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Rehab Racket; U.S. Issues Travel Alert

Aired August 02, 2013 - 15:00   ET

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

BROOKE BALDWIN, CNN ANCHOR: Top of the hour. I'm Brooke Baldwin. We begin, breaking news, brand-new information on world wild travel alerts issued today by the State Department and specifically focused on the Middle East. So, CNN has learned that the U.S. now has information suggesting al Qaeda in Yemen is about to do something.

I have Chris Lawrence standing by for us, also Dana Bash on Capitol Hill, where lawmakers, I know, have been briefed, and national security analyst Peter Bergen on the phone with us.

Chris, let me just start with you, because we have three sources. I have the memo here from the good folks with us, CNN's Pentagon unit and also State Department. They are saying that this terrorist group is in the final stages of preparation for some sort of operation. What more can you tell us about that?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, it's something that they have been keeping an eye on for the past several weeks, Brooke, that this -- that there was a growing threat from the al Qaeda affiliate based in Yemen, al Qaeda in the Arabian Peninsula.

But just in the last few days, they picked up new intelligence that suggested that a potential attack is in its final stages. That is what sort of spurred these recent moves by the Obama administration, not only to close the number of embassies that it did, but then today to also issue that worldwide travel alert.

But, basically, the more and more we hear from sources, the more everything seems to point to Yemen as the source of origin.

BALDWIN: And, as this note says, things seem to have ramped up in the last couple of days with the approach of the end of Ramadan.

Dana, to you on the Hill.

I mean, I know members of Congress, they are heading out of town for multiple weeks. They're being briefed. They are obviously taking this quite seriously.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: They are. Since you and I spoke last hour, Brooke, I have spoken to two additional sources, one from each party who have been briefed. Both say they absolutely think the administration is doing the right thing, that this is an entirely appropriate response and reaction based on the threat that they know is out there. The one thing they say, though, is, you know, Chris Lawrence and our other colleagues, their sources are saying all signs are pointing to Yemen. But they also say that they are seeing chatter that shows that this could be much more broad than that, not just in terms of the source of potential terrorists, but also the terror attack. So that is why the State Department put this global travel warning out there.

The other thing that may be kind of obvious, but I think it's worth underscoring, because one of the sources mentioned this to me, and that is that whenever the United States does this kind of thing, puts out there that there is a threat, they know that they're doing that at risk. They know they're not just putting people at risk, that they're risking the sources and methods that gave them this information. They could send potential terrorists underground.

But the fact they're doing this in such an aggressive way really gives a sense of how significant they think this threat is.

BALDWIN: It's a great point to mention.

And, Peter Bergen, terrorism analyst on the phone with me. Again, just to remind our viewers, when we talk Yemen, when we think al Qaeda in the Arabian Peninsula, we think of that thwarted cargo plane plot. We think of the underwear bomber, the shoe bomber. In hearing all this coming to light today, Peter, what do you make of all of it?

PETER BERGEN, CNN TERRORISM ANALYST: Brooke, I think one thing that's important to note is the date that all these 21 embassies and consulates are being closed on Sunday also happens to be the 27th day of Ramadan, which is a very sacred day for most Muslims, all Muslims, indeed.

But it's also a particularly auspicious day to die if you're an al Qaeda militant. We have seen in the past al Qaeda in Yemen planning an attack on the USS Sullivans, a major American warship, on the Night of Power back in 2000, economy in the year 2000 fell on January 3.

We also -- when bin Laden was thinking he was going to die at the battle at Tora Bora in 2001, he actually signed his will on the Night of Power. If you sort of buy into the al Qaeda ideology it's a particularly auspicious day to do an attack. I don't think it's a coincidence that all these embassies and facilities are being closed on that day.

I think another point here is I can't recall a time when you have had embassies and consulates closed in 18 countries. It's unprecedented. Yes, there may be indications of al Qaeda in Yemen. But, as you indicated, there are also perhaps worries in other countries.

Don't forget that in two of the countries where embassies and facilities are being closed, we have had major prison breaks by members of al Qaeda within the last several days. For instance, in Iraq, several hundred al Qaeda militants were sprung from a jail outside Baghdad. We have also seen a similar very large prison break in Benghazi, Libya, where 1,000 prisoners escaped on Saturday.

BALDWIN: Peter Bergen, Dana Bash and Chris Lawrence, thank you all very much.

Coming up next, a professor hiding a dark secret from his school and his students. Dr. James St. James is the chair of a psychology department as a private university. And 46 years ago he killed his sisters and his parents. He was released, changed his name, was hired at this university without ever revealing his criminal past. And now an investigative journalist put the pieces together and tracked him down. We will talk to her live next.

(COMMERCIAL BREAK)

BALDWIN: Let me take you back to 1967. A 15-year-old Texas boy sniffed some glue, loaded a rifle, walked into his parents' living room, shot his father twice in the chest. Walked to the next room. Shot his sister in the face. And then as she awoke to the gunshots that killed her family, that 15-year-old put the final fatal bullet in his mother's head.

