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ANDERSON COOPER 360 DEGREES

Republicans Accuse FBI of Going Too Far in Bribery Investigation; New Terror Tape Released

Aired May 23, 2006 - 22:00   ET

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


ANDERSON COOPER, CNN ANCHOR: And good evening, everyone.
They found a freezer full of cash in a congressman's home, a Democratic congressman. But now wait until you see who is saying, no fair.

(BEGIN VIDEOTAPE)

ANNOUNCER: He's a Democrat accused of taking bribes. So, why are Republicans complaining? And is anyone "Keeping Them Honest" in Washington?

Message from bin Laden: The man doing life for 9/11 was not his man for the job.

And what you didn't know about the beltway snipers, their plan to kill children and pregnant women day after deadly day.

(END VIDEOTAPE)

ANNOUNCER: Across the country and around the world, this is ANDERSON COOPER 360.

Live from the CNN Broadcast Center in New York, here's Anderson Cooper.

COOPER: Thanks for joining us on this Tuesday evening.

We begin with a truly bizarre situation in Washington, unlike anything we have seen before. It concerns a congressman from New Orleans accused of accepting bribes. The feds found $90,000 in cold cash, literally, money wrapped in tin foil stuck in his freezer.

This congressman, William Jefferson, is a Democrat. You would think Republicans would be critical. But today their criticism was about the investigation against him. They're upset with how it was being conducted.

We're covering all the angles tonight -- Republican lawmakers accusing the FBI of overstepping its bounds by raiding a legislative office. It's another issue pitting the Bush administration against Republicans on Capitol Hill.

And then there are the corruption allegations themselves, rampant in Washington. Jefferson is just the newest name on a growing list of lawmakers in trouble. It begs the question, who's supposed to be keeping these lawmakers honest, and why aren't they? We will investigate.

Plus, all the political angles -- why lawmakers may be afraid to finger-point, even if the case against Congressman Jefferson looks like a slam dunk.

We begin with CNN congressional correspondent Dana Bash.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): An 18- hour FBI raid of a Democratic congressman's office, allegations in a government affidavit William Jefferson took bribes and stuffed cash from an FBI informant in his freezer. In raw election-year politics, this should be manna from heaven for Republicans. So, why are they complaining?

REP. DENNIS HASTERT (R-IL), SPEAKER OF THE HOUSE: There's ways to do it. And my opinion is that they took the wrong path.

SEN. BILL FRIST (R-TN), MAJORITY LEADER: Yes, I'm concerned because it does involve the Constitution.

BASH: They're alarmed that the Bush Justice Department searched a congressional office for the first time in history and may have crossed the constitutional line.

House Speaker Dennis Hastert says he went straight to the president with his and other lawmakers' concerns. Both parties say, FBI agents, part of the executive branch, ignored the separation of powers by forcibly entering a legislative office, and may have breached the Constitution's speech and debate clause, intended to shield lawmakers from executive intimidation.

CHARLES TIEFER, CONSTITUTIONAL SCHOLAR: What happened Saturday night was an intimidating act, by which the Congress is going to be -- the members of Congress are going to be nervous about doing their job from now on.

BASH: Attorney General Alberto Gonzales defended the search as critical to a high-stakes corruption investigation.

ALBERTO GONZALES, ATTORNEY GENERAL: We respectfully, of course, disagree with the characterization by some. We believe, of course, that we have been very careful, very thorough in our pursuit of criminal wrongdoing.

BASH: And, he insisted, the search was necessary, given the extraordinary circumstances.

In fact, this FBI affidavit supporting the search warrant says a Jefferson aide told investigators relevant evidence was in his office. And, according to sources familiar with the investigation, a federal judge recommended the search, after the congressman ignored a subpoena issued eight months ago.

The affidavit also shows investigators were well aware of the potential backlash, setting up a so-called filter team of agents and prosecutors just to make sure they took nothing privileged. Some legal experts say no one is above the law.

VIET DINH, FORMER ASSISTANT ATTORNEY GENERAL FOR LEGAL POLICY: There is no constitutional protection for congressional offices, as such.

BASH: But Senate historian Don Ritchie says lawmakers have good reason to be concerned this unprecedented event sets a new precedent that could some day be abused.

DON RITCHIE, SENATE HISTORIAN: You don't want a situation in which future presidents might use this as an opportunity to punish congressional opponents. And that's one of the big issues.

(END VIDEOTAPE)

COOPER: Dana joins us right now from Capitol Hill.

You have some new information tonight on the story. What's going on?

BASH: Hi, Anderson.

Well, CNN is told that there is actually a move afoot by Congressman Jefferson's own Democratic leadership to pressure him to give up his post on one of Congress's most powerful committees, and that is the House Ways and Means Committee.

And this is, Anderson, further evidence that the Democratic leadership not only is isolating the congressman, but actually seems to be outright abandoning him, essentially trying to make sure he gets the message they want him to leave Congress -- Anderson.

COOPER: And just so my memory serves me correctly, this is the same Congressman Jefferson who used National Guard resources in the wake of Hurricane Katrina, when there was still flooding and people standing on rooftops, to go to his own house and remove items from his own house; is that correct?

BASH: That is correct. That is a separate situation and separate incident than what we are talking about right now, but you're -- but you're right about that.

