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American Morning

Businesses to BP: Pay Up!; Russian Secret Agents Arrested; Hurricane Warning in Texas; Russian Spy Sting; Avandia Heart Risk?

Aired June 29, 2010 - 06:00   ET

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

KIRAN CHETRY, CNN ANCHOR: Good morning to you. It's Tuesday, June 29th. Glad you're with us on this AMERICAN MORNING. I'm Kiran Chetry.

JOHN ROBERTS, CNN ANCHOR: Good morning to you. I'm John Roberts. Thanks so much for being with us. Lots to talk about this morning, so let's get right to it for you.

Southern Texas now under a hurricane warning. Tropical Storm Alex is gaining strength over the warm waters of the gulf. It could become a Category 2 storm. It's expected to crash into the coast sometime tomorrow. What this means for oil spill operations in the gulf. The latest from our hurricane headquarters coming up.

CHETRY: And two high-stakes hearings on Capitol Hill today. General David Petraeus, the president's choice to take over the Afghanistan war, is facing Senate confirmation. And the president's choice for the Supreme Court, Elena Kagan, is also back in the hot seat today. We're live on both big events just ahead.

ROBERTS: And spies among us. The FBI arresting 10 alleged deep- cover Russian agents. The indictment reading like a Tom Clancy thriller. Money handoffs, secret meetings, alter egos, invisible ink. We'll show you the undercover video. The latest on the search for more suspects and what this might mean for national security.

And, of course, as it is every morning, the amFIX blog is up and running. Join the live conversation going on right now at CNN.com/amFIX.

CHETRY: But first, developing this morning, thousands along the south Texas coast are under a hurricane warning this morning. Tropical Storm Alex getting stronger and possibly, possibly becoming a Category 2 storm before it makes landfall. The National Guard is also moving into place arriving in Edinburgh, Texas. That's about 50 miles from where Texas and Mexico meet. The storm is expected to slam into the coast some time tomorrow near that border.

ROBERTS: Along with the National Guard, the Red Cross is getting ready for the storm. Disaster response units from Dallas are moving into the Rio Grande Valley. The Red Cross tells us they're setting up shop with plenty of supplies a few miles inland near the border with Mexico.

CHETRY: Also, Texas is preparing for a possible hit by filling sandbags, getting out. Governor Rick Perry issued a disaster proclamation in 19 counties. Residents of South Padre Island right in the storm's path are all being urged to evacuate.

ROBERTS: CNN's weather team is tracking Alex following its most likely path and what it could mean for the oil spill in the gulf. For more now, let's bring in our Jacqui Jeras. She's at our hurricane headquarters this morning.

Good morning, Jacqui.

JACQUI JERAS, AMS METEOROLOGIST: Hi, good morning, guys. Alex really intensified in the overnight hours and is now nearly a hurricane. Maximum sustained winds, 70 miles per hour. You have to have 74 for this to be a Category 1. And we think that will happen probably just within the next few hours.

The center of circulation right here. And look at that big burst of intensification where we're getting heavy showers and thunderstorms associated with this. And we're going to start to see some of these outer bands push their way towards northern Mexico and into southern Texas probably late today, but we don't think that Texas will really feel the impact of the tropical storm-force winds or the stronger surf until some time tomorrow.

Here's that cone of uncertainty. And you can see those warnings from Baton (ph) Bay on southward down into northern parts of Mexico. Many of the models bringing it more on a southerly track at this time, but we still can't rule out this northerly track. And if it does happen more northerly, this will not happen until late Wednesday and into Thursday.

Here you can see the oil spill. And while it won't have a direct impact, it will have indirect effects by bringing in strong southeasterly to easterly winds and that is going to push that oil further inland than it has already moved, and also spread it slightly farther and off to the west. There are coastal flood warnings in effect across Louisiana and Mississippi coast because of that, and they could see some tides about one to two feet above what you normally would see today. Tomorrow may be even two to four feet above that tide -- John and Kiran.

CHETRY: Wow, it's crazy.

We also broke some records here in New York. I think we hit 96 degrees at both airports. So, crazy yesterday.

JERAS: Yes. We'll talk more about the rest of the nation's weather coming up about a half an hour from now.

CHETRY: Jacqui, thanks.

Also developing this morning, a big day in the nation's capitol. The U.S. Capitol building is going to be very, very packed today. There are Senate hearings to confirm two major presidential nominations, appointments, if you will. First is General David Petraeus, the president's choice to command troops in Afghanistan. He's going to be going before the Armed Services Committee.

ROBERTS: Meantime, Supreme Court nominee Elena Kagan will face tough questions from Republican senators in Day 2 of her Judiciary Committee hearing.

