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Iraqi Government Releases 450 Prisoners From Abu Ghraib; Congress Investigates FDA Enforcement; Investigating Katrina Fraud; Christian Bagge Recovers After Double Amputation

Aired June 27, 2006 - 15:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Well, flooding still threatens much of the East Coast. One man outside Washington says that flash floods appeared to watch away everything in their path.
Today, more rain keeping things miserable and dangerous. Roads have turned into raging rivers of muck as far as Albany, New York. And a Maryland woman was killed in an accident. And that was blamed on wet roads. A foot of rain fell in some spots.

Meteorologist Bonnie Schneider has some new information for us on that storm forming in the Atlantic. She's in our Weather Center.

Hey, Bonnie.

(WEATHER REPORT)

PHILLIPS: Well, a powerful blast, huge damage, and a two-story motel in ruins in northern Georgia. At least one person is unaccounted for.

CNN's Rusty Dornin is there on the scene in Bremen, near the Alabama line.

Rusty, any idea what caused the explosion?

RUSTY DORNIN, CNN CORRESPONDENT: Well, they don't, at this point, have any idea, although they know where it started.

But, Kyra, right now, search-and-rescue teams are on site, looking for that unaccounted-for man who was a maintenance working. They have got dogs. They have got to be very careful. They are working in very small groups, and have to be careful, because they have to shore up the areas behind the motel. It happened in a building just right behind the motel.

There was a press conference just about a half-hour ago. And the state insurance commissioner talked about what happened.

(BEGIN VIDEO CLIP)

JOHN OXENDINE, GEORGIA INSURANCE AND SAFETY FIRE COMMISSIONER: About 9:00 this morning, there was an explosion in the back area. There's actually a separate building from the motel. Its connected simply by breezeways. That building included maintenance areas, laundry, hot water heaters, dryers, various things. The explosion did occur at the entire -- that entire, that smaller building, is totally destroyed. There's major structural damage to the adjacent building of the hotel, motel itself.

The bottom floor has basically been covered up by the top floor. This entire building came down on itself. We still have an individual unaccounted for. We are also going through and trying to account everybody that may have been hotel guests. And officers are actually not marking anybody off the list until they have seen someone, you know, and said, you know, are you John Smith? We're checking them off the list.

(END VIDEO CLIP)

DORNIN: Family members of that man who is missing are up at the motel. Of course, they have no idea what has happened.

But he -- they have not heard from him. He is missing. As far as the other guests go, one of the other guests told CNN that some construction workers have been staying at the motel, and they leave fairly early in the morning, and most had left by the time the explosion occurred.

And it looks like everyone else has been accounted for. Inspectors will not be able to get inside that building, inside the wreckage, really, until tomorrow. Right now, it's still a search-and- rescue effort. And until tomorrow they won't be going in to find out exactly what happened. But it looks like it may have had something to do with the boilers or something that was going on in the laundry room -- Kyra.

PHILLIPS: All right, Rusty Dornin, thanks so much.

Well, a building in ruins -- a community leader is dead, and a community is in mourning. A 100-year-old anniversary celebration in a 100-year-old building turns to chaos in seconds in the Missouri town of Clinton.

CNN's Sumi Das is there.

(BEGIN VIDEOTAPE)

SUMI DAS, CNN CORRESPONDENT: Emergency crews here in Clinton, Missouri, are still on the scene of the Elks Lodge building that collapsed late Monday evening.

I am going to take a step aside, so you can see what remains of that building. It was three stories tall. Now you see it has been reduced to rubble, the third story completely gone. Here's what happened. At about 7:30 in the evening on Monday, members were preparing for an initiation ceremony. And they were sitting down to dinner.

And, at that time, the second floor basically collapsed from underneath them. People who were there described the scene as the following. The walls bowed in it, and, all of a sudden, they found themselves in a pile of rubble on the first floor.

About nine people were trapped inside. Most of the people who were there for the initiation ceremony were able to get out of the building soon after it collapsed. There were almost 50 people who were there initially. Those nine people were trapped. One person, unfortunately, did not make it out, so, 10 people altogether who were trapped, nine people who survived.

And one person -- his name is Tony Komer -- unfortunately, did not make it out of the collapse. He's 32 years old. He's married and has two children. He has been described as a family guy, a good guy, somebody who was very involved in the community.

The cause of the collapse is not yet known. However, we are hearing from local officials that a team of structural engineers will be arriving on the scene here on Wednesday from the U.S. Department of Commerce to determine the structural integrity of not just the Elks Lodge which collapsed, but the buildings that surround it.