This is a congressman who has had issues in the past. And for the Democratic leadership, who they're running this campaign year against Republicans on a culture of corruption, they're making it very clear that they're not going to tolerate this, despite the fact that, obviously, they understand he's innocent until proven guilty.

But they looked at these charges, and they really feel that it's time for him to go, and they hope he gets that message -- Anderson.

COOPER: It is fascinating, what's going on in Washington. Dana, stick around. We want to talk to you in a moment. The accusations against Jefferson are just the latest in a series of corruption probes in D.C. Remember, just last year, Congressman Randy "Duke" Cunningham pled guilty to taking nearly $2.5 million in bribes? Well, he's now sitting in federal prison. Maybe he's watching CNN.

CNN's Tom Foreman takes a look at big-money corruption in D.C. and why the congressional committee that's supposed to bite back against corruption seems to have lost its teeth.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): Indictments, investigations, resignation, and now, allegedly, a freezer full of money -- times are tough for ethics in Congress.

REP. TOM DELAY (R), TEXAS: One count of criminal conspiracy.

UNIDENTIFIED MALE: No, I have answered everything I'm going to answer.

RANDY "DUKE" CUNNINGHAM, FORMER U.S. CONGRESSMAN: And now I know great shame.

FOREMAN: So, who is keeping Congress honest? Critics say certainly not the House Ethics Committee. Even as a ranking member resigned from that committee amid questions about his own conduct, his fellow ethics watchdogs have been largely silent. And way down Texas way, a former congressman says he knows why.

CHRIS BELL, FORMER U.S. CONGRESSMAN: Well, everybody knew about it.

FOREMAN: Democrat Chris Bell joined Congress in 2002 and quickly learned that, in the mid-1990s, each party felt that the other was using ethics complaints to attack each other politically and unfairly. So, they agreed to a truce.

BELL: There was never any formal agreement between the two parties, but it just came to be known that you don't file a complaint against anyone on our side, and we won't file a complaint on anyone on your side.

FOREMAN: People on both sides of the aisle privately confirm this, infuriating political activists, who say the ethics truce is itself unethical.

Tom Fitton is with the conservative Judicial Watch.

TOM FITTON, PRESIDENT, JUDICIAL WATCH: It's not a matter of Republican vs. Democrat or liberals vs. conservatives. It's a matter of crooks vs. the rest of us.

FOREMAN: Melanie Sloan is a liberal with Citizens For Responsibility and Ethics in Washington. MELANIE SLOAN, CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON: It's a total disaster, and it needs to be repaired, and it needs to be repaired quickly, so that the American people can have some confidence in the integrity in the institution at the House of Representatives.

FOREMAN: Maybe it's changing. This month, the committee launched investigations into two current and one former congressman. And though committee members say they can't discuss such matters publicly, they're pledging to expand their investigation capabilities.

Chris Bell, however, has doubts.

BELL: You're dealing with a body that you basically have to force over the cliff, if you want to get anything done.

FOREMAN (on camera): Bell lost his seat after redistricting in Texas, and then he broke the truce, filing an ethics complaint against Republican Tom DeLay.

(voice-over): The committee admonished DeLay, who has announced his resignation and is under indictment. But then the committee publicly criticized Bell, too, suggesting his complaint smacked of politics and might damage the ethical reputation of Congress.

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

COOPER: Couldn't have that now, could we?

Certainly a lot to discuss here. Joining me now from Washington, part of the best political team in the business, Dana Bash, Kelli Arena and Joe Johns.

Guys, thanks for being with us.

Dana, why are lawmakers upset about the FBI searching a congressman's office? I mean, my office can be searched. Your office can be searched. Your company e-mail can be read by your employers. Why should lawmakers be any different, in their opinion?

BASH: That's a very good question.

And, you know, one senator here, Senator John Warner, said that, you know, John Doe should be treated the same, in general, as John Warner.

But when it comes down to it, you talked -- I talked to several constitutional scholars, the Senate historian. And there are different rules in general for members of Congress, because they say, look, they have to do different things than -- than regular people, than you and I have to do.

But the bigger issue is, for -- for members of Congress here, is the separation of powers issue, that they have oversight over the executive branch, and they could very well have files in their offices, they say, that could, you know, be an investigation that they're doing of the executive branch.

So, if this sets a precedent, they fear that this -- this could really change things. And it really breaches the fundamental separation of powers, they say.

COOPER: But, Joe, I mean, that argument is based on the idea that the executive branch is going to, you know, abrogate its responsibility and -- and do something illegal and -- and order investigations based on -- on political grounds.

I mean, that -- is that really a fair argument? I mean, why shouldn't these guys' offices be completely transparent? I mean, they're working for us, for American citizens. I don't quite get their argument.

JOE JOHNS, CNN CAPITOL HILL CORRESPONDENT: Well, their argument is, like Dana said, they have to do different things. They are protected by the speech and debate clause, for example.

A lot of people I talked to today, people who are -- work in Washington and have for a long time, including some Democratic strategists, say, there is an institutional concern here, and that is the thing that Congress has to protect.

