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CNN Live Saturday

U.S. Envoy Addresses North Korean Missile Launches; FBI & DHS Claim Terror Plot Foiled; Photographer Risks Life to Take Pictures Inside North Korea; Michael Chertoff Discusses Terrorism

Aired July 08, 2006 - 14:00   ET

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

FREDRICKA WHITFIELD, CNN ANCHOR: "Now in the News," a state-of- the-art guided missile destroyer docks at a Japanese port. Navy officials say the USS Mustin is a routine deployment, and not there in response to this week's missile tests by North Korea. Meanwhile, a State Department official is offering one-on-one talks with Pyongyang if it rejoins six-party nuclear negotiations.
Spectacular pictures from the International Space Station. Two shuttle Discovery astronauts are on a six-and-a-half hour spacewalk hundreds of miles above Earth. A live report coming up.

German prosecutors say they've arrested a man on charges he recruited suicide bombers for Iraq and financially supported al Qaeda. Authorities say the suspect has ties to the Hamburg cell that included several 9/11 hijackers. He was tracked through his online chats.

The Palestinian prime minister is calling for a return to calm. It comes nearly two weeks after violence erupted over the kidnapping of an Israeli soldier in Gaza. An Israeli official tells CNN Israel will only agree to a ceasefire if the soldier is released and Palestinians stop firing rockets at Israel.

A new verbal attack on Israel today from Iran's president, Mahmoud Ahmadinejad says the Muslim world's, quote, "basic and fundamental problem is the existence of the Zionist regime." He was speaking to foreign ministers of Iraq's neighboring countries and he called on them to support Iraq's new government.

We update the top stories every 15 minutes on CNN LIVE SATURDAY.

Welcome to CNN LIVE SATURDAY. I'm Fredricka Whitfield. Ahead this hour, how a California kid went from mama's boy to Osama's boy.

Also a rare look at life inside North Korea. One Korean man risks his life to bring you these pictures.

Now to our top story. A new arrival in a potential hot spot. Four days after North Korea stoked tensions with a series of missile tests, the USS Mustin arrived at the U.S. Naval base in Japan. The Mustin is equipped with state-of-the-art guided missile technology, but the commander says its arrival in Japan is not linked to the North Korean tests.

(BEGIN VIDEO CLIP) CMDR. EDWARD B. CASHMAN, USS MUSTIN: We are aware of the situation in North Korea and the events of the past several weeks. We don't have any particular mission right now. We're tasked to come and turn over as part of the normal rotation of forces.

(END VIDEO CLIP)

WHITFIELD: The Bush administration says it is trying to apply diplomatic pressure to convince North Korean leader Kim Jong-Il to stop the missile tests and return to multi-party negotiations over his weapons program. CNN's Sohn Jie-Ae reports from South Korea.

(BEGIN VIDEOTAPE)

SOHN JIE-AE, CNN CORRESPONDENT (voice-over): By the end of the day, Washington's top North Korea negotiator was sounding both conciliatory and firm. U.S. Assistant Secretary of State Christopher Hill did not rule out bilateral meetings with North Korea if China was able to pull together an informal meeting of the six countries involved in trying to resolve the north's nuclear weapons issue.

CHRISTOPHER HILL, ASST. SECY. OF STATE: When they come back in the six-party process, we can have as many meetings as they like. Indeed, we can enhance the number of meetings we will have, but we're not going do this outside of the six-party process. They know the deal. The deal is the six-party process.

SOHN: The U.S. negotiator met his South Korean counterpart in a show of a united front in dealing with the North Korean missile issue.

HILL: Our purpose is in staying very close to the ROK and figuring out how we can do this together. And what we're not going to do is allow DPRK missile launches to divide us from the ROK. These missile launches have actually brought us closer together and we're going to work very closely together in the weeks ahead.

SOHN: A small group of anti-North Korean protestors also pronounced their outrage at North Korea's missile launches and tried to burn the North Korean flag before being stopped by South Korean riot police who put out the flames and confiscated the flags.

While not so harsh, the U.S. negotiator also dismissed a North Korean demand made earlier that the U.S. must drop its crackdown on the north's alleged counterfeit and money-laundering activities before Pyongyang can return to the six-party talks.

HILL: To be very frank, I think this is not a time for so-called gestures of that kind. We have a country that has fired off missiles in a truly reckless way, that affect the regional tranquility, indeed affect regional security.

SOHN: While advocating a peaceful and diplomatic solution to the issue, South Korea has indicated it will stop any future food or fertilizer aid to its neighbors in the north. It will also urge the north to return to the six-party talks when the two sides meet for cabinet-level meetings next Tuesday. Sohn Jie-Ae, CNN, Seoul.

