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ANDERSON COOPER 360 DEGREES

Democrats on Defensive Over Iraq?; Katrina Fraud Uncovered; A Look at L.A.'s Skid Row; The Plot Thickens in the Killer Grannies Case

Aired June 14, 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: Good evening again, everyone. We're (AUDIO GAP) on the West Coast all week, as Larry said.
Meantime, President Bush is back in Washington, trying to put a new face on the war and Democrats on the defensive.

(BEGIN VIDEOTAPE)

ANNOUNCER: New hope on Iraq and a new dig at the opposition?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There's an interesting debate in the Democrat Party about how quick to pull out of Iraq.

ANNOUNCER: Putting Dems on the defensive -- is the president focusing more on winning elections than winning the war?

Tower of hope or tower of death? Is an oil derrick in the heart of Beverly Hills giving kids cancer? Erin Brockovich is "Keeping Them Honest." So are we.

And hiding in plain sight -- a human dumping ground.

UNIDENTIFIED MALE: Hey, let me see your wristband. Where are you -- were you in the hospital recently?

ANNOUNCER: In vans, buses, even ambulances, the sick and mentally ill dumped on 50 square blocks of downtown L.A.

(END VIDEOTAPE)

ANNOUNCER: This is a special edition of ANDERSON COOPER 360: "Keeping Them Honest on the West Coast."

Live from Los Angeles, here's Anderson Cooper.

COOPER: Hey, good evening tonight from Los Angeles.

As we begin tonight, 75,000 Iraqi and coalition forces are either in Baghdad or headed there soon. And they have got perhaps the worst job in the world, trying to get the city back under control. May not work. Didn't work the last time around there was a crackdown. But, today, just back from Baghdad, President Bush called the new operation a sign of progress. He was speaking as commander in chief, of course, but you couldn't help but notice he was also acting a lot like the leader of a party facing elections in November -- so, all the angles tonight on both. We will look at what appears to be a new strategy at the White House for regaining support on Iraq, while painting Democrats as weak or divided, which raises the question, are they? We will see where the battle lines are being drawn and whether the Democrats really are on the ropes.

Also, a new tone -- the president today unscripted, unplugged, a little jet-lagged, perhaps, but clearly having fun.

We begin, though, with the serious stuff, war and politics and CNN's Suzanne Malveaux.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice-over): More than three years since the Iraq war began, President Bush is still trying to convince the American people the U.S. invasion was worth it.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It was the right thing to get rid of Saddam Hussein.

Al Qaeda's real.

I also understand the stakes of this war.

MALVEAUX: The mantra is the same. But the administration insists, this moment is different.

BUSH: Mr. Prime Minister, thank you for this opportunity to visit with your cabinet.

MALVEAUX: Fresh from his surprise trip to Baghdad, President Bush says he's looked Iraq's new prime minister in the eye and now has a partner he can support.

BUSH: I saw firsthand the strength of his character and his deep determination to succeed, to build a country that can sustain itself, govern itself, and defend itself.

MALVEAUX: The White House strategy to recapture support for Iraq is threefold -- first, seizing the moment, introducing new initiatives, such as:

BUSH: Operation Together Forward started this morning.

MALVEAUX: A joint effort involving Iraqi and coalition forces, aimed at bolstering Baghdad security -- also, a new plan to drum up international aid for the Iraqis through the U.N., and a pledge by President Bush to send his own secretaries of commerce, agriculture, energy and treasury to Baghdad to help the Iraqis revitalize their economy.

The second part of the White House strategy, acknowledging mistakes and missteps.

BUSH: I was asked at a press conference in the East Room with Tony Blair, you know, mistakes. Abu Ghraib was a terrible mistake.

MALVEAUX: Mr. Bush also conceded, Iraqi troops need to be better equipped and rebuilding projects better planned.

The third part of the White House strategy, inviting new voices.

BUSH: I appreciate people's advice, and I appreciate their candor.

MALVEAUX: To demonstrate that point, today, the president briefed a group of bipartisan advisers, as well as the House and Senate leadership, about his Iraq trip. Lawmakers are embroiled in a debate over how soon U.S. troops should come home.

SEN. MITCH MCCONNELL (R), KENTUCKY: This is a particularly bad time to be sending a message to the terrorists in -- in Iraq that we might be thinking of running, just when they're running.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: What we did not hear was a new direction for Iraq. And I believe that we need a new direction.

MALVEAUX (on camera): Clearly, there's a change in tone at the White House, but not in policy -- the hope of the White House strategy, to win over Americans, while, at the same time, reassure Republicans that they won't pay the price for Americans' frustrations over Iraq come midterm elections.

Suzanne Malveaux, CNN, the White House.

(END VIDEOTAPE)

COOPER: Well, still on the message front, there's late word tonight that President Bush's top speechwriter, Michael Gerson, is stepping down. -- senior officials telling CNN his long-planned departure will come in the next few weeks. Today, however, during parts of his news conference, the president needed no help from Mr. Gerson, or anyone else, for that matter.

Take a look, the president unplugged.

(BEGIN VIDEO CLIP)

QUESTION: Good morning, Mr. President.

