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Rising Rivers Threaten Northeast Communities; Interview With New York Congressman Peter King; Tracking Warren Jeffs' Money Trail

Aired June 28, 2006 - 22:00   ET


ANDERSON COOPER, CNN ANCHOR: Good evening again, everyone.
It is a mess out there, fires threatening the Grand Canyon and tens of thousands of people leaving their homes, one step ahead of rising floodwaters.


UNIDENTIFIED MALE: All residents are to leave their houses.

ANNOUNCER: People fleeing, rivers still rising.

UNIDENTIFIED MALE: In my years here, this is the worst I have ever seen.

ANNOUNCER: And he might not have a house to come home to. Western infernos, walls of fire, even the Grand Canyon facing the flames.

Eyeball to eyeball -- tanks in Gaza, warplanes over Syria forcing a showdown over Israelis taken hostage. Could it trigger a full-sized war?

Plus: Polygamist crackdown, will it get police any closer to capturing America's most wanted polygamist?


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

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

COOPER: Thanks for joining us.

We begin with the flooding. In some places, it is as bad as they have seen in three decades -- all the angles tonight on rising waters, evacuation orders, people stranded in their homes, people swept away and drowned -- at least nine dead so far. Two people are missing, states of emergency are in effect -- also tonight, in the air, on the water, men and women now working around the clock, performing lifesaving rescues and trying to get people out of harm's way.

We're also out West tonight, where they haven't had rain in goodness knows when, where places like the Grand Canyon are right in harm's way. First, though, the rain and the flooding and the real possibility that the worst is yet to come.

Two reports tonight, starting with CNN's Jason Carroll in Northeastern Pennsylvania.


JASON CARROLL, CNN CORRESPONDENT (voice-over): The rivers overflowing here are flooding streets and homes. Two hundred thousand have been ordered to evacuate from the region. But Loretta Stachokus hasn't left, not yet.



STACHOKUS: To a certain extent, she doesn't...

CARROLL: And do you -- and do you think she's going to protect you this time?

STACHOKUS: I hope so. I hope so.

CARROLL: Her son hasn't evacuated either. He lives next door.

UNIDENTIFIED MALE: We lifted everything, fearing for the worst- case scenario, brought everything to the highest point possible.

CARROLL: The water in his home is already rising in the basement.

UNIDENTIFIED MALE: Water right now, if I was to get down there, I would say probably at my mid-waist. You're probably talking at least four -- four feet, maybe a little over four feet, in that basement right now.

CARROLL: The Susquehanna River, in the northeastern part of the state, is expected to crest at 35 feet, 13 feet above flood stage, just shy of the 41-foot levee protecting it.

But its swollen waters have reached Loretta Stachokus' home just outside Wilkes-Barre. Still, she has faith the water will not rise any higher. It's not clear how many of the 200,000 people ordered to evacuate have actually left the area. At least three people have died, and that number could rise. Rescue crews in Bear Creek Mountain responded to reports of two children swept away by floodwaters as they played by the river's edge.

Pennsylvania's governor, Ed Rendell, has declared a disaster emergency in 46 of the state's 67 counties.

GOV. ED RENDELL (D), PENNSYLVANIA: We're still bracing for what may come. The National Weather Service -- Service has downgraded where they think the flood crest will be almost everywhere. CARROLL: In the Manayunk neighborhood of Philadelphia, several children were rescued from one flooded area. And in Westfall Township in Pike County, floodwaters there surrounded homes, forcing evacuations.

Residents along the Schuylkill River in southern Pennsylvania were asked to evacuate Wednesday morning. And back north, near Wilkes-Barre, emergency crews keep watch on the rising Susquehanna with apprehension.

RON DOMBURSKI, PLAINS TOWNSHIP, PENNSYLVANIA, POLICE DEPARTMENT: It's been pretty bad, a lot of roads shut down in the area. And it's only going to get worse over the next couple hours.


COOPER: Jason Carroll joins us live.

Jason, is the water still rising?

CARROLL: Well, just as we have been out here the past few hours or so, Anderson, actually, there's been a little bit of good news for the folks out here.

