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Judge rules Madoff should not go to jail; Still contention regarding Burris's appointment; Senate Seat Controversy Headed for Resolution; Obama Asks for Authorization for Remaining Bank Bailout Funds; President-Elect Meets with Mexican President
Aired January 12, 2009 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
KYRA PHILLIPS, HOST (voice-over): You got the job, made the move. Time to meet the neighbors. It's a pre-inauguration tradition. A president-to-be meets the president of Mexico. A search for common ground on a troubled border.
JAWAD HARB, CARE INTERNATIONAL: We gather in the street with -- with the sound of children crying, and they are asking if we are -- if they are going to die.
PHILLIPS: Voices of Gaza. Reporters may be barred from the war zone, but laptops and Web cams allow Gazans caught in the crossfire to cry out, and sometimes be heard.
(END VIDEO CLIP)
PHILLIPS: Hello, everyone. I'm Kyra Phillips live at the CNN world headquarters in Atlanta. You're live in the CNN NEWSROOM. We've got a lot going on.
The Bernie Madoff show, the world according to Roland Burris, and two real talkers for you: one, about a Rottweiler killing a boy. Some of us on our team wondered why anyone with a child would even have a Rottweiler or a pit bull. Others say the breeds are great and that the owners are the problem.
And here's a doozy: what kind of penance do you have to do when you rob a convent full of nuns? Times might be tough, but seriously, nuns? We'll prime your outrage later this hour.
First, though, when it comes to outrage, it's hard to top the Madoff case. You know, the New York investment guru who allegedly fleeced thousands of clients out of billions of dollars, who won't be heading to jail, by the way, at least not right now. He's been under house arrest, or make that penthouse arrest, since his alleged Ponzi scheme imploded. And within the past hour, a federal judge refused a demand by prosecutors to yank his bail.
CNN's Allan Chernoff is outside Bernie Madoff's multimillion- dollar Manhattan digs, his idea of a jail cell.
Allan, what got prosecutors so riled? ALLAN CHERNOFF, CNN CORRESPONDENT: Well, Kyra, what happened here is that the prosecutors believed Bernie Madoff was trying to obstruct justice, as they said. And also, they said that he presented a danger to the community. Well, what sort of danger? A financial danger.
Forget about the charges already made against Bernie Madoff, that he allegedly orchestrated the world's biggest Ponzi scheme. What the prosecutors were saying is that Bernie Madoff was trying to hide and give away his assets. In his office desk, they found checks totaling $173 million, checks made out to friends, family, and employees. And from the penthouse apartment, Mr. Madoff and his wife had sent out five packages of jewels worth more than $1 million. So the prosecutors said, "Look, he's trying to give it all away."
The judge said only within the past hour, the judge said, "Look, that is not grounds enough to send Mr. Madoff to jail. The judge argued, "Look, we're not determining whether or not Mr. Madoff is guilty of running a Ponzi scheme here. The question is, does he present a threat to the community, even a financial threat?" The judge said no, because even stricter terms are now going to be laid onto Mr. Madoff.
Not only will he be required to give a list of all his possessions. He's also going to have a private security firm, paid for by the Madoffs, check those possessions every two weeks, and the private security firm will actually check all of his outgoing mail.
Given that, the judge is going to permit Mr. Madoff to remain in his penthouse apartment as this case progresses. But of course, he still is facing a very serious charge of securities fraud, for which he could potentially serve 20 years in prison -- Kyra.
PHILLIPS: So, Allan, I'm getting a BlackBerry message here from your photographer, one of my favorites, Helen (ph). I guess she's there with you. She says that you guys are freezing outside Madoff's place, and he hasn't even offered you a cup of tea yet.
Let's say something there. Maybe -- maybe while he's there on house arrest in his penthouse, maybe one of his special assistants could bring you something out there. Yes. Yes, watch from the windows.
CHERNOFF: I can tell you that they have -- they have not done anything at all for us. I can tell you, when -- when we were freezing years ago outside of Martha Stewart's apartment, she actually did have -- her home, actually, her Connecticut home. She did have hot chocolate brought out. And it was said to be very, very delicious. I did not partake.
PHILLIPS: Now we know who the classier crook is.
OK, Allan. Thank you. Good luck.
Well, we're not done yet. That's for sure. At the bottom of the hour, Abbie Boudreau of CNN's special investigations unit joins me with the red flags that went ignored for years as Madoff's empire grew. We'll address that.
Now, transition to power or ticket to retirement? We expect to find out any day now whether Roland Burris is the new junior senator from Illinois. And today the battle moves back to Capitol Hill, and CNN's Brianna Keilar is there.
Brianna, they're really -- I guess, there's not really any doubt about the outcome, right?
BRIANNA KEILAR, CNN CORRESPONDENT: Well, yes, any day now could really be any hour from now, Kyra, because Roland Burris's lawyers are meeting with Senate officials here within the next hour or so. And they're going to be discussing, basically, what Burris's fate will be.
And according to a couple Democratic sources, word is that Roland Burris will be happy by the outcome of this discussion, meaning of course, that he will get news that he will be seated.