(END VIDEOTAPE)

WHITFIELD: And now to other security concerns. On the U.S. mainland, we're getting new details about an alleged plot by Islamic extremist to flood New York City tunnels. The FBI says the foiled plot involves martyrdom and explosives.

CNN's Kelli Arena has details.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): Officials say the plot was in the early stages but well enough along and serious enough to act.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: We don't wait until someone has lit the fuse to step in and prevent something from happening. That would be playing games with people's lives. So we always intervene at the earliest possible opportunity.

ARENA: The attack they say was planned for this fall and called for putting suicide bombers with backpacks full of explosives on trains.

MARK MERSHON, N.Y. FBI ASST. DIRECTOR: They were about to go to a phase where they would attempt to surveil targets, establish a regiment of attack and acquire the resources necessary to effectuate the attacks.

ARENA: This is the alleged mastermind, Assem Hammoud, 31 years old from Lebanon. He's being held in Beirut.

MERSHON: We know that he is acknowledged pledging a bayat or allegiance to Osama bin Laden and he proclaims himself to be a member of al Qaeda.

ARENA: Lebanese security officials say Hammoud was taken into custody on April 27th. The Lebanese government says Hammoud was living a life of quote, "fun and indulgence to hide his extremist views." It also says he was supposed to travel to Pakistan for terror training. The FBI says that in all, eight people are involved. At least two other alleged participants are also in custody but the FBI won't say where. As for the other five, officials say they do not believe they're in the United States.

MERSHON: There are still subjects out there. Mostly known, some only partially identified or unknown and we remain vigilant.

ARENA: The plot was first revealed in a New York newspaper and that infuriated officials who say the disclosure jeopardized the investigation. But there is another view, the story of an apparent law enforcement success came out on the anniversary of the London subway attacks, and suggests the political motivation for leaking. JOSEPH CIRINCIONE, CENTER FOR AMERICAN PROGRESS: If this was a genuine plot there's nothing wrong with that, but we do have to keep in mind the Department of Homeland Security particularly is under a lot of pressure to show some results.

ARENA (on camera): The investigation is ongoing. The FBI says at least six countries are actively involved. Sources tell CNN those include Iraq, Canada, and Pakistan.

Kelli Arena, CNN, Washington.

(END VIDEOTAPE)

WHITFIELD: And stay tuned to CNN day and night for the most reliable news about your security.

Well, this is absolutely out of this world, high-tech, high- altitude tests being conducted by some space-walking astronauts 220 miles above us at the International Space Station. Here on Earth, along with me, our space correspondent, Miles O'Brien, however, joining us from New York.

And so this is the first of three planned spacewalks, right?

MILES O'BRIEN, CNN SPACE CORRESPONDENT: Yes, and as NASA tends to do things, it is the most important of the three. And what they're testing primarily on this space walk, Fredricka, now five hours into it, they're actually getting ready in just the next few moments to start wrapping things up.

By the way, did you know, you get a sunrise or sunset every 16 minutes as you travel through space in low-Earth orbit. So we're in the sunset mode and very shortly it will be instant daylight which is how it goes as you go across, 90 minutes for one orbit and in that period of time you see a lot of sunrises and sunsets.

In any case, what you're seeing there are spacewalkers Piers Sellers and Mike Fossum at the end of a much longer than normal robotic arm. The shuttle robotic arm has 50 feet -- it has a 50-foot appendage to it, doubling its length. And they're trying to see if it is possible to safely and stably work at the end of such a long boom. This would allow space shuttle astronauts to make repairs to the underbelly of a space shuttle separate from and flying away from the International Space Station.

So if there were a problem with the heat shield, they could conduct those repairs. Let's listen to some of the conversations to and fro as they tested things out.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: (INAUDIBLE) one is 90 degrees, (INAUDIBLE) yaw change in the clockwise direction going back to the starting point there.

UNIDENTIFIED MALE: Roger. UNIDENTIFIED MALE: Two, one, (INAUDIBLE).

(END AUDIO CLIP)

O'BRIEN: That's Piers Sellers deliberately trying to wiggle things around. And if you look very closely at the boom there, Fredricka, you see there's a fair amount of wobble in there. So I think the jury is still out as to whether they can do their job because it's kind of tricky. They have to keep their feet restrained in this foot restraint. And getting in and out of it and doing all of the things you have to do in order to do work in space does require some stability.

Now there is the possibility, Fredricka, that they will have a real world application for this. Discovery has yet to be cleared for re-entry. There are five spots on the belly of the orbiter, two up here, two on the right wing, and one way back here that they want to pay a little more close attention to, dings or marks, they're not sure what they are.

