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Calls for Resignation for New York Governor Spitzer; Mississippi Casts Primary Votes

Aired March 11, 2008 - 13:00   ET

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

DON LEMON, CO-HOST: All right. Here's the million-dollar question. Where does Eliot Spitzer go from here?
BETTY NGUYEN, CO-HOST: Well, one day after the New York governor's spectacular fall from grace, we're awash in sordid details but short on answers to those burning questions, Don.

LEMON: Will he step down? Will he be charged? What is next for New York?

Hello, everyone. I'm Don Lemon live at the CNN world headquarters here in Atlanta.

NGUYEN: And good afternoon, everybody. I'm Betty Nguyen, in today for Kyra Phillips. You are in the CNN NEWSROOM.

LEMON: OK. So it's now been almost 24 hours since Eliot Spitzer's deep, dark secrets became front-page news. And the shock -- the shock still hasn't worn off. Here's what we know right now.

The first-term Democratic governor is said to be contemplating whether, and how, to resign. Almost no one expects him to hang on. But if he does, a top state Republican is threatening impeachment.

NGUYEN: Well, it's also unclear whether he'll be charged and, if so, with what? The probe began with money transfers that caught the attention of the feds. Spitzer's hiring lawyers, including his former top deputy when he was in New York as the attorney general.

LEMON: Well, Betty, Spitzer's reputation as a squeaky-clean straight arrow, moralistic crusader is pretty well shot. But what about his career? Today we hear the wheels are in motion for him to give up the governorship just 14 months after being sworn in.

CNN producer Dana Garrett joins me now by phone from Albany.

And Dana, I understand a transition team is possibly in place.

DANA GARRETT, CNN PRODUCER: That's right, Don. I'm at the state capitol building in Albany, where I have been told by a top legislative staffer that staffers from Governor Spitzer's office and Lieutenant Governor David Paterson's office are currently meeting, holding transition talks.

This staffer also told me that Lieutenant Governor Paterson is meeting with his political consultants, as well, to discuss a transition.

Now, no word yet from the governor whether or not he is stepping down. And we've heard nothing from Lieutenant Governor David Paterson, either. But nevertheless, it would appear that things are moving forward towards a possible transition that could be happening, really, any day.

There's really been very little other developments here in the capital. We have not heard from other legislative leaders. The other one who really is speaking out is the Republican assembly minority leader, Jim Tedisco, who has been calling for Spitzer's resignation and has said this morning that, if that does not come soon, that he will, in short order, begin proceedings to impeach the governor, to remove him from power.

So amid those calls for his resignation and a possible impeachment, we hear that staffers for both the governor and lieutenant governor are meeting to discuss a possible transition -- Don.

LEMON: CNN producer Dana Garrett joining us from Albany. Thank you, Dana.

NGUYEN: Let's go now to CNN's Allan Chernoff in New York City with what is starting to feel like a resignation vigil.

Allan, what are you hearing from where you are?

ALLAN CHERNOFF, CNN CORRESPONDENT: Betty, we are witnessing one of the great political downfalls, I think, certainly in New York history and perhaps in American history.

Of course, we've all had -- seen very many political scandals involving sex, but this is a man, Eliot Spitzer, who built his entire career on ethics and on doing the right thing, and on taking down corruption. And now here he is, caught as a customer of a prostitution ring. So it is simply shocking.

Dana just said that there are transition talks under way. We're also hearing that some aides are actually saying the governor is likely to be stepping down by the end of the week.

The tabloids here in New York City are all calling for the resignation. Have a look at the "Daily News": "Pay for Luv Gov" on the cover. And then turn in to the editorial: "Hit the Road, John. Three Words: Just get out." It doesn't get a lot tougher than that.

"Newsday," "Eliot (ph) and the Call Girl." And "The New York Post": "New York's Naked Emperor, Eliot Spitzer, Must Resign." This is very intense pressure on the governor to step down.

And let's also keep in mind, Eliot Spitzer is very, very head- strong. This is a tough guy. And if he could hold on, he probably would. He'd probably try to figure out some way to hold on, but increasingly, that is not looking like a viable option. The fact is, Eliot Spitzer has a tremendous number of enemies. And that's partly because of the way that he practices politics. He has tried to rule with a bulldozer, and among those he tried to bulldoze down the senate minority leader, Joseph Bruno. Yesterday, Bruno was a little understated in his reaction. Let's have a listen.

(BEGIN VIDEO CLIP)

JAMES TEDISCO (R), NEW YORK STATE ASSEMBLY MINORITY LEADER: This is very, very disappointing, very saddening. And there's no question in my mind, he has compromised his ability to lead, to be our titular leader, to be the governor of this state. And I have asked for his resignation.

(END VIDEO CLIP)

CHERNOFF: That's one of the many calls that we're hearing, at least from the Republicans, for the resignation of New York's Governor Eliot Spitzer -- Betty.

NGUYEN: All right. Allan Chernoff with the latest there in New York. Thank you, Allan.