However, I am hearing from a Democratic source, familiar with discussions of Senate Democratic leaders, who as you know, last week were trying to block the Burris appointment but have been coming around on this, that even though Senate Democratic leaders want to seat Burris and they want to do it quickly, there's still an issue of the paperwork. We've been talking about this for a week, that certificate of appointment that does not have the signature of Jesse White, Illinois's secretary of state, who refused to sign it as long as Illinois Governor Rod Blagojevich was appointing this.
Well, what you're seeing right here is the signature of Jesse White, but it is on a second certificate, one that says that he has received the certificate of appointment from Illinois Governor Rod Blagojevich and that it is accurate.
And so what lawmakers are trying to do, what these lawyers are trying to do with Senate officials, is to determine if that is enough to satisfy Senate rules that say both of these -- both of these signatures are needed. And we're expecting to hear a decision some time here in the next hour, too, Kyra, on that.
PHILLIPS: All right. Brianna, thanks so much. We'll be talking soon.
And in just a few minutes, the latest from the Illinois front with state lawmaker and Rod Blagojevich. The impeachment case manager, Jack Franks, is going to join with us an update on where all of that stands.
Now to the White House, where a word from the president-elect prompts a $350 billion request to Congress.
CNN's Suzanne Malveaux is in the press room for President Bush's last formal news conference before he heads back to Texas.
All right, Suzanne. How did it all go?
SUZANNE MALVEAUX, CNN CORRESPONDENT: It was a fascinating news conference. A lot of times President Bush seeming defiant; other times very reflective over his last eight years or so.
The news of the day really coming right after the press conference, when we found out that Barack Obama called him immediately afterwards, about 15 minutes or so, to tell President Bush that he wanted him to go ahead and request that remaining $350 billion of that fund, that relief fund, to help with the financial markets.
We have been told that the president said, yes, in fact he would do that, that he would go before Congress and officially make that request. The statement coming just within the hour. This morning President-elect Obama asked President Bush to formally notify Congress, on his behalf, his intent to exercise the authority under the Emergency Economic Stabilization Act to access that last portion, the $350 billion in funding for the treasury programs addressing the financial crisis. President Bush agreed to the president-elect's request.
We'll continue our consultations with the president-elect's transition team and with Congress on how to best proceed in accordance with the requirements of the statute.
All that essentially, Kyra, means is that these two men are on the same page: the president and President-elect Barack Obama. They want to see that money as quickly as possible.
I actually ran into the treasury secretary, Henry Paulson, here at the White House. He had met with President Bush. And the whole idea now is that they're going to repair -- prepare a report.
And, hopefully, members of Congress, they would like to see them not put forward any kind of block, any resolution that would block it, because that would force President Bush to veto that. And if President Bush didn't do it, it would force President-elect Obama when he becomes president to actually veto. A very messy political situation. So they want to make sure that members of Congress are on board.
We got a letter here, this from team Obama. Essentially, Larry Summers, his top economic adviser, sending it off to the leadership in Congress, saying, "Look, this is why we believe this money is necessary. We'll try to be as transparent as possible, accountable as possible. We're not going to do as we had done before, which is a lot of people scratching their heads, wondering where that last $350 billion went. This is a new situation, a new game."
They're certainly hoping to get that money as quickly as possible. It could be just within days after Barack Obama becomes president, if Congress decides that they're not going to block this, Kyra.
PHILLIPS: All right, Suzanne. You're doing very -- doing a very good job of keeping your concentration as they're prepping the lawns behind you for inauguration. I don't think we've ever...
MALVEAUX: The leaf blower, it happens every time.
PHILLIPS: We haven't heard leaf blowers that loudly in eight years.
On a much more serious note, though, President-elect Obama is meeting with the Mexican president, Felipe Calderon, today. You know, he's got, obviously, a lot on his plate with the wars in Iraq and Afghanistan, the economy in the tank.
But at the same time, we can't forget the borders and the immigration issues; the drug cartels, some of the worst ever; and now Americans threatened with their lives as they go back and forth because of the problems with the drug running. So this has got to be a priority in 2009 for the president, as well.
MALVEAUX: You know, there's some really big problems in dealing with Mexico, obviously. A very close ally of the Bush administration and soon to be the Obama administration.
We're told that this meeting is really kind of a courtesy call, a get-together here. But big, big issues that they're going to have on their plates that they've got to deal with pretty immediately, when you talk about immigration, whether it's legal or illegal; you talk about the drug trade, a really big problem.
One of the things that Calderon talks about is the fact that all the guns that are coming from the United States over onto Mexico's side that are really exacerbating that whole problem, that whole drug problem.
And the final thing, of course, we keep hearing about the controversy over NAFTA, that free trade agreement with Canada and Mexico. Barack Obama said while he was campaigning he's willing to renegotiate, take a second look at it. And a lot of people from unions feel like, hey, those are American jobs that are going oversees; it's costing us those jobs because of this agreement.
Calderon has a very different perspective on it. So that's one of the things, as well, that they're going to have to deal with in the months to come -- Kyra.
PHILLIPS: All right. Suzanne Malveaux, appreciate it.
All right. We've just heard about the meeting between President- elect Barack Obama and Mexican President Felipe Calderon. And perhaps the three most pressing problems we share with our neighbor to the south is Mexico's drug war, immigration, and trade.