You seem quite energized by this moment of opportunity.

BUSH: No, I'm just fighting off fatigue.

(LAUGHTER)

Gregory, fine looking scarf -- not scarf. What do you call that thing? QUESTION: Thank you very much.

BUSH: It's strong.

QUESTION: Thank you.

BUSH: Yes, sir?

Roger?

QUESTION: Thank you, sir.

BUSH: Roger, Roger.

QUESTION: Thank you, sir.

BUSH: Let's see here -- Jake Tapper? Yes, filling in, huh?

QUESTION: How you doing, sir?

BUSH: I'm doing all right. Thank you, a little jet-lagged, as I'm sure you can imagine. Nearly 60.

QUESTION: What are your feelings about discussions in the new Iraqi government of amnesty for insurgents?

BUSH: Yes, that's a -- not a bad question for a substitute guy.

Peter, are you going to ask that question with shades on?

QUESTION: I can take them off (OFF-MIKE)

BUSH: No, I'm interested in the shade look, seriously.

QUESTION: All right. I'll keep it then.

BUSH: For the viewers, there's no sun.

(LAUGHTER)

QUESTION: I guess it depends on your perspective.

(LAUGHTER)

BUSH: OK. Touche.

(LAUGHTER)

(END VIDEO CLIP)

(LAUGHTER)

COOPER: Touche.

Joking aside, the president and his political advisers also know how to play tough -- case in point, what is coming up at congressional Democrats later this week, a vote on a Republican-sponsored resolution aimed at putting Democrats on the record on Iraq.

Now, two angles on the story tonight -- the strategy behind it and the very real Democratic divide it seeks to exploit.

Here's CNN's Dana Bash.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): The president's Rose Garden rhetoric was straight from Karl Rove's election-year playbook for Republicans worried about the war.

BUSH: There's an interesting debate in the Democrat Party about how quick to pull out of Iraq.

BASH: Turn the tables on Democrats by highlighting their differences on Iraq, especially the dicey question, whether to set a timetable to bring troops home.

BUSH: I know it may sound good politically. It will endanger our country to pull out of Iraq before we accomplish the mission.

BASH: Democrats are divided. Senator Russ Feingold is among those who say pull troops out by year's end.

SEN. RUSS FEINGOLD (D), WISCONSIN: I ask, what is wrong with having a clear timetable to bring our troops out of Iraq by the end of this year?

(CHEERING AND APPLAUSE)

BASH: A day earlier, Senator Hillary Clinton was booed by Democrats for disagreeing with that position.

SEN. HILLARY CLINTON (D), NEW YORK: Nor do I think it is smart strategy to set a date certain. I do not agree that that is in the best interest of our troops or our country.

(BOOING)

(APPLAUSE)

BASH: On Thursday, the House will debate the war and vote on a GOP resolution that links Iraq to the war on terror, and says it is -- quote -- "not in the national security interests of the United States to set an arbitrary date for withdrawal."

The GOP strategy is a flashback from the 2004 campaign: Force Democrats to take tough votes on Iraq and paint them as weak on defense. This internal memo tells Republicans to cast Democrats as prone to waver endlessly about the use of force.

UNIDENTIFIED MALE: Our hands are tied, literally.

BASH: Democrats call the renewed GOP attempt to connect the war in Iraq with the war on terror a political ploy. REP. IKE SKELTON (D), MISSOURI: It does not give the American people the real debate that we were promised about our policy in Iraq.

BASH: Democratic leaders hope to use the debate to slam Republicans for turning a blind eye to what they call Bush blunders in Iraq. But some in the rank-and-file are worried the GOP tactics could prove effective.

REP. TIM BISHOP (D), NEW YORK: There's an opportunity to run an ad that would do nothing more than mislead and politicize.

BASH: Democrat Tim Bishop represents a New York district the president won two years ago.

BISHOP: If I vote no, one -- an unscrupulous person could say that I don't support the troops. If I vote yes, someone could say that I'm supporting the president, which -- which, as I say, I -- I don't support the -- the way in which this administration has conducted this war.

BASH (on camera): Democrats on both sides of the Capitol have been meeting behind closed doors for days, trying to come up with a unified political position on U.S. troops in Iraq. In the Senate, Democrats hope to offer legislation to -- quote -- "responsibly redeploy troops from Iraq," but they're struggling to agree on a timetable.

Dana Bash, CNN, Capitol Hill.

(END VIDEOTAPE)

COOPER: Well, no doubt a tough position for Democrats to be in. We talked to a top Democrat earlier to find out what their reaction is going to be, chairman of the Democratic Congressional Campaign Committee, Rahm Emanuel.

I began by asking him whether he thought Republicans are getting back on message.

(BEGIN VIDEOTAPE)

REP. RAHM EMANUEL (D), ILLINOIS: Maybe it's good that the Republicans or the White House have gotten their act together, but, for the rest of America, it's still a wageless economy and an endless occupation.

And the question isn't whether the White House got an act together, but has the country gotten any better at solving its problems? Do we still have -- are we lacking or do we have an energy policy for energy independence?