They want to make sure that a collapse like this does not happen in this town again.

Sumi Das, CNN, Clinton, Missouri.

(END VIDEOTAPE)

PHILLIPS: Well, another 450 Iraqi prisoners are free. It's the latest mass release from Abu Ghraib, part of the new Iraqi government's national reconciliation plan.

Our Nic Robertson was there.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT (voice over): As the prisoners wait for their release, they get a lecture from the other side of the barbed wire on reconciliation, delivered by the country's national security adviser, Mowaffak al-Rubaie.

"Your release is real," he explains. "It's not a political game or propaganda. We need to unite Iraq and condemn violence."

(APPLAUSE)

ROBERTSON: Polite applause. Then, as al-Rubaie tries to leave, prisoners appeal for all detainees to be released. Minutes later, the prison gates open -- among the 450 men on their way to freedom, none with American blood on their hands, according to al-Rubaie.

MOWAFFAK AL-RUBAIE, IRAQI NATIONAL SECURITY ADVISER: All these were detained on a security basis. And none of them have been incriminated or convicted of killing Iraqis or Americans, or Brits, or any of the coalition or Iraqi security forces, or Iraqi civilians, for that matter. "Eighteen months I was detained," complains Aziz al-Nuwami (ph), a Sunni from Falluja, "and they only investigated me once."

He shows me his U.S. military charge sheet. It says he made car bombs.

(on camera): And it says you test positive for explosives. Had you been handling explosives?

(voice over): He denies the charge, but adds he fears that just because he's a Sunni from Falluja, he will be arrested again.

(on camera): And this is where the camera was in the telephone?

(voice over): Twenty-three-year-old Jawad Musad (ph) shows me his cell phone case. He says he was detained for having a camera cell phone, held for seven months, accused of photographing U.S. troops. But, like everyone else being released, says he is innocent. From behind the wire, others still being released say they, too, are innocent.

If the government is really sincere, he says, they will release all prisoners. Then, there is a chance of reconciliation.

AL-RUBAIE: Of course, there is a remote possibility that one in 1,000 and one in 10,000 might be going back and do something wrong. But this is a risk we have to take.

ROBERTSON: Already, the government says it is getting positive signals from intermediaries their reconciliation amnesty is working.

(on camera): This is the sixth of seven prisoner releases planned for the month of June. In total, about 2,500 detainees are expected to be released.

(voice over): Officials say they plan to let still more go, but won't say yet how many or whom.

Nic Robertson, CNN, Abu Ghraib jail, Iraq.

(END VIDEOTAPE)

PHILLIPS: Well, a new trial awaits Saddam Hussein. The ex-Iraqi dictator and six co-defendants will stand trial August 21 on genocide charges, those arising from the killing of an estimated 100,000 Kurds in the 1980s.

In Washington today, one of Hussein's attorneys in his current trial complained about security for defense lawyers and witnesses. Former U.S. Attorney General Ramsey Clark wants the U.S. to provide more security.

(BEGIN VIDEO CLIP)

RAMSEY CLARK, FORMER U.S. ATTORNEY GENERAL: We have got zilch in the deadliest environment that you have ever had to try to protect a witness in. So, this trial has been, in effect, a corruption of justice from the beginning.

(END VIDEO CLIP)

PHILLIPS: Hussein is on trial now in the killings of Shiite Muslims in a town where an attempt on his life was made in 1982.

We are getting pictures in now from one of our affiliates, WKMG out of Orlando, Florida. This is in Daytona Beach. I don't know how well you can see that picture. It's a little bit foggy. But it's a beached pygmy whale, we are told. And they are, of course, trying to keep it wet, pouring water over it, trying to save it.

Sea -- we are being told that one of SeaWorld's marine -- one of SeaWorld's marine biologists is on the scene, trying to just keep this whale alive. Don't know what kind of efforts are also in the process to try to get it back in the water. It could be sick. They might just have to care for it, as it is slowly passing.

But the marine biologists and others there are trying to attend to this pygmy whale that became beached there in Daytona Beach. We will keep you updated on its condition.

Well, scam artists, profiteers, prison inmates, they all made a bundle after Hurricane Katrina. I'm going to talk to a man investigating the massive fraud after the storm, coming up on LIVE FROM.

(COMMERCIAL BREAK)

PHILLIPS: Just getting new information about these seven men, as you know, that were detained after that sting operation, would-be terrorists out of Miami.

We are being told now that the government has filed a motion in federal court asking that these seven would-be terrorists be held without bail prior to trial. The motion includes new details, apparently, of this alleged plot, saying that it included buildings other than Chicago's Sears Tower in Chicago and the North Miami Beach FBI office that the seven men allegedly planned to target.

