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Tyco Execs Found Guilty; Another Suspect Arrested in Natalee Holloway Case; Some Ford Vehicles Catch Fire When Turned Off; Tom Cruise Proposes to Katie Holmes

Aired June 17, 2005 - 15:00   ET

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

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


KYRA PHILLIPS, HOST: Up first this hour, it took more than a year and two juries, but there's finally a verdict in the Tyco trial.
Let's go right to CNN's Allan Chernoff in New York with the details -- Allan.

ALLAN CHERNOFF, CNN CORRESPONDENT: Kyra, Dennis Kozlowski and Mark Swartz, the former chief executive officer and chief financial officers of Tyco International have been found guilty, guilty of grand larceny, securities fraud, conspiracy and also filing false business documents.

These charges carry a maximum of 25 years on the grand larceny. The other charges, a maximum of four years combined. Under New York state law, the two could serve as much as 30 years in prison.

Right now, the attorneys are arguing before the judge, asking that he permit them to stay out on bail, and the judge is agreeing to do that, saying that they do not present a flight risk.

Now, these charges very serious. Dennis Kozlowski has now been convicted, along with Mark Swartz, of stealing $170 million in cash from Tyco and an additional $430 million through unauthorized stock sales. They spent the money lavishly. The prosecution, though, in this case didn't focus as much as it had during the first case on the actual spending, more on the intent.

What happened here, that the jury has found, Kozlowski and Schwartz took unauthorized bonuses, and also they had many loans outstanding. And they forgave themselves the loan rather than getting authorization from the company's board of directors.

A very emotional scene inside of the courtroom. Dennis Kozlowski turning beet red, Mark Swartz literally in shock, according to observers there. And the families very upset. Dennis Kozlowski's family crying, absolutely in tears.

So a big victory for the Manhattan district attorney, Robert Morgenthau, 85 years old, after gaining a guilty in this second trial against Dennis Kozlowski and Mark Swartz -- Kyra.

PHILLIPS: All right. Allan Chernoff live outside the courtroom there. Thank you so much.

And in Fresno, California, just a short time ago Marcus Wesson was convicted in the gruesome murders of nine of his children. Wesson, the head of a bizarre clan marked by incest, now faces a possible death sentence.

The bodies of the children were found March 12, 2004, at the end of an 80-minute standoff with Fresno police. The police had been summoned by some of the victim's mothers after Wesson had closed himself in a back bedroom with the children.

The defense had argued that 25-year-old Sabrina Wesson, the oldest to die, killed herself as well as her siblings and the 1-year- old son she had with her father. But the prosecution said Wesson had plenty of time to shoot the children. The jury began deliberating this case on June 2.

Now to another arrest in Aruba. Island authorities say they've detained a fourth person suspected of being involved in Natalee Holloway's disappearance. The Alabama teen's mother says she believes this is just the beginning.

CNN's Karl Penhaul following the story in Palm Beach, Aruba -- Karl.

KARL PENHAUL, CNN CORRESPONDENT: Kyra, the morning began with word from prosecutors and police that there had been a fourth arrest in this case. They named the man at that stage only by the initials S.G.C., telling us he was 26 years old.

Police at that stage did tell us, though, that that lead had been provided by one of the three boys last seen in Natalee Holloway's company. Those three boys have been in police detention now for almost 10 days helping police with the investigation and being interrogated.

We managed to find, through our sources, the home of this fourth suspect. We talked to his uncle, a retired police chief inspector here on the island. And ye said his nephew was Steven Cruz (ph), 26 years old, and that he was arrested around 6:30 this morning. Not much fuss, not much noise.

He described his nephew as a quiet kind of a guy.

We also have found out, though, that his nephew, Steve Cruz (ph), was a D.J. on the Tattoo party boat. That's a 110-foot, three deck catamaran that sales off the west shore of Aruba with young people and party goers. That usually sets sail around 8 p.m. and comes round about midnight.

We talked to the boss, the owner of that party boat and -- Marcus Williams, and he told us that usually on Sunday nights and it was a Sunday night and early into Monday that Natalee Holloway went missing, that usually the Tattoo party boat does not go out on a Sunday. And even on the days that it does come back it's usually back in port by midnight -- Kyra.

PHILLIPS: Karl Penhaul, live from Aruba, thank you for the update. And Natalee Holloway's mother, Beth Holloway Twitty, will be a guest tonight at 7 Eastern on "ANDERSON COOPER 360".