Are we making college education affordable, or making it farther out for parents' ability to save for their kids' education or for their retirement? I mean, I don't think people -- this is not one -- and, listen, I appreciate spin, like everybody else -- but this is going to be -- this is not one you spin yourself out of a problem or try to throw a lot of smoke up and hope people are confused.

People know instinctually what's going on in their lives and that things are really off track here. And, so...

(CROSSTALK)

COOPER: How much, though...

EMANUEL: Go ahead.

COOPER: How -- how much, though, do things boil down, especially with these midterm elections coming up, boil down to what's going on in Iraq? As long as things are not going well in Iraq, helping the Democrats, and things get better in Iraq, it helps the Republicans?

(CROSSTALK)

EMANUEL: Well, first of all, all Democrats hope things get right. All Americans hope things get right in Iraq, because we have spent $480 billion, three years, nearly 2,500 lives, 18,000 wounded Americans. So, everybody, regardless of party, affiliation wants it to get right.

COOPER: Is it necessary for the Democrats to be unified on -- on a position going forward in Iraq?

EMANUEL: Well, Anderson, we are unified.

I mean, there is a very clear position in the sense of this. Staying the course and hoping for a different result is not a policy for victory. And that's all the president and the Republicans are offering. Democrats...

(CROSSTALK)

COOPER: But it doesn't seem like you guys are unified. I mean, here, Hillary Clinton was booed just the other day...

EMANUEL: No, but...

(CROSSTALK)

COOPER: ... for suggesting not pulling out early.

EMANUEL: No, but Democrats are unified that we have to change course and have a different policy to get to the success.

COOPER: We have heard from Karl Rove talking about highlighting differences between Republicans and Democrats, what he calls differences. Republican House Majority Leader John Boehner urged the party to highlight what they say are distinctions between you guys.

He wrote: "During this debate, we need to clarify just how wrong the Democrats' weak approach is and just how dangerous their implementation would be to both the short-term and long-term national security interests of the United States." You...

EMANUEL: Well...

COOPER: Go ahead.

EMANUEL: Well, let me just say this.

Again, I brought up -- I'm glad you brought those up, because it shows my point. They are constantly trying to seek partisan and political advantage in dividing this country, rather than unifying it.

Second, the Republican Congress has cut and run from its responsibility of oversight.

COOPER: The critics, though, of the Democrats will say, look, you -- you guys cannot speak about the war in Iraq without speaking about the past tense. When you try to speak about the -- the future and the plan...

EMANUEL: Anderson...

COOPER: ... for the future, you're -- you're all over the map. I mean, you have heard that criticism.

EMANUEL: As I just laid out to you, I do believe that 2006 will be the year of Iraq sovereignty, and 2007 will be the year of America's redeployment. And that will be how we do that.

Now, how do we get there? We will lay out pieces of how we get there and what are the key pieces for doing that. I don't know -- but they say, well, Democrats are this.

Republicans are stuck with just more of the same in a policy that, for three years, hasn't succeeded. And we were told this was going to be a short war. Let -- let's go. There -- there's facts here. And you just can't blow past the facts.

(CROSSTALK)

EMANUEL: Don Rumsfeld said it's going to be 10, 30, 30, 10 days of war, 30 days of occupation, 30 days of departure. How's it going?

COOPER: Congressman Emanuel, appreciate you joining us. Thank you.

EMANUEL: Thank you.

(END VIDEOTAPE)

COOPER: Well, three-and-a-half years ago, Democrats were perhaps just as divided on whether to declare war on Iraq. Here's the "Raw Data."

Eighty-one House Democrats voted for the Iraq war resolution. One hundred and twenty-six voted against. Senate Democrats were almost evenly split. Twenty-nine approved the resolution. Twenty-one voted against it.

Here's another number, $1 billion. That's the new amount for fraud associated with Katrina relief, $1 billion of your money. Remember those debit cards given to cover necessities? You know necessities, well, like diamonds and strippers and exotic vacations? How could that happen, you might wonder? Well, tonight, we're "Keeping Them Honest."

Also ahead tonight, the real-life Erin Brockovich, her new battle -- why she says oil wells on the campus of a high school here in Beverly Hills have caused more than 400 people to get cancer. We will hear from both sides.

Plus, a 360 exclusive -- Angelina Jolie will be with us next Tuesday, World Refugee Day -- more details to come.

You're watching 360 from Los Angeles.

(COMMERCIAL BREAK)

COOPER: Katrina relief, first, it was late in coming. Then, it arrived so fast, it became open season for fraud. So, it's good news that, today, federal prosecutors in Louisiana won two convictions and indicted two others on fraud charges. They have got a long way to go, however.

It turns out about a billion dollars in federal aid, a billion dollars, our tax dollars, have been squandered on everything from adult entertainment to exotic vacations or exotic entertainment.

Here's CNN's Jeanne Meserve, "Keeping Them Honest."

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Thirty-seven hundred dollars worth of diamond jewelry, a $2,200 all- inclusive vacation in the Dominican Republic, $2,000 for New Orleans Saints season tickets, $600 for strippers, $400 for adult erotica products, $300 for "Girls Gone Wild" videos, all bought with debit cards issued to victims of Hurricanes Katrina and Rita, your tax dollars at work.