We had reported those two places. Now, apparently, this motion has more details about additional buildings. As you know, all seven of these men are charged with conspiracy to provide material assistance to al Qaeda, also to provide material assistance to al Qaeda, also conspiracy to provide material assistance to terrorists, and to damage buildings with explosives, and to wage war against the United States.

We will keep you updated, as we get more information.

Now, four more U.S. troops are dead in Iraq, as are several more Iraqi police and civilians in several more attacks. But the Pentagon is looking ahead, hosting a briefing last hour from the commander of the Multinational Security Transition Command.

Jamie McIntyre joins me now with an update. He was there. Jamie, what did you find out?

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Kyra, this briefing from Lieutenant General Martin Dempsey, who has the unenviable task of training the Iraqi army -- and, of course, getting that Iraqi army and police up to speed is the linchpin for the U.S. strategy to draw down U.S. troops there.

General Dempsey gave, again, a pretty upbeat assessment of where things stand, even though he conceded that, at this point, there is not yet a single Iraqi unit that is capable of operating without U.S. assistance. That's because of the logistics and support that the U.S. provides for the Iraqi forces that are still crucial for them.

Nevertheless, he said, the Iraqi army is coming along by leaps and bounds. And he insisted that, even today, before it has fully matured, it is an extremely capable force.

(BEGIN VIDEO CLIP)

LIEUTENANT GENERAL MARTIN DEMPSEY, U.S. ARMY, COMMANDER OF MULTINATIONAL SECURITY TRANSITION COMMAND: This is an army that's being built while in contact with the enemy, and has been in some horrific fights, has taken some significant casualties, and has demonstrated a certain courage and resilience that, frankly, having been in the region for four or five years, I was very encouraged to see.

So, I think, given -- if you were a weightlifter, I would say, how many repetitions is it going to take you at 120 pounds before you are going to be able to lift 150? If you can answer that question, I will tell you how long it's going to take the army to be ready to go.

(END VIDEO CLIP)

MCINTYRE: Well, General -- General Dempsey disputed contentions that the Iraqi army is poorly equipped. He said -- quote -- "It's lightly equipped, but properly equipped" to carry out counterinsurgency operations.

He predicted the, by the end of this year, it will be capable of carrying out that counterinsurgency mission. But he said that U.S. troops would -- would have to partnered closely with Iraqi forces for at least another two years, before they're fully capable of operating on their own.

But, again, General Dempsey said, at this point, he believes significant problem is being made toward that goal. And he said the ultimate solution in Iraq is political reconciliation that could lead to disbanding the militias. He said that's really the big problem facing Iraqi at this point -- Kyra.

PHILLIPS: Jamie McIntyre at the Pentagon -- thanks, Jamie.

Negotiate on nukes? Maybe not. Iran's supreme leader, Ayatollah Ali Khamenei, tells state television it's not in his country's interests to hold talks with the U.S.

In his words: "We do not negotiate with anybody on achieving and exploiting nuclear technology. But, if they recognize our nuclear rights, we are ready to negotiate about controls, supervisions and international guarantees."

Some interpret that as a vow to the hard-liners while Tehran considers incentives offered by the U.N. The White House says that Khamenei doesn't speak for Iran's government anyway -- more LIVE FROM straight ahead.

Stay with us.

(COMMERCIAL BREAK)

PHILLIPS: Jogging with the president? Well, it's a moment Army Staff Sergeant Christian Bagge has been waiting for, for months. But, first, he had to relearn how to walk.

Bagge lost both legs in a roadside bombing in a Iraq a year ago. He approached Mr. Bush about a White House run after meeting him in January at the Army hospital in Texas. Weather permitting, they will hit the White House track at bottom of the hour.

Is the FDA failing to enforce the country's food and drug laws? That's the question being asked by one congressman.

Susan Lisovicz joins us live from the New York Stock Exchange with that story.

Hey, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: (INAUDIBLE), Kyra.

And his concerns come just days before the FDA's 100th anniversary. A 15-month investigation has found that enforcement of food and drug regulations declined sharply during the first five years of the Bush administration. The inquiry was launched by Congressman Henry Waxman. He is the senior Democrat on the House Government Reform Committee. It found the number of warning letters that the FDA issued to drug companies and medical device makers fell by more than 50 percent between 2000 and 2005.

And the seizure of mislabeled, defective or dangerous products dropped by 44 percent. The probe also found the biggest decline in enforcement actions at the FDA's Device Center. They were down 65 percent, despite a wave of reported problems with devices, including pacemakers and defibrillators -- Kyra.