James Wolcott admitted he planned the killings the week before. He was found not guilty by reason of insanity. So he spent some time in a psychiatric hospital, was then released. Today that 15-year-old boy who killed his family is a professor at Millikin University in Decatur, Illinois. He is teaching, of all things, psychology. He has changed his name, but his true identity revealed after this two-year investigation by the "Georgetown Advocate" newspaper.

Joining me now, Ann Marie Gardner, a senior writer at "The Georgetown Advocate" in Texas.

Ann Marie, congratulations on the piece. It's incredible that you uncovered all that you did, right?

ANN MARIE GARDNER, "GEORGETOWN ADVOCATE": Thank you, Brooke.

BALDWIN: Let me just begin with here you are. You know about this man's past. And you are sitting across the table from him and said, I know your other name. What did he say?

GARDNER: He didn't say much. He didn't really want to talk about his past. A lot of his responses were that he didn't -- he didn't want to think about it. He didn't want to go there. It was a long time ago.

When I asked him about the name change he said he just didn't want to deal with it. It was something he didn't want to think about. I can't presume what his reasons actually were.

BALDWIN: Yes.

GARDNER: However, what he did say was that, you know, I just don't want to deal with that. I guess changing his name was a way of moving on.

BALDWIN: Back to 1967. He confessed that night. You quote in your piece, this Texas Ranger asks him did you kill your parents, son? With only a brief hesitation and a sigh, James replied, yes, sir. At the time, then he was 16, determined competent to stand trial. Defense attorney takes him on. What did doctors say, though, about his mental state?

GARDNER: The doctors at the time, they all evaluated him over a period of about two months. Most of them agreed that he was suffering from paranoid schizophrenia. Some of them actually indicated that the glue sniffing could have triggered a delusional episode.

James did mention in some of the court documents he was suffering from delusions of persecution and as the article mentions that he believed his family was out to get him and he felt like it was a self-defense move.

BALDWIN: So, as we mentioned, he ultimately this goes to trial. He goes to this hospital, deemed sane. Connect the dots for me, Ann Marie. How does he go from being this mental patient and killing his family to being a pretty well-respected psychology chair of a department?

GARDNER: Sure.

When he was at Rusk, Rusk had a partnership program with Stephen F. Austin University in Texas. We presume he took some courses, because he was released in 1974. In 1976, he received a bachelor's degree as James Wolcott. We found he received a master's degree as James St. James in 1980 in psychology.

That was also at a Texas university. It was at that point that he -- when he decided to take on a doctoral program. He went to the University of Illinois at Champaign because he told me that was one of the top half-dozen colleges in the world for the kind of program that he wanted to be involved with.

So he continued his course work there. He did very well. He began student teaching at Millikin in 1986 and has been teaching there ever since. He got his doctorate in 1988.

(CROSSTALK)

BALDWIN: Let me jump in and just read Millikin's statement because they're standing by. "And Millikin University has only recently been made aware of Dr. St. James' past. Given the traumatic experiences of his childhood, Dr. St. James' efforts to rebuild his life and obtain a successful professional career have been remarkable. The university expects Dr. St. James to teach at Millikin in fall."

In 30 seconds, Ann Marie, tell me what the mayor of the town is saying.

GARDNER: The mayor of the town says for the good of the school and the town especially, because it is a small town that seems to be focused on the school activities, the mayor asked him to resign just for the betterment of the town or just because he's an honorable man and he believes that's what he should do.

BALDWIN: Ann Marie Gardner, "Georgetown Advocate," thank you so much. What a story you have uncovered.

GARDNER: Thank you, Brooke.

BALDWIN: Coming up, a remarkable story of a surgeon living out his father's dying wish.

(COMMERCIAL BREAK)

BALDWIN: You have to hear this story. A surgeon is living out his father's dying wish. He is devoting his time to providing medical care to his native country of Cameroon.

Here's this week's CNN hero.

(BEGIN VIDEOTAPE)

GEORGES BWELLE, DOCTOR: For a country like mine, people like to drink, to dance, to enjoy their life. But with poverty, they cannot enjoy their life.

To go to the village is a pleasure. If I can help two or three people, that would be great. I saw my father ill for 23 years. Before he passed away, he asked me, you see how people suffer to see a doctor? Please, if you graduate to be a doctor, help people.

My name is George Bwelle. I bring free surgery and health services to the people of (INAUDIBLE)

They're beating the drums, says thanks to come. They can live 60 kilometers around and they are coming on foot.

We are starting by doing consultation. And in afternoon, we have a list of patients that we are going to operate.

We need our generator because in the village there is no light. We start doing operations until Sunday morning. And we are doing around 40 surgical operations for free. We leave our address to all the patients that if there's any problem they can come back to us.

I help people and they are happy.

I'm bringing that to give them opportunity to restart.

(END VIDEOTAPE)

BALDWIN: And you can learn more. Go to CNNHeroes.com to nominate someone you know who's making a difference and deserves to be recognized.

(COMMERCIAL BREAK)

BALDWIN: Up next, a CNN special report. It's a yearlong investigation that will quite frankly stun you. This is a look into fraud and abuse involving a rehab program.

And CNN knocks down the doors.