LEMON: Well, sex may have been Eliot Spitzer's weakness, but money -- money was his downfall; specifically, transactions that banks deemed suspicious and referred to the IRS.

CNN's Justice Department correspondent Kelli Arena picks up the story from there -- Kelli.

KELLI ARENA, CNN CORRESPONDENT: Don, you know, investigators are focusing on how Spitzer allegedly paid for those sexual encounters, what he may have done to conceal the movement and source of the money, and whether he broke any laws doing it.

Now as we've reported and as you just said, the investigation began last year, when the IRS was conducting a routine examination of suspicious financial transactions that were reported to them by banks. Sources with knowledge of this investigation tell us that at least one bank reported several unusual movements of cash, including the governor. Sources say that he was basically moving cash from one account to another.

Those sources say the money ended up being in the bank accounts of shell companies, which then led investigators to the prostitution ring. Now, our sources say that prostitution was actually the last thing on anyone's mind at the time. And the FBI's public corruption squad was brought in very early. Whenever a government official is involved in suspicious financial transactions, it's standard procedure to make sure that it doesn't involve defrauding taxpayers.

So far, Don, I haven't heard anything from any of my sources to suggest that Spitzer used taxpayer dollars. Several sources suggest that he may have been shuffling money around just to hide things from his wife. Sources tell us that Spitzer hasn't been formally questioned, and they tell us that financial investigations do take a long time. This is still pretty early in this process. And it is possible that his lawyers will soon be meeting with federal prosecutors to discuss any legal issues that there may be. But right now we know he hasn't at least been publicly charged, Don.

LEMON: Yes. And I guess breaking the law, that's really going to be the crux in all of this. All right. Thank you very much for that, justice correspondent Kelli Arena.

NGUYEN: In the Democratic battle for the White House, the focus today is on Mississippi, the last stop before a six-week break in the election calendar. Barack Obama hopes to pad his delegate lead over Hillary Clinton before attention moves to Pennsylvania next month.

From Clinton, not so fast. She, too, hopes to pick up more delegates in today's primary. Mississippi hasn't voted for a Democrat in the general election since Jimmy Carter back in 1976.

Well, the polls in Mississippi have been open about five hours now. Both parties are holding primaries, even though John McCain has wrapped up the Republican nomination.

Our Sean Callebs joins us now from a polling place in Terry, which is just outside of Jackson.

How are people responding? Are they coming out in full force?

SEAN CALLEBS, CNN CORRESPONDENT: Well, so far, the turnout here has been what is considered light to moderate. They say Democrats come through about 100 per hour on an average day during election year. And that is about what they're seeing.

Behind me there's a little activity going. There's some controversy with one of these electronic voting machines. Apparently, there have been some phone calls from people who have come in and voted, saying they believe the light is very dim and very difficult to read.

There are people here, like Nicholas out here, who help people come in. They walk them up to the machines, and then the voting takes place. But there are some concerns. We're told these are some Hillary Clinton supporters down on the end, concerned that this one voting machine is not as bright as it should be. This just happened, so we'll keep you up to date on exactly how this plays out.

Mississippi's 33 delegates at stake puts it right center in the national spotlight for the election of these coming days. And people -- Mississippi may not be the most progressive state. But what folks are trying to say is, "Look, it is not race or gender that is attracting folks out to vote today. It's the issues." Here's what a couple had to say.

(BEGIN VIDEO CLIP) CHARLIE DAVIS, MISSISSIPPI VOTER: We're looking at the same issues that everybody else throughout the country is looking at. You're looking at the economy. You're looking at the fuel prices. You're looking at foreclosures on homes right now.

So we're looking at the same thing that everybody else is looking at. And we're hoping that we can get a candidate in there that will take care of all these things.

CLARENCE FINLEY, MISSISSIPPI VOTER: Real concerned about health care. Real concerned about of course the price of gas. And my daughter, who's 18, is so excited about Obama. She said, "Daddy, go out and support him." So I'm here. That's why I'm here.

But I will vote anyway, but she's excited about the movement. And I'm glad to see some of the young people getting involved in the election process.

(END VIDEO CLIP)

CALLEBS: And we have heard that throughout this whole election season, how voters are very energized this year.

But Barack Obama, Hillary Clinton, both campaigning in this state. The polls are going to be open for a number of hours. But light to moderate turnout right now.

Back to you guys in Atlanta.

NGUYEN: All right. Sean Callebs, reporting live.

Well, Mississippi does get its turn in the political spotlight. The state is holding its presidential primaries today. In the tight Democratic race, 33 delegates are at stake.

Now after Mississippi, there is a break until next month. Republican caucuses take place in the Virgin Islands, April 5. And then another big Democratic battleground, the Pennsylvania primary, on April 22.

You can get analysis and results from the Mississippi primary from the best political team on television. Join us in the "CNN ELECTION CENTER." That's tonight, 8 Eastern.