PHILLIPS: So, did the investigation reach any conclusions as to why this is happening?

LISOVICZ: Well, the report found no evidence that the declines are do to better industry compliance with the regulations, Kyra. FDA investigators continued to uncover about the same number of problems as before, but top officials at the agency increasingly overruled the investigators' enforcement recommendations.

We are hearing several different explanations for the decline in enforcement. Critics say it may be due to intense lobbying from drugmakers. But the FDA says the agency has been focusing on the most serious violations. And several former top officials blame the decline on budget problems -- Kyra.

PHILLIPS: Well, it seems as though we have got some problems on Wall Street as well.

(LAUGHTER)

LISOVICZ: You betcha.

This is a week, Kyra, when we have another decision from the Federal Reserve on interest rates. The decision comes on Thursday. Today, we have erased all of the gains we saw yesterday, stocks broadly lower right now.

Let's take a look at the Big Board. The Dow Jones industrials, they're off the triple-digit losses, right down just a mere 88 points, or nearly 1 percent lower, the NASDAQ composite, meanwhile, off 25 points, or about 1.25 percent.

And that's the latest from Wall Street. Stay with us. LIVE FROM will be right back.

(COMMERCIAL BREAK)

PHILLIPS: Hills on fire in Nevada -- firefighters thought they had the upper hand on wildfires burning across the state, until last night, when lightening sparked a half-dozen new fires around Reno and Carson City. Homes and businesses have been evacuated, but, so far, none has burned, and no one has been hurt. About 1,000 firefighters are on that line, battling the fires.

Closed until further notice, the only paved road to the Grand Canyon's north rim -- a wildfire is burning around it, but hasn't come close to the north rim itself, where about 750 tourists and workers are waiting it out. The National Park Service hopes to escort them out later today.

Maureen Oltrogge of Grand Canyon National Park joins me now by phone.

So, what do you think, Maureen? How are conditions right now?

MAUREEN OLTROGGE, PUBLIC AFFAIRS OFFICER, GRAND CANYON NATIONAL PARK: Hi, Kyra.

Actually, conditions are a little better than they were yesterday. We have been able to escort out all visitors now. I believe the word is, is, they were out -- they were to be out by noon today. Some of them are still on the road heading towards Jacob Lake, but I do believe that we have been able to escort out all the visitors. We were advised by the incident management team that is managing the -- the warm fire that fire activity could pick up this afternoon. So, we will continue with escorting nonessential employees out tomorrow morning.

PHILLIPS: Now, how did you get these tourists and other workers out? How did you escort them out?

OLTROGGE: Well, most of the tourists that were there were in their own vehicles. So, we escorted them out by pilot car last night and today.

Last night, we escorted them on a Forest Service road that was west of the fire. And then, this morning, the Arizona Department of Transportation, Coconino County Sheriff's Office, and the Department of Public Safety came in, evaluated the road, cleared it of all the hazards.

And we were able to escort the remaining vehicles, which were about another 150 vehicles, out of the park on Highway 67, which is a paved road.

And, so, things have gone pretty well with the escort of our visitors out of the park.

PHILLIPS: Now, everybody knows how popular this area is. Obviously, you had a lot of people there visiting when this all went down.

What kind of damage do you think -- can you even assess what it's going to do to the Grand Canyon's northern rim?

OLTROGGE: Well, actually, the fire is providing some good resource benefits.

Unfortunately, visitors have been displaced by that. But most of them have been very understanding and -- and cooperative. We had been providing daily briefings four times a day, answering visitors' questions, and letting them know what was going on, and educating them about the fire, and -- and so on.

So, they have all been fairly understanding. And we have received very few complaints about -- about the fire and about people being displaced. And we're trying to accommodate those visitors that have been displaced in other areas on -- in the park.

The south rim of Grand Canyon remains open. All facilities and services are available. Access into the south rim is open. And, so, that has not been a problem over here. And the south rim really gets the majority of the visitation. They get about 90 percent of the visitation.

PHILLIPS: All right. So, the 750 tourists and workers, those were -- that -- does that number right for the north rim? And, then, how many people are at the south rim right now?

OLTROGGE: We had about 800 visitors over on the north rim and about 200 employees.

PHILLIPS: OK.

OLTROGGE: And those nonessential employees will be escorted out of the park more than likely tomorrow.

And, in terms of the south rim, we probably get, oh, about -- at this time of year, about 25,000 people per day visiting the south rim...

PHILLIPS: Wow.

OLTROGGE: ... so, quite a difference, in terms of numbers.