You park your truck, you go into your house, and hours later the truck catches fire. It happened a hundred -- or it's happened hundreds of time. A CNN investigation straight Ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ALI VELSHI, HOST, "THE TURNAROUND": Episode two of "THE TURNAROUND" focused on the fitness business. We traveled to San Francisco to meet Simon Redmond and Paul Wade, two young Irish immigrants who own a boxing gym.

UNIDENTIFIED MALE: We just decided, you know what? Let's go for it ourselves. So we started off (ph).

VELSHI: But the gym's bottom line was a little flabby, so to get it back into shape, we introduced Simon and Paul to Mark Mastrov. He's the CEO of 24 Hour Fitness, one of the nation's largest health club chains.

MARK MASTROV, CEO AND FOUNDER, 24 HOUR FITNESS: I just fell in love with the business. It was fun. It was exciting. You're helping people. It was about positive. A lot of energy.

VELSHI: To keep the guys off the mat, Mark had them focus on four things. Sharpen their brand recognition. Get a better handle on their finances with a clear profit and loss statement. Create a budget that will let them take some money out of the business. And write up a shareholder agreement that would spell out each partner's obligations.

By the end of day three, Simon and Paul were in much better shape, thanks largely to the help from the team at 24 Hour Fitness.

I'm Ali Velshi. See you next time on "THE TURNAROUND."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

PHILLIPS: Well, imagine this: your car is turned off, parked, and suddenly with no one around it bursts into flames. That's what's happening to some Ford vehicles built before 2004.

Just this week, one family filed a wrongful death suit over a fire that family members say started in a 1996 F-150 pickup parked in the garage attached to their Iowa home. That fire killed 74-year-old Darletta Mohlis and injured her 76-year-old husband.

Investigators for Ford and the National Highway Traffic Safety Administration spent hours earlier this week poking through the rubble of the house. NHTSA had no comment on its findings, but Ford specifically denied the fire was caused by the truck.

But Ford admits it has a problem with some of its vehicles catching fire when parked and turned off. Ford has already recalled more than a million of its cars, trucks and SUVs. And the National Highway Traffic Safety Administration says it's investigating nearly four million more vehicles for the same problem.

Now, CNN investigative correspondent Drew Griffin has uncovered new information on just how many more Ford vehicles may be at risk.

(BEGIN VIDEOTAPE)

911 OPERATOR: Fire rescue. What is your emergency?

UNIDENTIFIED FEMALE: Please, my house is exploded. Something in my car -- my house is on fire.

DREW GRIFFIN, CNN CORRESPONDENT (voice-over): A frantic call to 911 at 5:00 in the morning.

UNIDENTIFIED FEMALE: Oh, my gosh.

GRIFFIN: A mother in a panic. Her 15-year-old daughter's bedroom wall is in flames.

UNIDENTIFIED FEMALE: My house is on fire! Please!

GRIFFIN: She makes several more calls to 911 before fire trucks arrive. Within minutes, the fire burned down the Kissimmee, Florida house of Nestor Oyola and his wife Laura leaving their daughter Rotsenmary scarred.

ROTSENMARY OYOLA, HOUSE BURNED DOWN: It's difficult. But you know, we have to accept it.

GRIFFIN: So what went wrong? What could have possibly caused this much destruction?

NESTOR OYOLA, FATHER (through translator): I bought the car on Monday and Wednesday it burned everything.

GRIFFIN: The insurance investigation showed the 2001 Ford Expedition Nestor just bought his wife caught fire while it was parked and turned off in the garage. Ken and Michelle Whelpley of Winterhaven, Florida had a similar experience.

KEN WHELPLEY, TRUCK CAUGHT FIRE: How do you park a vehicle, go to bed, sleep all night, and then in the morning, it's on fire?

GRIFFIN: It sounds unusual, but CNN has learned fires like this have occurred all across the country. A neighbor took this picture of the Whelpley's truck.

UNIDENTIFIED FEMALE: Flames were shooting all the way up to the top of the garage. I couldn't believe it. I mean, just could not believe it. GRIFFIN: In Orlando, a used car dealer surveillance camera caught this car bursting into flames. It had been parked overnight.

UNIDENTIFIED MALE: I just come in the morning like a regular day and I see a car all burnt up. I'm like, what the -- it was a shock. I didn't know what to do. I lost all the money.

GRIFFIN: And with many of the cars and trucks sitting in garages, houses are being burned down, too.

WHELPLEY: What if we'd have died in this mess?