(BEGIN VIDEO CLIP) DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: Drew Griffin with CNN. How you doing?

I would like to ask you some questions about your business, if I could.

ALEXANDER FERDMAN, FORMER CONVICTED FELON: I really don't have time right now.

GRIFFIN: But you can explain, how can a guy with a record like you be operating a drug rehab clinic?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BALDWIN: I'm Brooke Baldwin.

And for the next 30 minutes, you will see a special CNN investigation into a state-sponsored taxpayer-funded rehab program in California. It gives an eye-opening look at fraud and abuse. The program looks like a noble cause on paper. It's a privately run rehab clinic. They get Medicaid money by billing for each addict money who gets counseling.

But over the past year, this yearlong investigation by CNN and the Center for Investigative Reporting, we have found a system riddled with fraud and poor oversight, from billing for phony patients to allowing convicted felons to rub rehab centers. Because it's happening in California, folks, this is big money. State and federal taxpayers are on the hook for tens of millions of dollars each and every year.

Investigative correspondent Drew Griffin reports.

(BEGIN VIDEOTAPE)

GRIFFIN: Mr. Ilouno, Drew Griffin with CNN. How are you?

(voice-over): George Ilouno has run a taxpayer-funded drug rehab business in Southern California for the past six years, which is surprising because for the last 11 years he's been on a list of people banned from billing Medicaid. Convicted of student loan fraud, George Ilouno should never have been allowed to even open this clinic called G.B. Medical.

GEORGE ILOUNO, G.B. MEDICAL: What is going on?

GRIFFIN (on camera): I'm asking you a few questions, sir, about the drug rehab case. I want to ask you about -- you seem to be at the center of fraud allegations here.

ILOUNO: No, no, no, no, no.

GRIFFIN: Yes. Have you been faking signatures onto sheets of paper and billing the state for the money? ILOUNO: No, no, no.

GRIFFIN (voice-over): Guess what else. Ilouno is facing felony criminal charges for ripping off the state, allegedly getting paid by taxpayers to rehab drug abusers who weren't even there.

(on camera): Excuse me, sir. How can you bill the state for clients that don't exist? Mr. Ilouno, Mr. Ilouno, just one second, sir.

(voice-over): We never saw Ilouno again.

(on camera): Ilouno's drug rehab business here in Southern California has been part of the largest Medicaid program in the nation, paid for with federal and state dollars. A one-year investigation by CNN and the Center for Investigative Reporting, found the rehab portion of that program, called Drug Medi-Cal is rife with fraud, has operators who bill the government for made-up clients and often get away with it.

(voice-over): Joy Jarfors saw plenty of fraud in the nine years she spent working as a supervisor over Drug Medi-Cal.

JOY JARFORS, FORMER MANAGER, CALIFORNIA DEPARTMENT OF ALCOHOL AND DRUG PROGRAMS: I believe the word got out that there was easy money to be made in the outpatient drug-free system.

GRIFFIN (on camera): How bad is it?

JARFORS: It's bad. It was really bad. I left state service about three years ago, and we would have one provider that would bill for over a million dollars in one year that we believe was 100 percent questionable billing.

(voice-over): And that one provider was no isolated instance. Over and over, we found examples of fraud. Not hidden fraud. This was happening in plain sight. For example, George Ilouno.

Nineteen-year-old Darshaye Miles was just 14 when she went to his rehab center, along with her mother and three sisters. It is against the law to pay drug rehab clients, but that apparently didn't stop Ilouno. Miles said he paid her and other clients $5 each time they signed in for group counseling, all so he could then charge Medi-Cal between $28 and $61 per signature.

DARSHAYE MILES, ATTENDED REHAB CLINIC: At first, I didn't know it was illegal. I didn't know nothing about it. I thought it was just a thing. You were supposed to get paid to go in there, until people was like, oh, George was like you got to -- don't speak out loud about the money.

GRIFFIN: And what did she do with the $5 given to her by the drug rehab center? She bought drugs.

MILES: We was going just to get the money to buy weed. My whole thing was like, you all was paying us to get high. GRIFFIN: The day after our interview, the state charged Ilouno and three of his employees at G.B. Medical with grand theft in connection with more than 2,000 phony bills for rehab dating back to 2009. He's pled not guilty. But records show your tax dollars still paid him, even after he was arrested and out on bail.

Ilouno's attorney blamed the billing practices on counselors and employees who were not well-supervised. The attorney says Ilouno was a certified counselor himself who was allowed to bill Medicaid. Despite that, the clinic voluntarily shut down July 1 without explanation.

CNN and the Center for Investigative Reporting reviewed thousands of records in California Drug Medi-Cal program, including program audits. We analyzed patient billings, even watched clinics undercover to see who was getting treatment and who wasn't. The result? We found that in the last two fiscal years, half of the nearly $186 million spent for Drug Medi-Cal, about $94 million, went to clinics that had shown questionable billing practices or signs of fraud -- case in point, the man with the cigar, a convicted felon named Alexander Ferdman.

UNIDENTIFIED MALE: Ferdman was the organizer.

Marshall Voat (ph) was the lead investigator who helped prosecute Alexander Ferdman