But in this case in the back area here they have a piece of gap filler. That's this material here sticking out, which you may recall from a year ago, if it sticks out can create a hot spot on the thermal tiles. It's possible that mission managers will decide to go pluck it out. There you see the one in question right there. They'll try to go pluck it out using this extended boom on the third space walk of this mission. We'll keep you posted on that -- Fredricka.

WHITFIELD: Wow. That's fascinating stuff. You know, as Sellers has said, it's almost like walking at the end of a telephone pole 200 feet (sic), however, above Earth and nice to see that their feet are tethered down, because I wasn't seeing a tether in any other way. I was getting nervous for them.

O'BRIEN: They're attached with two tethers at all times.

WHITFIELD: All right. Miles O'Brien, thanks so much, in New York.

WHITFIELD: Well, the deal is done. We'll tell you what it took to get the slot machines spinning again in Atlantic City, New Jersey.

Also, Dave Chappelle, he speaks to CNN's Anderson Cooper about the controversy he touched off by walking away from a multi-million dollar television deal. Find out what he had to say.

And later, what's the legal fallout now that Enron's Ken Lay is dead? We'll ask our attorneys in today's "Legal Briefs."

(COMMERCIAL BREAK)

WHITFIELD: "Now in the News," at a quarter past the hour, as we've been showing you, high-stepping astronauts near the end of a six-hour space walk. They've been practicing repairs on the space station and testing a boom. They want to know whether it can be used to fix hard-to-reach areas on the shuttle. A routine scheduled deployment, but likely to send a signal to North Korea. The USS Mustin docked in Japan today. The destroyer is one of eight U.S. ships in the area equipped with technology for tracking and shooting down enemy missiles. Its arrival comes just days after North Korea tested seven missiles despite U.S. warnings.

Three U.S. soldiers were killed in Iraq today. The military says they were engaged in fighting in Iraq's restive Anbar province. In Baghdad, four civilians lost their lives, one in an ambush, the others in a mortar attack.

We update the top stories every 15 minutes on CNN LIVE SATURDAY. Your next update is coming up at 2:30 Eastern.

Ring-a-ding-ding, the music of one-armed bandits is playing again in New Jersey's casinos. The state's budget crisis over and bets went down early just after 7:30 this morning. A little earlier, Governor Jon Corzine signed an executive order sending state employees back to work. That ended a week-long state government shutdown.

"Across America" starts in Colorado, lightning zaps a teen's iPod while he mows the lawn. He is severely injured but lucky to be alive. The strike melted the buds of his iPod, ruptures his eardrums, frizzed his ear and blew a hole in his pants. Jason Bunch (ph) may have some permanent hearing loss. And by the way, I'll be talking to Jason tomorrow at 4:00 Eastern on "CNN LIVE SUNDAY" about his iPod lightning strike ordeal.

Deep water in the desert. Heavy thunderstorms brought a flash flood to Tucson. Roads were closed when underpasses were deluged. About a thousand customers lost power. The area got about a half inch of rain in an hour. That's all it takes in the desert to create this kind of chaos.

He's staying, Cleveland. All-star forward LeBron James has accepted a new five-year $80 million contract with the Cavs. James got the offer eight days ago and has been silent ever since. That had Cleveland fans a bit worried that he was ready to move on to another team.

No laughing matter. Dave Chappelle walked away from a hit show and a lifetime of riches.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: All right. You are all set.

DAVE CHAPPELLE, COMEDIAN: How much do I owe you, man?

UNIDENTIFIED MALE: Eleven thousand dollars.

(END VIDEO CLIP)

WHITFIELD: Chappelle tells our Anderson Cooper why he abandoned Comedy Central. He says the atmosphere changed after he signed a $50 million contract. Chappelle says his handlers made him feel like a prostitute. Besides, Chappelle says, he never had the entire 50 million in his hand anyway.

(BEGIN VIDEO CLIP)

CHAPPELLE: There's two perceptions that people have. One perception is that I got paid $50 million and left. That's not what happened. If that was the case then I'd be running from the law. I didn't get $50 million, I'm not $50 million richer than before I signed the deal.

Another thing that always bothers me is that whenever I see my name in the paper, they always mention $50 million and no one ever mentioned how much money the show generated. Like, what are they making to pay Dave Chappelle $50 million? Am I asking for an unreasonable sum or portion? I mean, I'm just interested to know and I'm surprised nobody else is.

(END VIDEO CLIP)

WHITFIELD: Comedy Central has packaged the skits Chappelle completed for season three, it airs tomorrow as "The Lost Episodes." Anderson Cooper talks to the newsmakers on "360." Join him weeknights at 10:00 Eastern on CNN.