REP. MICHAEL MCCAUL (R), TEXAS: This is an affront to the American taxpayer.

MESERVE: The Government Accountability Office estimates, 16 percent of the payments by the Federal Emergency Management Agency, about $1 billion worth, were made on fraudulent claims.

REP. BILL PASCRELL JR. (D), NEW JERSEY: We're talking about a lot of money here. We are not even talking about contractual fraud yet. Wait until we get into that.

MESERVE: The GAO says some applicants used invalid Social Security numbers and fake addresses, claimed damages to property they didn't own, and made multiple claims to scam the system. The address of this New Orleans cemetery was used by one person to get more than $2,300 in rental assistance. This inmate shows off the thousands of dollars he got in aid. The GAO says millions went to prisoners already housed, of course, at government expense.

And one man who defrauded FEMA out of tens of thousands of dollars used some of the money for a sex change operation, GAO confirms.

GREGORY KUTZ, GOVERNMENT ACCOUNTABILITY OFFICE: Because FEMA has been around for a while, why weren't these controls in place in 2004, 2003, 2002, etcetera? Some of it is very, very basic, making sure that people that register have valid Social Security numbers. That's fraud prevention 101.

MESERVE: Hurricane Katrina was a catastrophe of unprecedented scope. Thousands upon thousands lost everything they owned, including identification. FEMA says its systems and personnel were overwhelmed.

DONNA DANNELS, FEDERAL EMERGENCY MANAGEMENT AGENCY: We just made the calculated decision that we were going to help as many people as we could, and that we would have to go back and identify those people who we either paid in error or that were -- defrauded us, and deal with that.

MESERVE (on camera): Though GAO estimates $1 billion in fraud, FEMA is in the process of recovering only about $17 million. It is looking for more. The agency claims to have revamped how it verifies and crosschecks information. And it won't be issuing debit cards again, until it figures out a way to limit what can be bought with them.

Jeanne Meserve, CNN, Washington.

(END VIDEOTAPE)

COOPER: Well, lessons learned.

In a moment, Erin Brockovich takes on big oil. She says dozens of oil wells beneath a high school campus are causing cancer. We will hear from both sides.

But, first, Erica Hill from Headline News has some of the other stories we're following -- Erica.

ERICA HILL, HEADLINE NEWS CORRESPONDENT: Hey, Anderson.

In Massachusetts, investigators are trying to learn how large amounts of drugs, including cocaine and marijuana, ended up inside merchandise purchased from at least two Home Depot stores. The drugs were stashed in bathroom vanities, in one case, had a street value of around $145,000.

Following the death of Abu Musab al-Zarqawi, U.S. military officials say they are convinced the man claiming to be al Qaeda's new leader in Iraq is, in fact, Abu Ayyub al-Masri. The Egyptian is believed to have arrived in Iraq before Zarqawi. And officials say he likely established the first al Qaeda cell in Iraq. So far, there are no known pictures of al-Masri.

A young man accused of killing his girlfriend's parents today pleaded guilty to murder in a deal that spared him the death penalty. Nineteen-year-old David Ludwig was sentenced to life in prison without parole for shooting Michael and Cathryn Borden in November, after they demanded he break off his relationship with their 14-year-old daughter.

After the killings, the young couple fled by car. Ludwig is also -- also pleaded guilty to statutory sexual assault.

And, finally, Anderson, word is out. Some of your fans call you the silver fox, but you're not alone. In its new issue on newsstands tomorrow, "People" magazine ranks "American Idol"'s Taylor Hicks as the number-one hottest bachelor. The 29-year-old, of course, has silver hair, just like you, Anderson.

Hicks told the magazine he, though, is ready to give up his bachelor days, and he's looking for love...

COOPER: Well...

HILL: ... and probably won't have too much trouble getting a date.

(LAUGHTER)

COOPER: Yes. As the "American Idol," I'm guess not.

I'm just glad there's another prematurely gray person out there, you know? We are slowly taking over the planet.

HILL: I think you two wear it well, too.

(LAUGHTER)

COOPER: Erica, thanks.

A -- a special programming note now: Today, only four days after she returned from Namibia with Brad Pitt and their new baby, I sat down for an hour-long conversation with Angelina Jolie. We spoke about a lot of things, about her passion for helping refugees around the world, her role as a -- a UNHCR special ambassador, and about the places and terrible problems we have both been witnessing in Africa, Asia, and here in this country, and, of course, some questions about her new baby.

We will be airing all of our interview and much more on World Refugee Day. That's next Tuesday, here on a special edition of 360.

Julia Roberts helped make Erin Brockovich famous when she played the legal crusader in the movie. Now the real-life Brockovich has taken up another case, this time in one of the country's most glamorous cities, Beverly Hills. She says oil wells underneath a high school campus are causing a cancer epidemic. Coming up, I will talk to Brockovich about her provocative claim.