We've got team coverage of the big events. Dana Bash is live for us in Washington following the Kagan hearings. But we start with Barbara Starr who's live at the Pentagon with a preview of the Petraeus hearing. He's a known quantity, Barbara, but still senators want to know a lot about the plan forward in Afghanistan.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Oh, absolutely, John. Good morning.

There will be many tough questions for General Petreaus. Look for a couple of big topics on the table. The July 2011 withdrawal date, the beginning of the withdrawal of U.S. forces. How many, how soon, how many troops will be coming home. Will General Petreaus review the rules of combat that General McChrystal put into place? The troops are very concerned that there's too many restrictions on them with the use of airpower, when they can drop bombs on the ground, when they can shoot and attack the enemy because of the concern, of course, about civilian casualties.

And look for a lot of tough questions about training of Afghan forces. New reports out saying that the training is behind schedule, not enough of the Afghan forces able to really operate on their own and that they have corruption and drug use issues in those Afghan forces. Look for that to be a major topic -- John, Kiran.

CHETRY: Yes, and that's going to be all the more front and center today because it comes as the same day as a major offensive taking place in Afghanistan. There have been some senators who remarked we wanted the Afghans to be taking the lead on this, why is the coalition still taking the lead on these offensives.

STARR: Well, overnight there has been a major push issues, say, by both Afghan and U.S. forces into Eastern Afghanistan. The region in the crosshairs is Asadabad. This is an area where perhaps hundreds of Taliban and foreign fighters, the U.S. says, had moved in in recent weeks. There had been a lot of concern that maybe the Taliban were trying to open up a new second front in the east because the U.S., of course, is so focused on the south overnight attacks against the Taliban. The U.S. says they believe that they have killed up to 150 Taliban. They are looking for the Afghans to get very heavily involved in this region -- John, Kiran.

CHETRY: Barbara Starr for us, thanks so much.

Also a full day of questioning awaits the president's Supreme Court nominee Elena Kagan. Yesterday was Day 1 of her Senate confirmation hearings and she began by promising to begin independent and fair justice while Republicans laid out their plan of attack.

Dana Bash was in the hearing room yesterday, live in Washington. And, Dana, yesterday everyone was reading from the scripted statements. Today, we may get a little bit more interesting as the senators begin their questioning of her, huh?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It should get a lot more interesting because the overriding theme, Kiran, of nearly all of the Republicans' scripted statements and even some of the Democrats, was concern that they just don't know enough about Kagan's judicial philosophy. For a simple reason, she's never been a judge.

So, we're going to see senators try to pry that out of her today as best they can. But beyond that, senators will grill Kagan, especially Republicans, to better explain some politically incendiary topics. The most explosive, according to the committee's ranking Republican, Jeff Sessions, is Kagan's attempt to block military recruiters when she was the dean of Harvard Law School because of the military's ban on gays in the military.

(BEGIN VIDEO CLIP)

SEN. JEFF SESSIONS (R), ALABAMA: During the time as dean at Harvard, Miss Kagan reversed Harvard's existing policy and kicked the military out of the recruiting office in violation of federal law. Her actions punished the military and demeaned our soldiers as they were courageously fighting for our country in two wars overseas.

As someone who feels the burden of sending such young men and women into harm's way, and you spent much time drafting and redrafting legislation to ensure military recruiters were treated fairly on campus, I can't take this issue lightly.

(END VIDEO CLIP)

BASH: Now one of the key questions today is whether Kagan will answer the questions that she gets from senators. We talk yesterday about how Kagan herself talked about these hearings back in the '90s, that they were vapid and hollow because nominees tend to stonewall. As we expected, GOP senator after GOP senator, threw her own words back at her saying that they hope that she lives up to her own standard. We'll see -- John and Kiran.

ROBERTS: So, Dana, it's been an awfully long time since a nominee in confirmation hearings has not had a judicial paper trail.

BASH: Yes.

ROBERTS: So if she doesn't answer the questions and there's no paper trail, how are the Republicans ever going to get the answers they're looking for?

BASH: You know what? It's funny because one of the Republicans, John Cornyn, was asked that question and more to the point, could you ever be satisfied. And he kind of danced around it. From the perspective of the Republicans, I don't think they're ever going to get the real answers that they are looking for.

One of the things that I'm going to be looking for is the Democrats because there were some Democrats who complained about her lack of a paper trail and they're concerned as well because they think that perhaps she, you know, could be nominated by a Democratic president but might end up something different from what they bargained for. So that could be the most fascinating exchanges today.

ROBERTS: That has happened in the past once or twice.

BASH: Yes, it has.

ROBERTS: Dana Bash for us this morning.

BASH: Calling David Souter.

