His opponents say it was dishonorable and doesn't fit with the message Barack Obama is trying to portray today. Supporters say it shows Obama can be tough when he needs to be. And in his first race ever, he was mighty tough.

(BEGIN VIDEOTAPE) GRIFFIN (voice-over): Barack Obama was a relative unknown in 1996 when he first ran for office. To win, he had to get around the five year incumbent, Alice Palmer. After losing a bid for Congress, Alice Palmer decided to try to keep her Senate seat. She would have been tough competition for a newcomer, but Obama planned to beat her before she got on the ballot.

Will Burns was one of the volunteers assigned to challenge Alice Palmer's signatures.

WILL BURNS, VOLUNTEER: One of the first things you do whenever you're in the middle of a primary race, or any race -- especially in primaries in Chicago -- you look at the signatures. You know, because if you don't have the signatures to get on the ballot, you save yourself a lot of time and effort from having to raise money and have a full-blown campaign effort against someone.

GRIFFIN (on camera): And you guys successfully kept her from running. You also did your job on everybody else on that thought.

BURNS: There are rules.

(END VIDEOTAPE)

GRIFFIN: There are rules. The Obama campaign protested CNN putting this story together, Brianna. They called it old news rehash, even a hit job.

Well, tonight, you're going to hear from people who say America needs to know what went on Chicago's South Side back in 1996 before they decide who gets their vote for president in 2008 -- Brianna.

KEILAR: All right, Drew.

That was a bit of a cliff hanger.

We can check that out tonight. Thanks, Drew.

That's going to be at 10:00 p.m. Eastern on "ANDERSON COOPER 360." And it's something that you'll only see right here on CNN.

HOLMES: The Pentagon today released an unsettling figure -- the number of soldiers who died last year by their own hands in suicide. The number is 115. It might be the highest in the Army ever. It represents 115 Army families dealing with loss and some very painful questions.

Here now, CNN's Randi Kaye with one of those families.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): He grew up on Fort Bragg, the son of a master sergeant. For Jason Scheuerman, joining the Army was the natural thing to do. He enlisted in 2004. A year later, he was in Iraq. In his first week there, his parents say a solder from his unit was killed. Another committed suicide. This confident young man starts to unravel.

ANNE SCHEUERMAN, PFC. JASON SCHEUERMAN'S MOTHER: He said, "I'm seeing things, mom." He goes, "I guess I'm seeing visions."

KAYE: Private Scheuerman's military file, obtained by CNN shows, a soldier struggling. He's depressed and suicidal. One fellow soldier says he saw Scheuerman put his rifle in his mouth several times.

On June 22, his platoon sergeant finds him out of touch with reality and recommends counseling. An Army chaplain advises have his weapon and magazine taken from him immediately and send him for psychiatric evaluation.

A week later, this doctor's form shows signs of a nervous breakdown, depression, hopelessness. It asks, "Have you ever had any thoughts pertaining to the following?" He checks killing yourself.

(on camera): When somebody fills out a form saying that he's depressed, anxious, he's only sleeping three hours a night and has had thoughts of killing himself, what do you think should have been done?

CHRIS SCHEUERMAN, PFC. JASON SCHEUERMAN'S FATHER: He should have been on an airplane to Landstuhl, Germany for the treatment that he needed.

KAYE (voice-over): Early in July, Mrs. Scheuerman gets an e-mail from her son, which she interprets as a suicide note. She calls the Army. And two days later, Jason is back with a psychologist, denying he feels suicidal.

Despite it all, the psychologist writes, "Jason does not meet the criteria for any mental disorder. It is my opinion this soldier is capable of claiming mental illness in order to manipulate his command, shirk duty or avoid punishment."

C. SCHEUERMAN: I cannot fathom how my Army let my son down like that. His command had a duty to look out for his safety. They knew what was going on and they failed him.

KAYE: Keeping Them Honest, we asked the Army if Private Scheuerman's case was handled properly. Army officials said steps had been taken to reduce the risk of suicide and added, "Our prevention efforts do help soldiers and their families deal with the wartime challenges they face every day."

(on camera): Would those efforts help this soldier?

In the end, Private Scheuerman was pegged a phony, his behavior determined a hoax. Instead of getting help, he was threatened and punished -- even humiliated in front of Iraqi soldiers by being forced to do pushups.

(voice-over): Chris Scheuerman said the Army took away his son's dignity, made him feel like a coward.

C. SCHEUERMAN: In a million years, I can't imagine this happening, that everyone who saw him saw how he was suffering and failed to protect him, to help him.

(END VIDEOTAPE)

HOLMES: This soldier would still be alive today if the Army didn't turn a blind eye to his problems. So say his parents, who are still dealing with the suicide. Their story continues just ahead.

(COMMERCIAL BREAK)

HOLMES: We're talking again today about suicide in the armed forces. And the Pentagon talking about it today, too. More U.S. soldiers killed themselves in 2007 then at any time since the first Gulf War.

One young soldier's family can't understand how their son came to be one of them. They say the Army mishandled him and let him down.