GRIFFIN: Four investigations by the National Traffic Highway Safety Administration have compiled 559 reports of Ford fires. And those investigations are focusing on one part under the hood.

HARVEY MICHEL, FIRE INVESTIGATOR: Sometimes when we're digging through this, we find the remains that failed.

GRIFFIN: Harvey Michel is a fire investigator and says he's seen about 30 of these Ford cases in just the last year.

MICHEL: Tire damage is more severe on top.

GRIFFIN: We asked him to look at the Whelpleys burned, 2000 Ford F-150 pickup. Within 30 minutes, he finds what he says is the cause.

MICHEL: Here's the part. That is typical of the failure of the switch.

GRIFFIN: It's the cruise, or speed control deactivation switch. This is what several fire investigators hired by major insurance companies and auto engineers consulted by CNN say is causing the cars and trucks to ignite.

How? The pressure switch disconnects the cruise control when the driver steps firmly on the brake. That switch is attached to the brake master cylinder on one end and wired to the cruise control on the other.

Ford designed the switch to be powered, or hot at all times even when the vehicle is off and the key is out of the ignition. What separates the electrical components from the brake fluid inside the switch is a thin film barrier. Investigators say the film can crack allowing droplets of brake fluid to come in contact with the hot electrical components, sometimes, say investigators causing a fire.

And those fires can happen whether the vehicle is moving or even parked with the engine off. Firefighters in Deltona, Florida, say you can see it happen in this video. A firefighter was changing a fuse when he noticed the switch in his 1995 F-250 begin to smoke. A co- worker grabbed a video camera.

CHRIS NABICHT, DELTONA CHIEF FIRE MARSHAL: Had we allowed it to continue it would have burst into flames and it would have consumed the vehicle. GRIFFIN: Chris Nabicht is chief fire marshal for the city of Deltona. He says he's seen at least a half a dozen similar Ford fires.

NABICHT: The concern for people's lives and how fast this can occur, whether you're in the vehicle or not in the vehicle, is kind of scary.

GRIFFIN: Houston attorney Mike Jolly agrees. He represents clients whose vehicles have caught fire while parked.

MIKE JOLLY, ATTORNEY: There's no reason to wire the switch hot because you don't need to turn off the cruise control when the car is stopped and turned off and parked in your garage.

GRIFFIN: Five different auto engineers tell CNN the design is unique to Ford. And Ford has responded to the fires by issuing two separate recalls. The first in 1999 recalled nearly 300,000 Crown Victorias, Mercury Grand Marquis and Lincoln Town Cars.

Then, just this past January, Ford issued a second, larger recall 792,000 vehicles, including 2001 F-Series Super Crews, and 2000 Expeditions, Navigators and top selling F-150 pickups.

(on camera): Beyond those recalls, the federal government is investigating an additional 3.7 million Ford vehicles for the same problem. Now CNN has obtained this Ford document, which the company handed over to federal investigators. It shows a total of 16 million Ford cars and trucks have been built with what the company acknowledges is the same or similar switch.

(voice-over): The list includes recalled and non-recalled Expeditions, Explorers, F-Series pickups, Crown Victorias, Town Cars and Grand Marquis, some as early as 1992 and as recent at 2003. Also included are thousands of Tauruses, Econoline vans, Rangers and Windstars.

Ford declined our requests for an on camera interview. But in a statement to CNN, Ford says its records show the risk of fire differs for make, model and year. They say, quote, "it's important to understand that all speed control systems are not identical in Ford vehicles. In those populations with an increasing fire report rate, we stopped using the switch through the recall process. The switch has performed well in many models for many years."

Nearly half of those 559 Ford fires reported to the government safety agency as originating in the cruise control switch were in cars and trucks from model years not recalled. That includes the Expeditions owned by the Oyolas and that Orlando car dealer.

NABICHT: They've taken the step by recalling certain models of vehicles. I think the recall probably needs to be much broader than what it is.

GRIFFIN: Ford's response to that? "We have been asked why we have not expanded the recall. The last thing we want to do is make an important safety decision on incorrect or incomplete information."

So what does Ford say is the reason the switch catches fire? Again, Ford wouldn't agree to be interviewed for this report. But this is what the company told us in an e-mail.

"We have not determined at this time that there is a defect with the switch. But for reasons we still do not understand, the switch is failing. And we are trying to understand why."

Ford says it's cooperating with a federal investigation into the fires. As for the switch, Ford has stopped using it. And is now using a new switch as of the 2004 model year. In the meantime, the Oyolas who made that desperate 911 call when their non-recalled SUV caught fire, are left to pick up their lives.