So here's what we want to know. When he's sworn in as president, what can Barack Obama do to help stem Mexico's drug violence that killed some 5,400 people last year alone? And with all the other major issues already on his plate, how can the president-elect possibly deal with this drug war, much less the problems of immigration and trade?
Now for answers to these questions, we're going to talk with Georgetown University professor Arturo Valenzuela He's the director of Georgetown's Center for Latin Studies. And during the Clinton administration, he was senior director for inter-American affairs at the National Security Council. He's going to join us just a little bit in the hour -- later in the hour, and we're going to talk about all those issues.
Now, if you've put on too many pounds, you've got plenty of company, and a new report just might shock you. Obesity is now a bigger problem than just being overweight. We're going to tell you how many Americans now fall under those categories.
And on the weather map, trouble on both coast: from snow in the northeast to flooding in the Pacific Northwest. We're going to tell you about some more troubles on the way, as well.
(COMMERCIAL BREAK)
PHILLIPS: Well, foreign journalists still can't go into Gaza, but that doesn't mean stories aren't getting out. CNN's Karl Penhaul did a video chat with a Palestinian father as his town came under attack. Find out how he's trying to calm his terrified children.
(COMMERCIAL BREAK)
PHILLIPS: President-elect Barack Obama and Mexico's Felipe Calderon together today talking. Why do we care? Well, just consider these stats.
More than 9,000 tons of marijuana, heroin, and cocaine smuggled from Mexico into the U.S. every year. And listen to this: 90 percent, more or less, of the high-powered weapons used by Mexico's drug gangs come from the United States.
Congress approved $400 million in assistance to Mexico and Central America last year as part of a $1.4 billion anti-drug initiative. Where did all that go? That's why we care.
And joining us from Washington with his insight, Georgetown University professor Arturo Valenzuela. He's director of Georgetown's Center for Latin American studies.
Arturo, great to see you again.
ARTURO VALENZUELA, DIRECTOR, CENTER FOR LATIN AMERICAN STUDIES, GEORGETOWN UNIVERSITY: It's good to be here.
PHILLIPS: And you know, I just think of the stories that I've covered juts within the past year: from drugs, human trafficking, corrupt police force, corrupt immigration officers, beheadings in the city of Juarez. I mean, it is a constant problem, a constant threat. Why hasn't Mexico been made a priority?
VALENZUELA: Well, it should be made a priority. This is one of the most important relationships the United States has in the world, bar none. It's a country of 100 million people on our border.
It's a country that's going through a very complex transition, from a long-time authoritarian regime to a democracy. It's got some difficulties in carrying out its public policies. It hasn't been able to -- to make the reforms that are necessary. And now it faces this extremely difficult problem with the drug trafficking and with the violence that surrounds the drug trafficking.
And as your report noted, part of their problem, from their point of view, is there are too many weapons that are going into Mexico, small arms and things like that. And, of course, they are -- also have not been able, successfully, to control the drug gangs on the other side.
So this should be a top priority.
PHILLIPS: Well, and you look at even the pressure from the cartels. The more the cartels feel pressure, the more they're going to lash out. If you look in 2008, I think it was, like, half a dozen journalists were killed. There was even this massive attack on a TV station. Grenades were thrown. They opened up gunfire, saying, "You cannot cover the cartels, the drug gangs, or we'll come after you."
I mean, it's a constant threat for anyone that even tries to address this, go after this, investigate this.
So is there -- I mean, from what you know, and from what you've experienced and how you've advised even a former president, where does Barack Obama even begin?
VALENZUELA: Well, I think that there -- the good part is that Mexico's transition to democracy is going fairly well, although it has a lot of challenges. We just need to pay much more attention to this problem. We've been focusing elsewhere in the world, and Mexico should be a very, very top priority for us.
And we need to work very closely with the Mexicans on this drug violence problem. After all, it's the United States that consumes the drugs that the Mexicans are transporting into the United States. They're cultivated elsewhere: in Colombia and places like that. We have to have a genuine partnership.
But we also have to look to see how we can help Mexico improve the standard of living of its own population, because there is an asymmetry. It's a country of 100 million people. But there's a real asymmetry between the standards of livings of the two countries. And that's what leads to pressures for immigration, and it leads also to this drug violence and gang warfare.
PHILLIPS: So where is that money going, Arturo? I mean, already Congress approved $400 million. It already went to -- it's already gone to Mexico and Central America to help assist in this anti-drug initiative. Where did that money go? The problems keep getting worse.
VALENZUELA: Well, the money has to be focused properly. Initially, it's going to be for equipment, but we have -- much more has to be done than equipment.
One of the things that needs to be done in Mexico, urgently, is to stand up a better police force and also to improve law enforcement at the level of the -- of the judiciary. There has to be, you know, better judges.
Unless one strikes against corruption in the country -- and that's what the Mexicans have to do -- they're going to have a tremendous challenge ahead. And we need to work much more diligently with Mexico to overcome these problems, because many in ways they are joint problems between both countries.
PHILLIPS: Just to button it up, a U.S. intelligence source based along the Texas border, Arturo, actually told Alfredo Corchado of "The Dallas Morning News" that America businessmen and journalists are going to become targets, if they're not already. We've already seen how journalists have become targets.
