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American Morning

Pope's Condition Improving; Day Four of Jackson Trial

Aired March 03, 2005 - 07:00   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.


SOLEDAD O'BRIEN, CNN ANCHOR: New information on the murders at the home of a federal judge. Police release sketches of two men. What were they doing on the day of the killings?
The mounting toll for U.S. troops in Iraq. The number of those killed now 1,500.

Exclusive video of Martha Stewart in prison. Her release now planned to be a major television event.

And could Steve Fossett come up empty in the last leg of his round the world flight? Pushing for the record on this AMERICAN MORNING.

ANNOUNCER: From the CNN Broadcast Center in New York, this is AMERICAN MORNING with Soledad O'Brien and Bill Hemmer.

BILL HEMMER, CNN ANCHOR: Good morning, everyone. Good to have you along with us today. Good morning to you, as well. Other stories in a moment here. There is fresh new information on the pope today, released by the Vatican a few moments ago. And Alessio Vinci standing by in Rome. We'll get you to the hospital in a moment overseas with Alessio.

O'BRIEN: And we'll take you back to the Michael Jackson trial. Testimony today that will take the jury inside Neverland when police searched the singer's ranch. We'll take a look at very damaging testimony from one of Jackson's former P.R. specialists.

HEMMER: Day-to-day, more and more interesting. Also, Jack Cafferty, good morning. What's on your mind?

JACK CAFFERTY, CNN ANCHOR: Good morning. Houston, we have a problem. Federal Reserve Chairman Alan Greenspan warned of decades, decades of economic stagnation ahead for this country if something isn't done about the runaway federal budget deficits. Was anybody listening? Well, he was talking in Washington, so probably not. We'll take a look in a little more detail in a minute or two.

O'BRIEN: All right, that's ahead. Thanks, Jack. Let's get right to Carol Costello. She's at the Time Warner Center with a look at some of the stories that are making headlines this morning. Hey, Carol, good morning.

CAROL COSTELLO, CNN ANCHOR: Good morning, Soledad. Good morning to all of you. "Now in the News," the number of American troops killed in Iraq hits the 1,500 mark. The Defense Department says most of the deaths were because of hostile action. In the meantime, Iraq's Prime Minister Ayad Allawi is extending the country's state of emergency for another 30 days. The announcement coming on the heels of two car bombings in Baghdad. At least 5 Iraqi police officers were killed in those attacks.

U.S. officials now saying there is no cause for alarm. They're responding to a report in a Spanish newspaper, which claimed authorities there uncovered a terror plot aimed at New York's Grand Central terminal. But city mayor Michael Bloomberg does say New York remains a terror target and should receive more federal dollars.

(BEGIN VIDEO CLIP)

MAYOR MICHAEL BLOOMBERG, NEW YORK: It's a constant battle. The truth of the matter is, Homeland Security money should be given out based on risk. You do not find a map of a cornfield in a potential computer. You find a picture of New York. And that's why we think that the monies should be given out based on risk and that the risk is here.

(END VIDEO CLIP)

COSTELLO: Transit officials say they're doing everything possible to ensure people's safety.

Basketball star Kobe Bryant has settled a civil suit with the woman accusing him of sexual assault. No word on the terms of that agreement, but Bryant's attorney says both parties are satisfied. Bryant had no comment when asked about it last night.

And the final countdown for millionaire adventurer Steve Fossett. The solo world navigator is off the coast of California now. He's expected to land back in Salina, Kansas, within the next five hours or so. Fossett decided to press ahead with his flight, despite problems with the plane's fuel system. We'll hear from Sir Richard Branson, who helped finance the record-seeking trip, just ahead. And hopefully he can explain exactly what that fuel problem was, Bill.

HEMMER: Uh-huh. Maybe they did not fill it to the brim, so to speak, Carol, because apparently, like 2,600 gallons worth. So thank you, Carol. We'll talk to you a bit later. Want to get these new developments out of Rome this morning concerning the health of the pope. In the past 30 minutes, the Vatican released a statement saying that Pope John Paul II's condition is quote, "in progressive and continuous improvement."

To our Rome bureau chief Alessio Vinci. He's live at Gemelli Hospital. And Alessio, any word on when the pope may leave that hospital behind you?

ALESSIO VINCI, CNN ROME BUREAU CHIEF: That is the only question really, Bill, that has not been answered. When will the pope be able to return to the Vatican? We know from chief Vatican spokesman, Joaquin Navarro-Valls, that the pope wants to get back to the Vatican as soon as possible. As you know, at the end of the month, Easter celebrations will begin and the pope very much wants to be back at the Vatican.

However, we're told also the pope is this time listening to the advice of doctors and he will listen to when it would be a good time to be discharged. You may remember, in early February, he was discharged here after only nine days being admitted here with a breathing spasm. The bulletin that was issued earlier today by the Vatican also says that the pope's surgical wound is healing and the pope continues to do his breathing and voice exercises.