We have actually seen the waters recede just a little bit. But some of the old-timers out here tell us that's not unusual. Sometimes, the waters recede and then crest again. So, we are going to be out here all night waiting to see if they do crest again later on this evening.

COOPER: Jason Carroll, thanks.

Evacuations and misery really up and down the Susquehanna.

Upstream, in Binghamton, New York, more rain is forecast for tonight, as well as for tomorrow, pushing the river even higher. All across the area, older residents say they have not seen it this bad since Hurricane Agnes, which was back in 1972.

CNN's Allan Chernoff is in Binghamton in a very wet part of the town.

Allan, what are you seeing there?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Anderson, we're looking at a very soaked basement right here, seven feet high. That's the reason I'm not further. There's another reason I'm not further down in, because there's raw sewage here. A sewage treatment plant is down right near this home.

But, normally, this home is about 100 yards away from the Susquehanna River. Right now, it is entirely flooded here. And, throughout the home, there's plenty of damage. We spoke today with the owner of this house. He's doing everything he can to save his valued house.


CHERNOFF (voice-over): Anton Lewis (ph) was up all night last night trying to save his home on the bank of the Susquehanna River.

(on camera): It looks like the living room is pretty much gone, huh?



CHERNOFF: I mean, it's all evacuated on stilts now.

(voice-over): Lucas (ph) is a contractor. He knows how to rebuild homes. The problem is, all his tools are in the basement.

(on camera): We have got about how many feet of water here?

UNIDENTIFIED MALE: Since it's about nine-foot ceilings, I would say seven feet.

CHERNOFF: About seven feet?


CHERNOFF: And this is a totally finished basement?


CHERNOFF (voice-over): And some of his property, like the garage, appears ready to float away.

UNIDENTIFIED MALE: It's about ready to collapse. It might slide down.

CHERNOFF: His neighbor was one of the 15,000 in this region ordered to evacuate, not knowing if his home would still be here when he comes back.

But for someone in the area, there will be no home to return to. Motorcycle builder Mark Callahan (ph) has cleared out all the working bikes from his shop next to the Shenango River. Three sump pumps have been running for the past two days, but the basement is still under water.

UNIDENTIFIED MALE: I have been worried all day. I mean, I have had a lot of friends. You see a lot of people out front helping me.

CHERNOFF (on camera): The Shenango River right now is 25 feet high, exactly the height of the flood wall that protects the city of Binghamton. In most places, the wall is holding. But, in certain seam areas, it's flowing right through.

(voice-over): In spots, Binghamton's two rivers cascaded over the flood walls. The Susquehanna washed over a pedestrian bridge. And animals of all kinds sought higher ground. MICHAEL WASHINGTON, ASSISTANT FIRE CHIEF, BINGHAMTON, NEW YORK: Because there's two rivers and many creeks that run through this area, several portions of the city have been evacuated.

CHERNOFF: Binghamton's Lourdes Hospital planned to evacuate about 100 patients. In New Jersey, hundreds were evacuated up and down the Delaware River. Flooding forced a shutdown of Trenton's water filtration system, and floodwaters washed away part of Interstate 88 north of Binghamton, killing two truck drivers that plunged into a 25-foot hole.

The fact that there's been no rain since this morning has people here hoping the worst has passed, but no one knows for sure.


CHERNOFF: Not only is the basement flooded here, but there's no power in the house at all. However, the folks here are making the best of it. Lots of people are out on the porch, singing. They have been partying -- and, as you can see over here, the living room, entirely empty. They have got the sofa up on a little bench there.

But, otherwise, they have done everything they possibly can, so that the house does survive this terrible flood -- Anderson.

COOPER: Allan, thanks -- Allan Chernoff reporting.

Now, the worst place to be when a flood strikes may be behind the wheel. Here's the "Raw Data."

Out of all the flood-related deaths reported, about 60 percent of victims were actually inside their vehicles. Experts say just six inches of moving water is enough to sweep away a small car -- six inches. And, on average, floods claim more American lives each year than tornadoes and hurricanes.

Well, by now, it's become a cliche, but it's almost a fact. What the Northeast has too much of, the Southwest would kill for -- tens of thousands of acres right now in California, Nevada, and Arizona burning tonight, flames edging right up to the Grand Canyon.