LEMON: Another day, another record. The price of oil tops 109 -- $1.09 a barrel -- $109 a barrel, I should say. Get ready for your heating oil costs to go up.

Filling up your car also getting more expensive. The cost of regular gas is up half a penny from yesterday to an average of nearly $3.23 a gallon. Fractionally above the record high set last may. We'll have more on all of these stories, these pricey moves when it comes to gas and oil. It's going to be very interesting to figure out where it all ends up today.

Iraqi leaders are counting on oil supplies to help the country pay for a brighter future. But smugglers are putting the plan at risk. Who is stealing Iraq's oil and who's benefiting? We'll find out from our Kyra Phillips. She's live in Baghdad.

NGUYEN: And if both of your parents had Alzheimer's, what's your risk of getting the disease? You'll want to hear the results of a new study.

(COMMERCIAL BREAK)

LEMON: All right. This just in to the CNN NEWSROOM. As we know, it's been almost 24 hours since we heard about Eliot Spitzer's alleged link to a prostitution ring. And now people are starting to speak out about it.

We heard from Senator Clinton yesterday. She spoke out about it, talking about the governor's family.

Now for the first time, the mayor of New York City, Michael Bloomberg, is speaking out about the Spitzer scandal.

(BEGIN VIDEO CLIP)

MICHAEL BLOOMBERG, MAYOR OF NEW YORK CITY: I did talk to Governor Spitzer this morning. And I told him my thoughts were with him and wished him all the best and said, if he ever wanted to talk and wanted my advice, I'd be happy to give it to him.

But any conversations I would have with the governor are just between the governor and me. That's always been the case. It was the case with Governor Pataki and the case with Governor Spitzer. These are private conversations. But I did wish him all the best and told him that I was thinking about him and his family.

(END VIDEO CLIP)

LEMON: That was Michael Bloomberg, the mayor of New York City, just moments ago.

Of course, there have been calls for Governor Spitzer's resignation. And if that would happen, David Paterson, the lieutenant governor, would take over. We just heard from our Dana Garrett, a producer in Albany, that there is a transition team in place talking to Spitzer's people, between Spitzer's people and Paterson's people. As soon as we get more information on that, we'll bring it to you right here in the CNN NEWSROOM.

NGUYEN: Well, it's 16 past the hour. And here are three of the stories that we are working on in the CNN NEWSROOM.

There's another look at the person of interest in the killing near the UNC Chapel Hill campus. Police say this guy was the only customer in this convenience store when Eve Carson's bank card was used to make a purchase. Carson was student body president, and she was found last week shot to death.

We're also learning more about the suspect in the murder of an Auburn University student, Lauren Burk. Police affidavits with Courtney Lockhart's alleged confession allege he shot Burk during -- or after a rape attempt. Lockhart is charged with her murder.

And where are the Calverts? John and Elizabeth Calvert were last seen March 3 in Hilton Head, South Carolina, where they live part-time on a yacht. Investigators are checking out their boat and their car. But so far there is no sign of the couple.

LEMON: Windy and wet across northwest -- the northwest today. And Chad Myers on top of all of it for us.

Chad, we've seen some pretty rough weather happening across much of the nation, and that is continuing.

(WEATHER REPORT)

CHAD MYERS, CNN METEOROLOGIST: Don, look at this. I just want to get to this for a second. I was so excited; I wanted to get to it. Twenty-two- to 26-foot waves...

LEMON: Wow.

MYERS: ... from Oregon all the way up into British Columbia, with a monster storm that we talked about yesterday generating huge waves, huge winds, a foot of snow or more and snow levels, only 2,500 feet. That's way down into the passes. So even driving east to west here across Washington, Oregon, or even into Montana and Idaho, we'll see snow for sure.

LEMON: Oh, my goodness. Did we get any I-Reports from there? I'd love to see...

MYERS: I would love to see some. I'm looking for Web and surf cams, but I can't find one that actually shows anything except mist all over the camera. Such a mess going on.

LEMON: Got to ask you, as a non-surfer, does this bring the surfers out?

MYERS: No.

LEMON: It's too cold?

MYERS: I would hope not, because that's too big.

LEMON: Too big?

MYERS: Yes.

LEMON: OK.

MYERS: And too cold.

LEMON: All right. Even the bad weather in Miami still looks good compared to that.

MYERS: Yes, doesn't it? Yes.

LEMON: OK. Thank you, sir.

MYERS: You bet.

NGUYEN: Smuggling oil in Iraq has become quite a business. So who's involved, who's buying, and what is Iraq doing about it? Our Kyra Phillips joins us from Baghdad with what she has discovered.

SUSAN LISOVICZ, CNN CORRESPONDENT: I'm Susan Lisovicz on the floor of the New York Stock Exchange. Oil hits a new all-time high, $109 a barrel. Stocks do not hit an all-time high, but they are sharply higher. I'll explain next. You're in the CNN NEWSROOM.