Of course, the tracheotomy has left him temporarily voiceless, although two top Vatican officials who have visited the pope in the last few days are telling us that the pope actually has already began speaking a little bit. Back to you, Bill.

HEMMER: Alessio, thanks, there in Rome -- Soledad.

O'BRIEN: Now to day four of Michael Jackson's child molestation trial. The prosecution is presenting its case against the pop star. This, after a public relations expert who briefly worked for Jackson delivered some potentially damaging testimony.

CNN's Miguel Marquez is live outside the courthouse in Santa Maria, California. Hey, Miguel, good morning.

MIGUEL MARQUEZ, CNN CORRESPONDENT: Good morning to you there, Soledad.

Yes, it's Ann Marie Kite, is the woman who testified. She only worked for Jackson for six days. She was a guest or a witness for the prosecution. But in the end, it's not clear who she helped, the prosecution or the defense.

(BEGIN VIDEOTAPE)

MARQUEZ (voice-over): Michael Jackson putting on a confident face after a day of testimony from a P.R. agent who was hired as a crisis manager days after the Martin Bashir documentary aired in February 2003.

RAYMONE BAINE, JACKSON SPOKESWOMAN: Michael feels very confident in his defense team. And he feels very happy about yesterday and today.

MARQUEZ: Ann Marie Kite testified she was fired after six days on the job. In her short time with Team Jackson, she says she grew concerned for the safety of the accuser and his family, felt Jackson's former attorney, Mark Geragos, was trying to silence her and that just days after the Bashir documentary aired, another Jackson attorney, David LeGrand, told her not to worry about the accuser's mother because quote, "they had her on tape and were going to make her look like a crack whore." Unquote.

ANNE BREMNER, LEGAL ANALYST: I mean, that's the best thing the prosecution brought out and that was dynamite evidence.

MARQUEZ: But defense scored points, too. During hours of questioning by Jackson's lawyer, Kite divulged that she felt Jackson's advisers, including several of those who are now named as co- conspirators in the charges against the pop star, were scheming against him for their own financial gain. Kite also testified that she never met Jackson, never visited Neverland and never had a clear idea of who was in charge.

(END VIDEOTAPE)

MARQUEZ: So a lot of that adds to this idea that Jackson was sort of an unwitting victim of his own team, essentially, setting them up for this conspiracy charge that he faces. On the stand today is Albert Lafferty. He took it late afternoon yesterday. He is a forensics expert with the Santa Barbara sheriff's office. And he is expected to testify for most of today about Neverland itself, giving the jurors a picture of what Neverland is -- Soledad.

O'BRIEN: CNN's Miguel Marquez for us this morning in Santa Maria, California. Miguel, thank you -- Bill.

HEMMER: From Chicago now. Police have released sketches of two men they want to talk to about the murders of the husband and mother of federal judge Joan Humphrey Lefkow. So far, police are not calling them suspects, but instead, persons of interest. Both men are white, one in his mid-20s, seen in a car near the judge's home. The other in his 50s, wearing dark overalls and a dark knit cap.

Natasha Korecki is a reporter with the "Chicago Sun-Times." She's with us this morning from the windy city. Good morning to you, Natasha.

NATASHA KORECKI, "CHICAGO SUN-TIMES" REPORTER: Good morning.

HEMMER: We gave a description. What more can you tell us about these two men?

KORECKI: Well, last night, police released two composite sketches of two men various witnesses have said they've seen in the neighborhood. We've been hearing reports of those from a couple days ago. We know that one witness saw two men in a red car just down the block from the Lefkow's home the morning of the murder about 8:00 a.m. We also know that there's been other witnesses who've have seen these two men.

Police aren't specifically tying the two composite sketches to the men seen in the car, but the descriptions seem similar. And that's what they're looking at right now. It's another lead, just one of many. But it does seem like they're people of interest.

HEMMER: Your paper talked with Judge Lefkow. In part, she said this. She says, "If someone was angry at me, they should go after me. It's not fair to go after my family." How is she handling this?

KORECKI: You know, as best she can. She's devastated right now. She's lost her mother and her husband and from what everyone has described, Michael Lefkow and the judge, they were just very much in love. Always walking together hand in hand. He moved his office to be near her, to overlook her. Walked her into the courtroom building every day. Picked her up every day. They would lunch together.

She's absolutely devastated, but she was -- she did say that she was not going to be intimidated and not going to step down from the bench. She would return to the bench. And but right now, she's foremost thinking about her daughters.

HEMMER: Did she say in that interview whether or not who she thought might be responsible? Did she talk at all about Matthew Hale, this jailed white supremacist leader who has issued threats in years past against her?

KORECKI: She didn't want to specifically get into the Hale case, but she did say generally that she was afraid or she feared that the people who did this did it because of some of her work on the bench. Other than that, she didn't make any more ties to anyone.