He went on to say that he got information from informants and other intelligence there, saying that attacks against Americans may include car bombs placed outside consulate offices and embassies or attacks on specific individuals.
So, I mean, in just a one-line sentence, if you could, if you were to sit down with Barack Obama -- you've advised other presidents in the past -- what would you say? "Look, if you don't do something, this is what could happen to the United States."
VALENZUELA: We need to cooperate with the Mexicans. We need to work with them. We need to put resources; we need to pay attention to the region. It's been neglected too long. Not only Mexico, but South America as a whole.
PHILLIPS: Arturo Valenzuela, always good to see you. Muchas gracias.
VALENZUELA: You're welcome.
PHILLIPS: OK.
Well, a ceasefire is still just talk. Rockets and air strikes are doing the talking. Israeli air strikes have hit Hamas leaders where they live. And thousands of Israeli military reservists are now moving into the Gaza Strip.
Militants reportedly launched more than a dozen rockets. At least one fell as far as Askelon. And there were no reports of injuries. But Israel's prime minister says that the iron fist will keep hitting Hamas until it halts those rocket attacks.
Now, foreign journalists are still banned from Gaza, and it's tough to get an accurate picture of what's going on there. From a rooftop on the Egyptian border with Gaza, however, CNN's Karl Penhaul actually video-chatted with a Palestinian employee of the aid group CARE International just across the border as that town came under attack. Listen to this conversation.
(BEGIN VIDEOTAPE)
HARB: All we can hear is this, you know, horrible sound of bombing, and the houses are shaking, you know, with this bombing. And there was, you know, the kind of panic in the whole area, and you know, the screaming of the children.
KARL PENHAUL, CNN CORRESPONDENT (voice-over): Amid the terror, Jawad's six children have just one question.
HARB: We gather in the street with -- with the sound of children crying, and they are asking if we are -- if they are going to die.
PENHAUL: He cannot give them an honest answer but tries to calm them.
HARB: It's just, you know, it snuggles to me like birds (ph). And I try to tell them stories. You know, those are the stories that my mother used to tell me. I tell them that this war is going to come to an end soon, and there will be no more killing.
PENHAUL (on camera): Every night those children are afraid they're going to die, and every night, you're spinning them a new tale just like in the "Arabian Nights." You're spinning them another tale and another tale to keep them happy, to try and keep their minds off things.
HARB: I feel like "Arabian Night," like you say. One of my children ask me, "Dad, why can't Ali Baba come to Gaza and save (ph) war in Gaza?" All he is hoping for is to find a magic way to put an end to this violent war going on in Gaza.
(END VIDEOTAPE)
PHILLIPS: Jawad also told Karl that he has no fuel to heat his home, and supplies are running low. He said that he did get enough food for a couple of days, but after that he doesn't know what will happen.
The Northeast digs out from a big snowstorm. The Pacific Northwest waits for the flooding to end. Much of the nation gets ready for the deep freeze. We're going to check it all out with our Chad Myers, coming up.
And it takes one cold dude to rob a bunch of nuns. Clearly, this guy has never heard of divine retribution. (COMMERCIAL BREAK)
PHILLIPS: Let's hit the weather bar with Chad, ordering up -- what are we having?
CHAD MYERS, CNN METEOROLOGIST: Espresso.
PHILLIPS: Espresso.
MYERS: Can't have cappuccino after noon, so we already -- already missed that.
PHILLIPS: All right. Pacific Northwest getting -- getting -- they probably need a few cappuccinos or something else to get through what they're dealing with. MYERS: I don't know. I mean, just all the flooding. The water is now all going downhill. And over the weekend, it was in Pacific Washington. And people were just there. A lot of people were just completely caught off-guard; with all the news, off-guard.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Did you have any warning about this?
KEITH CRADY, FLOOD VICTIM: No. The only word I got was I looked out my window and seen the street flooded.
(END VIDEO CLIP)
MYERS: And on the other side of the country, snow. Snow in New Hampshire, snow in Vermont. Fifty-nine cars, I think, were crashed?
PHILLIPS: Actually, I think we've got the videotape. Somebody was telling me this out of our affiliate KOMO out of Seattle.
MYERS: Yes.
PHILLIPS: Coming up. Is this the video of that?
MYERS: That's still -- that's still the video.
PHILLIPS: All right, this is from the flooding. Right?
MYERS: Yes.
PHILLIPS: This is what caused all the mudslides and closed all the roads. Is this what also -- is this what caused the pileup?
MYERS: No, the other side. It was the snow. The snow was in New Hampshire. It was like a foot of it.
PHILLIPS: OK.
MYERS: And now -- and now Chicago is in a blizzard warning for tonight. I mean, here we go. Temperatures in Chicago are going to be 20 degrees below zero, and the wind is going to be blowing. Do you know what those buildings are going to feel like? It is going to be chilly.
PHILLIPS: You know, I grew up in Jacksonville, Illinois, and I remember taking the big trip to Chicago, how many times we got snowed in because of the weather and the roads. You would think after all these years, they'd be totally prepared, but it just gets too much.
MYERS: Well, please don't come with video tomorrow, saying, "We didn't know it was coming," because it's coming. Chicago, you need to get -- I mean, this is really going to get ugly. Blizzard conditions tonight after midnight; zero visibility. Don't be on the roads. Just do not be on the roads.