Straight ahead, you'll hear a young American who left his country to star in an al Qaeda propaganda video. Who is he and why did he do it? Stay with CNN, the most trusted name in news.

(COMMERCIAL BREAK)

WHITFIELD: A U.S. military investigation into the deaths of up to 24 Iraqi civilians in Haditha last year has been handed to General George Casey, head of the multinational forces in Iraq. The New York Times quotes two Defense Department sources as saying the report found that some senior Marine officers were negligent in failing to investigate the killings, more aggressively.

The Times also says the report recommends disciplinary action for some officers who were, quote, "derelict in their duties," unquote. While the complete report could be made public as early as next week, it looks only at what happened in the aftermath of the Haditha incident.

Officials say a separate investigation is also being conducted which could lead to criminal charges. Iraqis say 24 people, including women and children, were shot by Marines after a Marine unit came under attack by a roadside bomb last November.

Well, how does a young American make the transition from home- schooled farm boy to suspected terrorist wanted for questioning by the FBI? Intelligence officials say 29-year-old California native Adam Gadahn had popped up in several al Qaeda videos accusing the U.S. and Britain of targeting Muslim civilians. Our Anderson Cooper takes a look at this American al Qaeda.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN CORRESPONDENT (voice-over): Adam Gadahn has come a long way from his home in California.

ADAM GADAHN, AMERICAN AL QAEDA: And why should we target their military only?

COOPER: That's him playing a starring role in the latest al Qaeda video.

GADAHN: ... because they're the ones who started this dirty war.

COOPER: U.S. officials say this tape shows Gadahn playing a central role in al Qaeda's inner circle, valued by its leaders for putting an American face on al Qaeda, a valuable propaganda tool, attacking his own country in its own language.

GADAHN: No sane Muslim should shed tears for them.

COOPER: This is Adam Gadahn in the early 1990s. His odyssey began on this goat farm in rural Riverside County, California. His father, Phil, once an acid rock guitarist and his mother dropped out of the L.A. music scene, moved to the farm and home-schooled their children. But Adam Gadahn rebelled against the counterculture and his parent's Christianity.

PHIL GADAHN, ADAM'S FATHER: Most of the kids, they don't want to be a bumpkin out here, you know, living on the farm, so they all move to town.

COOPER: After going through a heavy metal phase, Adam Gadahn embraced Islam and took the Muslim name Yaya. That was in 1995 and Gadahn wrote about it in this Web site posting. "Having been around Muslims in my formative years," he wrote, "I knew they were not bloodthirsty barbaric terrorists."

Two years after becoming a Muslim, he was arrested for allegedly attacking the president of the Islamic Society of Orange County. Federal officials say soon after, Gadahn moved to Pakistan in 1998. His family lost touch with him after 2002.

P. GADAHN: He sort of detached. He went off and did his own thing.

COOPER: But he surfaced in a big way in 2004. First named by the FBI as someone it was seeking information on in connection with possible terrorist threats, threats he later made when appearing masked in this video, calling himself "Azam, the American."

A. GADAHN: People of America, I remind you...

COOPER: Now in this latest video, he gives a hint of time he spent in Afghanistan during and after the Americans toppled the Taliban and drove out al Qaeda.

A. GADAHN: They have murdered thousands of Afghan civilians. I've seen it with my own eyes. My brothers have seen it. I've carried the victims in my arms, women, children, toddlers, babies in their mother's wombs. You name it, they've probably bombed it. COOPER: Gadahn is now believed to be somewhere along the Pakistan/Afghanistan border. He appears for more than five minutes in the latest video, his words aimed at both the British and American audience.

A. GADAHN: Britain is the one who taught America how to kill and oppress Muslims in the first place.

COOPER: Gadahn refers to the recent charges of U.S. killings in Iraq, saying it is proof that Muslims are being slaughtered by American troops there.

A. GADAHN: And then when our mujahedeen take revenge on the unit which committed this outrage and capture and execute two of its members, they're called terrorists.

COOPER: Gadahn's family isn't talking about the latest tape. But a family friend says they are devastated.

Anderson Cooper, CNN.

(END VIDEOTAPE)

WHITFIELD: Now what is it like for those who live in North Korea? A Korean man risks his life to show you the uncensored view. Those pictures straight ahead.

And later, are the teens teaching the dogs or is it the other way around? A remarkable program that pairs troubled teens with troubled dogs in hopes of giving both of them a second chance.

(COMMERCIAL BREAK)

FREDRICKA WHITFIELD, CNN ANCHOR: Well, this information just in, if I can have prompter, please. Israeli forces pulled out of northern Gaza today, but they remained in eastern and southern Gaza despite a truce proposal from the Palestinian prime minister.