HEMMER: One of their daughters apparently is about to get married. She talked about that, as well. In part, she said her husband had gotten himself a tux to wear to that wedding and was so looking forward to walking has daughter down the aisle, and now he will not able to do that. This was a tight family, as you point out?

KORECKI: Yes, very much so. That was just one of many things they were thinking about that was very emotional thing for them. Their oldest daughter, Helena, I believe, is getting married this summer, and they were all looking very forward to it, and now she won't have her father to walk her down the aisle.

HEMMER: We will follow the investigation from here. Natasha from the "Chicago Sun-Times," Natasha Korecki, thanks for your time there...

KORECKI: Thank you.

HEMMER: ... in Chicago for talking with us today.

O'BRIEN: Ahead this morning, a deadly shooting shocks a small community. Police say that a student killed his bus driver in front of dozens of other school children. What was the motive?

HEMMER: Also the Martha Stewart rules, from where she can shop to who she can see. We'll you what life will be like outside of prison.

O'BRIEN: And we're talking about the Global Flyer fuel crisis. Is it too risky to finish the flight? We talk with the billionaire bankrolling the mission, Sir Richard Branson, ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Even before Martha Stewart's release from prison, which could happen as early as tomorrow, congratulations are in order. Her TV show "Martha Stewart Living" just received three daytime Emmy nominations. She's going to need special permission, though, to attend the May 20th ceremony, because she's under house arrest under her -- unlike her discreet arrival in October, Stewart's planning a very public exit from the West Virginia prison. Once she's released, she'll be America's most closely watched ex-felon but not exactly free.

Kelly Wallace has more on that this morning.

Nice to see you. Good morning.

KELLY WALLACE, CNN CORRESPONDENT: Nice to see you.

That's right, not exactly free because she will face first five month where she's under house arrest. Those five month, though, won't exactly be like the five month she spent behind bars.

(BEGIN VIDEOTAPE)

WALLACE (voice-over): Martha Stewart moving from the prison known as "Camp Cupcake" to a place where she can bake all the cupcakes she wants. This 153-acre estate in the tony Westchester Town of Bedford, New York is where she will spend the next five month under house arrest.

(on camera): One prison to another in Bedford, New York?

BENJAMIN BRAFMAN, DEFENSE ATTY.: In a sense, but it's a terrific tradeup. It's a much nicer facility. She can go to work. She can have visitors.

WALLACE (voice-over): As long as those visitors are not convicted felons. "The New York Post" recently did its own list of what Martha can and cannot do under house arrest. She can fire contestants on her own version of "The Apprentice" but can't own firearms. She can ride her staffers, but can't ride her horses.

The queen of decorating is allowed to leave her home just 48 hours per week for work, doctors' visits, church and grocery shopping. And 24 hours a day, she must wear an electronic ankle bracelet like this one, which alerts her probation officer anytime she leaves her home.

PAMELA HAYES, FMR. PROSECUTOR: It's a burden. I mean, it's a constant reminder that, you know, you're a criminal. I mean, you've got this thing on your leg as if she's going somewhere. Where's she going?

WALLACE: She won't be going to the Bahamas or the Hamptons or anybody else for fun for the next five months. She'll likely do her shopping here in nearby Katonah, New York, where the welcome wagon has already been rolled out, although people seem, well, unfazed by the imminent arrival of their celebrity neighbor.

JOYCE DUPEE, N.Y. RESIDENT: I don't think it will make too much difference one way or the other. We have a lot of very well-known people who live in the area.

(END VIDEOTAPE)

WALLACE: And after Martha Stewart completes five month of house arrest, she'll still face two years of supervised release, where she has to continue to regularly check in with her probation officer, and continue to get approval before leaving the southern judicial district of New York for business or pleasure.

O'BRIEN: Is she allowed to wander around basically essentially free around that estate, 150 some odd acres.

WALLACE: Actually, no. And this is something that has come up, because that electronic ankle bracelet is not designed to have a range of 153 acres.

We want our viewers to first take a look at an aerial view of Martha Stewart's estate. We're going to put a circle around her house. There it is. That is where she must remain at all times, with the exception of the 48 hours where she can go out for work or doctors' appointments. This all means that -- we're going to draw another circle around another part of her estate. She cannot go to that house. She can't walk over, check the flowers, check the building. She also can't go to her stable. We're going to draw an arrow. It is the right there. That is where her horses are. She, in essence, has to remain in that house -- no gardening, no strolling, no riding her horses. This according to the chief probation officer for the southern judicial district of New York. And this means the gardening, riding the horses, might have to wait till the summer.

O'BRIEN: I'm sure she's got people to manage all that for her.

WALLACE: She does.

O'BRIEN: So it won't be a problem.

Kelly, thanks.

WALLACE: Sure.