CNN's Dan Simon now, who was close enough today to feel the heat.


DAN SIMON, CNN CORRESPONDENT (voice-over): Nature ignited this massive wildfire with a lightning strike. More than 58,000 acres have burned in this Arizona forest, only miles from the northern rim of the Grand Canyon. The view from above showed it is far from under control, as smoke filled the sky from all directions. Helicopters have been dumping water on the flames, but it's done little to help.

(on camera): From this vantage point, seeing all these trees killed off by the fire, it looks to be devastating. But forestry experts don't look at it that way. They're thinking long-term, very long-term. UNIDENTIFIED MALE: It's an OK thing. It really is. It will regenerate itself, not in my lifetime, not in my kids' lifetime. But forests have been around for thousands of years, and they're still here.

SIMON: The National Forest Service was content letting this fire burn, saying fires like this help keep forests in good shape. The problem with this blaze, it took an unexpected turn. And fire crews say they needed to get aggressive with it to prevent any kind of threat to homes or property.

The biggest headache so far has been for tourists, who are unable to see the north rim of the Grand Canyon. Carol Levenoff (ph) and her family made their reservations more than a year ago and drove all the way from Cleveland.

(on camera): And you were to go stay in your cabin on the north rim and look at the views?

UNIDENTIFIED FEMALE: Look at the views, do hiking, have picnic lunches, you know, the whole nine yards. And that -- that didn't happen.

SIMON: It's even more frustrating for people living here. Tim Balsama (ph) works as a waiter at a Grand Canyon restaurant and is paying money out of his own pocket to stay at a motel.

UNIDENTIFIED MALE: This is my first time actually having to deal with anything even close to this. I mean, they have had smaller fires and things like that, but never anything to this kind of extreme, where they have actually shut down and had to evacuate everyone.

SIMON: With only a fraction of the fire contained, it's not clear when the north rim will reopen. Instead, tourists and residents alike will have to settle for a different kind of wonder from Mother Nature.


COOPER: Dan, have they been evacuating people?

SIMON: Well, we are actually at Fredonia High School, where the Red Cross has opened up a shelter, if you can believe that. There are about 85 people here, mostly college students who take jobs at the Grand Canyon for the summer. So, it's going to be a long couple days for those folks.

As for the fire itself, we are told they made good progress today. The temperatures were a bit cooler, so we're expecting the containment levels to go up. Earlier today, it was about 20 percent. Tomorrow, it should be a bit higher -- Anderson, back to you.

COOPER: Dan, appreciate it. Thank you.

For the latest on the weather conditions from coast to coast, let's quickly check in with Reynolds Wolf in the CNN Weather Center. How does it look, Reynolds?

REYNOLDS WOLF, CNN METEOROLOGIST: Well, Anderson, we are going to start with what's happening out in the West. Then we are going to make our way back towards the East.

And, you know, they are desperate for some rainfall in the desert Southwest. You just showed moments ago some video near Grand Canyon. And I will tell you, Anderson, we do see some things popping up on radar. Most of this -- and -- and, folks, get ready -- this is a nerd alert for you -- most of this is virga, which is precipitation that's so light, it's not even reaching the surface of the Earth.

And whatever thunderstorms that we get out there, the lightning strikes have been spawning other storms. And, of course, with those, we're getting more fires, certainly what we do not need at this time.

Meanwhile, let's make our way out to the other side of the country, where, again, as you mentioned, Anderson, just the opposite. You know, we have had rain where we really don't need it. It's dry where we're desperate for the -- the showers. Again, the places that have just been hit really hard by flooding would be in the Northeast and also parts of the Eastern Seaboard.

Now, take a look, Anderson, if you can. Any county that you see that's lined up in the dark green, that would indicate your places that are under a flood warning at this hour. The problem is, we're seeing more rain move in. In fact, just to the north of Richmond, we're seeing some scattered showers, near Washington, D.C., back into West Virginia and Morgantown, even as you get up towards Williamsport, back over to Hazleton, Scranton, of course, heavy rainfall, again, just out to the west.