(COMMERCIAL BREAK)

LEMON: Well, stocks roared out of the gate on news from the Federal Reserve. But today's buying hasn't been enough to push the Dow back above 12,000.

Susan, I remember when we were excited that, oh, my gosh, it's going to 12,000. Now it's below. Not doing well. You're on the floor of the New York Stock Exchange. What do you have for us today?

LISOVICZ: Well, Don, you know, this is a major move by the Federal Reserve, and it's not an interest rate cut, but it is an effort by the Federal Reserve to address yet another problem that resulted from the housing crisis. Not only a slowdown in the economy, but the paralysis we've seen in the credit market.

The Federal Reserve saying this morning it's going to offer up to $200 billion in loans to certain banks so that they'll be more willing to make loans to people and businesses. Those banks -- this is an interesting part of it -- can use some of the mortgage-backed debt that has been the root of the woes here on Wall Street as collateral, and that it is considered so toxic. This is why so many lenders aren't lending, because they still have all of this bad stuff on their books.

The Fed's taking -- making this move not only itself, but with other central banks overseas. One economist says this is the Fed's most significant step so far. Another economist who I spoke to just minutes ago says it's imaginative; it's substantial; it's targeted.

Certainly, the reaction on Wall Street is pretty visceral. The Dow jumped 200 points within the first two minutes of trading, and it's holding it halfway into the session. The blue chips up 218 points, as you mentioned, Don. Not at 12,000, but a whole lot closer.

The NASDAQ is jumping, as well. And the financial sector, which has been so hard-hit, is just rallying across the board. So a very nice rally that we're seeing -- Don. For a change.

LEMON: So can you call it a relief rally? Is that a technical term, a Wall Street term, "relief rally"? LISOVICZ: I think it's a commonly used term, and I think it applies today, no question about it. But you know, that doesn't mean we're out of the woods yet, Don. You know that.

I mean, what we mentioned just moments ago, oil hitting a new all-time high today of $109 a barrel. It's eased a bit. It's only at $108.20 right now. But it is moving up.

And of course, as oil moves -- well, what's been pushing -- one of the factors pushing oil up is the weakening dollar. And what weakens the dollar, among other things, is the Federal Reserve by cutting interest rates, and the Fed makes a decision on interest rates next week. And the expectation here is that the Fed will ease at least another half a point.

Coming up in the next hour, Don Lemon, the other big story on Wall Street today, Governor Eliot Spitzer. Well-known on Wall Street. He was once called the Sheriff of Wall Street. Few tears are being shed about his downfall. I'll talk to a guest in the next hour here on the floor.

Back to you.

LEMON: I was going to ask you. I was going to say, it would be interesting to get your reaction on Wall Street since he was no -- Wall Street was no fan of Eliot Spitzer's. Let's be honest about this.

LISOVICZ: I think there is always an uneasy relationship between the law enforcer, the top law enforcer, and business.

LEMON: Right.

LISOVICZ: And there was a lot of stuff that should have been investigated. I think it was the manner in which it was investigated that has -- that created so much bad blood.

LEMON: Yes. Amen. They're going to be talking about the hypocrisy, as well, I'm sure. Susan Lisovicz, I can't wait to see that one. See you in a bit.

LISOVICZ: You got it.

NGUYEN: Well, sex, money, power. The Spitzer scandal has it all. And we are going to take a look at what the political fallout is going to be.

(COMMERCIAL BREAK)

LEMON: Hello, everyone. I'm Don Lemon live at the CNN world headquarters in Atlanta.

NGUYEN: Hi, everybody. I'm Betty Nguyen in for Kyra Phillips, who is on assignment. You're in the CNN NEWSROOM.

LEMON: Eliot Spitzer still the governor of New York, at least for the moment. Aides to both Spitzer and Lieutenant Governor David Paterson tell CNN that transition talks are underway. Spitzer's been caught up in a high-end prostitution ring. He hasn't been charged with any crimes just yet, but the man who staked his political life on fighting corruption is under intense pressure to step down.

New York Mayor Michael Bloomberg says he talked with the governor today.

(BEGIN VIDEO CLIP)

MAYOR MICHAEL BLOOMBERG, NEW YORK: I did talk to Governor Spitzer this morning, and I told him my thoughts are with him and wished him all the best and said if he ever wanted to talk and wanted my advice, I'd be happy to give it to him.

But any conversations I would have with the governor are just between the governor and me. That's always been the case. It was the case with Governor Pataki and the case with Governor Spitzer. These are private conversations. But I did wish him all the best and told him that I was thinking about him and his family.

(END VIDEO CLIP)

LEMON: The Republican leader of the New York State Assembly says Spitzer has 24 hours to resign before a move to impeach him begins -- Betty.

NGUYEN: Eliot Spitzer's a Democratic governor, a supporter of fellow New Yorker Hillary Clinton and a superdelegate to the Democratic convention in this heated election year. So, what's the possible political fallout from the scandal?