Israeli air strikes continue and new pictures are just coming in to CNN. Medical sources say a 20-year-old man, a 4-year-old girl and one other person were killed in a drone attack on the edge of Gaza City.

And now other news we're following for you, five hours down, another hour or so to go. That sums up today's space walk outside the International Space Station. Astronauts Piers Sellers and Mike Fossum have been testing equipment that could be used to make repairs.

A remarkable report out of Albany, New York. A 4-year-old boy survived a huge fall after a window screen gave way in an 11th floor apartment. The boy suffered a broken skull, a broken leg, and other injuries, but he was still talking. The police chief says he is amazed the boy is still alive.

U.S. diplomats are still hoping to pressure North Korea into giving up its weapons program. North Korean missile tests earlier this week have increased tensions. A U.S. warship equipped with advanced guided missile technology arrived in Japan today, but the Pentagon says it's a routine deployment not connected with the Korean crisis.

A new verbal attack on Israel today from Iran's president, Mahmoud Ahmadinejad. He says the Muslim world's, quote, "basic and fundamental problem is the existence of the Zionist regime." He was speaking to foreign ministers of Iraq's neighboring countries, and he called on them to support Iraq's new government.

We update the top stories every 15 minutes on CNN LIVE SATURDAY. Your next update is coming up at 2:45 Eastern.

A U.S. Navy guided missile destroyer is taking up residence in the Japanese port of Yokosuka. The arrival of the USS Mustin comes in the middle of a growing crisis over North Korean missile testing, but the Navy says the deployment was part of a previously-scheduled plan to replace older ships with newer, more capable vessels. The Mustin contains an advanced missile guidance system that could ultimately prove very useful.

(BEGIN AUDIO CLIP)

VOICE OF MAJ. GEN. TOM WILKERSON, U.S. NAVAL INSTITUTE: The capability to stop a missile from entering home airspace is something that's very desirable to have and, in fact, Aegis-equipped destroyers of the latest class, flight two and beyond, are more than capable of handling any of the missiles that North Korea attempted to fire whether they went well or not.

(END AUDIO CLIP)

WHITFIELD: North Korea is one of the most secretive places on earth. Simply taking pictures on the streets is a treasonous offense, but one man did it anyway. Frank Sesno has the dramatic footage.

(BEGIN VIDEOTAPE)

FRANK SESNO, CNN CORRESPONDENT (voice-over): Across from this hill in China is one of the border towns of North Korea. Loudspeakers pump propaganda through the streets. Somewhere over there, Mr. Lee (ph), the undercover cameraman, has new pictures to smuggle out. When he finally arrives, Mr. Lee brings his new footage to a secret location.

UNIDENTIFIED MALE (through translator): It's been an incredibly tense time. How can I say this? there would have been no way if my work was discovered -- they would have put me out of existence.

SESNO: This is uncensored North Korea in its bleak, unadulterated form.

UNIDENTIFIED MALE (through translator): Using a camera is the most serious form of treason in North Korea. My wife came with me on the journey and she kept telling me not to do it, that we should just get on with our lives. SESNO: He's captured people outside the station, huddled in the streets waiting for a train to arrive. Fuel shortages mean the trains don't often run.

UNIDENTIFIED MALE (through translator): I was petrified, but totally determined. The punishment they inflict on political offenders in North Korea is extremely severe. The system is such that they don't just punish the offender himself. His family and relatives are also punished.

I placed my camera inside a bag and made a hole on the side to secretly film, but the thing is, light was being reflected on the camera lens so I had to be very, very careful.

(END VIDEOTAPE)

WHITFIELD: Tonight at 8:00 p.m. Eastern you can see more of this rare inside look at North Korea on "CNN PRESENTS: UNDERCOVER IN THE SECRET STATE." If you miss it tonight, you can watch it tomorrow night, the same time.

This week the world marked the first anniversary of the London train bombings and after learning the same day that authorities had foiled a planned attack against New York's commuter train system, many people are wondering just how safe that ride to work really is.

Our Dan Lothian talked about it with the nation's homeland security chief.

(BEGIN VIDEOTAPE)

DAN LOTHIAN, CNN BOSTON BUREAU CHIEF (voice-over): On the very day a plot to attack New York's trains and tunnels was revealed, and exactly one year after the assault on London's transit system, Homeland Security Secretary Michael Chertoff walked onto a subway train in Boston, confident, but aware of the constant threat the London attack reinforced.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: I think it was a great reminder, first of all, about the fact that we cannot be complacent about terrorism, that it's not going to go away. It's not just a one-time event.