The Republican leadership, in fact, is in control of the Congress. They don't want to leave the Congress in worse shape than when they came here. They want members of Congress to have the same rights and to be able to stand up to the administration, to the other branches of Congress, without fear of somebody coming into their office, going through all their papers, taking away privileged things, and, perhaps, using them for unintended purposes.

COOPER: Kelli, legally speaking, I guess we are in unchartered territory. Why did the FBI feel compelled to go about the investigation in this particular way, I mean, raiding his office?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Justice officials say that they actually have been working with the congressman to get their hands on that material for some time, and, in fact, issued a subpoena back in last -- last August.

But they say they got no cooperation. They got not one single document that they needed. At the advice of a federal judge, they moved forward and -- and went to another judge and said: Look, here's the evidence we have. We want to get a search warrant.

The judge approved it. They went in.

COOPER: Kelli, do we know at this point what it was that he removed from his house when he got the National Guard to drive him after Hurricane Katrina? And then, you know, their truck sunk in the mud, and a Coast Guard helicopter had to come. Is it known yet what he actually was doing in that home and removing?

ARENA: No. I don't know, but I'm sure that's something that the FBI has definitely looked at, Anderson.

COOPER: Dana, politically speaking, you would think Republicans, I mean, in some ways, would be thrilled...

BASH: Mmm-hmm.

COOPER: ... that a Democrat was being investigated.

What can they gain from defending Jefferson? Is it purely -- you know, I mean, is it sort of just protecting themselves, because they don't want their offices raided down the road?

BASH: Well, certainly, that is -- that is a part of it.

You know, this is -- that has been one of the most interesting twists in this story, that you have Republicans, who, as you said, should basically be, you know, swinging from the chandeliers, politically, when you have -- they have a Democrat with this kind of evidence apparently built up against him.

But it's sort of in the DNA of Republicans, of conservatives, to really not only protect institutions, but to be very concerned about the separation of powers, about, you know, Big Brother, if you will, things like that.

If you talk to Democrats, I can tell you, though, Anderson, a lot of them up here say, wait a minute. You know, there's a little bit of hypocrisy going on here. They say, Republicans have been fine with some of the other practices of the Bush Justice Department. But when it's treading on their turf, they get upset.

COOPER: I'm shocked to hear about hypocrisy in Washington.

(LAUGHTER)

COOPER: Joe, what -- Democrats you have been talking to, how concerned are they about this?

JOHNS: Well, they say this is an opportunity for Republicans to push back at an administration that's been very aggressive in rooting out corruption, first among Republicans, now with a key Democrat.

They say it's an opportunity for -- for the people on Capitol Hill to simply say to the administration, hey, look, we're not going to stand for you coming up on Capitol Hill and doing just anything.

COOPER: Hmm, interesting. It will be interesting to see how people around the United States view, you know, this raid on the office and whether they see it as their lawmakers seem to see it.

Guys, appreciate it, Joe Johns, Kelli Arena, Dana Bash. Thanks.

The FBI is focusing more resources on public corruption cases. Here's the "Raw Data."

The bureau says about 2,200 investigations are under way -- we are talking nationwide, not just in Washington -- indictments are up about 40 percent. And, in the past two years, more than 1,000 federal, state and local government officials have been convicted in corruption cases.

Tonight, in Washington, authorities are also analyzing a new tape apparently from Osama bin Laden. You're going to hear for yourself in a moment. And, for the first time, if it is bin Laden, this guy is talking about his personal involvement in the 9/11 attacks.

Plus, a new FTC report on gas-gouging after Katrina -- some senators fired up over the findings. After all, it's an election year. We are "Keeping Them Honest."

And one of the beltway snipers on trial -- remember these guys? Well, they are back in court, and some shocking testimony. It turns out the killers were on the eve of an even more sadistic attack. One of them tells jurors they were going to use bombs packed with nails and ball bearings to attack children on buses, in schools, and in hospitals. Unbelievable testimony.

We will have that when 360 continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (SPEAKING IN ARABIC)

(END VIDEO CLIP)

COOPER: Well, that's a bit of the new audiotaped message purportedly from Osama bin Laden that was posted on a Web site today.

Now, CNN has not yet verified that it is his voice, but U.S. officials are taking it seriously. The message is loaded with fresh details, but most remarkable is that, for the first time, bin Laden claims to have personally made the job assignments for the 9/11 terrorists.

CNN's Nic Robertson now joins me in London.

Nic, let's listen to exactly what bin Laden says about his role in 9/11.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): I begin by talking about the honorable brother Zacarias Moussaoui. The truth is that he has no connection whatsoever with the events of September 11.

I am certain of what I say, because I was responsible for entrusting the 19 brothers -- Allah have mercy upon them -- with those raids, and I did not assign brother Zacarias to be with them on that mission.

(END VIDEO CLIP) COOPER: So, he's saying, for the first time, that he picked these 19 killers. Why is that so significant?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, what he's trying to do here is build a case to say that Moussaoui is innocent, and he's trying to discredit President Bush and his administration, and build himself support in the Middle East at the same time. It is, in many ways -- it is vintage Osama bin Laden.

This is -- this is the main theme of many of his messages. He says he doesn't expect anything to change, but what he's trying to do here is draw attention to oppression and injustice. So, really, what he's doing here is setting out a case about Zacarias Moussaoui, saying he's innocent; he's wrongly tried, wrongly accused, a wrong and erroneous confession on his part, and the United States, President Bush, is wrong. This has been the thrust of many messages.