LAURA HERNANDEZ, HOUSE BURNED DOWN (through translator): Here, there is nothing to replace, nothing. I was left with nothing.

GRIFFIN: Firefighters found the family cat burned to death in this corner.

For Nestor Oyola, as a father, it's hard to talk about it. The night before the fire, he moved his wife's Expedition in the garage, hoping to keep it safe. He says he'll never forget it.

NESTOR OYOLA: (SPEAKING IN SPANISH)

GRIFFIN: (on camera): In the past few weeks, the Oyola family has been able to move into a rental home. Their insurance will not cover the costs of rebuilding the home that burned down. They are hoping for a settlement with Ford. And Ford has settled hundred of these cases across the country, but has admitted guilt in none of them.

Drew Griffin, CNN.

(END VIDEOTAPE)

PHILLIPS: Now with regard to the fire involving the death in Iowa, Ford is denying the pickup truck was the cause, saying in a statement, quote, "Unfortunately, fires happen every year in all makes and models of all manufacturers for a number of reasons including faulty repair, improper modification to the vehicle with aftermarket parts and wiring, prior accident damage, and even arson."

You can find out more about this story and the vehicles affected by the recall at CNN.com.

(COMMERCIAL BREAK)

PHILLIPS: Tom and Katie watchers are swooning today, thrown into a state of celebrity romance nirvana after overnight dispatches from Paris. Straight to the terribly exciting news and Brooke Anderson at our Hollywood love desk.

Hi, Brooke. BROOKE ANDERSON, CNN CORRESPONDENT: Hollywood love desk, I love that. Kyra, hi there.

Katie Holmes has said she grew up wanting to marry Tom Cruise. Well, now her dream is coming true. Tom Cruise and Katie Holmes are engaged. Cruise popped the question in Paris at the Eiffel Tower early this morning. The actor then announced the news to the world at a press conference in Paris today to promote his upcoming film, "War of the Worlds."

Listen to this.

(BEGIN VIDEO CLIP)

TOM CRUISE, ACTOR: The premier we wanted here in France, because it's beautiful and it's romantic and, yes, I proposed to Kate last night.

(END VIDEO CLIP)

ANDERSON: Cruise has said no wedding date has been set. They haven't discussed that. He said they want to take it one step at a time.

Holmes said she was, quote, "so happy" about the upcoming marriage. She was seen supporting a massive engagement ring, and you saw that in some of the earlier video. Pretty big there.

Cruise and Holmes have been very open about their relationship. Since they made their courtship public in April, they both deny it's a publicity stunt.

Cruise has been making the rounds to promote "War of the Worlds" and has demonstrated extreme excitement, to say the least -- you see him there -- about his relationship with Holmes. He's jumped on a couch on the "Oprah Winfrey Show." He repeated the action -- you see it on "The Tonight Show." He's telling anyone and everyone he's not crazy, just crazy in love.

Holmes is also on the press circuit talking up her new film, "Batman Begins." This will be the first marriage for 26-year-old Holmes. She recently split from actor Chris Klein, breaking off their engagement after five years together.

This will be the third marriage for 42-year-old Cruise. He was recently married to Mimi Rogers and Nicole Kidman. Kyra, many are skeptical about this one, but time will tell.

Back to you.

PHILLIPS: OK. I know you'll be following it. Brooke, thank you so much.

Well, Wall Street is wrapping up another week. Chris Huntington has a check of the markets live from the New York Stock Exchange -- Chris. (STOCK REPORT)

PHILLIPS: Of course, perfect segue. Thanks, Christ.

We just got in some recent pictures of former Tyco CEO Dennis Kozlowski leaving the courtroom. If you're just tuning in, the verdict guilty, as well is the verdict for former finance chief Mark Swartz, guilty, grand larceny, conspiracy charges, security fraud. Just a number of the counts. They could face up to 30 years in prison.

Kozlowski's attorney is coming forward saying they're disappointed. They will appeal.

That wraps up this edition of LIVE FROM. Now John King with a preview of what's ahead on "INSIDE POLITICS" -- Hi, John.

JOHN KING, HOST, "INSIDE POLITICS": Hello to you, Kyra. Have a great weekend.

President Bush on the road again today pushing his domestic agenda. I'll speak with two members of the Bush cabinet about the administration's priorities on the economy and healthcare.

And the debate over the U.S. presence in Iraq continues to grow here in Washington. We'll look at how the president's team is responding to its critics in our special "Reporters' Roundtable."