PHILLIPS: Sure.

And where the -- where the fire is, do you -- are you able to assess the kind of damage it's going to do? I mean, this -- obviously, this whole area is a national treasure and a popular place to go. But can you even begin to tell what kind of damage it's going to cause to the park?

OLTROGGE: Again, the fire is burning about 30 miles north of the developed area.

And while the fuels are pretty thick over there, wildland fire can actually provide benefit to the resources as well. So...

PHILLIPS: Tell me what kind of benefits you mean.

OLTROGGE: Well, it can reduce those fuels that have built up over the years that can cause much larger, greater fires, so that, and other resource benefits, in terms of the habitat that it provides for wildlife and such.

That is being managed by an incident management team. It's called the Northern Arizona Type II Incident Management Team, and they can provide you more information in terms of benefits and what the fire is doing on the strategy they have taken to allow the fire to burn and then turn it into a suppression fire once it went out of the boundaries of the area that they were allowing it to burn in.

PHILLIPS: Maureen Oltrogge with the National Park Service, thanks so much for the information, Maureen, appreciate it.

OLTROGGE: You're quite welcome, Kyra.

PHILLIPS: Well the rain keeps falling and the rivers keep rising, and that's keeping rescue teams pretty busy. Most often they're having to help people trapped in flooded homes. But sometimes they're called to save people from themselves. Here's a case in point in Bowie, Maryland.

(BEGIN VIDEOTAPE)

ADAM METWALY, SWIMMER: We are about to swim across the, what is it? The Patuxent? It's about eight or nine feet deep. My friends are on the other side of the bridge, so I want to go join them really quick.

UNIDENTIFIED MALE: Why are you doing that?

METWALY: We're bored.

UNIDENTIFIED MALE: Have you gotten across this before when there's less water?

RANDY AUGUSTINE, ONLOOKER: Yes. I have had it up to the door handle and I've gotten across, The current wasn't real strong though.

UNIDENTIFIED MALE: Do you think it's too much today?

AUGUSTINE: Oh yes.

METWALY: My name is Adam.

UNIDENTIFIED MALE: Where are you from?

METWALY: New Jersey.

UNIDENTIFIED MALE: You are going to try this.

METWALY: Yes.

UNIDENTIFIED MALE: So is he crazy or what?

AUGUSTINE: No, he's a pretty strong swimmer.

UNIDENTIFIED FEMALE: Who is that?

UNIDENTIFIED MALE: Did you feel the current pulling you? What was it like?

MIKE CASEY, ATTEMPTED RESCUE: It's stronger on the bottom than it is on the top, so you've got to try to stay on top of the water as much as you can.

UNIDENTIFIED MALE: Are you worried about your friend.

CASEY: Yes, I'm going out there to get him in a minute. I'm going to try.

UNIDENTIFIED MALE: If he took his shirt off, he probably would have been a lot better.

UNIDENTIFIED FEMALE: It's cold. I'm freezing.

UNIDENTIFIED MALE: Why is he out there?

UNIDENTIFIED MALE: He's been swimming in it for awhile.

UNIDENTIFIED MALE: You guys have lost your mind.

UNIDENTIFIED MALE: Hey stay right on that tree and don't let go.

UNIDENTIFIED MALE: All right.

UNIDENTIFIED MALE: Kind of crazy?

UNIDENTIFIED MALE: Yes, absolutely. In this type of water, it is definitely crazy.

(END VIDEOTAPE)

PHILLIPS: Well, firefighters are bringing in the heavy equipment at a motel in northern Georgia now. As you can see, they need it pretty badly. An explosion brought down a big chunk of roof and scattered bricks and furniture and other debris from the two-story building all over that parking lot. No one is known to be hurt, but a maintenance worker is still missing and feared trapped. His family is at the scene now. There's also no word on the cause of this blast, but an arson team is investigating it.

Well they were celebrate a milestone when a ton of bricks and wood and roofing fell right on top of them. About 50 members of the Elk's Lodge in Clinton, Missouri were in a three-story building that collapsed last night, just before a gathering to mark the club's 100th anniversary. The club's president was killed and most of the others made it out on their own, but nine had to be rescued.

(BEGIN VIDEO CLIP)

DON EATON, SURVIVOR (voice-over): We're on the second floor in the dining room. We're all eating and I am siting with my back basically to the, well, the west wall. And all of a sudden, there was a loud noise and I turned to see what it was. And the floor had disappeared.

And so as I had turned back around, before I had a chance to move, the floor underneath me caved in. And myself and nine other members of the Elk's Lodge dropped with the floor down halfway between the first floor and the second floor, with the third floor and the roof caving in on top of us. It all happened so fast, but yet it seemed like everything was moving in slow motion.