(CROSSTALK)

COOPER: Yes. I mean, lectures on justice from Osama bin Laden, it's kind of sickening to hear.

But why -- I mean, why would he deny that Moussaoui had any involvement in 9/11 now and not before, even during that guy's trial?

ROBERTSON: You know, it's really interesting.

He could have weighed in with this kind of explanation before. Perhaps it really serves his purposes better to leave it until afterwards, when he can come out. The event is done. It has happened. Nothing can change it, and now he can criticize. Now he can try and build himself some support in the Middle East.

I mean, he says this is a message for the people of the United States, but nobody's going to take him seriously after 9/11. Really here, he's looking at his support and people who might support him in the Middle East who question what the United States is doing in Iraq, who question many things about the United States at the moment. And he's trying to play to those people, and say, hey, here's another thing where the U.S. is getting it all wrong.

And he goes on to mention, you know, the injustices in Guantanamo Bay, as he sees it.

COOPER: You listen to these tapes probably more than anyone. In this one, he makes no reference toward the -- the U.S. or its allies. You know, we don't hear the kind of threats that he usually makes. Why do you think he avoided that? Just oversight, or was there a -- a strategy there?

ROBERTSON: You know, it's interesting.

This message at the end concludes by saying, perhaps there are people in the United States who -- in America who are yet to come forward who want fairness and justice, and that is the way for them to be at peace and secure. So, rather than a threat, there's almost a sort of a carrot here: Hey, come out and believe what I'm telling you, and listen to what I'm saying, and everything will be OK. We will leave you alone -- so, kind of a different style of message in that respect.

COOPER: Interesting. Nic, thanks -- Nic Robertson from London tonight.

Right now, officials are trying to authenticate that tape. And how they do it, it's a fascinating process. They're listening to, of course, the spoken words, but they're also searching for hidden clues.

CNN's David Ensor takes us into how they do it.

(BEGIN VIDEOTAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over): The voice on this audiotape, definitely Osama bin Laden. In his New Jersey home, acoustic expert Tom Owen identifies voices. To learn more, he focuses on the moments when bin Laden is not speaking.

TOM OWEN, AUDIO ANALYST: Let's just take a very small section where he's -- he hesitates for a second, and let's see what we can hear in there.

ENSOR (on camera): OK.

OWEN: There is something in the background. You can't really tell what it is.

ENSOR (voice-over): Tom Owen is one of the nation's top sound analysts, using spectrographic equipment like that used by the CIA, the FBI and others to identify voices. Listening for clues on the recent bin Laden tape, right away, Owen runs into something.

OWEN: You hear that noise in the background?

ENSOR (on camera): Yes, sure.

OWEN: It sounds like metal scraping metal?

ENSOR: Yes.

OWEN: It's to eliminate noises other than the voice, but it's a little overused.

ENSOR: Visually, this is such a flat band of sound here.

OWEN: Right. It has been -- it has been compressed.

(CROSSTALK)

ENSOR: So, you think they may have compressed this, taken off the highs and lows, to make it harder to draw any clues out of the tape, as to where he's hiding?

OWEN: Right.

ENSOR: Do you think it's conceivable that a clue off an audiotape might lead U.S. intelligence to Osama bin Laden one day?

OWEN: Possible. It's possible. It wouldn't be the first time. When -- when they were doing the mob cases in New York, one of the ways that they were finding out where certain people were and making -- where certain gangsters were conducting operations is because they heard the airplanes overhead.

ENSOR (voice-over): And, in fact, he does find a tantalizing clue on this tape.

OWEN: Yes, right through here.

ENSOR (on camera): Starting right in there, yes...

OWEN: Right through here.

ENSOR: ... there's something.

OWEN: It almost sounds like there's a -- kind of thing going on.

ENSOR: Yes.

(voice-over): Could be engine noise. That would say something about bin Laden's hiding place. When there are pictures to look at, there is much more to analyze, though it's not as easy as it looks on TV.

(BEGIN VIDEO CLIP, "CSI: NEW YORK")

UNIDENTIFIED ACTRESS: Got our three reference points. How far are the buildings from Zoya (ph)?

GARY SINISE, ACTOR: We will know in a second, right down to her front door. Circling and isolating.

UNIDENTIFIED ACTRESS: Queens.

(END VIDEO CLIP)

ENSOR (on camera): Do you ever watch "CSI"?

RICHARD VORDER BRUEGGE, FBI FORENSIC EXAMINER: Never. Makes me sick to my stomach.

ENSOR (voice-over): FBI agent Richard Vorder Bruegge doesn't like the way "CSI" makes it all look so easy. But, an unmarked FBI lab in Northern Virginia, he uses the same technique, triangulation, on bank surveillance images to figure out the height of masked robbers and help convict them.

VORDER BRUEGGE: If you have one measurement in that scene, then you can measure anything in the scene.

ENSOR: Vorder Bruegge looks for patterns, like the masked robber of 10 banks who always wore the same shirt.

VORDER BRUEGGE: Patterned shirts are very easy to individualize, that is to say, to identify them, to the exclusion of all other shirts.