And there's the snow. They're plowing snow across the northeast, as well. There you are.
PHILLIPS: All right. What are some other areas that we need to be looking at? Obviously, we get the videotape in. Oh, here we go. Here's where all the accidents were. There's the pileup.
MYERS: Yes.
PHILLIPS: Oh, my gosh.
MYERS: That's 59 cars. Two dozen people taken to the hospital. No life-threatening injuries there. Amazing, as all these cars were just piling up. Look at that. Think about how you see that school bus coming at you and say, "Oh, I'm not going to get this car stopped."
And make sure your car is full of gas this weekend if you're in the Midwest, this week. And also, make sure you have blankets in the car. Because if you get stuck, those wind chills, at 40, 70 degrees below zero, those are life-threatening wind chills this weekend in the Midwest. There are the temperatures right now. There's Fargo. It's 20...
PHILLIPS: Look at all the minuses.
MYERS: Look at the wind chill. Twenty-eight, 24 degrees.
PHILLIPS: Minus 3 in Duluth, minus 3 in Minneapolis. Minus 12 -- where is Pierre? Oh, there we go. That's the side not far from Rapid City.
MYERS: It's "Peer."
PHILLIPS: "Peer." Oh, I've got to work on that.
All right. We're going to study...
MYERS: I've from Nebraska. I should know.
PHILLIPS: We're going to study the regions. Yes, exactly. It's like "Missouree" or "Missourah"? I grew up in that area; it's "Missourah," OK?
MYERS: Right. You got it. You know. Right.
PHILLIPS: We're going to take a quick break. We'll be right back.
(COMMERCIAL BREAK)
PHILLIPS: Well, as we mentioned at the top of the hour, Bernie Madoff is still under penthouse arrest in Manhattan, despite demands by prosecutors that he go straight to jail. They're troubled by a burst of holiday generousity that they claim was meant to hide assets from Madoff's alleged victims. As the case drags on, and the outrage grows, so does the hindsight. The warnings and the signals and hunches that nobody acted on until Madoff's alleged pyramid scheme fell apart.
Well, here's more from CNN's Abbie Boudreau.
(BEGIN VIDEOTAPE)
ABBIE BOUDREAU, CNN CORRESPONDENT (voice-over): Right now, the S.E.C. inspector general, David Cox, has just as many questions as everyone else.
(on-camera): Some members today said the S.E.C. failed miserably. Do you think that's a fair statement?
DAVID COX, SECURITIES AND EXCHANGE COMMISSION INSPECTOR GENERAL: Well, we haven't conducted our investigation yet so...
BOUDREAU: But do you think that statement is fair?
COX: Once we complete our investigation, I'll be able to tell you. But, I really do have to go.
BOUDREAU: Cox says he promises to find out exactly what went wrong, (CROSSTALK), whether obvious red flags were missed.
Do you feel like the S.E.C. dropped the ball in this case?
COX: I need to find that out after I finish my investigation.
BERNARD MADOFF: Today's regulatory environment, it's virtually impossible to violate rules.
BOUDREAU: This is the only video that surfaced so far, where you could hear what Bernie Madoff had to say. The round table discussion was about the future of the stock market. "Time" magazine business columnist Justin Fox moderated. He gave us one of the only glimpses into how Madoff says how he ran his firm, and his admittedly cozy relationship with S.E.C. regulators.
MADOFF: I'm very close with the regulators. I'm not trying to say that they can't -- you know, what they do is bad. As a matter of fact, my niece just married one, but the...
JUSTIN FOX, TIME MAGAZINE: The thing about his niece being married to a regulator and all of that, yes, that's cringe worthy after the fact. At the time it was sort of, whatever.
BOUDREAU: Fox says he had no idea at the time he was sitting across from one of the world's biggest con men.
FOX: It was innocuous enough. I wasn't investigating the guy, there weren't obvious red flags.
BOUDREAU: Former financial reporter Michael Ocrant did see the red flags. In 2001 after being tipped off, he wrote the first news article to question the way Madoff was doing business. Ocrant recalls a conversation with one of his sources. MICHAEL OCRANT, FORMER FINANCIAL REPORTER: He basically said but he is either -- he's either doing it through front running, trading ahead of his customers as market maker, or it's a giant Ponzi scheme. And I -- I just kind of said, come on. It doesn't make any sense.
BOUDREAU: Madoff invited him to his office to talk.
And was he believable?
OCRANT: He was believable in the sense that, how calm he was. How unplushed he was. He was just -- it was almost as if we were sitting down to Sunday tea.
BOUDREAU: Ocrant's article was printed in May of 2001, followed by a second article in "Baron's." But according to former S.E.C. chairman Harvey Pitt, neither ever got any attention.
(on-camera): Did you know about these articles or is this the first you're hearing about it?
HARVEY PITT, FMR. S.E.C. CHAIRMAN: No, this is the first time I'm actually hearing about them.
BOUDREAU (voice-over): Pitt was chairman from 2001 to 2003. He started three months after the articles were published, yet he says his staff never alerted him.
PITT: If I had seen the articles, I believe that I clearly would have sprung into -- into action on it.