Well, let's bring in Mark Halperin. He is a senior a political analyst from "Time" magazine. And yesterday, Mark, we heard Spitzer come out and speak to the public. He didn't mention the prostitution link, he didn't mention resignation, but there is word of a transition team. What do you know about that today?

MARK HALPERIN, TIME SENIOR POLITICAL ANALYST: Well, I think the governor is on borrowed time. I think if he doesn't resign today, he will resign before too long. It's simply untenable for him to go forward. He did not have much political support. He did not have too many political allies before this scandal broke. And it's true in politics that if you're lacking friends, if something bad happens, you don't have many places to go except the exit.

NGUYEN: Well you know, the minority leader of the State Assembly says he could file articles of impeachment within two days if Spitzer doesn't resign. Why didn't we see a resignation yesterday if all this evidence is going to continue to mount against him? Is he trying to work a deal here, so hey, look, I'll resign if I don't have to face indictment? Is that something that's going on behind the scenes?

HALPERIN: It's certainly possible. You know, Eliot Spitzer has been on the other side of that table back when he was the attorney general of New York and a very aggressive prosecutor. He knows that if you're dealing with a tough prosecutor, if you're facing a threat of indictment, you don't give away any of the cards you hold unless you absolutely have to.

NGUYEN: But does he hold any cards right now? Does he have any political clout right now?

HALPERIN: Well, traditionally, prosecutors who have been thinking about indicting public officials have often made part of an agreement that the person leaves office. It is something historically that prosecutors have allowed the defense, the potential defendant to give up.

And if Spitzer tries to strike a deal, and I suspect that if he's -- if the prosecutors are serious about going forward, he will seek a deal. He'd rather have that deal in hand before he leaves office, or at least the outlines of one.

So again, he can say to the prosecutors, I recognize a part of why I'm being prosecuted is because I'm a public official and I'm going to leave the elected office I hold.

NGUYEN: Well, let's get to some of the things that we're learning in this affidavit. The hotel room where all of this went down, we're learning that it was registered under the name of George Fox, but with Spitzer's 5th Avenue address. Now, Fox may not know anything about this, but tell us, what is the connection between George Fox and Eliot Spitzer?

HALPERIN: Well, George Fox is a major financial supporter, fundraiser for Governor Spitzer. I think it's pretty clear, even though a lot of the facts are still not known, and part of the reason I think Governor Spitzer must resign, and will resign, is because he couldn't stand -- do his job as governor and deal with the revealing of all of these facts over the next few days and weeks and months.

I suspect just based on what's already been reported that Governor Spitzer had worked out a pretty complicated way of dealing with these alleged payments and that part of that potentially involved using his friend's name in order to reserve hotel rooms. That at least, based on what we've seen reported is a potential way he dealt with some of the questions.

One of the big questions we don't know the answer to is Governor Spitzer travels with a security detail and there's no mention of how his security detail might have been positioned the night he allegedly met with this woman.

NGUYEN: Well, exactly. Wouldn't they be nearby, wouldn't they have seen someone go into that hotel room?

HALPERIN: That's -- that is one of many questions. But the facts we now have suggest further investigation of it. Again ...

NGUYEN: So, was it a cover-up? Were they trying to cover it up?

HALPERIN: ...the big -- well, potentially. The biggest problem for Governor Spitzer is, again, he's an elected official holding a very high office, one of the highest offices in the country. And when you engage in activity that prosecutors become interested in, the problem is the questions never end. And that's one of many questions that will be investigated.

And again, it would be almost impossible, probably impossible, for Governor Spitzer, already unpopular, already facing a very adversarial relationship with the Republicans and many of the Democrats in the New York legislature to go forward and govern effectively when all of these things are going to be looked at, not just by the prosecutor but by the tabloid media and the other media here in New York.

NGUYEN: Yes, and the legal implications and the money trail and all these other questions that are coming to light today.

Mark Halperin, we could talk for days on this, but we are simply out of time today. We do appreciate your insight, though. Thanks for joining us.

HALPERIN: Thanks, Betty.

LEMON: Leading our political ticker today, controversial comments from a big Hillary Clinton supporter. Geraldine Ferraro, remember her? Well, she tells a California newspaper Barack Obama would not be in the position he's in, a major presidential contender, if he were a white man. Ferraro was the Democratic party's vice presidential nominee in 1984. A senior adviser with the Obama campaign is calling on Clinton to repudiate the comment.

Barack Obama's campaign aims new jabs at Hillary Clinton. At issue, her claim of experience. In a memo given to reporters today, a former State Department official in the Bill Clinton administration suggests the New York senator uses "false charges and exaggerated claims to play politics with national security." That memo is from Greg Craig who supports Obama.

Republican Party's presumptive nominee John McCain is getting set for a trip abroad. His office says he will lead a Congressional delegation to Europe and the Middle East next week. Stops include London, Paris and Jerusalem. Also going, McCain backer and independent Senator Joe Lieberman who was a Democratic vice presidential nominee in 2000.