ENSOR: Once the man was arrested, the goal was to prove he had committed all of the robberies. In his house, they found the shirt.

VORDER BRUEGGE: I'm 100 percent sure that it's the same shirt.

ENSOR: Law enforcement and intelligence officers use those techniques and others to analyze tapes from terrorists, like this one from Osama bin Laden, not long after he escaped from American bombardment at Tora Bora.

Bin Laden and his deputy, Ayman al-Zawahri, generally use plain backgrounds to reduce the clues. But analysts soon noticed that, on this one, he did not move one of his arms.

JAMES FITZGERALD, FBI BEHAVIORAL ANALYST: Members of the medical profession were brought in to review that. And there was a -- an opinion that, in fact, he -- he probably had been hurt at some point.

ENSOR: In the early days, things were different. Bin Laden and Zawahri even put out a walking tape, showing terrain. That set analysts to examining rock formations and listening to bird calls. But the former head of the CIA's bin Laden unit says, since then, al Qaeda has learned to be careful.

MICHAEL SCHEUER, FORMER CHIEF OF CIA BIN LADEN UNIT: The enemy is stupid, if they're going to give us a tape that tells us where they are, geographically, if it's going to give us a fix on them. So, a lot of this stuff is just -- we -- we go through the motions, so we can cover our behinds and say, we have checked everything we could think of.

ENSOR: Nevertheless, over the years, there have been successes against al Qaeda. Officials will not say whether tape analysis contributed to them. Each time a new terrorist tape emerges, though, American analysts go through every sound, every image, just in case.

David Ensor, CNN, Northern Virginia.

(END VIDEOTAPE)

COOPER: Fascinating.

Up next on 360: the high cost of filling up your tank. We are going to look at how Congress is trying to dig up some kind of explanation for you, so you will still vote for them come November. We're "Keeping Them Honest" tonight.

Plus, new details about the beltway snipers. If you think you know what these guys were up to, think again. One of the killers today revealed their master plan, saying he was ordered to shoot pregnant women at a cemetery by the other shooter. Their twisted plot didn't stop there.

We will have more when 360 continues.

(COMMERCIAL BREAK)

COOPER: Filling up your gas tank, it's hard not to get angry. We will show you how Congress is trying to make sure you don't get angry at them. We are "Keeping Them Honest" -- next on 360.

(COMMERCIAL BREAK)

COOPER: An "arm" and a "leg" there, some all-too-familiar gas station humor.

A lot of people are angry at the price of gas, especially when they hit it at the pump. But that makes Congress worried. Now, they don't want you angry at them. So, now it seems they're looking to blame someone else for the rising cost of gas. The lawmakers' latest target is the head of the Federal Trade Commission. The question is, is that really fair?

Tonight, John Roberts is "Keeping Them Honest."

(BEGIN VIDEOTAPE)

JOHN ROBERTS, CNN SENIOR NATIONAL CORRESPONDENT (voice-over): By now, it's a familiar story: a crisis like Hurricane Katrina. Gas prices spike. Consumers fume. Politicians scream. The Federal Trade Commission investigates price-gouging by the oil industry and finds nothing.

It would usually end there, but not in this election year.

SEN. TRENT LOTT (R), MISSISSIPPI: There's something real fishy here.

SEN. BARBARA BOXER (D), CALIFORNIA: I am very disappointed in this report. I think it's a whitewash.

ROBERTS: The chairwoman of the Federal Trade Commission was pummeled today by senators feeling the heat from angry voters, moved close to tears by charges she could care less about consumers.

DEBORAH PLATT MAJORAS, CHAIRWOMAN, FEDERAL TRADE COMMISSION: But if you have any doubt whatsoever about my caring and my empathy and my background of working class for the people of America, then, I would like to spend -- suggest that you spend some time with me, because nobody who works with me doubts that for one second.

ROBERTS: But there was no sympathy for a commission that critics charge has allowed the oil industry to consolidate, to the point there is no incentive to compete. * MARK COOPER, CONSUMER FEDERATION OF AMERICA: So the FTC allowed the industry to get into this state, and now they don't have to do anything technically illegal to rip the consumer off. ROBERTS: The oil companies say the price of gas simply reflects supply and demand.

JOHN FELMY, CHIEF ECONOMIST, AMERICAN PETROLEUM INSTITUTE: Our industry has been investigated dozens of times and exonerated every single time.

ROBERTS: But critics say the industry keeps a tight leash on supply through refining capacity. And it's no surprise, they say, that there hasn't been a new refinery built in 20 years.

TYSON SLOCUM, PUBLIC CITIZEN: When you do not add more capacity by building new refineries to keep up with rising demand, you are going to create tighter supply situations. And when you have tighter supply situations, you have greater ability to increase prices to consumers.

ROBERTS: Of course, the high cost of gas does provide convenient fuel for political outrage. In a presidential-style speech today, Hillary Clinton called for a virtual revolution in America's energy policy.

SEN. HILLARY CLINTON, (D) NEW YORK: Our present system of energy is weakening our national security, hurting our pocketbooks, violating our common values, and threatening our children's future.

ROBERTS: The Republican National Committee, meanwhile, rolled out a new Internet ad, taking aim at democrats for wanting high gas prices. And if you want to know just how much is at stake, listen to this extraordinary warning Senator Trent Lott sent to the oil companies.