O'BRIEN: CNN going to present a "PEOPLE IN THE NEWS" hour in conjunction with Martha Stewart's release that contains exclusive prison footage and looks how life behind bars has changed her.

(BEGIN VIDEO CLIP)

RICHARD FEIGEN, FRIEND OF MARTHA STEWART: She's achieved a certain kind of serenity. She didn't used to listen much, she knew what she should do and went about it. I mean, now she listens.

(END VIDEO CLIP)

O'BRIEN: You can see the entire "PEOPLE IN THE NEWS" hour on Martha Stewart, tonight at 10:00 Eastern, right here on CNN -- Bill.

HEMMER: Soledad, in a moment, a brand new case of massive identity theft. Thousands left vulnerable, and again, they did not even know it. Andy's "Minding Your Business," next here when we continue live in New York City after this.

(COMMERCIAL BREAK)

HEMMER: All right. Welcome back, everyone. Closing arguments under way now in the Bernie Ebbers fraud case. Andy Serwer, first check "Minding Your Business" this morning.

Moring, Drew.

ANDY SERWER, "FORTUNE" MAGAZINE: Good morning.

Good morning. The Bernie Ebbers case getting down to the wire, Bill. Prosecutors summing up their case yesterday for jurors in the $11 billion fraud case. They told jurors that Bernie Ebbers was using the "aw shucks, I'm not sophisticated" defense, and then said Ebbers treated you no better than ordinary shareholders -- he lied right to your face. The defense will proceed today, and the case may go to the jurors as early as tomorrow.

Meanwhile, more developments on the ChoicePoint fraud case. You may remember this one. ChoicePoint, by the way, is what's known as an information broker. Basically they collect information on individuals and then sell that information, ironically, to prevent fraud from happening. But you may remember in mid-February they had to acknowledge that 145,000 files were compromised, in other words, were taken by thieves. The CEO came out several days later and said that's the first time that's ever happened to the company.

Yesterday, we learned that that's probably not the case -- 7,000 other files were stolen by thieves in 2002, and a million dollars of fraud was perpetrated. So this company is now in the crosshairs by regulators in Washington who have taken note.

Obviously, security fraud is a huge problem. We've heard about Paris Hilton, we're heard about Bank of America with Senator Pat Leahy. It has homeland security implications and is a multi, multimillion-dollar problem, that continues to grow.

HEMMER; The thing that strikes me about this is you can always watch your numbers and your private information and fight as best you can to keep it private, but in these cases, you've had no option. Someone else is selling you out.

SERWER: That's right. And if thieves get in, you're toast.

HEMMER: Well, thank you, Andy.

SERWER: You're welcome.

HEMMER: We'll continue to watch those headlines, as disturbing as they might be.

SERWER: Yes.

O'BRIEN: Jack, what's the Question of the Day.

CAFFERTY: Speaking of being toast, the United States is headed toward decades of economic stagnation -- decades. That's the warning from Federal Reserve chairman Alan Greenspan. He spoke to the House Budget Committee yesterday, and said we're in deep trouble if the people in Congress don't do something soon. Social Security, Medicare and runaway government spending are bankrupting the country.

Forget Social Security reform. That ain't going to happen. Polls indicate the public doesn't want it. That's all Congress needs to hear to do something. They say maybe next year. Next year's an election year. Ain't going to happen next year either. Medicare is an even bigger problem than Social Security. Much bigger, and nothing's being done about that. Hoping the federal government will reduce spending in a meaningful way is like expecting pigs to stop eating. Here's the question. What's the answer to the country's financial problems? Am@CNN.com.

SERWER: That's a biggie.

HEMMER: Only a three-hour show too.

O'BRIEN: You should put limits on how much space they can take up in their e-mails.

CAFFERTY: Or we can talk about Martha Stewart.

SERWER: We're going to be doing that a little bit tomorrow.

CAFFERTY: We'll probably be doing that elsewhere in the program.

HEMMER: Thank you, Jack.

It seems Mike Tyson is try again to hit the high notes. The boxer made his singing debut last night in Italy's most popular music festival. After prompting from the presenter, Tyson sang several seconds of the Italian ballad of "Volare (ph)." He then closed with a rapping version of "New York, New York." That would sound interesting, I think. Organizers say they paid Tyson more than 90 grand to appear at that event. That's from Italy. And we're waiting tape, and we're awaiting sound on that.

SERWER: Is he going to cut a CD.

O'BRIEN: There is much more American morning right after this break.

Ahead on the special edition of "90-Second Pop."

(BEGIN VIDEO CLIP)

MARTHA STEWART: Good morning, everybody. And thank you for coming here today on such short notice.

(END VIDEO CLIP) O'BRIEN: It's Martha, Martha, Martha. She's almost out of the slammer. What will the domestic diva turned convict do on her first day of freedom? Plus, could her new TV gig hurt her company's bottom line? That and more on AMERICAN MORNING.