And, in downtown L.A., 50 square blocks of despair -- it was designed to help people. It's become a human dumping ground for the sick and the mentally ill, a problem hiding in plain sight -- next on this special edition of 360, live from Los Angeles.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, "ERIN BROCKOVICH")

ALBERT FINNEY, ACTOR: Something like this, Erin, it could take forever. They're a huge corporation. They could bury us in paperwork for the next 15 years. I'm just a guy with a small private firm.

JULIA ROBERTS, ACTRESS: Who happens to know they poisoned people and lied about it.

(END VIDEO CLIP)

COOPER: That was Julia Roberts playing Erin Brockovich in the movie based on a real-life battle to bring a giant company to its knees.

The real Brockovich helped win a record court settlement after discovering a cover-up involving contaminated water in a tiny California town. That was just 10 years ago. Now Brockovich is rallying behind another case, this one in tony Beverly Hills, where Brockovich says big oil is turning part of the city into a cancer hot zone. It's a controversial claim, to be sure. Take a look.

(BEGIN VIDEOTAPE)

COOPER (voice-over): At age 21, Lori Moss was hit with devastating news.

LORI MOSS, BEVERLY HILLS HIGH GRADUATE: You're not supposed to get cancer at that age. So, it just is something you hear when you're older. And it just -- it's very frightening.

COOPER: Diagnosed with Hodgkin's disease, Moss was in and out of hospital with chemotherapy and radiation. And, then, in 2001, at the age of 27, she was told she had thyroid cancer.

MOSS: It was just hard to believe, two cancers in my 20s.

COOPER: Moss thought she was simply unlucky, until, in 2001, she met environmental crusader Erin Brockovich at a book signing.

MOSS: She asked how I was. And I said, you know, I had just, you know, came from the hospital.

ERIN BROCKOVICH, INVESTIGATOR: And I said, oh, are you sick?

And she said, well, I have cancer.

And I was really pretty taken back, because she's very young. Now, is Chris (ph) there?

COOPER: Not long after their encounter, Brockovich came across a possible reason for Moss' condition.

BROCKOVICH: I believe it was a 2001 EPA newsletter. It talked about the oil industry and how they had found a clever way to mask their oil operations amid the glamour -- example, Beverly Hills.

COOPER: Their clever way? An oil derrick covered with bright flowers, painted by terminally ill children, and named the Tower of Hope, sitting right on Beverly Hills High School's campus.

BROCKOVICH: And, then, I thought, how could that be? At a public high school, you have basically an onshore oil platform, and nobody knows it's there? That's really kind of what initially set me off, because nobody had a clue. Nobody knew.

COOPER: But this Tower of Hope has 18 operating oil wells underneath the school's athletic field, which provides the city and school district millions of dollars in royalties, pumping out about 450 barrels of oil a day.

BROCKOVICH: Straight in front of you, it looks like a big retaining wall, with some white stripes on it and equipment on the top. That's Sempra. Most people don't know behind that behind that wall is Sempra's power plant.

COOPER: Brockovich set out to investigate, researching and testing the air quality of the school, and hired Columbia Analytical Services, a network of laboratories that specializes in environmental testing.

The company found abnormal amount of toxins in the air emitted from the derrick and the power plant's cooling towers. Brockovich says this puts innocent students, teachers and residents at risk.

BROCKOVICH: These facilities emit chemicals, poisons, cancer- causing agents, benzene, probium-6 (ph), and dioxin. And they sit right on top of a public school. They're more than close. They're on it. They're there.

COOPER: Brockovich claims it was those toxins that resulted in a cancer diagnosis for more than 400 people who either went to the school or lived near it between 1978 and 1996.

They are among roughly 800 plaintiffs in lawsuits filed in 2003 against the city of Beverly Hills, its school district, eight oil companies, and Sempra Energy, a gas and electric utility and production company, all which deny liability.

Sempra Energy, which just sold the office building, heating and cooling plant next to the school declined to comment on the allegations. Beverly Hills City and school officials declined our request for an interview, but did release a statement, saying, "The safety of our children and all of the children in our community is our highest priority.

The school district and the city hired an internationally respected environmental testing firm. That firm was unable to find any unusual conditions at the high school. The state's air pollution control agency, the South Coast Air Quality Management District, found nothing unusual. Even the testing performed under the direction of the plaintiffs' lawyers showed the air quality at the high school is typical for Los Angeles."

Despite studies that show no link between pollution from oil wells and the types of cancers the lawsuit focuses on, Brockovich says you can't ignore the numbers.

ERIN BROCKOVICH, INVESTIGATOR, MASRY & VITITOE: I'm just that ordinary person that tells you, common sense is kind of kicking in here for me somewhere. You got an unusual number of kids in my humble little opinion with cancer.

COOPER: But one cancer epidemiologist contacted by CNN says certain types of cancers are increasing in young adults everywhere. Most likely because diagnostic techniques have improved. The controversial case is expected to go to court in October. Brockovich says no matter which experts the court sides with, she hopes people will have the awareness to push for change.

(END OF VIDEOTAPE)

COOPER: Well, it is a case that's as complicated as it is controversial. Erin Brockovich joins me now. Thanks for being with us.