ROBERTS: Dana, thanks so much.

Also new this morning, Lance Armstrong has the world abuzz with his latest tweet. The seven-time champion says next month's Tour de France is going to be his last. Armstrong's twitter page says it's been a great ride and he's looking forward to three great weeks. He finished third in the tour last year after a three-year retirement.

CHETRY: And Rod Blagojevich thought about Oprah for President Obama's former Senate seat. The ousted Illinois governor's telephone conversations about the talk show host were revealed during his trial yesterday. Blagojevich telling his chief of staff that Oprah was the "kingmaker" who made Obama and also appealed to him because there is nothing affirmative action about her. Oprah has yet to respond to the news.

ROBERTS: Well, just about any time Vice President Joe Biden gets near a microphone you know that something's going to happen. Well, yesterday at a speech at General Electric in Kentucky, the CEO of GE's appliances and lighting division fainted, fell off the stage in front of several hundred workers. Doctors believed it was the heat that got to him, not the speech. He was checked out at a local hospital and is expected to be OK.

CHETRY: Boy, poor Joe Biden. Every time he's in front of the camera, something happens.

ROBERTS: Those open mike moments, you know.

CHETRY: That guy's OK.

Well, just hanging out almost 500 feet in the air. Two window installers got stuck on Atlanta's tallest building when their platform shut down. They were 47 floors up on the 55th -- 55-story tower. Firefighters were able to pull the men to safety. There you see them there.

They seemed actually unfazed. I guess you kind of have to be if you're a window washer, right? You can't really be afraid of heights and actually waved to the news helicopters and were seen talking on their phones during the rescue.

ROBERTS: That's a heck of a way to get home from work, no question.

CHETRY: Exactly.

Still to come on the Most News in the Morning, the Feds say they used everything from high-tech computers to low-tech invisible ink. A wide-ranging investigation breaks up a major Russian spy ring here in the United States. Deb Feyerick has got the story for us coming right up.

Ten minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: A little post-cold war chill this morning after the FBI says it arrested 10 alleged Russian spies, some who looked like they were living the American dream. FBI agents raided several east coast spots from Boston down to the nation's capital. They are accused of a KGB-style plot to ferret out top-secret U.S. intelligence.

CHETRY: And it comes at an interesting time, just days after President Obama met with Russian President Dmitry Medvedev in Washington.

Our Deb Feyerick joins us now with the latest on this case. So they're sharing burgers together at a burger joint in D.C.

DEBORAH FEYERICK, CNN CORRESPONDENT: Oh, yes.

CHETRY: And meanwhile, the spy ring is being investigated. What's the latest?

FEYERICK: Exactly. The president must have probably been partially briefed on this. But you know, these people did it in some cases using the names of dead people, Murphy, Foley, Heathfield, just some of the alleged aliases. Eleven people accused of being spies, one of them still at large, all described as Russian intelligence operatives highly trained.

Now, their goal was not espionage. It was recruiting, specifically people in the U.S. government, were people with access to policymaking. This is according to the criminal complaint. An intercepted message quoted in papers shows that the men and women were given bank accounts, cars and houses to accomplish this mission. They were expected to send back intelligence reports.

Now among the alleged spies, a long-time columnist for Spanish language newspaper "El Diario" and her husband, both arrested. Their Yonkers home seen here in New York, searched on Monday. According to the complaint, the spied communicated with their Russian contacts through private ad hoc computer networks that they set up. Essentially it transferred encrypted data between computers at specific designated times.

Now in one case, an alleged spy identified as Anna Chapman worked from a coffee shop near Times Square. Another time from a bookstore in Greenwich Village. Each time an official allegedly with ties to the Russian mission to the United Nations was in that area. That's how their computers were talking to each other, receiving coded information. Both Chapman's parents are Russian. She was here on a work visa, working out of her home.

Another case in Washington, D.C., a U.S. undercover agent posing as a Russian met with an alleged spy in a local park. The undercover agent gave the accused spy Michael Seminco (ph) $5,000 to leave at a secret drop point under a bridge in Arlington, Virginia. He did that. The money was wrapped in a newspaper. His home was also searched on Monday. Now when the U.S. undercover agent asked whether Seminco (ph) had specific meeting place, the response was, the Russian consulate in New York City. A Russian Embassy spokesman tells CNN right now that they're unaware of reports of these spying arrests.

CHETRY: This is interesting. We just had this cross right now from the Russian foreign ministry saying, it is regrettable that spy allegations have come forward after the president's meeting with their president. So, it will be interesting to see how it affects U.S.- Russia relations.