"INSIDE POLITICS" begins in just a moment.

(COMMERCIAL BREAK)

END

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Aired June 17, 2005 - 15:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, HOST: Up first this hour, it took more than a year and two juries, but there's finally a verdict in the Tyco trial.
Let's go right to CNN's Allan Chernoff in New York with the details -- Allan.

ALLAN CHERNOFF, CNN CORRESPONDENT: Kyra, Dennis Kozlowski and Mark Swartz, the former chief executive officer and chief financial officers of Tyco International have been found guilty, guilty of grand larceny, securities fraud, conspiracy and also filing false business documents.

These charges carry a maximum of 25 years on the grand larceny. The other charges, a maximum of four years combined. Under New York state law, the two could serve as much as 30 years in prison.

Right now, the attorneys are arguing before the judge, asking that he permit them to stay out on bail, and the judge is agreeing to do that, saying that they do not present a flight risk.

Now, these charges very serious. Dennis Kozlowski has now been convicted, along with Mark Swartz, of stealing $170 million in cash from Tyco and an additional $430 million through unauthorized stock sales. They spent the money lavishly. The prosecution, though, in this case didn't focus as much as it had during the first case on the actual spending, more on the intent.

What happened here, that the jury has found, Kozlowski and Schwartz took unauthorized bonuses, and also they had many loans outstanding. And they forgave themselves the loan rather than getting authorization from the company's board of directors.

A very emotional scene inside of the courtroom. Dennis Kozlowski turning beet red, Mark Swartz literally in shock, according to observers there. And the families very upset. Dennis Kozlowski's family crying, absolutely in tears.

So a big victory for the Manhattan district attorney, Robert Morgenthau, 85 years old, after gaining a guilty in this second trial against Dennis Kozlowski and Mark Swartz -- Kyra.

PHILLIPS: All right. Allan Chernoff live outside the courtroom there. Thank you so much.

And in Fresno, California, just a short time ago Marcus Wesson was convicted in the gruesome murders of nine of his children. Wesson, the head of a bizarre clan marked by incest, now faces a possible death sentence.

The bodies of the children were found March 12, 2004, at the end of an 80-minute standoff with Fresno police. The police had been summoned by some of the victim's mothers after Wesson had closed himself in a back bedroom with the children.

The defense had argued that 25-year-old Sabrina Wesson, the oldest to die, killed herself as well as her siblings and the 1-year- old son she had with her father. But the prosecution said Wesson had plenty of time to shoot the children. The jury began deliberating this case on June 2.

Now to another arrest in Aruba. Island authorities say they've detained a fourth person suspected of being involved in Natalee Holloway's disappearance. The Alabama teen's mother says she believes this is just the beginning.

CNN's Karl Penhaul following the story in Palm Beach, Aruba -- Karl.

KARL PENHAUL, CNN CORRESPONDENT: Kyra, the morning began with word from prosecutors and police that there had been a fourth arrest in this case. They named the man at that stage only by the initials S.G.C., telling us he was 26 years old.

Police at that stage did tell us, though, that that lead had been provided by one of the three boys last seen in Natalee Holloway's company. Those three boys have been in police detention now for almost 10 days helping police with the investigation and being interrogated.

We managed to find, through our sources, the home of this fourth suspect. We talked to his uncle, a retired police chief inspector here on the island. And ye said his nephew was Steven Cruz (ph), 26 years old, and that he was arrested around 6:30 this morning. Not much fuss, not much noise.

He described his nephew as a quiet kind of a guy.

We also have found out, though, that his nephew, Steve Cruz (ph), was a D.J. on the Tattoo party boat. That's a 110-foot, three deck catamaran that sales off the west shore of Aruba with young people and party goers. That usually sets sail around 8 p.m. and comes round about midnight.

We talked to the boss, the owner of that party boat and -- Marcus Williams, and he told us that usually on Sunday nights and it was a Sunday night and early into Monday that Natalee Holloway went missing, that usually the Tattoo party boat does not go out on a Sunday. And even on the days that it does come back it's usually back in port by midnight -- Kyra.

PHILLIPS: Karl Penhaul, live from Aruba, thank you for the update. And Natalee Holloway's mother, Beth Holloway Twitty, will be a guest tonight at 7 Eastern on "ANDERSON COOPER 360".