BROCKOVICH: Hi, thank you.

COOPER: So this case has become pretty controversial. There's tests done on behalf of the city and by the South Coast Air Quality Management District which found nothing unusual in the air around the school. Are you really confident you can win this case?

BROCKOVICH: Well, I mean, that's what our judicial system is for and we're going to find that out in a court of law in October. But I'm very comfortable with the legal team and the information that is coming out, and the test results that we did. And you have to take a look that all through the '70s and the '80s and the '90s, nobody was monitoring this situation. And if you look at the numbers from Sempra Energy and the amount of hexavalent chromium and dioxins and the emissions from the platform with the number of cancers, we clearly have experts and epidemiologists who have, in fact, found significant increased risk of Hodgkin's disease, thyroid, and testicular cancer from this location through the '70s, '80s and '90s.

COOPER: You've got some 400 cases of cancer which on the face of it sounds like a lot. But there was a study done I guess at the request of concerned parents at the school, who found that the rates of the cancers that your clients primarily suffer from were in the expected range for that area. Do you dispute that?

BROCKOVICH: Well, again you know, I'm not the scientist or epidemiologist. But, yes, our epidemiologist --

COOPER: But you are the one suing.

BROCKOVICH: Pardon me?

COOPER: But you are the one taking this to court.

BROCKOVICH: Yeah, we are suing on behalf of over 800 clients. And our experts and our epidemiologist have concluded that there is statistically significant increased risk of cancers, Hodgkin's, thyroid and testicular, in particular, at the school.

COOPER: There was a follow-up, I guess, a study from the same study showed that those diagnosed with these cancers, for example Hodgkin's disease, that it's twice as common in wealthy people and more prevalent in families with only one or two kids than in bigger families. Beverly Hills obviously a pretty wealthy town. Couldn't these numbers just be statistics?

BROCKOVICH: You know, that boils down to one's perception. And again, you know, we deal with the experts that aren't saying that. That it is increased. They are concerned about it. And that's what will be argued in court in October.

COOPER: There was another expert who told us that there's little evidence that chemicals like benzene coming from an oil well would actually cause Hodgkin Lymphoma or even thyroid cancer in young adults and these diagnoses of thyroid cancer are increasing in young adults just about everywhere.

BROCKOVICH: You know, again, it's going to be their experts and our experts, and a battle if you will, down in a court of law. But we disagree with that. And we have clearly taken a look at all the hexavalent chromium, all the dioxin, all the benzenes, all the cancers and have, in fact, found that it's elevated and it is of concern. We could have this argument forever. And for me, representing and working with these clients, to have 18 operational well heads and a power plant sitting on top of a public school anywhere in the United States of America is not acceptable. And we have over 800 clients, of which over 600 have cancer, and they've come to us, and asked them -- asked us to help them.

And those are our intentions, and that's what we plan to do. And you know, the whole thing is actually very, very frustrating. You know, the other side doesn't get out that often, and after I had initially come on to the site, the South Coast Air Quality Management District sent inspectors out there, and they were so concerned because of the fugitive emissions coming off of the site that they, in fact, thought it was going to blow up, and they sent a letter and a memorandum in stating that this was a very serious problem.

COOPER: Well, as you said the battle now moves to the courts. Erin Brockovich, appreciate you joining us. We'll continue to follow it. Thank you.

BROCKOVICH: Thank you. COOPER: It's the Los Angeles you don't hear about. Skid row. Home to thousands of homeless and allegedly a dumping ground for patients and prisoners if you can believe it, hiding in plain sight. The problem is, that story coming up.

And later an update on two elderly women accused of a million dollar con, now suspected of more than one murder when this special edition of 360 from Los Angeles continues.

(COMMERCIAL BREAK)

COOPER: Tonight we're going to take you to the dark side of Los Angeles, to skid row. You're seeing some of the images there. Right now thousands of people are living on the streets of downtown L.A. Many are on drugs, many are desperate and some allegedly dumped there. A video from earlier this year shows a woman dressed in a hospital gown, authorities say a taxi took her from a medical center to skid row against her will. Many consider this to be L.A.'s greatest shame. CNN's Randi Kaye with a problem that is hiding in plain sight.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT: This is skid row, a 50 square block human dumping ground in downtown Los Angeles.

Let me see your wrist band. Were you in the hospital recently?

KAYE: Still wearing a bracelet from the county jail, this woman, Lily, was too strung out to tell how she got here.

How long were you in the county jail?

KAYE: Because of the abundant social services skid row is a magnet for the drug addicted, the mentally ill, the criminals, and the helpless. It's also a magnet for other cities who don't know what to do with their own problems. So they bring them here, and dump them.

ANDREW SMITH, CAPTAIN, LOS ANGELES POLICE DEPARTMENT: I saw an outside agency dropping off an individual who didn't live in this area, who had never been here before and hadn't been arrested in this area, down actually right down on that corner down there.

KAYE: Out on patrol, LAPD Captain Andrew Smith says he saw two L.A. County Sheriff's deputies dump this man, Byron Harris, who Smith described as confused.