FEYERICK: Yes, it really will. One of the interesting thing is these people were really here for the long term, 20 years, 25 years. They were supposed to fit in. They were supposed to blend in, become Americanized. All of this to recruit people. Question is, who did they recruit? How many people are out there? And what kind of information was actually gained because they were able to sort of turn people?

ROBERTS: Because this operation is not over yet, is it?

FEYERICK: No. It's still ongoing. And we're hearing that there are going to be additional search warrants as well.

CHETRY: Fascinating.

FEYERICK: Yes.

CHETRY: Really is. As we said, a Tom Clancy novel.

FEYERICK: Absolutely. Absolutely. Who knew?

CHETRY: Deb Feyerick, thanks.

ROBERTS: Thanks Deb. Coming up at 6:40 Eastern, we'll going to talk with the Former CIA officer about how common this type of espionage is and how much damages the spies may have done already.

CHETRY: Also, next in the most news in the morning, is college worth the price? After all, you spend years paying off those student loans. Our Christine Romans is next. She's going to break down whether college is worth your time, your energy and your money? Seventeen minutes part the hour.

(COMMERCIAL BREAK)

CHETRY: Twenty minutes past the hour right now. Welcome back to the most news in the morning. Two new studies are bringing more bad news for the diabetes drug Avandia. Both link the pill to a greater risk of heart attack or heart failure. The news comes just two weeks before a scheduled FDA meeting on the drug's safety. Avandia's manufacturer, GlaxoSmithKline issued a statement denying those findings.

ROBERTS: Two shots may be safer than one. Another new study says, young children getting a vaccine that combines measles, mumps- rubella and chicken pox immunizations run twice the usual risk of fever-related seizures. Researchers say that's compared with kids who get two separate shots, one for measles, mumps-rubella and another containing the chicken pox vaccine.

CHETRY: And Jerry Seinfeld may ask, what's the deal with airline food? Well, an FDA report says that many of meals served to passengers are prepared in unsanitary conditions and that you could get sick. The FDA cited numerous catering facilities that prepare airline food for suspected health and sanitation violations following inspections of their kitchens over the past two years. One of the scariest findings, I believe they found a Listeria bacteria which can be deadly to some people. They tell you especially if you are a pregnant woman to really make sure you don't eat lunch meats and things where you could get Listeria.

ROBERTS: Airline food though. That's something you don't see much of these days.

CHETRY: Yes. You have to be in first class to get sick.

ROBERTS: Vacuum-packed, sealed container, cookies, peanuts, pretzels, whatever.

CHETRY: Christine Romans is "Minding Your Business" this morning talking about the value of a college education. Is that really worth all that money?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Look, PayScale.com did this amazing study that I want to bring to you right away this morning. That shows you exactly what kind of investment a college education is. Think about the safest investment out there, right? The U.S. Treasury bond. That investment is about 4.5 percent.

Well, PayScale went through a list of 800 colleges and universities to tell you what kind of investment you get back for that college. Is your college worth it? The list goes from everything from Black Hills State University in South Carolina or South Dakota, right, I'm really. It cost, overall cost of $67,000 and 4.6 percent return. University of Kentucky, $84,000 is that four-year cost, a 10 percent return on that investment.

And then, it goes all the way up to M.I.T. where the cost is $189,000 but you get 12.6 percent return. What do I mean by return? Well, I mean, when you look over the course of 30 years of working, how much more would you make than if you were just a high school graduate and didn't graduate from there. Black Hills, $6,900. University of Kentucky, $361,000.

Look at M.I.T., $1.6 million is the difference in your earnings over 30 years. This study is so interesting because it shows that state universities and leading technical universities are the best bang for your buck.

It also shows in the words of the director of quantitative analysis there, Al Lee, that it is almost infinite the return on your investment if you have good financial aid and grants and the like from some of these schools. You look at some schools like M.I.T., Cal Tech, Harvard, Harvie Med, Dartmouth, Stanford, for example. Some of them don't charge, they caps what they charge for families who make less than $200,000 a year. So, this can be a really important. And I think, it's a story to say right now because the class of 2010 is still competing with the class of 2009. And so, some people are doubting this investment.

CHETRY: Right.

ROMANS: But PayScale says, it is a valuable investment.

CHETRY: And it is eliminated in your "Romans' Numeral" today as well.

ROMANS: It is, 4.7 percent. You've heard me say this number before, 4.7 percent. And this is unemployment rate of someone with a bachelor's degree. Now think of that. Think of -- that's half almost.

CHETRY: What's the overall rate? It is nearly ten percent, right?