You park your truck, you go into your house, and hours later the truck catches fire. It happened a hundred -- or it's happened hundreds of time. A CNN investigation straight Ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ALI VELSHI, HOST, "THE TURNAROUND": Episode two of "THE TURNAROUND" focused on the fitness business. We traveled to San Francisco to meet Simon Redmond and Paul Wade, two young Irish immigrants who own a boxing gym.

UNIDENTIFIED MALE: We just decided, you know what? Let's go for it ourselves. So we started off (ph).

VELSHI: But the gym's bottom line was a little flabby, so to get it back into shape, we introduced Simon and Paul to Mark Mastrov. He's the CEO of 24 Hour Fitness, one of the nation's largest health club chains.

MARK MASTROV, CEO AND FOUNDER, 24 HOUR FITNESS: I just fell in love with the business. It was fun. It was exciting. You're helping people. It was about positive. A lot of energy.

VELSHI: To keep the guys off the mat, Mark had them focus on four things. Sharpen their brand recognition. Get a better handle on their finances with a clear profit and loss statement. Create a budget that will let them take some money out of the business. And write up a shareholder agreement that would spell out each partner's obligations.

By the end of day three, Simon and Paul were in much better shape, thanks largely to the help from the team at 24 Hour Fitness.

I'm Ali Velshi. See you next time on "THE TURNAROUND."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

PHILLIPS: Well, imagine this: your car is turned off, parked, and suddenly with no one around it bursts into flames. That's what's happening to some Ford vehicles built before 2004.

Just this week, one family filed a wrongful death suit over a fire that family members say started in a 1996 F-150 pickup parked in the garage attached to their Iowa home. That fire killed 74-year-old Darletta Mohlis and injured her 76-year-old husband.

Investigators for Ford and the National Highway Traffic Safety Administration spent hours earlier this week poking through the rubble of the house. NHTSA had no comment on its findings, but Ford specifically denied the fire was caused by the truck.

But Ford admits it has a problem with some of its vehicles catching fire when parked and turned off. Ford has already recalled more than a million of its cars, trucks and SUVs. And the National Highway Traffic Safety Administration says it's investigating nearly four million more vehicles for the same problem.

Now, CNN investigative correspondent Drew Griffin has uncovered new information on just how many more Ford vehicles may be at risk.

(BEGIN VIDEOTAPE)

911 OPERATOR: Fire rescue. What is your emergency?

UNIDENTIFIED FEMALE: Please, my house is exploded. Something in my car -- my house is on fire.

DREW GRIFFIN, CNN CORRESPONDENT (voice-over): A frantic call to 911 at 5:00 in the morning.

UNIDENTIFIED FEMALE: Oh, my gosh.

GRIFFIN: A mother in a panic. Her 15-year-old daughter's bedroom wall is in flames.

UNIDENTIFIED FEMALE: My house is on fire! Please!

GRIFFIN: She makes several more calls to 911 before fire trucks arrive. Within minutes, the fire burned down the Kissimmee, Florida house of Nestor Oyola and his wife Laura leaving their daughter Rotsenmary scarred.

ROTSENMARY OYOLA, HOUSE BURNED DOWN: It's difficult. But you know, we have to accept it.

GRIFFIN: So what went wrong? What could have possibly caused this much destruction?

NESTOR OYOLA, FATHER (through translator): I bought the car on Monday and Wednesday it burned everything.

GRIFFIN: The insurance investigation showed the 2001 Ford Expedition Nestor just bought his wife caught fire while it was parked and turned off in the garage. Ken and Michelle Whelpley of Winterhaven, Florida had a similar experience.

KEN WHELPLEY, TRUCK CAUGHT FIRE: How do you park a vehicle, go to bed, sleep all night, and then in the morning, it's on fire?

GRIFFIN: It sounds unusual, but CNN has learned fires like this have occurred all across the country. A neighbor took this picture of the Whelpley's truck.

UNIDENTIFIED FEMALE: Flames were shooting all the way up to the top of the garage. I couldn't believe it. I mean, just could not believe it. GRIFFIN: In Orlando, a used car dealer surveillance camera caught this car bursting into flames. It had been parked overnight.

UNIDENTIFIED MALE: I just come in the morning like a regular day and I see a car all burnt up. I'm like, what the -- it was a shock. I didn't know what to do. I lost all the money.

GRIFFIN: And with many of the cars and trucks sitting in garages, houses are being burned down, too.

WHELPLEY: What if we'd have died in this mess?

GRIFFIN: Four investigations by the National Traffic Highway Safety Administration have compiled 559 reports of Ford fires. And those investigations are focusing on one part under the hood.