All of the latest campaign news is available right at your fingertips. Just go to CNNpolitics.com. Plus, analysis from the best political team on television, that and more at CNNpolitics.com.

NGUYEN: Well, Iraqi leaders are counting on oil supplies to help the country pay for a brighter future. But smugglers are putting that plan at risk. So, who's stealing Iraq's oil and who's benefiting from it? We're going to find out from our Kyra Phillips in Baghdad.

LEMON: And if both your parents had Alzheimer's, what's your risk of getting the disease? Well, you'll want to hear the results of a new study. (COMMERCIAL BREAK)

NGUYEN: Oil, it flows across Iraq and the new leaders count on it to help rebuild their war-torn country. But smugglers are swiping a big share. And our Kyra Phillips is on special assignment in Baghdad has been investigating this.

So Kyra, how much money are we talking about here?

KYRA PHILLIPS, CNN ANCHOR: $5 billion a month, that's how much oil brings in to Iraq. So, you look at the conditions here, and you wonder where's that money going? And then you add the billions of dollars a month coming from the U.S. into this country.

Well, smuggling is a huge industry. And here's one personal story.

(BEGIN VIDEOTAPE)

PHILLIPS (voice-over): Basam Ali (ph) has been a smuggler all his life. We're protecting his true identity for his safety. And he has it down to a science. He's showing where he hides oil and fuel and how he siphons it out to buyers. It's all stolen from Iraq's pipelines.

"I have 12 people to feed in my family and I can make up to $300 a day. I'll work from 4:00 a.m. to midnight. It's worth every bit of money."

It's quite an orchestrated operation. And Basam says his most lucrative client is Iran. "The Iranian Coast Guard intercepts us. We pay them $100 to $200 and they let us go. Our boss calls the buyer, usually UAE and Iranian barge owners. Then, we let them know that we're one kilometer away. We call the captain of the ship, pull over by him and unload the products."

Iraqi police are trying to take down these smugglers, but as you can see, it's hard to keep up with them. What looks like homes on the outside are really warehouses to store barrels of smuggled oil, gasoline, and other oil products. And underneath the barrels, buried tanks of petroleum products deep underground.

And Iraqi Coast Guard commanders say they just don't have the means to fight them. "The smugglers are just more powerful. They have heavier fire power and their ships are incredibly armored, 30 millimeters thick. We shoot at them, but we can't catch them."

I sat down with Iraq's Minister of Oil.

(on camera): So, you know there's a problem that the ...

HUSSEIN AL-SHAHRISTANI, IRAQI OIL MINISTER: Absolutely.

PHILLIPS: ...Iraqi Coast Guard needs help. They need weapons, they need manpower.

AL-SHAHRISTANI: Absolutely, absolutely. No, we know that because our pipelines keep attacked all the time.

PHILLIPS: What are you doing to support the Iraqi Coast Guard now?

AL-SHAHRISTANI: There is still work that needs to be done, particularly with aerial surveillance, and with aerial equipment, not only to detect, but to be able to attack and stop the smugglers. I've always been telling the Missile Defense Ministry here (ph), if you can sink a couple of those boats, this would be the best message to the smugglers that they cannot do it anymore.

PHILLIPS (voice-over): But these smugglers have a message, too: show me the money.

(on camera): He said, look, we're poor, I need this money. I make runs from 4:00 a.m. to midnight. I make hundreds of dollars a day. This is all I know, this is how I'm going to make money.

AL-SHAHRISTANI: This is argument that an option grower will also put because he's a poor father and he needs money. I do understand that. As a matter of fact, as the Minister of Oil, we have tried to recruit their young men into our oil protection forces, from attacking the pipeline, come and defend the pipeline and we'll pay you.

PHILLIPS (voice-over): An incentive smugglers like Basam Ali say is still just not enough.

(END VIDEOTAPE)

PHILLIPS: So, bottom line Betty, it's all about the money. A lot of these smugglers and these terrorists, they just take on that job not even believing in the cause, but they make more money. Like Basam Ali comes from a family of fishermen, but he makes more money smuggling.

NGUYEN: So, what do they do? I mean, is there someone joining, who's going to join this oil protection force in Iraq?

PHILLIPS: Yes, that's what the Minister of Oil wants to do, he wants to build on these oil protection forces. And what he's trying to do is get men from the tribes who live along these pipelines who in the past, and still do, support the smuggling efforts because they make a cut, they make a lot of money.

So, they're saying come protect the pipelines, we'll pay you more, and then you'll see the results right there back within your tribe and in your community. It's working in some areas, but they still have a long way to go.

NGUYEN: All right, CNN's Kyra Phillips joining us live from Baghdad as she's on special assignment there. Thank you, Kyra.

LEMON: Unsettling news for people whose parents are suffering from Alzheimer's. A new study looks at your chances of getting the memory-robbing disease.

(COMMERCIAL BREAK)

LEMON: We have some report on health news for you about Alzheimer's. If both of your parents had it, you'll want to know the results of a new study.