ROMANS: Nearly ten percent, right. So, 4.7 percent, that's basically full employment if you have a college degree. Now, we always talk about make sure it is right now, especially, make sure you get a degree in the right kind of field, the kind of field where you'll going to get a job. Engineers are getting jobs right now. So are economists. So, is anybody in healthcare? People in health care, that's right. So, I'm going to tweet this study. We'll going to put it on "A.M. Fix." If you got a kid going to school, you can find your school on here and find out what the return on the investment is.

CHETRY: Oh, that will be fine, sure.

ROBERTS: Christine Romans "Minding Your Business" this morning, thanks.

Still to come on the most news in the morning, he fought a controversial handgun ban in a case that went all the way to the Supreme Court. Hear what he had to say after the court ruled in his favor and what this might mean for gun laws across the country.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the Most News in the Morning. Twenty seven minutes past the hour right now. It is a major victory for gun owners and the NRA. And another serious setback for gun control advocates. The Supreme Court ending its term with a landmark ruling expanding an individual's right to bear arms. The decision comes in a case involving Chicago's strict ban on handguns in the city.

CNN's Kate Bolduan has reaction from the man who challenged the city's decades-old law, and won.

(BEGIN VIDEO CLIP)

OTIS MCDONALD, PLAINTIFF FOR HANGUN RIGHTS: That's all I wanted, is just a fighting chance. Give me the opportunity to a least make somebody think about something before they come in my house on me.

(END VIDEO CLIP)

(BEGIN VIDEOTAPE)

KATE BOLDUAN, CNN CORRESPONDENT (voice-over): Wanting to defend himself from what he calls the drug dealers and gangs in his South Side Chicago neighborhood, 76-year-old Otis McDonald began a fight that ended Monday on the steps of the Supreme Court. This community activist won a challenge to Chicago's strict handgun ban. The justices effectively striking down a law in place for nearly 30 years.

(BEGIN VIDEO CLIP)

(on-camera) What does this decision mean to you after this long journey that you've described?

MCDONALD: It means that I can rest a little better at night. I believe, you know, I will believe now, and I will believe resting at night that another person will have an equal chance to protect themselves in their own home.

(END VIDEO CLIP)

BOLDUAN (voice-over): Two years ago, the Supreme Court invalidated a similar ban in Washington, D.C., but that only applied to Federal law. Justice Samuel Alito writing this 5-4 majority opinion took that view even further, saying the second amendment, quote, "Applies equally to the Federal government and the states." But Justice Stevens on his last day on the bench disagreed saying this decision, quote, "could prove far more destructive quite literally to our nation's communities and to our constitutional structure." Chicago's Mayor Richard Daley says, he's disappointed.

(BEGIN VIDEO CLIP)

MAYOR RICHARD DALEY, CHICAGO: That person has a right to have a gun in his home. Does he have a right to point a gun at his child? He's the parent. Does he have the right to point a gun at his spouse? Does he? Those are valid questions to ask.

(END VIDEO CLIP)

(END VIDEOTAPE)

BOLDUAN (on camera): Chicago is now working to rewrite its ordinance to comply with the high court ruling and still retain tough gun restrictions. The justices did signal that what they called reasonable gun regulations would presumably be allowed to stay in place. But one key question the justices left unanswered -- where then are the boundaries? Kate Bolduan, CNN, Washington.

ROBERTS: Crossing the half-hour now. It is time for our top stories. Opening statements and formalities now over, republican senators are ready to grill Supreme Court Nominee Elena Kagan. She'll face a full day of questioning before the judiciary committee.

Also on Capitol Hill today, General David Petraeus goes before the Senate Armed Services Committee. He's hoping to be confirmed as the new troop commander in Afghanistan.

CHETRY: And the spies next door. Russia says the arrest of 10 people described as trained deep cover operatives in the United States is, quote, "regrettable" after the Obama administration's relations were reset with the country. FBI says, for more than a decade, this spy ring tried to get their hands on inside intelligence, posing as average Joes living in the suburbs and trying to cozy up to U.S. policymakers.

ROBERTS: Plus, a hurricane warning along the south Texas coastline as the state braces for Alex. It's still a tropical storm at this point, but Alex could strengthen, according to forecasters, into a category-2 hurricane before it makes landfall, which is expected some time tomorrow. The National Guard and the Red Cross are already prepositioning themselves, getting ready to respond.

CHETRY: And Tropical Storm Alex just one of the many worries for those dealing with the oil spill in the Gulf. It's now day 71 of this disaster, and a lot of small business owners along the coast have a simple message for BP: It's time to pay up.

ROBERTS: The claims are stacking up. And for too many families, the cash just isn't coming fast enough.

For more, let's bring in our Chris Lawrence. He's live in New Orleans this morning.