LOTHIAN: In a one-on-one interview that lasted two subway stops, Chertoff said guarding against another terror attack on the American transit system is a complicated effort.

CHERTOFF: We have to look at all of the kinds of transportation, as well as our fixed infrastructure. You know, we have to worry about ferries. We have to worry about buses, as well as, obviously, the traditional aviation type of situation.

LOTHIAN: This latest case is the second plot against New York's transit system to come to light in the past month, after news of an alleged subway cyanide attack was revealed in early June.

CHERTOFF: What we try to do is not focus on any single threat, but look at all of the threats, and make sure we're covering them.

LOTHIAN: If trains and buses seem to be more vulnerable than air travel or perhaps even secured buildings, it's because, Chertoff says, the system has some constraints.

CHERTOFF: We have an open system. And that's one where we want to encourage people to come in and out without a lot of inconvenience. So, we try to build security that raises the level of safety, but doesn't actually break the system we're trying to protect.

LOTHIAN (on camera): Critics argue, not enough money has been spent on securing ground-based transportation since 9/11. It's been hundreds of millions of dollars vs. billions spent on aviation security.

(voice-over): But based on the potential catastrophic nature of a terror event in the sky, the federal government believes tax dollars are being used wisely. And Chertoff says strides are being made on the ground, like the addition of high-tech surveillance equipment and bomb-sniffing dogs to assist local law enforcement agencies.

CHERTOFF: We're doing other things as well, including random searches, surge operations, where we put more inspectors, more bomb- detection team into subways, either on a random basis on when there's a particular threat.

LOTHIAN: Chertoff used to ride these trains all the time while a student at Harvard. Now, as the nation's top terrorism fighter, he says he's confident commuters are still safe and that Americans should not live in fear.

CHERTOFF: Sure, there are no guarantees in life. But what we continue to work to do is to get as close as possible to safety.

LOTHIAN: Dan Lothian, CNN, Boston.

(END VIDEOTAPE)

WHITFIELD: Tonight on CNN's "THIS WEEK AT WAR," CNN correspondents around the world will look at the latest on the London bombing anniversary, Iraq, and the CIA's decision to close its bin Laden unit. John Roberts hosts "THIS WEEK AT WAR" tonight at 7:00 Eastern, 4:00 p.m. Pacific.

Heart disease claimed the life of Ken Lay before he could be sentenced by a judge. What is the legal fallout? Will the government still seize his assets? Our legal experts will weigh in after this break.

(COMMERCIAL BREAK)

WHITFIELD: A look at the top stories. Check out these amazing new pictures from NASA. It's tool time 220 miles above earth. Two astronauts practice repairing the space station and test the shuttle's arm. The ultimate handymen have been floating out there since just after 9:00 Eastern this morning. They should wrap it up within the next hour.

The U.S. stands by its offer to President Kim Jong-Il. Envoy Christopher Hill says one-on-one talks between Washington and the communist country are possible if Pyongyang rejoins the six-nation negotiations.

And days after North Korea launches a series of missiles, a U.S. missile destroyer arrives in Tokyo Harbor. It is described as a routine deployment, however, but the ship's commander says he is aware that he leads a major mission now.

And a terror arrest in Hamburg, Germany. Prosecutors say they have an al Qaeda suspect with close ties to the September 11 terrorists in custody. The suspect is described as a German of Moroccan descent. Authorities have been monitoring his online chatroom conversations.

We update the top stories every 15 minutes on CNN LIVE SATURDAY. Your next update is coming up at the top of the hour at 3:00 Eastern.

Ken Lay could have spent the rest of his life in prison for fraud and conspiracy. They cost thousands of people their jobs and savings, but this week while waiting to appeal his case, he suddenly died and because that appeal was pending, it could result in his conviction being erased.

Is that likely? And what does this mean for government efforts to seize Lay's assets?

Our legal experts, civil rights attorney Avery Friedman and New York criminal defense attorney Richard Herman join me now. Good to see both of you.

RICHARD HERMAN, CRIMINAL DEFENSE ATTORNEY: Hi, Fred.

AVERY FRIEDMAN, CIVIL RIGHTS ATTORNEY: Nice to see you, Fredricka.

WHITFIELD: Well, where do we begin? Because there are a lot of potential twists and turns in this Ken Lay case. Avery, how about we start with he dies and so does his criminal record?

FRIEDMAN: You nailed it. You're multilingual, Fredricka. I'm going to give you a Latin phrase and the Latin phrase is abatement abanitio. Now that's a legal principle that applies here that means, essentially, it's void from the beginning.

That is, at his death, because he's entitled to a criminal appeal, the appeal to the criminal conviction the whole thing is erased. That means not only is the conviction nullified but so is the indictment. So in terms of the criminal proceedings, Fredricka a there's nothing left.