CNN medical correspondent Elizabeth Cohen is here to explain. Elizabeth, so, should we be concerned about getting Alzheimer's if your parents have Alzheimer's?

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: You know, we certainly don't want to scare people who have two parents with Alzheimer's disease.

LEMON: Right.

COHEN: I mean, they're scared enough as it is because they look and think, gosh, is this what's going to happen to me? But, there is some -- there is sort of a growing feeling that there is a genetic component for Alzheimer's. It doesn't mean you're absolutely going to get it, far from it, but it does mean that -- it does seem to mean you are perhaps more likely to get it.

Let's take a look at the results of a new study. They looked at about 100 families where both parents have Alzheimer's. And what they found is that if both parents have Alzheimer's disease, there is a 22 percent chance that a child of those parents is going to have Alzheimer's. But when you look at the general population where they don't have two parents with Alzheimer's, there's about a six to 13 percent chance of getting the disease. So, those numbers kind of speak for themselves, and speaks to an increased chance.

Now, what happens in Alzheimer's is that you get these plaques and these tangles that produce the symptoms of Alzheimer's disease. And so, again, there is this feeling that there is a genetic component to what is happening here in the brain.

And another interesting thing in this story, Don, is that they found that when both parents had Alzheimer's, the children tended to get it at a younger age, perhaps in the 50s and 60s rather than in the 70s like other people.

LEMON: Oh, I've dealt with it, dealing with it now, but dealt with it twice in my family.

COHEN: Horrible.

LEMON: So then, what is the worry factor? How nervous should you be about it if both your parents have it?

COHEN: You should certainly be concerned and it's certainly something that you want to think about, but it's not something that you -- you shouldn't become convinced. You shouldn't become sure that, oh, gosh, this is it. I'm definitely going to get Alzheimer's.

LEMON: OK, so, is there any way to delay or prevent Alzheimer's if your parents had it? Can you delay it? COHEN: There's no sure way. There's no pill you can take, there's nothing you can do. However, there are a few things that doctors are studying to see if perhaps it could delay the progression of Alzheimer's or prevent it from happening at all.

So, there are a list of things being studied and some of them are things you really want to be doing anyhow. So for example, keeping your weight and your cholesterol and blood pressure all in good places. That's something you ought to be doing anyhow.

LEMON: Right.

COHEN: And that may prevent Alzheimer's. Also, stay mentally active. You hear about doing crossword puzzles or things like that ...

LEMON: Right, right.

COHEN: ...to keep the brain -- kind of brain exercises. And statins, which are cholesterol drugs, and gingko and Vitamin E, those are things that are being investigated.

Now, I don't think a doctor is going to tell anyone, oh yes, take those, and you won't get Alzheimer's, but it's something that's being studied and something you can talk to your doctor about.

LEMON: That's right. I often wonder if it runs in families because I know -- there's like three instances now in my family, or at least two and my grandmother died from it. So, it's very interesting, and it's horrible, because there's nothing, nothing you can do.

COHEN: But that's exactly why doctors did those studies because they saw families like yours and said is this just chance or is there a real genetic link here? And they're finding more and more that perhaps there is a genetic link.

LEMON: Yes, OK. Thank you very much for that.

COHEN: Thanks.

NGUYEN: In other news, Governor Eliot Spitzer and his wife all smiles on inauguration day.

LEMON: What a difference a year makes. The trouble he is now in is stunning when you consider the platform, the promises and the resume that got him elected. We'll take a look back at his career.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Four, three, two, one, zero, and liftoff of Endeavour, going where east and west do meet.

(END VIDEO CLIP) NGUYEN: What a sight. A rare nighttime launch of a space shuttle. Endeavour's 16-day mission will be NASA's longest visit to the International Space Station and the planned five space walks will be the most ever during a shuttle visit. The seven-man crew is delivering Canada's two armed robots that's designed to help work outside the orbiting station. The astronauts also will install the first part of Japanese-built space lab Kibo, which means "hope."

LEMON: That cute little girl in the Hillary Clinton 3:00 a.m. phone call ad, remember the one who she actually likes Barack Obama now, she supports him, well, she's not so little anymore and she's not a Clinton supporter.

And CNN's Jeanne Moos, well, she has that story.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Then and now -- now and then makes for a big oops.

(BEGIN VIDEO CLIP FROM HILLARY CLINTON FOR PRESIDENT CAMPAIGN AD)

UNIDENTIFIED MALE: It's 3:00 a.m....

(END VIDEO CLIP)

MOOS: Do you know where the children in this Hillary commercial are?

For instance, this sleeping angel, who was only nine-years-old is now about to turn 18 -- old enough to vote.

(BEGIN VIDEO CLIP FROM HILLARY CLINTON FOR PRESIDENT CAMPAIGN AD)

UNIDENTIFIED MALE: Who do you want answering the phone?