SEN. TRENT LOTT, (R) MISSISSIPPI: I don't want to do something crazy. I voted against every regulatory effort in this area for 30 years. But the American people are agitated about this. And there better be some restraint shown, or the consequences are not going to be pretty.

ROBERTS: That something is already in the works. Republican Senator Ted Stevens is drafting a federal law to ban price gouging. Right now there isn't one, only laws against collusion to drive up prices. But the challenge for Senator Stevens will be how to give this new law teeth. John Roberts, CNN, Washington.

(END VIDEOTAPE)

COOPER: Well, a bizarre and terrifying new dimension to the Washington area snipers. In a courtroom today, testimony to what the alleged mastermind was planning, not just shootings, but bombings targeting kids as well as extortion and a whole lot more mayhem. Details of that coming up.

And later, take a look at this video. The flames pushed this woman and child to the edge. A mother and son took a leap of faith. See how their faith was rewarded ahead on 360.

(COMMERCIAL BREAK)

COOPER: As if a story couldn't get any stranger or sicker or scarier. The terrifying saga of the beltway snipers did all three today. In a Maryland courtroom just outside Washington, the two killers went face to face, literally. John Muhammad and Lee Malvo. They've already been convicted in Virginia for one of 10 killings. Muhammad's now on trial for six more in Maryland and he's acting as his own attorney, cross-examining his young protege.

Malvo has been testifying about how much worse their rampage could have been. He says they planned six shootings a day, then bombing schools and children's hospitals. Such a twisted plan, Malvo says it nearly drove him to suicide. We'll have more of their day in court in a moment. But first, just a reminder, lest we forget of when these two killers ran free.

(BEGIN VIDEOTAPE)

COOPER: For three terrifying weeks in October of 2002, the Washington, D.C., area was under siege. Schools closed. Parking lots deserted. The most mundane chores of daily life, pumping gas, grocery shopping, suddenly high-risk activities. When it was all over, 10 people were dead, another three injured and a nation left to wonder why. The first shot was fired on October 2nd, killing 55-year-old James D. Martin in the parking lot of a Shopper's Warehouse in Wheaton, Maryland.

It launched 30 hours of terror. Six people gunned down, seemingly at random, while mowing lawns, filling car tanks, walking down the street. And it didn't stop. October 4th, a woman shot outside a craft store in Fredericksburg, Virginia, as she was loading bags into her car. Three days later, a 13-year-old boy hit outside the Benjamin Tasker Middle School in Bowie, Maryland. This time the sniper left a sinister calling card, death from the tarot deck, inscribed with a cryptic message, Mr. Policeman, I am God.

All over this region, police are everywhere, looking for these people.

The news media descended, but the killers always seemed just one step out of reach, vanishing into thin air after each shooting. Panic swept the area, already jittery just one year after the 9/11 attacks. Fear that Al Qaeda was behind the spree that America was once again under attack. Some wondered if there was another Timothy McVeigh, sending police chasing false leads, a couple in a white van, an olive- skinned man. More than 60,000 tips were phoned in. Among the callers, the shooters themselves.

Montgomery County Police Chief Charles Moose led the local and federal investigation.

CHARLES MOOSE, MONTGOMERY COUNTY POLICE CHIEF: We understand that you communicated with us by calling several different locations. Our inability to talk has been a concern for us as it has been for you. COOPER: The cat and mouse game continued. On October 19th, the killers shot a man outside a steakhouse in Ashland, Virginia, and left a note. "Call me God," it said, demanding $10 million to stop the killing spree. And a chilling postscript. Your children are not safe anywhere anymore. But behind the scenes, clues were starting to add up. Authorities compared tips with the killers' own words. And on October 24th, three weeks after the spree began, the trail led to two drifters, 42-year-old John Muhammad, and 17-year-old Lee Boyd Malvo. Sleeping in a beat-up Chevy Caprice near a Maryland rest stop.

MOOSE: We have not given in to the terror. Yes, we've all experienced anxiety. But in the end, resiliency has worn out.

(END VIDEOTAPE)

COOPER: Well, all of that brings us to the trial today. And what Lee Malvo called phase two of their killing plan. That and new insight into how these killers went about their deadly work. Reporting for us tonight, CNN's Kathleen Koch.

(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT: You took me into your house and made me a monster. The first words sniper suspect Lee Boyd Malvo had for the man he once loved and would have died for. In Montgomery County Circuit Court, Malvo, the now 21-year-old suspect, called John Allen Muhammad a coward. He revealed the 45-year-old defendant had planned a month of terror. His goal, kill six people a day. Then Malvo said they would begin phase two, using improvised explosives packed with nails and ball bearings to attack children on buses and schools and at children's hospitals.

Malvo said they were about to begin phase two when they were caught. Calm and articulate, the young man described how he became distraught when his mentor and father figure first unveiled the plot. He sat in the bathroom for hours crying and playing Russian roulette. Quote, "I loaded one round, spun, put it to my head. Fired, fired, fired. Until I reached the fourth round and then realized this was the one. I just broke down. I couldn't do it."