WHITFIELD: Richard, are you in agreement with that?

HERMAN: Well, I'll give you another phrase, there's no more play against Ken Lay. Avery's 100 percent right. There is no criminal conviction because that only takes place at at the time of sentencing. There is no criminal liability because the jury of the jury has been nullified. So the criminal forfeiture proceedings against his assets are now extinct.

Now, there could be civil forfeiture proceedings brought and there could be claims brought against his estate, but that's where the action lies, with ken lay's estate now, half of which goes on his wife and is not subject to any form of attachment or anything. It's ...

WHITFIELD: Go ahead.

HERMAN: It's a very incredible situation. Yes, really.

WHITFIELD: So, then, Richard, when you say no play against Lay, then you would think that would apply to any kind of ongoing civil cases or even any potential ones, simply because if he's no longer here he doesn't even have the right to appeal even if the civil case were to proceed forward. Fair enough?

HERMAN: Well, the civil distinctions with the criminal are apparent here and they still could go after his estate civilly, regardless of whether or not there are appellate issues because the states could take the appeal.

WHITFIELD: Go ahead, Avery.

FRIEDMAN: Right, and that's going happen. The fact is that the government very recently sought to seize his assets based on the criminal conviction. That's gone, but the government is not foreclosed.

They're proceeding with the civil forfeiture action or attachment action. The difficulty is that there's practicality involved. It is very, very difficult to do and that will -- that civil action will be coupled with some pending civil cases right now.

A massive class action case that's pending, individual cases. The reality is that at one time we were dealing with hundreds of millions of dollars and right now there's only a small percentage of what Ken Lay really had left.

WHITFIELD: Maybe a few million and that might be, you know, in property. So I wonder then, Avery, if we're talking about the estate that would be at issue now with this, you know, civil suit, if the estate was passed over to Ken Lay's wife through a trust, then why is it it could still be seized away from her?

FRIEDMAN: Well, because the conveyance into the trust may be fraudulent. That is the question becomes -- and it's a fact question, did Ken Lay know, based on what has come out in the civil suit, not in the criminal suit, if there's any argument that the behavior was wrongful, then the conveyance into the trust may be invalidated by a civil court.

WHITFIELD: Wow. All right, Richard. HERMAN: Yes?

(CROSSTALK)

WHITFIELD: Last word.

HERMAN: The complete liability against Ken Lay is now extinguished. Civilly, they have to go ahead and start all over again and try to find him liable. That has not been done yet. That is an open question. The claim is only against Ken Lay's estate and in 2002 the former Enron executive who was being sued, his estate was being sued, they dropped all of the charges against the estate.

(CROSSTALK)

WHITFIELD: Wow, all right. I'm sorry, guys. We've got to go. We're rung out of time. But, you know what, I didn't even get a chance to ask you about Jeffrey Skilling, but I know that's ongoing so we can talk about that another time.

(CROSSTALK)

FRIEDMAN: He's still on the line.

WHITFIELD: Well, we have got time to talk about that yet. All right. Thanks a lot, Avery and Richard. Have a good weekend.

FRIEDMAN: Thanks, Fred. Take care.

HERMAN: Thanks, Fred.

WHITFIELD: Well, take a look at these dogs. They face death. Straight ahead, meet the people, however, trying to keep them alive. Find out why the struggle is so important for everyone involved.

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WHITFIELD: And we continue to watch these amazing live pictures, 220 miles above earth, two astronauts wrapping up their mission's first walk in space. They're checking out the equipment there as well as inspecting the Shuttle Discovery.

They are troubled teens, doing time for everything from minor theft to murder. So what can they learn from a bunch of dogs on the brink of being put to sleep at a local shelter. Maybe a lot. Our Keith Oppenheim goes inside a remarkable program aimed at giving both a second chance.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This is just a single, right?

UNIDENTIFIED FEMALE: Yes.

KEITH OPPENHEIM, CNN CORRESPONDENT (voice-over): Jessica is 17 years old. We aren't using her last name because she's in juvenile detention. However, we were allowed to show her face. She's been locked up now for six months at this facility in Albuquerque, New Mexico. She got in trouble for using methamphetamine, running away from home, and stealing.

JESSICA, JUVENILE DETAINEE: I took stuff from my stepmom, and they pressed charges against me for that.

OPPENHEIM: Felicia is 16, in detention for nearly a year. She's had a history of violence, including assaulting staff while in treatment.

FELICIA, JUVENILE DETAINEE: I've been beat up a lot. And I just seen a lot of stuff.