BOUDREAU: The S.E.C. examined Madoff's operations at least four times since 1999. And conducted two separate investigations. One in 1992, and the other in 2006. According to government officials, no fraud was ever found, even after the S.E.C. received this detailed 19-page road map that uncovered Madoff's scam. It was written by Harry Marcopolis (ph), a hedge fund expect, who concluded "the world's largest hedge fund is a fraud." His tip even referenced Michael Ocrant's article and contact information.
BOUDREAU: And the S.E.C. never contacted you?
OCRANT: No. No.
PITT: I think that the S.E.C. performed miserably in connection with Mr. Madoff. There's -- if I were grading this and I do teach law school from time to time, I would give it an "f."
BOUDREAU: And from the sound of it, so would members of Congress, who wanted to know how the inspector general is going to lead the investigation.
REP. GARY ACKERMAN (D), NEW YORK: I want to know who is responsible for protecting the security investor? Because I want to tell that person or those people whose job it is that they suck at it.
(END VIDEOTAPE) PHILLIPS: He just laid it out, didn't he, Abbie? Well, look at where we are. They pretty much sucked at it. Did anybody talk to the S.E.C. chairman? I mean, did you have a chance to talk to Cox?
BOUDREAU: Right. Well, we tried to talk to S.E.C. Chairman Cox, and he just wouldn't talk to us.
PHILLIPS: Imagine that. He didn't want to sit down with you for a nice lengthy conversation?
BOUDREAU: Well, there's so many questions that we want to ask him, and I think people want to know, you know, where is the investigation at this point? How is it coming along? What does he think about his own agency?
I mean, we know from public statements that he has said he is deeply troubled by the initial findings of is agency and how they handled the case, but where are they at now? We asked several times to sit down, talk to him, and it just never happened. Scheduling issues was what they --
PHILLIPS: (CROSSTALK) Yes, but so many people are pointing the finger at him, which they should because I mean, he was the head of the S.E.C. And for years he was given signals and warnings that something was going on, and there's a lot that he could have done for a number of years and he didn't.
BOUDREAU: Well, at this point, most people have seen that road map, that 19-page, that detailed tip that was given. It was just handed over to the S.E.C. A lot of people are wondering, how is it possible that regulators missed it. And that's what they're looking into and that's what they'll continue look into. And we'll keep looking into this, as well.
PHILLIPS: I know you will. Big money has big power, that's for sure. Thanks a lot.
BOUDREAU: OK. Thank you.
PHILLIPS: Well, we could be nearing a resolution of Roland Burris's Senate battle, believe it or not. A lot has happened since the last time that he and his lawyers were in Washington, and most of it happened in Springfield, Illinois.
Joining me now from there, Democratic state lawmaker, Jack Franks. Jack has been keeping us up to date from the very beginning, because, Jack, you've been right there involved with the investigative committee. So I want to talk about two things with you first.
Roland Burris, what did you ask him; what did he say? Did anything earth shattering happen when he met with your committee?
JACK FRANKS (D), ILLINOIS STATE ASSEMBLY: Not really, because -- I don't think anyone thought there was going to be any pay to play allegations with Roland Burris because he was never seriously considered until after the governor was arrested. So I don't think anyone would be that naive to think that he was going to be offering something for the job at that time.
He did come out though and say that did meet with Lon Munk, who was the governor's former chief of staff and now he's a lobbyist, and he had told Lon Monk back in July of 2008 that he was looking at the Senate seat and they were trying to trade some lobbying business.
And as you know, Lon Monk's, his cell phone has been tapped by the feds, and he has shown up on some of those tapes, as well. But that was the only bombshell but it was never really followed up with in the committee.
PHILLIPS: So what happens now then, with that information, and nothing really earth shattering from Roland Burris, what happens next?
FRANKS: Well, hopefully he won't be seated. You have to remember the governor promised that he would not name a Senate replacement. And he lied and he did so.
Remember there was also Democratic Senators who signed a letter saying that they would not seat anyone who was appointed by Rod Blagojevich.
Now, our secretary of state has not confirmed that Burris is the appointee. So if the Senate -- the only way they could seat him would be to break 135 years of tradition, which I hope they don't do. The people of the state of Illinois are fed up with this system that's broken.
And really the only to fix it is to have an open election, and I filed a bill today to allow that to happen. It'll be an emergency bill, and we would have the election on April 7th, which is the same day where we're filling the same vacancy for Rahm Emanuel, who's becoming the chief-of-staff for President-elect Obama. And at that time, I think we should also have an election to fill Obama's seat.
PHILLIPS: So you're saying, no matter what in this type of case that's so unique and so bizarre and so twisted in so many ways that whether Roland Burris is clean or not or tied to Blagojevich or not or rule or that or this signature wasn't here or there, start from scratch because no matter what, this is tainted. Is that how you feel?
FRANKS: Absolutely. And Roland Burris is correct, that it is technically legal what the government -- what the governor has done, but it doesn't make it right. And we need leaders who are going to do what is right for the citizens of the state of Illinois. So, he should not have accepted the appointment. And right now, what we desperately need is an election to restore confidence in our democracy here in this state.
PHILLIPS: All right. We'll follow-up and see if that happens. Meanwhile January 26th, the impeachment trial for Rod Blagojevich, hopefully we can talk to you about that as well as we get closer to the date. Jack, as always, thanks for your time.