Still, they traveled to Montgomery County, Maryland, that Malvo says Muhammad described as well off, mostly white, quote, "the perfect area to terrorize." Malvo described how they scouted each shooting location to make sure there were no surveillance cameras, few witnesses and good escape routes. He was the spotter, saying over and over, quote, "I told Mr. Muhammad he had a go, and he took the shot." Malvo even demonstrated how some victims fell. Victims' family members cried. One woman so overwhelmed, she left the courtroom sobbing.

Malvo said they trained their sights on other victims, in Washington and Maryland. In Baltimore he says Muhammad ordered him to shoot pregnant women at a cemetery. Malvo couldn't pull the trigger. In cross-examination, Muhammad questioned Malvo's memory, vision, and honesty. Pointing out he confessed to the murders before in seven hours of questioning by detectives. Quote, "so seven hours of lying, is that correct?" Yes. "That was a sworn statement, and you're sitting here today, and this is a sworn statement?" Yes. Malvo now says he shot three victims, two survived. He admitted firing the shot that killed bus driver Conrad Johnson. Those in court say Malvo was not the timid, brainwashed boy they thought he was.

MARY BRANCH, FRIEND OF SNIPER VICTIM: Malvo, I thought he was more controlled by Muhammad. But no, he had a large part in the situation also. He was very articulate. I didn't know he was going to be so articulate. He was very articulate. That changes everything I think as far as I was concerned.

(END OF VIDEOTAPE)

COOPER: Kathleen, you were in the courtroom today. Can you describe how Malvo and Muhammad interacted? It's fascinating they were sort of toe to toe on this.

KOCH: They were Anderson and this was the first time the two men have been in the same room in more than two and a half years. Malvo rarely looked at Muhammad directly. But Muhammad stared quite intently at Malvo throughout his testimony. And Muhammad tried to, again, exercise dominance over Malvo as he began cross-examination, asking the last time we ran four miles, who won? And Malvo replied, you. The last time we ran five miles, who won? And Malvo replied, "You." Very, very interesting.

Now, both men will be back in the courtroom, Anderson, in the morning in Montgomery County. Muhammad will continue cross-examining Malvo, and Malvo for his part today, said he was pleading guilty to the murder charges for his involvement in the six killings in Maryland. He has cut a deal with prosecutors for life in prison.

COOPER: So disturbing. Kathleen, appreciate that.

The question is really, what really made these two tick? A mystery really remains. Was Lee Malvo brainwashed? We're going to ask Sari Horwitz who has written a definitive book on the beltway snipers.

Also tonight, later a mother and a son and a fire. This video is just extraordinary. They had no way out except straight down. See what happened next when "360" continues.

(COMMERCIAL BREAK)

COOPER: We're talking about the two men now known as the beltway snipers. A kind of twisted father/son team. John Muhammad there on the left and his young protege, Lee Malvo. Together they've been convicted of, pleaded guilty to or may be facing trial in connection with 10 fatal shootings over more than 20 days in the Washington, D.C. area and other killings elsewhere. Today Lee Malvo painted a really chilling picture of what else John Muhammad had in mind.

So many questions remain. Here to help us answer some of them is Sari Horwitz, co-author of "Sniper: Inside the Hunt for the Killers Who Terrorized the Nation." She joins us in Washington. Sari thanks for being with us. At one point during the trial Malvo glared at Muhammad and said you took me into your house and you made me a monster. How much control did Muhammad have over Malvo?

SARI HORWITZ, CO-AUTHOR, "SNIPER": Well, Anderson, I believe he had tremendous control over Malvo. When the crime spree began, Malvo was a child basically without a parent. And Muhammad was a parent without children. And they bonded in this deep father/son relationship. But really the beginning of it was two years before in the Caribbean. And for our book, "Sniper," we went to the Caribbean, we talked to family, friends about their relationship. And it's fascinating.

COOPER: And he would control his diet. I mean, I remember at one point reading --

HORWITZ: Exactly.

COOPER: -- you know, he would only eat, like, spoonfuls of honey. What was he eating?

HORWITZ: Oh and certain vitamins, sometimes just one meal a day. He controlled his exercise. He had him on shooting ranges for hours at a time. But it's important to understand how it started. Because in Jamaica where Malvo grew up, he was known as a nice kid, he did well in school. And there was none of what you saw in court today or what we saw during those weeks.

COOPER: And Malvo originally refused to testify against Muhammad in the first trial. Why do you think he's agreeing to testify for the prosecution now? Is it just that he made a deal?

HORWITZ: Well first of all, it's been four years since this all happened. He's had a long time to think about it. He's facing, you know, life in prison, and Muhammad is facing a death sentence. He really has nothing to lose. And as you said, in court, he said, you know, you brought me into your house. You took me into your family, and you created a monster. And he certainly did create a monster.

COOPER: Malvo had testified also today about playing Russian roulette after hearing Muhammad's plans. And he did it three times, stopping he says when he was sure the next time would kill him. What does that tell you about his frame of mind?

HORWITZ: Well you know it's interesting that Russian roulette story, hard to know if it's true, hard to any if any of these stories he says are true. But when we were working on the book, we heard something that tracked with that. And when they were traveling to Louisiana, they met a relative of Muhammad's, a cousin of his, who Malvo liked, a young girl. And as they continued their journey across America doing two-bit liquor store stickups, he wrote a letter to this young girl and he said, "I feel trapped. I'm depressed. I'm in a bad situation, I'm in a bad frame of mind. There's a plan coming up I don't like." And that tracks with this Russian roulette story that he wanted to kill himself.