HARVEY MICHEL, FIRE INVESTIGATOR: Sometimes when we're digging through this, we find the remains that failed.

GRIFFIN: Harvey Michel is a fire investigator and says he's seen about 30 of these Ford cases in just the last year.

MICHEL: Tire damage is more severe on top.

GRIFFIN: We asked him to look at the Whelpleys burned, 2000 Ford F-150 pickup. Within 30 minutes, he finds what he says is the cause.

MICHEL: Here's the part. That is typical of the failure of the switch.

GRIFFIN: It's the cruise, or speed control deactivation switch. This is what several fire investigators hired by major insurance companies and auto engineers consulted by CNN say is causing the cars and trucks to ignite.

How? The pressure switch disconnects the cruise control when the driver steps firmly on the brake. That switch is attached to the brake master cylinder on one end and wired to the cruise control on the other.

Ford designed the switch to be powered, or hot at all times even when the vehicle is off and the key is out of the ignition. What separates the electrical components from the brake fluid inside the switch is a thin film barrier. Investigators say the film can crack allowing droplets of brake fluid to come in contact with the hot electrical components, sometimes, say investigators causing a fire.

And those fires can happen whether the vehicle is moving or even parked with the engine off. Firefighters in Deltona, Florida, say you can see it happen in this video. A firefighter was changing a fuse when he noticed the switch in his 1995 F-250 begin to smoke. A co- worker grabbed a video camera.

CHRIS NABICHT, DELTONA CHIEF FIRE MARSHAL: Had we allowed it to continue it would have burst into flames and it would have consumed the vehicle. GRIFFIN: Chris Nabicht is chief fire marshal for the city of Deltona. He says he's seen at least a half a dozen similar Ford fires.

NABICHT: The concern for people's lives and how fast this can occur, whether you're in the vehicle or not in the vehicle, is kind of scary.

GRIFFIN: Houston attorney Mike Jolly agrees. He represents clients whose vehicles have caught fire while parked.

MIKE JOLLY, ATTORNEY: There's no reason to wire the switch hot because you don't need to turn off the cruise control when the car is stopped and turned off and parked in your garage.

GRIFFIN: Five different auto engineers tell CNN the design is unique to Ford. And Ford has responded to the fires by issuing two separate recalls. The first in 1999 recalled nearly 300,000 Crown Victorias, Mercury Grand Marquis and Lincoln Town Cars.

Then, just this past January, Ford issued a second, larger recall 792,000 vehicles, including 2001 F-Series Super Crews, and 2000 Expeditions, Navigators and top selling F-150 pickups.

(on camera): Beyond those recalls, the federal government is investigating an additional 3.7 million Ford vehicles for the same problem. Now CNN has obtained this Ford document, which the company handed over to federal investigators. It shows a total of 16 million Ford cars and trucks have been built with what the company acknowledges is the same or similar switch.

(voice-over): The list includes recalled and non-recalled Expeditions, Explorers, F-Series pickups, Crown Victorias, Town Cars and Grand Marquis, some as early as 1992 and as recent at 2003. Also included are thousands of Tauruses, Econoline vans, Rangers and Windstars.

Ford declined our requests for an on camera interview. But in a statement to CNN, Ford says its records show the risk of fire differs for make, model and year. They say, quote, "it's important to understand that all speed control systems are not identical in Ford vehicles. In those populations with an increasing fire report rate, we stopped using the switch through the recall process. The switch has performed well in many models for many years."

Nearly half of those 559 Ford fires reported to the government safety agency as originating in the cruise control switch were in cars and trucks from model years not recalled. That includes the Expeditions owned by the Oyolas and that Orlando car dealer.

NABICHT: They've taken the step by recalling certain models of vehicles. I think the recall probably needs to be much broader than what it is.

GRIFFIN: Ford's response to that? "We have been asked why we have not expanded the recall. The last thing we want to do is make an important safety decision on incorrect or incomplete information."

So what does Ford say is the reason the switch catches fire? Again, Ford wouldn't agree to be interviewed for this report. But this is what the company told us in an e-mail.

"We have not determined at this time that there is a defect with the switch. But for reasons we still do not understand, the switch is failing. And we are trying to understand why."

Ford says it's cooperating with a federal investigation into the fires. As for the switch, Ford has stopped using it. And is now using a new switch as of the 2004 model year. In the meantime, the Oyolas who made that desperate 911 call when their non-recalled SUV caught fire, are left to pick up their lives.