SMITH: Watched them pull to the curb, open the door, and take a handcuffed prisoner out, un-handcuff him, hand him a bag of his property and begin to leave. So I of course stopped them and tried to figure out what was going on.

KAYE: Smith says Harris told him he had not requested to be dropped downtown. He had been arrested in Long Beach, 25 miles away. But a spokesman for the sheriff told CNN Harris, just released from jail, had requested food and shelter. Both available on skid row. The spokesman said deputies did not dump that man or anyone else. Why do you think, if it's indeed happening, other communities are doing this?

SMITH: Well, we have a lot of services, social services down here. But really I think it's a way for other cities to get rid of the problems that they have.

KAYE: Skid row services include food, shelter, medicine, even prenatal care. It's a unique setup born from good intentions. But critics like Central City East Executive Director Estela Lopez now worry the free handouts are leading to dumping.

ESTELA LOPEZ, BUSINESS LEADER: A long time ago they thought that this idea of centralized services was a good thing.

KAYE: Has it turned out to be a good thing?

LOPEZ: It's turned out to be a nightmare. What it has done, it's been a good thing for the 88 other cities in the county of Los Angeles that don't have to deal with problems that come from their own communities. They send them here.

KAYE: Which of these people have been dumped or decided to come on their own is unclear. But Estela Lopez and Captain Smith aren't the only ones who have witnessed dumping.

How long have you been on the street?

KAYE: Orlando Ward works at Midnight Mission, just a block from where Captain Smith encountered Byron Harris.

ORLANDO WARD, THE MIDNIGHT MISSION: I had a guy in our courtyard three days ago, he had hospital gown on, he had the IV was still attached. So I went and I asked him, I said how did you get down here? And he said that the ambulance dropped him off a couple blocks down in front of a mission. I said well did you go in? He goes, well they just dropped me off.

KAYE: Ward was once a basketball star at Stanford University. Drugs lured him to the streets of skid row. He bottomed out, and after two years, he got clean. Ward says skid row was designed to help people, not dump people.

WARD: It makes me angry when you dump people without attaching them to the services that they really need. If your motive is getting them out of your backyard and dumping them on somebody else, I have a problem with that.

KAYE: Captain Smith's 145 officers can hardly make headway here. On San Julian Street otherwise known as heroin alley is like a giant block party where everyone brings an illegal drug. This woman propositioned me. Police say it's well-known she's a prostitute. She explained she's been on the street since age 9. Why do you live like this, go and do this to yourself?

Because you know what, this is a million dollar corporation. It will never stop.

KAYE: This is skid row.

Skid row looks out for skid row --

How are you doing, how are you hanging?

I'm downtown.

Are you?

KAYE: Captain Smith says police can't fix the problem. So who will? And when, the captain wonders, will other communities start providing services for their needy.

MAYOR ANTONIO VILLARAIGOSA, (D) LOS ANGELES: A great city can't be a place where we're leaving so many people behind.

KAYE: Los Angeles Mayor Antonio Villaraigosa is investigating. He says the city of Los Angeles has pledged millions to help the chronically homeless. But it's time the federal government step up, too.

VILLARAIGOSA: The only governmental entity with the resources to deal with the structural problems of poverty in the cities is the federal government. The federal government has failed and refused over the last few years to invest in housing, to invest in the urban core in our cities.

KAYE: The same society that's allowing people to live on skid row is in some cases transporting them to be forgotten. And perhaps to die.

WARD: It's a cultural genocide losing a whole generation of people to this despair and ultimately death.

KAYE: Unlike Byron Harris countless others may have been dumped here without a witness. Randi Kaye, CNN on skid row in Los Angeles.

(END OF VIDEOTAPE)

COOPER: It is hard to believe from skid row now to seniors suspected of murder. We told you about these two before. Police say they made a fortune in deadly hit and run accidents. That is just the tip of the iceberg. And in the next hour, English or else. Zero tolerance law for California school kids who don't know the language. Some say the solution may actually be a problem. First business sense with babies in mind, tonight's edition of "On the Rise."

(BEGIN VIDEOTAPE)

UNIDENTIFIED REPORTER: These kids are years away from medical school, but with MiniScrubs they can pretend to be doctors now. Graphic Designer Jacquelyn Aven came up with the idea for authentic personalized children's scrubs while watching TV.

JACQUELYN AVEN, FOUNDE R & PRESIDENT, MINISCRUBS: I saw a child going in for an operation and I thought how cute would that be if that little boy had a pair of scrubs on. I had an 18-month-old son at the time and his grandfather was a doctor. I immediately went to the internet to try and find a pair for my own son and I was unsuccessful.

UNIDENTIFIED REPORTER: Four years and almost 5,000 scrubs later, Aven's company seems to be in good health.

AVEN: I think one of the biggest successes is just making people happy. The most touching moment was actually dealing with a 5-year- old cancer patient. His mother found me on the internet and said my son is going through chemotherapy right now and these are perfect. Starting MiniScrubs has been worth it because I have been contacted by lots of charities, and that's what really makes me happy is helping out, and trying to give back to the community.