(COMMERCIAL BREAK)

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Aired March 3, 2005 - 07:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: New information on the murders at the home of a federal judge. Police release sketches of two men. What were they doing on the day of the killings?
The mounting toll for U.S. troops in Iraq. The number of those killed now 1,500.

Exclusive video of Martha Stewart in prison. Her release now planned to be a major television event.

And could Steve Fossett come up empty in the last leg of his round the world flight? Pushing for the record on this AMERICAN MORNING.

ANNOUNCER: From the CNN Broadcast Center in New York, this is AMERICAN MORNING with Soledad O'Brien and Bill Hemmer.

BILL HEMMER, CNN ANCHOR: Good morning, everyone. Good to have you along with us today. Good morning to you, as well. Other stories in a moment here. There is fresh new information on the pope today, released by the Vatican a few moments ago. And Alessio Vinci standing by in Rome. We'll get you to the hospital in a moment overseas with Alessio.

O'BRIEN: And we'll take you back to the Michael Jackson trial. Testimony today that will take the jury inside Neverland when police searched the singer's ranch. We'll take a look at very damaging testimony from one of Jackson's former P.R. specialists.

HEMMER: Day-to-day, more and more interesting. Also, Jack Cafferty, good morning. What's on your mind?

JACK CAFFERTY, CNN ANCHOR: Good morning. Houston, we have a problem. Federal Reserve Chairman Alan Greenspan warned of decades, decades of economic stagnation ahead for this country if something isn't done about the runaway federal budget deficits. Was anybody listening? Well, he was talking in Washington, so probably not. We'll take a look in a little more detail in a minute or two.

O'BRIEN: All right, that's ahead. Thanks, Jack. Let's get right to Carol Costello. She's at the Time Warner Center with a look at some of the stories that are making headlines this morning. Hey, Carol, good morning.

CAROL COSTELLO, CNN ANCHOR: Good morning, Soledad. Good morning to all of you. "Now in the News," the number of American troops killed in Iraq hits the 1,500 mark. The Defense Department says most of the deaths were because of hostile action. In the meantime, Iraq's Prime Minister Ayad Allawi is extending the country's state of emergency for another 30 days. The announcement coming on the heels of two car bombings in Baghdad. At least 5 Iraqi police officers were killed in those attacks.

U.S. officials now saying there is no cause for alarm. They're responding to a report in a Spanish newspaper, which claimed authorities there uncovered a terror plot aimed at New York's Grand Central terminal. But city mayor Michael Bloomberg does say New York remains a terror target and should receive more federal dollars.

(BEGIN VIDEO CLIP)

MAYOR MICHAEL BLOOMBERG, NEW YORK: It's a constant battle. The truth of the matter is, Homeland Security money should be given out based on risk. You do not find a map of a cornfield in a potential computer. You find a picture of New York. And that's why we think that the monies should be given out based on risk and that the risk is here.

(END VIDEO CLIP)

COSTELLO: Transit officials say they're doing everything possible to ensure people's safety.

Basketball star Kobe Bryant has settled a civil suit with the woman accusing him of sexual assault. No word on the terms of that agreement, but Bryant's attorney says both parties are satisfied. Bryant had no comment when asked about it last night.

And the final countdown for millionaire adventurer Steve Fossett. The solo world navigator is off the coast of California now. He's expected to land back in Salina, Kansas, within the next five hours or so. Fossett decided to press ahead with his flight, despite problems with the plane's fuel system. We'll hear from Sir Richard Branson, who helped finance the record-seeking trip, just ahead. And hopefully he can explain exactly what that fuel problem was, Bill.

HEMMER: Uh-huh. Maybe they did not fill it to the brim, so to speak, Carol, because apparently, like 2,600 gallons worth. So thank you, Carol. We'll talk to you a bit later. Want to get these new developments out of Rome this morning concerning the health of the pope. In the past 30 minutes, the Vatican released a statement saying that Pope John Paul II's condition is quote, "in progressive and continuous improvement."

To our Rome bureau chief Alessio Vinci. He's live at Gemelli Hospital. And Alessio, any word on when the pope may leave that hospital behind you?

ALESSIO VINCI, CNN ROME BUREAU CHIEF: That is the only question really, Bill, that has not been answered. When will the pope be able to return to the Vatican? We know from chief Vatican spokesman, Joaquin Navarro-Valls, that the pope wants to get back to the Vatican as soon as possible. As you know, at the end of the month, Easter celebrations will begin and the pope very much wants to be back at the Vatican.

However, we're told also the pope is this time listening to the advice of doctors and he will listen to when it would be a good time to be discharged. You may remember, in early February, he was discharged here after only nine days being admitted here with a breathing spasm. The bulletin that was issued earlier today by the Vatican also says that the pope's surgical wound is healing and the pope continues to do his breathing and voice exercises.