FRANKS: Thank you.
PHILLIPS: And forget about being just a few pounds overweight, new figures are raising alarm bells about obesity in America.
And next hour, we go back to Little Rock Central. Back in 1957, it was integration central. Do the kids there today realize how their school helped make next week's inauguration possible? They absolutely do; we'll hear from them.
(COMMERCIAL BREAK)
PHILLIPS: Well, some new sobering statistics out from the CDC about obesity in America. More people in the United States are obese than overweight. And with the added pounds, you can imagine the health risks soar.
Senior medical correspondent Elizabeth Cohen here with all the numbers. And a lot of folks are asking, OK, so what is different than this report than any other, ad it's because --
ELIZABETH COHEN, SENIOR MEDICAL CORRESPONDENT: More obese people in this country than overweight people.
PHILLIPS: OK.
COHEN: It used to be that when you took those two categories, overweight and obese, there were more overweight than obese people.
PHILLIPS: (CROSSTALK) And some people might say what's the difference?
COHEN: And I'm going to tell you.
PHILLIPS: OK. There we go.
COHEN: First, let's illustrate these numbers that Kyra and I have just been talking about. According to the most recent CDC report, 32 percent of Americans are overweight, and 34 percent are obese, and 6 percent are extremely obese.
Now, if you want to know, what does that mean -- what's obese, what's overweight, let's take an example of someone who is five feet five inches, this is for a man or a woman. Overweight would be 150 pounds. Obese would be 180 pounds. So that sort of gives you an example. Now, if you want to look up your own numbers, see if you're obese or overweight or hopefully neither, go to CNN.com/health. You will see a body mass indicator outline right on there. You put in your height, and it will tell you what you ought to weigh.
PHILLIPS: All right. So are there differences among groups in the U.S., like whites, blacks, Hispanics? Is there a difference?
COHEN: There certainly are. Obesity is a especially a problem among blacks and Hispanics in this country. And that's something that public health authorities have really tried go in there, right to the communities to try to fight that.
PHILLIPS: Now, on another side note, I just totally --
(CROSSTALK)
COHEN: Right there is a connection.
(CROSSTALK)
PHILLIPS: OK. I heard the talking, and I heard there was a connection, your grandmother?
COHEN: My grandmother's special birthday today, January 12th...
PHILLIPS: How old?
COHEN: ...she's 100 years old today.
PHILLIPS: Oh, my gosh.
COHEN: And the connection here is...
PHILLIPS: She's healthy.
COHEN: ...she's not obese, right. (CROSSTALK) Exactly. Those are two of the keys. You want to live to be 100? Don't smoke and keep your weight under control. Those are the two big things that you ought to do. So there she is. Happy 100th birthday, nana, Sarah Weintraub (ph). You see two of her many grandchildren there behind her. She has ten grandchildren and a legion of great grandchildren.
We did a CNN documentary with her, "The Fountain of Youth," a few years ago, and we just want to say, happy birthday.
PHILLIPS: OK, but nana's got to have a vice. There's got to be something. A shot of whiskey now and then?
COHEN: No, nothing. (CROSSTALK) She doesn't smoke, she doesn't drink. An occasional glass of wine at dinner kind of thing.
PHILLIPS: Does she pray, meditate?
COHEN: She does pray. She does pray, she does pray. (CROSSTALK) That's not a vice though but, it's a good vice, I guess.
PHILLIPS: Thanks, Elizabeth.
All right. Well, you know that he dispenses timely advice to the stars shedding pounds on "Celebrity Fit Club" and Thursday Dr. Ian Smith, author of the new book, "The 4 day diet" will be our guest.
You'll also recognize him from the 50 Million Pound Challenge. Tune in on Thursday for his new tips to help you get fit. We'll also going to meet a woman who's taken on Dr. Ian's challenge and has lost 65 pounds.
You going to learn all about it right here in the CNN NEWSROOM.
Oh, God, you devil. A crook breaks into a convent in Philly, rips the sisters off. Police in some heavenly heat on the case.
(COMMERCIAL BREAK)
PHILLIPS: I'll just tell you, this story just ain't right. When we heard about it, we all said, "What the...?"
Philadelphia police investigating a weekend robbery. OK, the victims, a bunch of nuns. The perp? Someone who not only needs a ruler-smack on the knuckles, but really needs to go to confession. Listen to this.
He broke into the convent while the nuns were sleeping, and he took a computer, cash, and tons of personal items. And among the personal items, a silver cross that belongs to a 94-year-old sister. I know one guy that's going to burn down under, that's for sure.
And from perps to pirates, well, it all comes back to karma, right? remember the Somali pirates that took over an oil tanker and scored a huge ransom drop on Friday? Well, guess what? Five of them have reportedly drowned. And three that survived, word is their shares of the $3 million booty have been deposited in Davy Jones's locker.
Talk about a crew of incompetents, right? We kind of prefer a more wholesome pirate, anyway.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": You're not pirates, are you?
UNIDENTIFIED MALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": Well, we're -- we're --
UNIDENTIFIED MALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": We sure aren't cabin boys.
UNIDENTIFIED MALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": We're friendly pirates. Sort of.
UNIDENTIFIED FEMALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": You don't rob or pillage, do you?