(END OF VIDEOTAPE)

(COMMERCIAL BREAK)

COOPER: You're looking at a live picture of the well-known Hollywood sign right here in Los Angeles. Sometimes the strangest stories in this town don't come from Hollywood, they're being told in the courtrooms and police stations. That certainly describes one case we've been following. It's about two elderly women, Helen Golay and Olga Rutterschmidt. They face charges of insurance fraud allegedly collecting millions of dollars in staged hit and run accidents. Accidents that actually killed two homeless men. Police say the women are suspects in the murders of those two men. Tonight the case has taken another bizarre turn. Reporting for us Peter Viles.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT: A new twist in the bizarre mystery of the elderly ladies and the dead homeless men. Now it turns out there is a third dead man. You can barely make out Fred Downie in this photo but he died of injuries after being struck by a car at age 97 six years ago in Santa Monica, blocks away from where he lived out his final days with Helen Golay's family. Back in Massachusetts, his relatives are suspicious.

MILDRED HOLMAN, FRED DOWNIE'S NIECE: It's still very confusing to me. Still very upsetting. After six years, this is coming up. And if he knew this was happening, talk about people turning over in their graves.

VILES: Then there's the Downie grave in Massachusetts. The headstones on either side of it are reserved for the Golays. A mother and daughter still living in California.

HOLMAN: I don't know how that come about, either. That seems strange. I cannot believe that these two people from California would want to come back to Plymouth to be buried.

VILES: There's more. Downie's will names as sole beneficiary Keisha Golay, Helen's daughter. As far as Los Angeles police are concerned, Downie's death was an accident. ROGER DIAMOND, ATTORNEY FOR HELEN GOLAY: Nobody took out on insurance policy on Mr. Downie and then collected on the policy, so it doesn't fit the first two cases. It's just remotely similar, and there's a coincidence. There's nothing sinister about it at all.

VILES: Helen Golay's lawyer says it's also a coincidence that she benefited from the hit and run deaths of two homeless men.

DIAMOND: Coincidences do happen. And it looks suspicious. But there was no wrongdoing. No criminal acts here. And I'm sure she'll be vindicated.

VILES: Los Angeles police are not done. They are investigating ties between Golay and Olga Rutterschmidt and 12 other men. Some of whom have not been located.

LT. PAUL VERNON, LOS ANGELES POLICE DEPARTMENT: We've identified now about a dozen names, some of those were names from the stationery store where the women had purchased rubber stamps. We know they're using those rubber stamps to take out other life insurance policies.

VILES: Both women have pleaded not guilty to federal fraud charges and are in jail. But at the state level police say this is an active murder investigation and the women are the main suspects. Peter Viles for CNN, Los Angeles.

(END OF VIDEOTAPE)

COOPER: Bizarre. Coming up, what happens when you put Mentos in Diet Coke. That's the shot today. But first Erica Hill has some of the business stories we're following. Erica?

ERICA HILL, CNN ANCHOR: Anderson, stocks surged on Wall Street today. The Dow gaining 110 points to finish at 10,816. The NASDAQ was up 13. The S&P jumped 6. The boost comes after two weeks of losses wiped out gains for the year.

And another market issue soaring gas prices helped to trigger an increase in consumer inflation last month. The consumer price index rose 0.4 percent in May after a bigger jump in April. Economists say this virtually guarantees an interest rate hike by the Federal Reserve later this month.

And soccer star David Beckham, he's the new face of Motorola. As part of a three-year deal Beckham will promote the cell phone makers products across Asia. Financial terms were not disclosed Anderson but I'm sure it's a hefty check.

COOPER: I know that guy is like a promotion machine. Time now for the shot. The video that caught our eye. And tonight's images are explosive Erica, take a look. An experiment that's been making the rounds on the web, this is from google.com. Take a look at what happens when this kid combines Diet Coke and Mentos candies.

HILL: Whoa. The fresh maker. COOPER: The fresh maker. Apparently that demonstration wasn't enough. These guys from eepybird.com take it up a notch using 101 2 liter bottles of Diet Coke and 523 Mentos, putting to shame some of the country's best fountain displays. There you go. The website says the explosions are caused by quote nucleation sites. I don't know what that means, but we love the results. Kudos, eepybird.com guys. And look at that. Take a look at that.

HILL: That is impressive.

COOPER: Yeah.

HILL: Oh, hey it's lick the Bellagio fountains.

COOPER: This shot is like blue man group. Believe it or not in the next hour I'm actually going to try the experiment myself. I've got some Mentos, I've got some Diet Coke. We're going to join the two and see what happens.

HILL: I'm going to have to stay tuned for the nucleation or whatever it was.

COOPER: Nucleation, alright, thanks Erica.

Well a far more serious experiment playing out in California's public schools giving Spanish children and others a bilingual education which costs California taxpayers millions. So they practically banned it. But now some are saying the move is causing more harm than good. We'll explore both sides. And the woman charged with shooting her minister husband in the back. She was in court today. Now she's starting to talk.

Also how scam artists committing auto insurance fraud by forcing you into an accident. You can watch it and protect yourself when 360 continues from Los Angeles.

(COMMERCIAL BREAK)

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