(END VIDEO CLIP)

CASEY KNOWLES, IN CLINTON AD BUT SUPPORTS OBAMA: I want Barack Obama answering the phone.

MOOS: Casey Knowles served as a precinct captain for Obama during the Washington State caucuses. She wound up in Hillary's commercial because as a kid she had done some acting and Getty Images sold the stock footage for use in the Hillary spot. It was Casey's brother who noticed when he saw the commercial on "The Daily Show".

KNOWLES: That's me, by God.

MOOS: Now she and her family are doing the media rounds, swearing allegiance to Obama.

(on camera): Do we have information on any of the other sleeping children in the ad?

KNOWLES: I've not heard from them. We could all get together and form a coalition.

MOOS: Sleeping Children for Obama.

KNOWLES: Yes.

UNIDENTIFIED MALE: Sleeping Children for Obama.

MOOS: You know, little Casey Knowles isn't the only one in bed. Check out "The New Yorker" cover.

(voice-over): Hillary and Barack lunging for the red phone, as if to say, "I'll get it." The 3:00 a.m. Commercial was a gift that keeps on giving.

(BEGIN VIDEO CLIP FROM "SATURDAY NIGHT LIVE," COURTESY NBC)

UNIDENTIFIED FEMALE: I'm Hillary Clinton and I approved this unfair and deceptive message.

UNIDENTIFIED MALE: It's 3:00 a.m....

(END VIDEO CLIP)

MOOS: It's "Saturday Night Live".

(BEGIN VIDEO CLIP FROM "SATURDAY NIGHT LIVE," COURTESY NBC)

UNIDENTIFIED MALE: Hillary, I'll sorry to call this late again, but I need your help.

UNIDENTIFIED FEMALE: Mr. President, what can I do?

(END VIDEO CLIP)

MOOS: Iran's got the bomb and Russia, North Korea and Venezuela helped.

(BEGIN VIDEO CLIP FROM "SATURDAY NIGHT LIVE," COURTESY NBC)

UNIDENTIFIED MALE: Those (EXPLETIVE LANGUAGE). I trusted them. They (OBSCENE WORD OMITTED) lied to me. Oh, my God. I am so (OBSCENE WORD OMITTED).

What do I do, Hillary?

UNIDENTIFIED FEMALE: Go to our key allies -- the British, the Germans, the French -- and show them our intelligence.

UNIDENTIFIED MALE: Hold on, I'm trying to write this down.

(END VIDEO CLIP)

MOOS: And the 3:00 a.m.. Call doesn't stop there.

(BEGIN VIDEO CLIP FROM "SATURDAY NIGHT LIVE," COURTESY NBC)

UNIDENTIFIED MALE: I think the heat may be off in the White House.

UNIDENTIFIED FEMALE: Go down to the basement, open the panel in front of the furnace.

UNIDENTIFIED MALE: Hold on. Let me get my pen.

(END VIDEO CLIP)

MOOS: By the way, the supposedly sleeping girl?

(on camera): I think the real scandal here is were you really sleeping?

(LAUGHTER)

KNOWLES: That is a scandal. Hillary is using footage of a girl that's not even really asleep.

MOOS (voice-over): But if she were, we'd now know who she was dreaming of.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

NGUYEN: Mississippi is front and center today in the race for the White House. We're going to find out more about how the voting is going just ahead.

LEMON: Waiting for that little scream right there. We'll show you how a card game settled one election dispute in New Mexico.

LEMON: Getting into politics is always a gamble. And in New Mexico winning a local office was determined by a game of poker.

Christine Jones of our affiliate KOAT has the story.

(BEGIN VIDEOTAPE)

CHRISTINE JONES, KOAT REPORTER (voice-over): Reporter: A high- stakes game of five-card stud.

UNIDENTIFIED MALE: They got a brand new deck of cards for us to use.

JONES: The prize, a position as a Estancia town trustee. You see Josie Richards and Michelle Dunlap each took the gamble of running for office. The vote, a draw. The only way to pick a winner, a game of chance.

(on camera): One seat and three women. Michelle Dunlap, Josie Richards and Lady Luck.

(voice-over): In the end, Lady Luck sided with Richards. She drew a pair of 9s.

UNIDENTIFIED MALE: Turn over your bottom card and see what we have. A pair of 9s. A pair of 9s wins.

JONES: If this all sounds a little familiar, it might be this isn't the first time a New Mexico election has been decided by a deck of cards. In 2006 Edgewood's mayor was chosen by card draw. Turns out under New Mexico law in the event of a tie the winner is chosen by a game of chance, a chance Richards is glad she took.

JOSIE RICHARDS, LUCK OF DRAW WINNER: I was very nervous of course. I'm a big competitor, and I wanted this position.

JONES: And she got it, thanks to a little luck. Not a bad prize for one hand of five-card stud.

In Estancia, I'm Christine Jones, KOAT Action 7 News.

(END VIDEOTAPE)

LEMON: The next hour of the CNN NEWSROOM starts right now.

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