(END VIDEO CLIP)

PHILLIPS: Well no word on what caused the collapse. The building is a century old.

A rough day on the job in Brooklyn, but two construction workers are safe now thanks to a lot of helping hands. These men were pulled from wet cement at a construction site where they were trapped after some sort of collapse. No word on their condition, but they were said to be alert during that rescue. Sixty fire department units responded along with paramedics.

You have heard the reports, how much FEMA money was misspent after Hurricane Katrina. Coming up, we will talk about some of those funding flops with the head of the Hurricane Katrina fraud task force. That's ahead on LIVE FROM.

(COMMERCIAL BREAK)

PHILLIPS: Let's go straight to Bonnie Schneider. It looks like a tornado warning in Florida.

(WEATHER REPORT)

PHILLIPS: Well $2 billion and counting. "The New York Times" estimates that much went to fraud, cheats, crooks or simple waste and mismanagement right after Hurricane Katrina. Now consider the hotel owner in Texas who allegedly submitted $232,000 in bills for storm victims who never existed.

And how about this -- 1,100 prison inmates reportedly receiving $10 million in housing and disaster aid. Many more cases are under investigation.

Joining me now, David Dugas, executive director of the Hurricane Katrina Fraud Joint Command Center. We are talking about 335 filed charges, 335 individuals. Do you think there should be a lot more? If you are thinking of billions of dollars in fraud, this seems like a small number.

DAVID DUGAS, U.S. ATTORNEY, MIDDLE DIST. OF LA: Well Kyra, two things to remember. First of all the numbers that we are working with right now are based on data mining that the government accountability office did.

Typically that data mining will tend to overstate the actual criminal fraud. And they really looked at a combination of waste and fraud, so we won't really know the true numbers on the criminal fraud until we've had a chance to look at the individual cases.

We've done 335 already in 27 judicial districts around the nation. That's a record for the Department of Justice following a hurricane. We are working currently of over 5,000 leads that have been provided by the public on hotlines or have come to us through other sources. And we'll be investigating and prosecuting Katrina related fraud for probably the next five-to-eight years. So we'll be working a lot of leads and we'll have quite a few prosecutions, I think significantly more than we've seen already.

PHILLIPS: All right, I want to get to specifics on those 335 individuals in a second. But I want to ask you about the 1,100 prison inmates across the Gulf Coast who collected more than $10 million in rental and disaster relief assistance. Will they be held accountable?

DUGAS: Well, if they submitted fraudulent claims, they will. Obviously, if they are in the custody of a state prison system and they weren't displayed by the storm and they claimed that they were, then we'll prosecute them just as we're prosecuting other individuals around the country who never went to New Orleans, weren't living in New Orleans or any of the affected area, but falsely claimed that they were living there and displaced by the storm.

PHILLIPS: Will you be able to get that $10 million back from those prison inmates?

DUGAS: What we do when we prosecute individuals, we do two things. First of all, we get a restitution judgment against them for the amount that they've taken. The second thing we can do is the judge can impose a fine.

The third thing we can do is we can file a civil false claims act claim against them where we are able to get penalties plus treble damages if they've made a false claim against the government, and we get a judgment that we can then use to garnish wages, seize bank accounts and go after any other assets that they'll have. So we'll get judgments for that amount. Whether we collect it or not obviously will depend on whether we can find assets that they have that we can take back.

PHILLIPS: All right, now, the 78 people that you charge with fraud against the Red Cross, let me ask you about the Red Cross and how it didn't keep track of recipients getting hotel rooms. All you had to do is go in there, show a zip code from a hurricane zone and you got your free room and then FEMA sent checks to those people getting free rooms. Could criminal -- criminal negligence -- could there be charges of criminal negligence against Red Cross and FEMA?

DUGAS: No, I mean, the statutes that would apply in that case are intentional statutes, not negligent statutes. So we would have to show that there was knowing fraud or false statements or something along those lines. If individuals were getting the hotel rooms and then knowingly claimed benefits that they weren't entitled to, we can prosecute them.

The other thing we're looking are hotels -- instances where hotels billed FEMA for rooms that weren't occupied by evacuees. In another case, the allegation is that the rooms weren't even occupied. They were simply billed as if an evacuee were there. So we're looking at that.

But again, remember, from a criminal prosecution standpoint, we're charging felonies in these cases. So that means we need to show that there was a knowing fraud or a knowing lie or a misrepresentation.