Of course, the tracheotomy has left him temporarily voiceless, although two top Vatican officials who have visited the pope in the last few days are telling us that the pope actually has already began speaking a little bit. Back to you, Bill.

HEMMER: Alessio, thanks, there in Rome -- Soledad.

O'BRIEN: Now to day four of Michael Jackson's child molestation trial. The prosecution is presenting its case against the pop star. This, after a public relations expert who briefly worked for Jackson delivered some potentially damaging testimony.

CNN's Miguel Marquez is live outside the courthouse in Santa Maria, California. Hey, Miguel, good morning.

MIGUEL MARQUEZ, CNN CORRESPONDENT: Good morning to you there, Soledad.

Yes, it's Ann Marie Kite, is the woman who testified. She only worked for Jackson for six days. She was a guest or a witness for the prosecution. But in the end, it's not clear who she helped, the prosecution or the defense.

(BEGIN VIDEOTAPE)

MARQUEZ (voice-over): Michael Jackson putting on a confident face after a day of testimony from a P.R. agent who was hired as a crisis manager days after the Martin Bashir documentary aired in February 2003.

RAYMONE BAINE, JACKSON SPOKESWOMAN: Michael feels very confident in his defense team. And he feels very happy about yesterday and today.

MARQUEZ: Ann Marie Kite testified she was fired after six days on the job. In her short time with Team Jackson, she says she grew concerned for the safety of the accuser and his family, felt Jackson's former attorney, Mark Geragos, was trying to silence her and that just days after the Bashir documentary aired, another Jackson attorney, David LeGrand, told her not to worry about the accuser's mother because quote, "they had her on tape and were going to make her look like a crack whore." Unquote.

ANNE BREMNER, LEGAL ANALYST: I mean, that's the best thing the prosecution brought out and that was dynamite evidence.

MARQUEZ: But defense scored points, too. During hours of questioning by Jackson's lawyer, Kite divulged that she felt Jackson's advisers, including several of those who are now named as co- conspirators in the charges against the pop star, were scheming against him for their own financial gain. Kite also testified that she never met Jackson, never visited Neverland and never had a clear idea of who was in charge.

(END VIDEOTAPE)

MARQUEZ: So a lot of that adds to this idea that Jackson was sort of an unwitting victim of his own team, essentially, setting them up for this conspiracy charge that he faces. On the stand today is Albert Lafferty. He took it late afternoon yesterday. He is a forensics expert with the Santa Barbara sheriff's office. And he is expected to testify for most of today about Neverland itself, giving the jurors a picture of what Neverland is -- Soledad.

O'BRIEN: CNN's Miguel Marquez for us this morning in Santa Maria, California. Miguel, thank you -- Bill.

HEMMER: From Chicago now. Police have released sketches of two men they want to talk to about the murders of the husband and mother of federal judge Joan Humphrey Lefkow. So far, police are not calling them suspects, but instead, persons of interest. Both men are white, one in his mid-20s, seen in a car near the judge's home. The other in his 50s, wearing dark overalls and a dark knit cap.

Natasha Korecki is a reporter with the "Chicago Sun-Times." She's with us this morning from the windy city. Good morning to you, Natasha.

NATASHA KORECKI, "CHICAGO SUN-TIMES" REPORTER: Good morning.

HEMMER: We gave a description. What more can you tell us about these two men?

KORECKI: Well, last night, police released two composite sketches of two men various witnesses have said they've seen in the neighborhood. We've been hearing reports of those from a couple days ago. We know that one witness saw two men in a red car just down the block from the Lefkow's home the morning of the murder about 8:00 a.m. We also know that there's been other witnesses who've have seen these two men.

Police aren't specifically tying the two composite sketches to the men seen in the car, but the descriptions seem similar. And that's what they're looking at right now. It's another lead, just one of many. But it does seem like they're people of interest.

HEMMER: Your paper talked with Judge Lefkow. In part, she said this. She says, "If someone was angry at me, they should go after me. It's not fair to go after my family." How is she handling this?

KORECKI: You know, as best she can. She's devastated right now. She's lost her mother and her husband and from what everyone has described, Michael Lefkow and the judge, they were just very much in love. Always walking together hand in hand. He moved his office to be near her, to overlook her. Walked her into the courtroom building every day. Picked her up every day. They would lunch together.

She's absolutely devastated, but she was -- she did say that she was not going to be intimidated and not going to step down from the bench. She would return to the bench. And but right now, she's foremost thinking about her daughters.

HEMMER: Did she say in that interview whether or not who she thought might be responsible? Did she talk at all about Matthew Hale, this jailed white supremacist leader who has issued threats in years past against her?

KORECKI: She didn't want to specifically get into the Hale case, but she did say generally that she was afraid or she feared that the people who did this did it because of some of her work on the bench. Other than that, she didn't make any more ties to anyone.