UNIDENTIFIED MALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": Oh, no. We don't do any of that stuff.
UNIDENTIFIED MALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": In fact, we don't do anything at all.
UNIDENTIFIED MALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": Back home, they actually call us the pirates who don't do anything.
UNIDENTIFIED MALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": That's right.
UNIDENTIFIED MALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": How comforting.
UNIDENTIFIED FEMALE, "THE PIRATES WHO DON'T DO ANYTHING: A 'VEGGIE TALES' MOVIE": You're not pirates.
(END VIDEO CLIP)
PHILLIPS: You know they wouldn't steal from nuns, either.
Straight ahead, the glitz, the glamour, the Golden Globes. We're going to check out who went home with a new trophy for their mantel.
(COMMERCIAL BREAK)
PHILLIPS: A Hollywood newcomer, an underdog from overseas and a poster boy for a Tinseltown comeback. What do the three have in common? They're all proud owners of some new hardware today, a Golden Globe statue. Kareen Wynter tallies up the winners from last night's show.
(BEGIN VIDEOTAPE)
TOM CRUISE, ACTOR: And the Golden Globe goes to "Slumdog Millionaire."
KAREEN WYNTER, CNN CORRESPONDENT: "Slumdog Millionaire," about an orphan who goes on India's version of "Who Wants to be a Millionaire," went four for four, winning best picture drama, plus score, screenplay and directing honors.
DANNY BOYLE, DIRECTOR, "SLUMDOG MILLIONAIRE": The Globes give us a platform that presents the film to the world.
WYNTER: The night's other top honor, best picture, musical or comedy, went to Woody Allen's "Vicky Cristina Barcelona." Comedy acting honors went to Sally Hawkins for "Happy Go Lucky" and to "In Bruges" leading man Colin Farrell.
COLIN FARRELL, ACTOR: Nicer to be told "well done" than get a smack in the back of the head. Sometimes a smack is needed but a "well done" is always lovely.
WYNTER: Hollywood loves a comeback story, and they don't come much better than this. Mickey Rourke winning best actor, drama for "The Wrestler."
MICKEY ROURKE, ACTOR: I appreciate it a lot because it's a profession where, you know, if you work hard enough and many years go by, you can get a second chance.
WYNTER: Kate Winslet ended her Golden Globe drought in dramatic fashion by winning two awards: supporting actress for the Holocaust film "The Reader" and best actress, drama for "Revolutionary Road," which reteamed her with her "Titanic" friend, Leonardo DiCaprio.
KATE WINSLET, ACTRESS: Leo, I'm so happy I can stand here and tell you how much I love you and how much I have loved you for 13 years.
WYNTER: Perhaps the night's most poignant moment came when the late Heath Ledger won for his memorable portrayal of the Joker in "The Dark Knight."
UNIDENTIFIED MALE: He will be eternally missed, but he will never be forgotten.
PHILLIPS: And Kareen Wynter joining us now. Kareen, it seems there's always at least one speech that everyone's buzzing about the next day, right? And I hear maybe that goes to Tracy Morgan?
WYNTER: Well, of course, Kyra. What would an awards show be without that? Morgan said quite a mouthful when he and the cast of "30 Rock" accepted for best comedy series. You have to listen to this.
TRACY MORGAN, ACTOR, "30 ROCK": Tina Fey and I had an agreement that if Barack Obama won, I would speak for the show from now on. Welcome to post-racial America. I'm the face of post-racial America.
Deal with it, Cate Blanchett. We would like to thank the Hollywood foreign press, especially me, because a black man can't get no love at the Emmys.
WYNTER: Boy, oh boy. Well, Kyra, some believe Morgan's comment is a reflection of the current TV landscape, where many feel steps are needed to make it more ethnically diverse. By the way, Tracy Morgan, he has not been nominated for an Emmy. He's only been nominated within the ensemble cast of "30 Rock" for SAG awards. He's also up for an NAACP Image Award this year for his role in "30 Rock."
But quite a speech. Raised some brows, didn't it?
PHILLIPS: Yes, no doubt. And also, "Slumdog Millionaire," I saw it. Oh, my gosh. The movie was remarkable. I hope everybody goes and sees that movie. It's an amazing message.
WYNTER: I agree.
PHILLIPS: I'm curious, how were the ratings this year? I mean, in a tough economic time, a lot of people haven't really spent the money to go and even see a movie.
WYNTER: That's true. And you know, we got some early estimates that last night's broadcast, it was watched by 14.6 million people. It sounds like a lot, and it is an impressive number, especially when you compare it to last year, where the broadcast itself was canceled, Kyra. We had journalists on stage announcing the winners. That only drew in six million viewers. So, when you compare the numbers, of course, this year is much better. But you look back two years ago, the viewership was 20 million, an estimated 20 million. So, that number that I just quoted you, still a bit down, but again, it shows that people are tuning in, and they wanted a little escapism last night and perhaps found it -- Kyra.
PHILLIPS: Good. We all need a little escapism. Isn't that the truth?
WYNTER: Oh, yes.
PHILLIPS: Good to see you, Kareen.
WYNTER: Thanks, Kyra.
PHILLIPS: All right. Next hour of CNN NEWSROOM starts right now.