PHILLIPS: And you have -- there have been confessions on behalf of FEMA officials I've noticed here that you have been able to get onto. Let me ask you about public officials. Eight have been charged. I was reading specifically about the St. Tammany Parish councilman Joseph Impastato, charged with extortion. His lawyer says that he is going to be cleared. But this is one local name that is out there. What exactly are you charging him with?

DUGAS: In the case of Mr. Impastato, that's being prosecuted by the New Orleans Eastern District of Louisiana. And he's charged with offering to direct a contract represented to debris removal to someone in exchange for a payment, a percentage of that contract as a payment back to him. We also have two FEMA officials who have already pled guilty to offering to allow a base camp operator to falsely inflate the meal count, the number of people that he was actually feeding at the base camp. In exchange, they were trying to solicit from that individual kick-backs, bribes, in exchange for letting him increase his billings to FEMA.

PHILLIPS: Have you ever seen such audacity?

DUGAS: You know, I'm a prosecutor and most criminal conduct is pretty audacious or at least it's obviously something that law-abiding citizens don't see on a day-to-day basis. We knew that there was going to be a certain amount of fraud coming. The attorney general established the Katrina fraud task force on September 8th, which was just a week and a half after the storm. So we obviously knew this was coming.

We have a full-court press on to find and prosecute these individuals. The task force is working nationwide. We've got prosecutions all ready in 14 states around the nation. And we'll continue to work in conjunction with all of the federal law enforcement agencies and the inspectors general to bring these people to justice.

PHILLIPS: And we want to get your hotline number up there, too, hurricane fraud hotline, 866-720-5721. And I know you got your hands full. David Dugas, U.S. attorney for the Middle District of Louisiana. Sure appreciate your time today.

DUGAS: Thanks, Kyra.

PHILLIPS: You bet.

It's never accepted, never recognized, never backed down from demanding the destruction of Israel. And Hamas says it hasn't changed, despite its reported agreement, at least in principle, to a plan for a Palestinian state in the West Bank and Gaza. Hamas, as you may know, shares control of the Palestinian Authority with the much more moderate Fatah.

And Fatah says that the statehood plan implicitly recognizes Israel. Now, Hamas denies it and Israel calls the whole thing a non- starter, anyway. Israel, the U.S. and E.U. have long demanded Hamas renounce violence and accept past agreements.

Well, he paid a huge price fighting the war in Iraq, and today he has gone from the front lines to the starting line, right alongside the president of the United States. Here this soldier's story when LIVE FROM continues.

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PHILLIPS: Well, when President Bush goes jogging this hour, he probably won't go very far. But the man running with him will have come a very long way. Staff sergeant Christian Bagge's journey began a year ago in Iraq. "AMERICAN MORNING"'s Kelly Wallace first introduced us to this courageous soldier a few months ago.

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UNIDENTIFIED MALE: Bring it up and hold it. Hold it. Hold it. Hold it. Hold it. Hold it. Hold it. Hold it. Down.

KELLY WALLACE, CNN CORRESPONDENT (voice-over): There is a lot that 24-year-old Christian Bagge wants to do.

UNIDENTIFIED MALE: Attack that cone, attack that cone! Come on, push, push, push, push! Shuffle, shuffle, keep going, keep going, keep going.

STAFF SGT. CHRISTIAN BAGGE, U.S. ARMY: I want to run. I want to swim. I want to mountain bike. The biggest goal of all is just to do what I did before.

WALLACE: What he did before the attack in Iraq, before the humvee he was driving was blown apart by a roadside bomb ...

UNIDENTIFIED MALE: Arms in. Hip steers, hip steers. There you go.

WALLACE: ...and his life forever changed.

BAGGE: I told one of the guys, tie my wedding ring around my wrist. And they did. And that was the last image I had in my mind was my wedding ring being tied around my wrist. And then I woke up in Germany with my amputated legs.

WALLACE: Before going off to war, Christian's passions included playing drums in a Christian rock band and a gal named Melissa. The two were good friends in high school, who fell in love about a week before he left for Iraq. They married while he was on leave, just three months before he became a double amputee.

MELISSA BAGGE, WIFE OF AMPUTEE: There have been times when I thought it was -- how am I going do it, but there's always someone there.

UNIDENTIFIED MALE: Dig in, last cone. Dig in, dig in.

WALLACE: And always someone who knows just what they are going through. The Brooke Army Medical Center in San Antonio is home to one of only two U.S. Army amputee care centers in the country.

C. BAGGE: It's kind of like a brotherhood in there. We all -- we're all rooting for each other and pushing each other to do the best that we can.

UNIDENTIFIED MALE: Push, pull.