HEMMER: One of their daughters apparently is about to get married. She talked about that, as well. In part, she said her husband had gotten himself a tux to wear to that wedding and was so looking forward to walking has daughter down the aisle, and now he will not able to do that. This was a tight family, as you point out?

KORECKI: Yes, very much so. That was just one of many things they were thinking about that was very emotional thing for them. Their oldest daughter, Helena, I believe, is getting married this summer, and they were all looking very forward to it, and now she won't have her father to walk her down the aisle.

HEMMER: We will follow the investigation from here. Natasha from the "Chicago Sun-Times," Natasha Korecki, thanks for your time there...

KORECKI: Thank you.

HEMMER: ... in Chicago for talking with us today.

O'BRIEN: Ahead this morning, a deadly shooting shocks a small community. Police say that a student killed his bus driver in front of dozens of other school children. What was the motive?

HEMMER: Also the Martha Stewart rules, from where she can shop to who she can see. We'll you what life will be like outside of prison.

O'BRIEN: And we're talking about the Global Flyer fuel crisis. Is it too risky to finish the flight? We talk with the billionaire bankrolling the mission, Sir Richard Branson, ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Even before Martha Stewart's release from prison, which could happen as early as tomorrow, congratulations are in order. Her TV show "Martha Stewart Living" just received three daytime Emmy nominations. She's going to need special permission, though, to attend the May 20th ceremony, because she's under house arrest under her -- unlike her discreet arrival in October, Stewart's planning a very public exit from the West Virginia prison. Once she's released, she'll be America's most closely watched ex-felon but not exactly free.

Kelly Wallace has more on that this morning.

Nice to see you. Good morning.

KELLY WALLACE, CNN CORRESPONDENT: Nice to see you.

That's right, not exactly free because she will face first five month where she's under house arrest. Those five month, though, won't exactly be like the five month she spent behind bars.

(BEGIN VIDEOTAPE)

WALLACE (voice-over): Martha Stewart moving from the prison known as "Camp Cupcake" to a place where she can bake all the cupcakes she wants. This 153-acre estate in the tony Westchester Town of Bedford, New York is where she will spend the next five month under house arrest.

(on camera): One prison to another in Bedford, New York?

BENJAMIN BRAFMAN, DEFENSE ATTY.: In a sense, but it's a terrific tradeup. It's a much nicer facility. She can go to work. She can have visitors.

WALLACE (voice-over): As long as those visitors are not convicted felons. "The New York Post" recently did its own list of what Martha can and cannot do under house arrest. She can fire contestants on her own version of "The Apprentice" but can't own firearms. She can ride her staffers, but can't ride her horses.

The queen of decorating is allowed to leave her home just 48 hours per week for work, doctors' visits, church and grocery shopping. And 24 hours a day, she must wear an electronic ankle bracelet like this one, which alerts her probation officer anytime she leaves her home.

PAMELA HAYES, FMR. PROSECUTOR: It's a burden. I mean, it's a constant reminder that, you know, you're a criminal. I mean, you've got this thing on your leg as if she's going somewhere. Where's she going?

WALLACE: She won't be going to the Bahamas or the Hamptons or anybody else for fun for the next five months. She'll likely do her shopping here in nearby Katonah, New York, where the welcome wagon has already been rolled out, although people seem, well, unfazed by the imminent arrival of their celebrity neighbor.

JOYCE DUPEE, N.Y. RESIDENT: I don't think it will make too much difference one way or the other. We have a lot of very well-known people who live in the area.

(END VIDEOTAPE)

WALLACE: And after Martha Stewart completes five month of house arrest, she'll still face two years of supervised release, where she has to continue to regularly check in with her probation officer, and continue to get approval before leaving the southern judicial district of New York for business or pleasure.

O'BRIEN: Is she allowed to wander around basically essentially free around that estate, 150 some odd acres.

WALLACE: Actually, no. And this is something that has come up, because that electronic ankle bracelet is not designed to have a range of 153 acres.

We want our viewers to first take a look at an aerial view of Martha Stewart's estate. We're going to put a circle around her house. There it is. That is where she must remain at all times, with the exception of the 48 hours where she can go out for work or doctors' appointments. This all means that -- we're going to draw another circle around another part of her estate. She cannot go to that house. She can't walk over, check the flowers, check the building. She also can't go to her stable. We're going to draw an arrow. It is the right there. That is where her horses are. She, in essence, has to remain in that house -- no gardening, no strolling, no riding her horses. This according to the chief probation officer for the southern judicial district of New York. And this means the gardening, riding the horses, might have to wait till the summer.

O'BRIEN: I'm sure she's got people to manage all that for her.

WALLACE: She does.

O'BRIEN: So it won't be a problem.

Kelly, thanks.

WALLACE: Sure.