OPPENHEIM: Both Jessica and Felicia are no longer in restricted units behind barbed wire. They're now in a transitional program, living in what looks like a dormitory, where Tamara Ward is preparing them for life on the outside in a very unusual way.

TAMARA WARD, SOCIAL SERVICE COORDINATOR: I felt like bringing dogs in, and working with dogs would be really beneficial for the kids.

OPPENHEIM: You heard it, dogs. Dogs from an animal shelter that face an uncertain future. If they're not adopted, they'll be destroyed. But by matching troubled dogs with troubled teens ...

UNIDENTIFIED FEMALE: Good boy.

OPPENHEIM: Ward figured the odds of survival for a dog could go up and the odds for a teen might be better, too. It's called Project Second Chance, where boy and girls in detention get a dog for three weeks. Their job? Train the dog so it's more likely to be adopted. Ward says, since 1999, 175 canines have been trained through the project. Nearly all have been placed in new homes.

UNIDENTIFIED MALE: Kiss her.

OPPENHEIM: This time around, the dogs are, buckwheat, a 4-year- old male, black lab. And Rudy, an 8-year-old male, Pitbull mix, who may have been abused in his past.

UNIDENTIFIED MALE: You've got a couple of scrapes on your face.

OPPENHEIM: Jessica and Felicia admit they're nervous.

WARD: They don't care you've been in trouble. So, all they want is somebody that's going to love them and is going to show them the right things to do.

Number one, who is this.

JESSICA: Yes, I want this dog.

OPPENHEIM: Jessica gets Buckwheat, who clearly doesn't know the basics. JESSICA: Buckwheat, sit. Sit.

OPPENHEIM: Felicia gets Rudy. He's got a long way to go, too.

FELICIA: Stay. Oh.

OPPENHEIM: From learning how to give these dogs a bath, to cleaning up after them, the teens discover what they and the dogs need to know. Who's being trained here, the dog or you guys?

FELICIA: I think both. Because we're trying to learn, you know, how to work with the dogs too.

OPPENHEIM: If all this seems adorable, it's meant to be much more. Research indicates juveniles in detention often lack empathy. In fact, many have had abusive relationships with people, and have been known to abuse animals as well. Tamara Ward believes, taking responsibility for a dog is fundamental.

WARD: If we can put that caring with the kids here and try to get them to where they connect with a being and have that transfer on to connect with a human being, then our hope is that, everything, all the crime and the behavior, will have a reduction in it.

OPPENHEIM: Sometimes the dog or the teen runs astray. Just two days after Rudy arrived, Felicia was kicked out of this facility. Felicia had discipline problems. She was talking back. And she was sent to an intense supervision program, where she is under house arrest. But Rudy here still had a shot at a second chance. For three weeks, another girl in detention stepped in to train Rudy to be an even better dog.

ANGELA, JUVENILE DETAINEE: No kissy?

OPPENHEIM: Her name is Angela.

ANGELA: My big baby.

OPPENHEIM: And in short time, she transformed Rudy into a model of obedience, ironic given how wild Angela used to be.

ANGELA: I was a runaway. I was a big runaway.

OPPENHEIM: Now this 17-year-old was finding it hard to separate. At graduation, Angela wrote words for Rudy.

ANGELA: I'm looking for the kind of home that will accept me for who I am and not use me for a fighting dog or beat on me.

OPPENHEIM: As Rudy tried to eat his diploma, Buckwheat and Jessica strutted their stuff. Jessica, who finished high school while in detention is hoping to leave soon and get a job. She feels she owes a piece of her success to this black lab.

JESSICA: If you can take care of something else, then you know, you should be able to take care of yourself too. OPPENHEIM: When the three weeks are up, the teens can't keep the dogs. They have to say good-bye.

JESSICA: It'll be okay.

OPPENHEIM: Jessica tries to be reassuring. Angela cries. She doesn't want to part with the pudgy pitbull.

WARD: You're giving more love than he's had in a long, long time. And there is going to be another family who's just going to love him and think he is wonderful and that's because of you.

OPPENHEIM: And the successful training ends with uncertainty. The girls let go not knowing if the dogs will live, and for that matter, wondering if they themselves will make it when they leave detention. Keith Oppenheim, CNN, Albuquerque, New Mexico.

(END VIDEOTAPE)

WHITFIELD: And since we taped that segment, Jessica has been released on parole. Angela is still awaiting parole and Buckwheat and Rudy have both been adopted into new homes.

Straight ahead, as summer temperatures rise, "CNN PRESENTS" melting point and at 4:00 p.m. Eastern I'll speak with an FBI counter- terrorism expert about the plot to attack New York. Is the Big Apple safe? A check of the day's head lines is next and then "CNN PRESENTS."

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