WALLACE: The pushing comes not just from peers, but from a team of physical therapists.

CAPT. JUSTIN LAFERRIER, U.S. ARMY: Some people come in and they say, wow, I would have never thought that I would be able to do that again. And they need to be pushed to be shown that it is possible.

WALLACE: Also available to amputees like Christian, state-of- the-art technology to create custom-made legs for any activity they choose.

Christian's immediate goal, to run with President Bush. When the president visited the center on New Year's Day, Christian asked if they could jog together some time. He says Mr. Bush said yes.

C. BAGGE: He said that I would be an inspiration to other people. And I think he's right, you know, hopefully, that I can be an inspiration.

WALLACE: His positive outlook doesn't mean there haven't been really hard times. In the beginning, he was angry and depressed. And every day, there are reminders of what life used to be like.

C. BAGGE: It takes me longer to shower, it takes me longer to get my legs on, getting dressed. Putting pants on is a 20-minute process and I hate it.

WALLACE: But Christian and Melissa are adjusting, even thriving.

C. BAGGE: You learn a lot about true love, and being away from your family. You learn the important things in life.

WALLACE: Charting a new life with new limbs and new friends who know what it's like to walk in their shoes.

Kelly Wallace, CNN.

(END VIDEOTAPE)

PHILLIPS: And it may be all right for clothes, maybe even gossip, but when it comes to smoke, secondhand is not OK. And the latest government report says that you can forget about separate sections. Smoke-free is the only way to eliminate the risk of what U.S. Surgeon General Richard Carmona calls involuntary smoking.

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DR. RICHARD CARMONA, SURGEON GENERAL: Secondhand smoke exposure causes heart disease and lung cancer in adults, and sudden infant death syndrome and respiratory problems in children. There is no risk-free level of secondhand smoke exposure, with even brief exposure adversely affecting the cardiovascular and respiratory systems. Only smoke-free environments effectively protect non-smokers from secondhand smoke exposure in indoor spaces.

(END VIDEO CLIP)

PHILLIPS: Carmona is especially concerned about the children being exposed to secondhand smoke at home, where no law can protect them. It's estimated that applies to at least one in five kids in the U.S.

Straight ahead, a Star fades from "View." Yes, that Star, and that "View." But why is the daytime diva hitting the eject button? We're going to entertain some thoughts on that topic when LIVE FROM returns. (COMMERCIAL BREAK)

PHILLIPS: Time now to check in with CNN's Wolf Blitzer. He's standing by in "THE SIT ROOM" to tell us what's coming up at the top of the hour.

Hey, Wolf.

WOLF BLITZER, CNN ANCHOR: Thanks, Kyra.

Happening right now, the Senate getting very close to a vote on a Constitutional amendment to ban flag burning. That vote could come up very soon. Will the senators move to forever change U.S. law, or is this simply political posturing?

Also, the cost of war -- just how much is being spent right now in Iraq? We are crunching the billions.

Also disaster evacuations -- is the nation's Capitol ready for the next big one? The city has been pretty much crippled by rain. We will take a closer look at what might happen if something much more serious were to strike.

And billion dollar fraud, the nameless, faceless victim of Hurricane Katrina. That would be the American taxpayer. It's your money. We are keeping track.

All that, Kyra, coming up right here in "THE SITUATION ROOM."

PHILLIPS: All right, Wolf. Thanks so much.

(BEGIN VIDEO CLIP)

STAR JONES, "THE VIEW": Something has been on my heart for a little bit, and after much prayer and counsel, I feel like this is the right time to tell you that the show is moving in another direction for its 10th season, and I will not be returning as co-host next year.

(END VIDEO CLIP)

PHILLIPS: Daytime diva hits the eject button. After almost a decade of dishing on "The View," Star Jones announced today she's leaving. Jones said the show is moving in another direction -- you heard her say it there -- and it is, since Rosie O'Donnell was picked to succeed the Meredith Vieira.

O'Donnell and Jones are said to not really be on the best of terms. Jones hasn't commented on that, but she did tell "People" magazine her contract wasn't renewed for "The View's" 10th season and she feels like she was fired.

Well, when was the last time this happened? Some late breaking news about Axl Rose. The Associated Press says the Guns N' Roses frontman has been sprung from the Stockholm stir.

He was jailed after allegedly biting a hotel security guard, but a little cash is making it all go away. Rose was fined about $5,500, and ordered to pay about $1,300 to the security guard. No charges have been filed and that gig in Oslo is still for Wednesday.

Ali Velshi, I don't know about you but that's how I solve all my problems. I just bite people.

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