Again, CNN's Randy Kaye.

(BEGIN VIDEOTAPE)

KAYE (voice-over): In late June of 2005, Private Jason Scheuerman is under severe stress. The company chaplain says he needs professional help. Instead, he's punished -- cut off from his family, denied phone and computer privileges.

C. SCHEUERMAN: And the last thing you do to someone you know who is suicidal is cut off their support group.

KAYE: Seven months after he's deployed to Iraq, Private Scheuerman is punished again -- for failing to secure his weapon. He's given two weeks of extra duty and told he may face a court-martial and sodomy in military prison. That night in the closet of his barracks, he puts the rifle into his mouth again. This time, he pulls the trigger.

C. SCHEUERMAN: They said, "Mr. Scheuerman, I'm sorry to inform you that your son died in Iraq."

KAYE (on camera): Did they ever indicate that it was suicide?

C. SCHEUERMAN: After a while, they told me it appeared to be from a self-inflicted gunshot wound.

KAYE: Did you ask if there was a suicide note?

C. SCHEUERMAN: Yes, I did.

KAYE: And what was their response?

C. SCHEUERMAN: They said no.

KAYE (voice-over): Yet more than a year later, a suicide note written by Jason arrived in his parents' mailbox. It was mixed in the with hundreds of documents they had specially requested from the government. Nobody had told them it had been found tacked to the wall of the closet where Jason had shot himself.

C. SCHEUERMAN: "Maybe finally I can get rid of these demons. Maybe finally I can get some peace. Scheuerman."

A. SCHEUERMAN: It just -- every day it breaks my heart. It breaks my heart because he was reaching out for help.

KAYE: Keeping Them Honest, we asked the Army why it didn't protect Jason Scheuerman from himself. The Army refused to answer questions, but in a statement told us, "The loss of any member of the Army family is a tragedy and suicide prevention is a top priority for the U.S. Army."

The statement did not address why a soldier who had been recommended for psychological treatment twice and was seen putting a gun in his mouth was punished rather than pulled from combat. Two investigations by the Army found no evidence of negligence, though one said there was a lack of communication among those concerned about Scheuerman.

The Army inspector-general has launched a third investigation and the Army has updated its guidelines for mental health screening.

Jason's dad still teaches Army medics at Fort Bragg.

(on camera): How do you feel speaking out against the Army which you've spent your entire life serving?

C. SCHEUERMAN: Right is right and wrong is wrong. And what happened to my son was wrong. No one was held accountable.

KAYE (voice-over): Private First Class Jason Scheuerman is buried about a mile from where he grew up on Fort Bragg.

C. SCHEUERMAN: When I go there I see the little boy. It's hard.

KAYE: One soldier -- casualty of war or casualty of a military struggling with the stress of war?

Randi Kaye, CNN, Sanford, North Carolina.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

KEILAR: Feverish preparations are underway to get this boat ready for a world record attempt. In just 48 hours, 16-year-old Zac Sunderland of Thousand Oaks, California is set to begin a solo sail around the world. And he is hoping to be the youngest sailor ever to complete this journey alone.

Zac and his mom Marianne are joining us from Marina del Rey, California.

Thanks to both of you for being with us.

And, Zac, I'm just wondering, I mean what is the motivation here?

We were talking about this in our morning meeting. And you have been sailing all of your life, from the time that -- probably almost before you could walk.

And is this just kind of your equivalent of maybe backpacking through Europe? Is this just your chance to see the world in a way that's very familiar to you?

ZAC SUNDERLAND, ATTEMPTING WORLD RECORD SAIL: Yes. And I love adventure, you know. So that's one of the main things, too, just getting out there and having a big adventure. And it sea I know really well. So it's my way of having the adventure.

KEILAR: And talk to us about where you're going to go, where your really excited to go. I know you're going to the Solomon Islands, Australia, South Africa, Galapagos Islands, a few places -- to name a few.

What are you really looking forward to and what are you going to do there?

Z. SUNDERLAND: The Marshall Islands is my first stop. I'll be looking forward to that, because that will be, you know, my first big thing getting away from all the preparation. That will be awesome, you know. And checking out there. I've never been there before. So that will be amazing.

And then, also, Australia, because I have some friends there. We're going to -- that will be fun, they'll show me around there, Darwin.

And, yes, it's -- I'm looking forward to those places. But I'm kind of a little nervous about going around the Cape of Good Hope. That's one of the places I'm a little bit nervous about. But...

KEILAR: Yes, talk to us about this, because I know that initially you were talking about going through the Suez Canal. But you changed your plan.

Why is that?

And talk to us about why the Cape of Good Hope is so treacherous.

Z. SUNDERLAND: Well, the Cape of Good Hope has a lot of weather down there. And it's pretty -- it's low in the world, so there's a lot of big weather. But, also, the Suez Canal is very notorious for piracy. So that's kind of -- I chose the weather over the piracy, because my boat can definitely handle the weather.

KEILAR: Certainly. And, in fact, we talked today. We've run one story today where there were two recent hijackings of cargo ships there off the off the Somali coast. So, certainly a concern there.