COOPER: Something else came up today. Malvo talked about a commune in Canada that they hoped to, I guess plan where they would train other kids. What was the commune going to be for? HORWITZ: Well, this is classic John Muhammad. They wanted to train other kids, you know, kids who were disadvantaged, to be terrorists and to be sent out across America to commit acts of terror. And I say it's classic John Muhammad because John Muhammad was a very angry, bitter man. And he also saw himself as sort of a mini Osama bin Laden. He was fascinated with 9/11. He told people he felt like America had 9/11 coming to them. They bought the car, the Chevy Caprice, in New Jersey on the anniversary of 9/11. They actually signed papers at the time of those attacks.

He was a very bitter man. He was angry at his wife because he had lost his kids. He was angry at this country, this society. He had been in the military. He'd been in the gulf war. And there had been a racial incident there. And he came back very embittered. So you combine that angry bitterness with this obsession with 9/11, and you see where this idea of the commune and creating mini terrorists comes from.

COOPER: It's just so twisted and bizarre. Sari Horwitz appreciate you joining us. The book is "Sniper," the definite account. I appreciate you joining us. Thank you.

HORWITZ: Thank you Anderson.

COOPER: Up next on 360, the shot of the day. Incredible video to show you from Hamburg, Germany. A mother and son and a very narrow escape. We'll show you the full tape.

Plus, the fight over illegal immigrants just keeps going. The difference is the whole country's paying attention now. Coming up, we'll take you back to the border and see what is being done on both sides to try to stem the flow.

(COMMERCIAL BREAK)

COOPER: Coming up, the dramatic shot of the day. But first, Erica Hill from "HEADLINE NEWS" has the business headlines we're following. Erica?

ERICA HILL, CNN ANCHOR: Anderson, Wall Street can't seem to break its losing streak. Stocks turned south in the last half hour of trading today over concerns the Fed may keep raising interest rates to fight inflation. The Dow, which just two weeks ago was near an all- time high, lost nearly 27 points today. The NASDAQ gave back 14, falling for the tenth trading day out of the past 11. And the S&P dropped 5 points.

On the earnings front, some disappointing numbers from Borders. The nation's second biggest book seller lost nearly $19 million in the first quarter, blaming weak sales at its Walden Book Stores for those numbers, as well as a challenging sales environment overall.

On a more upbeat note now, two of the world's biggest brand names, Nike and iPod, teaming up to create a new wireless device that will sync up your running shoes to your iPod. Basically it's going to tell you via your iPod how far you've run, how many calories you've burned. The Nike iPod sports kit will be available in the U.S. in mid-July for about 30 bucks. Apparently it will also play a pre- chosen power song when your energy levels are lagging a little and you need that extra motivation Anderson.

COOPER: Power song. What would your power song be, Erica Hill?

HILL: I'm trying to think of what I put on at the gym some time. You know what, really lately is -- I don't know the right name to it, but the Rolling Stones, "The Rain Fall Down." Lately that one gets me going on the treadmill.

COOPER: Really?

HILL: Yeah.

COOPER: Well you're kind of kicking it old school.

HILL: Well, you know, back to the roots. And you?

COOPER: You know I don't know. I'll have to give it some thought. I ask the questions I don't answer them.

HILL: I'm sorry. Your show.

COOPER: Let's take a look at the shot, the most amazing video from this day. I don't know if you've seen this. In Hamburg, Germany a woman and her son -- it ends up okay, while you're watching this, just so you know. A woman and her son jumped from her apartment balcony to escape this fire. Look at this from the kid's hanging over. The woman is obviously distraught.

HILL: Gosh, that's just amazing.

COOPER: Yeah. The fire broke out early this morning. Both amazingly suffered only minor injuries. Take a look. The woman just drops right down.

HILL: And it looks like -- do you see that other thing fly? I heard earlier today that she was holding a cat, and it kind of looks like that's what falls when she falls, but I haven't been able to find confirmation of that. I saw it on "AMERICAN MORNING" this morning on CNN.

COOPER: Well then it must have been true.

HILL: It's true.

COOPER: Erica, thanks.

Just ahead, with pressure growing on immigration reform, Mexico's president has come to calling. What he said and the fine line he's walking in a moment. Why he didn't go to Washington.

Later, what Mexico is and isn't doing to stop the flow of illegal immigrants. We'll talk to Lou Dobbs, and we'll go back to the border for a closer look. And we'll take you to the ground zero for the bird flu in this country, the place where researchers have been preparing for years to track and stop the killer. A break first. You're watching "360."

(COMMERCIAL BREAK)

COOPER: Good evening again. The battle on the border. Thousands of illegal immigrants a day and many say the man who could do something about it, just isn't doing enough. Now Mexico's president is here, visiting out west, but avoiding Washington.

ANNOUNCER: Mexican President Vicente Fox inside the U.S. What's he doing here? And how will his visit play in the battle on the border? We're covering all the angles.

Smuggled in carpets or tucked inside a dashboard. Tonight, illegals going to the extremes just to get in.

And fearing the bird flu and getting scammed.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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