LAURA HERNANDEZ, HOUSE BURNED DOWN (through translator): Here, there is nothing to replace, nothing. I was left with nothing.

GRIFFIN: Firefighters found the family cat burned to death in this corner.

For Nestor Oyola, as a father, it's hard to talk about it. The night before the fire, he moved his wife's Expedition in the garage, hoping to keep it safe. He says he'll never forget it.

NESTOR OYOLA: (SPEAKING IN SPANISH)

GRIFFIN: (on camera): In the past few weeks, the Oyola family has been able to move into a rental home. Their insurance will not cover the costs of rebuilding the home that burned down. They are hoping for a settlement with Ford. And Ford has settled hundred of these cases across the country, but has admitted guilt in none of them.

Drew Griffin, CNN.

(END VIDEOTAPE)

PHILLIPS: Now with regard to the fire involving the death in Iowa, Ford is denying the pickup truck was the cause, saying in a statement, quote, "Unfortunately, fires happen every year in all makes and models of all manufacturers for a number of reasons including faulty repair, improper modification to the vehicle with aftermarket parts and wiring, prior accident damage, and even arson."

You can find out more about this story and the vehicles affected by the recall at CNN.com.

(COMMERCIAL BREAK)

PHILLIPS: Tom and Katie watchers are swooning today, thrown into a state of celebrity romance nirvana after overnight dispatches from Paris. Straight to the terribly exciting news and Brooke Anderson at our Hollywood love desk.

Hi, Brooke. BROOKE ANDERSON, CNN CORRESPONDENT: Hollywood love desk, I love that. Kyra, hi there.

Katie Holmes has said she grew up wanting to marry Tom Cruise. Well, now her dream is coming true. Tom Cruise and Katie Holmes are engaged. Cruise popped the question in Paris at the Eiffel Tower early this morning. The actor then announced the news to the world at a press conference in Paris today to promote his upcoming film, "War of the Worlds."

Listen to this.

(BEGIN VIDEO CLIP)

TOM CRUISE, ACTOR: The premier we wanted here in France, because it's beautiful and it's romantic and, yes, I proposed to Kate last night.

(END VIDEO CLIP)

ANDERSON: Cruise has said no wedding date has been set. They haven't discussed that. He said they want to take it one step at a time.

Holmes said she was, quote, "so happy" about the upcoming marriage. She was seen supporting a massive engagement ring, and you saw that in some of the earlier video. Pretty big there.

Cruise and Holmes have been very open about their relationship. Since they made their courtship public in April, they both deny it's a publicity stunt.

Cruise has been making the rounds to promote "War of the Worlds" and has demonstrated extreme excitement, to say the least -- you see him there -- about his relationship with Holmes. He's jumped on a couch on the "Oprah Winfrey Show." He repeated the action -- you see it on "The Tonight Show." He's telling anyone and everyone he's not crazy, just crazy in love.

Holmes is also on the press circuit talking up her new film, "Batman Begins." This will be the first marriage for 26-year-old Holmes. She recently split from actor Chris Klein, breaking off their engagement after five years together.

This will be the third marriage for 42-year-old Cruise. He was recently married to Mimi Rogers and Nicole Kidman. Kyra, many are skeptical about this one, but time will tell.

Back to you.

PHILLIPS: OK. I know you'll be following it. Brooke, thank you so much.

Well, Wall Street is wrapping up another week. Chris Huntington has a check of the markets live from the New York Stock Exchange -- Chris. (STOCK REPORT)

PHILLIPS: Of course, perfect segue. Thanks, Christ.

We just got in some recent pictures of former Tyco CEO Dennis Kozlowski leaving the courtroom. If you're just tuning in, the verdict guilty, as well is the verdict for former finance chief Mark Swartz, guilty, grand larceny, conspiracy charges, security fraud. Just a number of the counts. They could face up to 30 years in prison.

Kozlowski's attorney is coming forward saying they're disappointed. They will appeal.

That wraps up this edition of LIVE FROM. Now John King with a preview of what's ahead on "INSIDE POLITICS" -- Hi, John.

JOHN KING, HOST, "INSIDE POLITICS": Hello to you, Kyra. Have a great weekend.

President Bush on the road again today pushing his domestic agenda. I'll speak with two members of the Bush cabinet about the administration's priorities on the economy and healthcare.

And the debate over the U.S. presence in Iraq continues to grow here in Washington. We'll look at how the president's team is responding to its critics in our special "Reporters' Roundtable."

"INSIDE POLITICS" begins in just a moment.

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