So, we had Ken Feinberg appointed to administer this escrow fund. He said it's so important to get the money out there quickly. Where's the bottleneck?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, I think, John, I think we're starting to kind of crack that bottleneck just a little bit. And we went back to a case of a charter boat captain that we had looked into a week ago, and the thing that made his case stand out to us so much was that he went line by line and accounted for over $100,000 in lost profits. Yet BP came back and offered him $33,000.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): We first met Stu Scheer on one of his charter boats.

(on camera): Six boats, right?

(voice-over): His customers scared off by the oil spill.

Stu filed a claim with BP for damage done to his fishing business.

STU SCHEER, CHARTER BOAT CAPTAIN: They wanted 2007 through 2009 returns. They wanted my log books. They wanted my bank statements. They wanted all my licenses, P&L statement.

LAWRENCE (on camera): So, you laid out all this paperwork.

SCHEER: Everything.

LAWRENCE: To the number.

SCHEER: To the penny virtually. My bookings for this year amounted to a gross net of $107,000 and they basically offered me $33,000.

LAWRENCE: We've learned that BP is using a process called forensic accounting. Technically, it means the application of scientific knowledge to a legal problem and it's usable in a court of law. But to a lot of businesses down here, like Stu's, forensic? It just means death.

(voice-over): This investigative approach prevents fraud. But in Stu's case, only covers partial losses from months past.

(on camera): Those people who had looked out of state charter boat trips, they've just -- they've already canceled.

SCHEER: That's right. I mean give you an example. Actual booking in October was $13,400 gross. You know, I can't say, well, let's look at it in October. They have to make their plans now. So, we've lost that business.

LAWRENCE (voice-over): So, we went back to BP where an official told us Stu's claim is now being recalculated.

And what about having to come back to the adjuster every 30 days? We took that concern to the man about to take charge of the whole claims process.

(on camera): Some of the folks have complained to us that they're being forced to file their claims every single month. They feel like they're being treated like children handed an allowance.

KEN FEINBERG, COMPENSATION ADMINISTRATOR: Well, I'm sympathetic to that complaint. Senator Landrieu suggested to me to consider the idea of an emergency lump sum payment maybe over three to six months rather than one month. And I think that I'll give that serious consideration. I'm inclined to do it.

LAWRENCE: So, if Ken Feinberg keeps his word and follows through and you were to get a payment from July through December, in addition to that $33,000 that they've already offered you --

SCHEER: I think that would probably be pretty good. I'm hopeful that everything that he said, you know, has come about. I think that with him in charge, I'm a lot more optimistic.

(END VIDEOTAPE)

LAWRENCE: And when you have documented $100,000 in losses and you are originally offered $33,000, optimistic is pretty good. And the decision -- the potential decision -- to offer a lump sum payment three to six months instead of that every 30 days, that can have huge implications for a lot of people in this region. Not just Stu. I mean, there are 80,000 claims out there. A lot of people are waiting for money. So that can be a very potentially big development as well.

ROBERTS: The quicker they can get the money out, I'm sure the happier people are going to be.

Chris Lawrence in New Orleans this morning -- Chris, thanks.

LAWRENCE: Yes.

Next up on the Most News in the Morning: A Russian spy ring busted by the feds. We'll take a closer look with Jamie Smith, an expert on intelligence matters, coming up next.

It's 35 minutes after the hour.

(COMMERCIAL BREAK)

(MUSIC PLAYING)

ROBERTS: Shades of the Cold War. Ten people are under arrest this morning, charged with spying for Russia. The feds say the alleged secret agents operated under deep cover in the United States for years. The FBI is now trying to determine just how much damage they might have done.

Jamie Smith is a former CIA officer who now runs a private intelligence firm. He joins us this morning from Batesville, Mississippi.

It's great to see you this morning, Jamie. Thanks for joining us.

JAMIE SMITH, FORMER CIA OFFICER: Thank you, John. Good to be with you.

ROBERTS: So, we get a sense of what they were up to and what they have been up to for the past few years for some, couple of decades for at least one person. 2009 communication from their handler said, quote, "You were sent to the USA for a long-term service trip. Your education, bank accounts, car, house, et cetera -- all these serve as one goal: fulfill your main mission, to search and develop ties in policy-making circles in U.S. and send intels -- intelligence reports to" Moscow.

How much damage could this group have done to national security? The fact that there were 10 of them, it's very unusual.

SMITH: It is, John. At any one time there were probably no more than 10 illegals from the SVR back in the '90s, and the fact that we've had 10 and 11, an 11th is being sought is -- it is -- the potential is quite damaging to the United States in terms of the nuclear program of the United States, the policy toward Iran, and just penetrating policy-making circles in the congressional side of the House. It is potentially very damaging.