And, mom, Marianne, he's only 16. Is it -- are you scared to send him off? Are you excited? MARIANNE SUNDERLAND, MOTHER OF YOUNG SAILOR: Oh, a little of both. You know, we've done some -- a lot of sailing ourselves, so we're familiar with the excitement and the thrill of getting to a new place and seeing someplace that, you know, nobody has been to or can't fly to. And -- but there are -- you know, he will have the low points, too. So that does concern me, but not overly so.

KEILAR: Zac, talk to us about some of the difficulties of being alone. At some point, you have to sleep on this trip.

What do you do then?

Z. SUNDERLAND: Well, I've got a radar that will turn on and scan every, I think, five minutes. And if there's anything within 10 or 15 miles of the boat, it will send off an alarm. So I'll know if there's anything around the boat. And other than that, you know, you just -- you set the sails and make sure everything is good up on deck and go down below and sleep.

KEILAR: So I know that you're going to have a satellite phone, but you're not going to be on it all time.

It costs about $2.00 a minute, is that right?

Z. SUNDERLAND: Yes, it's pretty expensive. It's sponsored -- one of my sponsors, ClearPoint Weather. So they've been very generous with that. But, you know, I can't be on it all the time. But it's definitely a good way to keep in contact. You also have e-mail over the single sideband of my boat. So I'll be able to blog and keep in touch with all my friends online.

KEILAR: You're going to see your mom and dad, though, right?

You're going to see them on this trip?

Z. SUNDERLAND: Yes. My mom and dad will probably fly into my first stop at the Marshall Islands first, which will be -- that will be fun to see them again after four weeks. But, yes, they're planning to fly in a couple of places.

KEILAR: And you're bringing your school books with you.

Are you going to buckle down? We need you to commit to this.

Z. SUNDERLAND: Yes, definitely. I've got a -- I have enough time. I'll be out there with all the sailing and stuff. So, I mean, I'll definitely be occupied out there, having my school and writing my book and doing some video stuff out there, so, yes.

KEILAR: And what's -- what do you think is the hardest part?

Is it being alone?

Because there are going to be stretches here -- I think your first stretch is four weeks by yourself. Z. SUNDERLAND: Yes, that's going to be kind of interesting. I mean I've never really done huge, huge things alone like that for a month. But, I mean, I'll have -- I'll be in contact with everybody and like I'll be very busy setting up the boat for the first leg and getting everything ready, getting to know the boat a lot better, how it sails and everything. So I should be pretty well occupied.

KEILAR: Well, we are certainly looking forward to charting your progress.

Zac Sunderland and his mom, Marianne, with us from Marina del Rey.

Thank you so much for telling us about your adventure. You're leaving here in a couple of days.

Thanks for being with us, you guys.

Z. SUNDERLAND: Thanks for having us.

M. SUNDERLAND: Thank you.

HOLMES: All right. Well, we will turn to the red planet now, seeing it in black and white. We've got some new images here for you that have just been beamed back to Earth. This one shows what the landscape is like around NASA's Phoenix lander, which landed on Mars. The spacecraft got there on Sunday and after a minor glitch, scientists were able to get the robotic arm moving through a series of signals.

Project managers say the lander is now in excellent shape. It's designed to dig into the soil around it and scientists are hoping it finds ice not too far from the surface. And that could provide evidence that at one point there may have been life on Mars.

All right. Well, will turn now to CNN's Wolf Blitzer.

KEILAR: He's standing by in "THE SITUATION ROOM" to tell us what's coming up at the top of the hour -- Wolf.

WOLF BLITZER, CNN ANCHOR: OK, guys. Thanks very much.

Is Louisiana's governor on John McCain's vice presidential short list?

Does Bobby Jindal even want to be on that list?

He's here and we'll talk about that. We'll talk about a lot more. And I'll ask him if he has what it takes to help McCain win the White House.

Barack Obama says his fight with Hillary Clinton will essentially be over next week.

But might a Democratic Rules Committee meeting on Saturday throw a wrench in those plans? I'll ask Obama's chief strategist, David Axelrod. He's here in "THE SITUATION ROOM."

And after withering criticism for not having gone to Iraq in a long time, Obama's campaign now says he's considering it. But is that smart strategy or is Obama playing into a political trap from McCain?

All that and a lot more, guys, coming up right here in "THE SITUATION ROOM."

KEILAR: All right. Thanks, Wolf.

HOLMES: And the closing bell and a wrap of the action on Wall Street straight ahead.

(COMMERCIAL BREAK)

KEILAR: The closing bell is about to ring on Wall Street.

HOLMES: So let's say hello again to Susan Lisovicz.

Hello, Susan Lisovicz.

(STOCK MARKET REPORT)

KEILAR: Interpretive dance in GDP. That is a complete experience with Susan Lisovicz.

HOLMES: We can stop trying to figure it out.

KEILAR: Thanks, Susan.

HOLMES: We want to head now to "THE SITUATION ROOM" and Wolf Blitzer.