O'BRIEN: CNN going to present a "PEOPLE IN THE NEWS" hour in conjunction with Martha Stewart's release that contains exclusive prison footage and looks how life behind bars has changed her.

(BEGIN VIDEO CLIP)

RICHARD FEIGEN, FRIEND OF MARTHA STEWART: She's achieved a certain kind of serenity. She didn't used to listen much, she knew what she should do and went about it. I mean, now she listens.

(END VIDEO CLIP)

O'BRIEN: You can see the entire "PEOPLE IN THE NEWS" hour on Martha Stewart, tonight at 10:00 Eastern, right here on CNN -- Bill.

HEMMER: Soledad, in a moment, a brand new case of massive identity theft. Thousands left vulnerable, and again, they did not even know it. Andy's "Minding Your Business," next here when we continue live in New York City after this.

(COMMERCIAL BREAK)

HEMMER: All right. Welcome back, everyone. Closing arguments under way now in the Bernie Ebbers fraud case. Andy Serwer, first check "Minding Your Business" this morning.

Moring, Drew.

ANDY SERWER, "FORTUNE" MAGAZINE: Good morning.

Good morning. The Bernie Ebbers case getting down to the wire, Bill. Prosecutors summing up their case yesterday for jurors in the $11 billion fraud case. They told jurors that Bernie Ebbers was using the "aw shucks, I'm not sophisticated" defense, and then said Ebbers treated you no better than ordinary shareholders -- he lied right to your face. The defense will proceed today, and the case may go to the jurors as early as tomorrow.

Meanwhile, more developments on the ChoicePoint fraud case. You may remember this one. ChoicePoint, by the way, is what's known as an information broker. Basically they collect information on individuals and then sell that information, ironically, to prevent fraud from happening. But you may remember in mid-February they had to acknowledge that 145,000 files were compromised, in other words, were taken by thieves. The CEO came out several days later and said that's the first time that's ever happened to the company.

Yesterday, we learned that that's probably not the case -- 7,000 other files were stolen by thieves in 2002, and a million dollars of fraud was perpetrated. So this company is now in the crosshairs by regulators in Washington who have taken note.

Obviously, security fraud is a huge problem. We've heard about Paris Hilton, we're heard about Bank of America with Senator Pat Leahy. It has homeland security implications and is a multi, multimillion-dollar problem, that continues to grow.

HEMMER; The thing that strikes me about this is you can always watch your numbers and your private information and fight as best you can to keep it private, but in these cases, you've had no option. Someone else is selling you out.

SERWER: That's right. And if thieves get in, you're toast.

HEMMER: Well, thank you, Andy.

SERWER: You're welcome.

HEMMER: We'll continue to watch those headlines, as disturbing as they might be.

SERWER: Yes.

O'BRIEN: Jack, what's the Question of the Day.

CAFFERTY: Speaking of being toast, the United States is headed toward decades of economic stagnation -- decades. That's the warning from Federal Reserve chairman Alan Greenspan. He spoke to the House Budget Committee yesterday, and said we're in deep trouble if the people in Congress don't do something soon. Social Security, Medicare and runaway government spending are bankrupting the country.

Forget Social Security reform. That ain't going to happen. Polls indicate the public doesn't want it. That's all Congress needs to hear to do something. They say maybe next year. Next year's an election year. Ain't going to happen next year either. Medicare is an even bigger problem than Social Security. Much bigger, and nothing's being done about that. Hoping the federal government will reduce spending in a meaningful way is like expecting pigs to stop eating. Here's the question. What's the answer to the country's financial problems? Am@CNN.com.

SERWER: That's a biggie.

HEMMER: Only a three-hour show too.

O'BRIEN: You should put limits on how much space they can take up in their e-mails.

CAFFERTY: Or we can talk about Martha Stewart.

SERWER: We're going to be doing that a little bit tomorrow.

CAFFERTY: We'll probably be doing that elsewhere in the program.

HEMMER: Thank you, Jack.

It seems Mike Tyson is try again to hit the high notes. The boxer made his singing debut last night in Italy's most popular music festival. After prompting from the presenter, Tyson sang several seconds of the Italian ballad of "Volare (ph)." He then closed with a rapping version of "New York, New York." That would sound interesting, I think. Organizers say they paid Tyson more than 90 grand to appear at that event. That's from Italy. And we're waiting tape, and we're awaiting sound on that.

SERWER: Is he going to cut a CD.

O'BRIEN: There is much more American morning right after this break.

Ahead on the special edition of "90-Second Pop."

(BEGIN VIDEO CLIP)

MARTHA STEWART: Good morning, everybody. And thank you for coming here today on such short notice.

(END VIDEO CLIP) O'BRIEN: It's Martha, Martha, Martha. She's almost out of the slammer. What will the domestic diva turned convict do on her first day of freedom? Plus, could her new TV gig hurt her company's bottom line? That and more on AMERICAN MORNING.

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