These individuals are what are called illegals and they come from the Directorate S. The SVR is the follow-on agency to the KGB. Directorate S was responsible for managing the illegals' program. And we would know it in the United States as the non-official cover program.

ROBERTS: Right. As you say, they were directed to gather intelligence on nuclear programs, relations with Iran, what's going on in Congress. Yet none of them were charged with espionage. So, what does that say about this plot? Were they -- were they able to get very far?

SMITH: Well, I imagine that they were, but the authorities are probably still putting together their case and they -- I'm sure they've got their case rather well put together now.

But, you know, this also gives the authorities some leverage, some room, to negotiate with the Soviets and, you know, they've got them on money laundering, they've got them on conspiracy to commit money laundering, rather, and on failing to register a foreign agent. This allows them to say, look, we've got you guys. We want some evidence of what you've been doing.

And we need to kind of narrow it down, damage control so to speak. And it allows them to negotiate directly with the Russian government once they present to the Russian government what the actual evidence of the espionage is, because, you know, what they've seen them do, and according to the FBI agents that were witnessing the activity, in their experience, the agents' experience, they looked at it and said, hey, this is espionage. And so, you know, these guys -- the men and women that they picked up, they did not register as foreign agents because they're part of the illegals program.

ROBERTS: Right.

SMITH: And the way that the intelligence service works is: you'll have somebody that will come in either working as a diplomat from the Russian embassy and that will be their cover for status and cover for action. And then if they get picked up, they can always fall back and say, I'm a diplomat, I have immunity. And in this case, these people don't have that.

ROBERTS: Sure.

SMITH: And they undertook one of the most risky missions that the intelligence business provides.

ROBERTS: Yes. You know, when you take a look at the gamut of the suspects, one of them was working as -- one of the alleged suspects was working as a journalist at the "El Diario" newspaper.

You know, when you take a look at the trade craft that they employed, it's really an interesting combination of modern day and old school. They were communicating with each other over peer-to-peer secure communications networks. But then at the same time, there were dead drops, bag swaps, one person apparently buried some money in Upstate New York and a couple years later, somebody came and dug it up -- and all of this under surveillance.

What does that say about -- about this, old school and some new school?

SMITH: Well, the new school techniques are actually just building off the old school techniques, if you will. What it says is that, you know, when a group adheres to the basics of trade craft, you know, they work.

And, you know, what they've done is, you know, they have simplified it in a way with -- they've made it a little less risky by doing these peer-to-peer network transfers where you got one laptop that sees another one, that put an ad hoc wireless network together and then they pass information. That's nothing more than a 21st century version of what was called a brush-pass in the pass, where you walk past somebody and literally touch them and hand the information off. In this case, they were doing it electronically, sitting -- you know, sitting in park or in a restaurant.

ROBERTS: Yes.

SMITH: And so, it's just a natural flow from taking the techniques that have been used since, you know, God created dirt until now and, you know, putting the electronic age in with -- you know, with the old techniques. But what it says is that for 10 years, these techniques allowed them to move and work in our society and penetrate our society in a way that was very, very effective.

ROBERTS: You know, although the FBI was on to them for a long time, they certainly didn't seem to raise too many suspicions in the neighborhoods in which they were living. This couple that was living in Montclair, New Jersey, suburb just a little bit west of New York City, Richard and Cynthia Murphy, apparently, were the epitome of a suburban couple.

One teenager who was interviewed by "The New York Times" joked, "They can't be Russian spies, look what they did with the hydrangeas."

SMITH: Right. You know, that -- that just goes to remind our society that, you know, we are -- we are not -- we're not immune to having intelligence officers working against -- working against us, living amongst us, as well as the terrorism side of the house. You know, we cannot ignore that these two things take place and when the wall came down back in the early '90s, everybody said, hey, the KGB's gone, we don't have to worry about Russia anymore, and that is the furthest thing from the truth.

And the SVR picked up where the KGB left off. When Putin was in office, it was his goal to return the SVR to the -- you know, really, just to bring the KGB's reputation back. And, you know, we can't ignore the fact that our country is a target for espionage no matter the friendly relationships appear to be all over the world. It still takes place. Espionage happens 24/7.

ROBERTS: Right. You got to look behind the hydrangeas, I take it, right?

SMITH: That's right, John. That's exactly right.

ROBERTS: All right. Jamie Smith, good to talk to you this morning. Thanks for joining us.

SMITH: Thanks again.

CHETRY: It's 45 minutes past the hour. Jacqui Jeras is in the extreme weather center. She's going to be tracking the latest on tropical storm Alex, where it's headed and whether or not it will affect clean-up efforts from the Gulf oil spill.

Meantime, in 10 minutes, it's pretty hard to sing and cry at the same time. Ask Chris Brown, who did it while performing a tribute to Michael Jackson. But as Jeanne Moos shows us, he's got a lot of company.

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CHETRY: Forty-eight minutes past the hour right now. A look at Washington, D.C., the nation's capital is going to be hot no matter what the temperature is today because there are two big hearings taking place, General Petreaus and confirmation hearings for Elena Kagan as well from the Supreme Court, but it's going to be 92 degrees down in the nation's capital.

ROBERTS: A little relief coming later on to the week. Let's get a quick check of the morning's weather headlines. Jacqui Jeras is in the Extreme Weather Center. All eyes right now on the Gulf and potential for hurricane Alex to form.

JACQUI JERAS, AMS METEOROLOGIST: Yes, absolutely. We're almost there, you know. Winds are 70 miles per hour. You got to get up to 74 for it to be a hurricane. So this close, you know, just a few miles per hour, but the storm really intensified in the overnight hours the center of circulation somewhere in here now. Still more than 400 miles away from the Texas coastline. But we're going to start to feel some of these impacts I think by late tonight. You won't feel the tropical storm-force winds though until some time tomorrow.

Here's the forecast now for Alex. There you can see that cone of uncertainty still pretty wide. Hurricane warnings in effect from Baton Bay (ph) on southward. We are expecting land fall at the earliest Wednesday night or into Thursday. Now, we will see showers and thundershowers with a stalled front all along the Gulf Coast today with strong easterly winds that is going to be impacting that oil spill and potentially bringing oil further onshore, unfortunately. Cool-like conditions across the upper Midwest, looking really nice. I know you haven't been liking the heat across the Northeast. It's going to be a little bit better today. Our high temperature in New York City about 94 degrees, but we'll be seeing more 80s across the eastern seaboard by tomorrow. So, hang in there one more day. Things will be looking a little bit better.

CHETRY: Wow. It is hot there. They're breaking records yesterday, 96 degrees at JFK and LaGuardia. Wow.

JERAS: Not fun.

CHETRY: Thanks, Jacqui.

This morning's top stories just minutes away, including oil and stormy waters. As Jacqui just explained, tropical storm Alex is gaining strength. Now, the worry is that it could kick up strong waves and delay BP's clean-up efforts off Louisiana.

ROBERTS: Plus, a cold war flashback. The feds say they nabbed ten members of a secret Russian spy ring. Coming up, why they also say this is only the tip of the iceberg.

CHETRY: And it's being called the iPhone 4 death grip? If you're having trouble with your new iPhone, when you place phone calls, you aren't alone. Christine Romans is looking at a lawsuit now aimed at Apple over its newest gadgets. Those stories and much more coming up at the top of the hour.

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ROBERTS: Fifty-three minutes after the hour now. At a really good concert, it's easy for people in the audience to get caught up in the emotion of the moment, but at the BET. Awards on Sunday night, it was performer, Chris Brown, who actually choked up.

CHETRY: And he brought himself to tears during his own tribute to Michael Jackson. And Jeanne Moos shows us that he's actually just the latest singer to breakdown on stage.

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JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): First he danced, then he cried, and Chris Brown broke down at the BET Awards performing a tribute to Michael Jackson. It was one of those try to sing but nothing comes out. Brown isn't the first singer inspired by Michael Jackson that get choked up paying tribute to him. Usher was singing to Michael's casket at his memorial service.

Stevie wonder was, likewise, rendered momentarily mute in the middle of "The Way You Make Me Feel." The way he made everyone feel at this HBO "Rock and Roll Hall of Fame" event was sad. We're more accustomed to the singer making the audience cry. Be it Sanjaya on "American Idol." or Bette Midler serenading Johnny Carson with "One for the Road," the last guest on "Carson's Tonight Show."

But when the singer cries, be it Beyonce or Fantasia on "American Idol," they have the audience eating out of their tear-stained hand. A performer doesn't have to be sad to cry. Sometimes, the biggest meltdowns are just caused by nerves. After heading for a shoulder to cry on, all Hollie Steele wanted was a chance to start over again on "Britain's Got Talent."

UNIDENTIFIED MALE: I just found out we don't have time to do it again, I'm afraid. I know it's upsetting.

MOOS: They found the time.

MOOS (on-camera): Some performers cry a lot. Think Celine Dion.

MOOS (voice-over): She cries so much she developed dramatic techniques for wiping away her tears. There's the backhand. The two- handed fling and the two-handed fling with eyes raised to the heavens. Sure beats Kleenex.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

ROBERTS: Of course, (INAUDIBLE).

CHETRY: Producers, "we're out of time. Got to end it here." Sorry about that. We'll be right back.

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