Farther to the north, up in New York state, we are seeing a few cells pop up, some of these severe thunderstorms. And the problem is, the farther back you go, you see another line of storms that's quite powerful. And, as these make their way on through, there's the potential they could see another inch, possibly as much as two inches, in a few spots as this rumbles on through, not exactly what you want. What we need is a -- a couple of days of really dry conditions.

And that doesn't look like it's going to be in the cards for us until maybe the weekend, if not later, so, not exactly what we want from the weather department.

COOPER: Yes, bad news there.

Reynolds, appreciate it. Thanks.

WOLF: You bet. No problem.

COOPER: A political blaze is burning in Washington, fueled by a "New York Times" report that revealed classified information. Now, tonight, one Republican lawmaker is asking the Justice Department to investigate. He says "The New York Times" has committed treason. I will talk to him ahead. Also, another setback for a massive visitor center at the Capitol, of course, paid for with your tax dollars. Why is it taking so long to build? Tonight, we're "Keeping Them Honest."

Also, new developments in the hunt for one of the FBI's most wanted, that man, fugitive polygamist Warren Jeffs. Subpoenas have now been issued. We will have that, and we will hear from a former member of his sect about how they're still raking in money -- when 360 continues.


COOPER: So, on Capitol Hill, Republican lawmakers have been rallying against the newspaper they love to hate, "The New York Times." They have been fuming ever since "The Times" and other newspapers revealed that banking transactions were tracked in anti- terrorism probes.

Now, some lawmakers claim the reports may have jeopardized national security. And, tomorrow, the House will likely vote on a resolution that would condemn "The Times" and other media for exposing details of secret intelligence programs. "The Times," meanwhile, is standing by its story.

CNN's Tom Foreman reports.


TOM FOREMAN, CNN CORRESPONDENT (voice-over): Between the busy streets of New York and the crowded capital in Washington, new shots are being fired in the war over words in "The New York Times."

A congressional resolution has been introduced effectively condemning "The Times." Some lawmakers are suggesting they now want extensive investigations into how "The Times" found out about and decided to publish details of a secret government program to track terrorists through bank transactions.

SEN. BILL FRIST (R-TN), MAJORITY LEADER: Where did this information come from? Was it purposely leaked to "The New York Times"? And was "The New York Times" complicit in leaking a highly classified program to the American people, which makes us less safe? Then, I think we might have to look at it.

FOREMAN: "The Los Angeles Times" and "The Wall Street Journal," which has twice as many readers as "The New York Times," also reported on the program. But "The New York Times" is being hammered for leading the way.

Despite the fact that federal employees clearly leaked secrets, some members of Congress seem intent on nailing the messenger, saying "The Times" has undermined the war on terror and indirectly endangered U.S. troops.

SEN. PAT ROBERTS (R-KS), SENATE INTELLIGENCE COMMITTEE CHAIRMAN: I believe now that we are less capable, we are less safe than we were before.

REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE CHAIRMAN: This is -- this is war. This is not the same as a highway bill or a tax bill. This is life and death. And "The New York Times" should understand that.

FOREMAN: There's even talk about "Times" reporters and editors being jailed if they won't reveal their sources.

(on camera): An editor at "The New York Times" says they talked at length with administration officials before publishing this piece, and understood the prime concern was not about terrorists.

BILL KELLER, EXECUTIVE EDITOR, "THE NEW YORK TIMES": The main argument that they made to support their argument that publishing this would endanger the program was that bankers who are involved in it would be spooked by the publicity and would withdraw their cooperation.

FOREMAN (voice-over): Now, however, the talk is all about security, making it clear that, even during a week of terrible flooding in D.C., the old leaks are still a big problem.

Tom Foreman, CNN, Washington.


COOPER: Well, Congressman Pete King of New York, whom you just saw, is asking the Justice Department to investigate "The New York Times." And

I spoke with the Republican congressman earlier today.


COOPER: Congressman King, what -- what do you hope to achieve with today's resolution?

KING: Well, the purpose of the resolution is to put Congress on -- on record being absolutely opposed to the leaks that were done, and also calling on the media to realize, you know, the damage that's caused to the United States, to our national security, by what I believe is a reckless disregard for homeland security and national security priorities.

COOPER: "The New York Times"' executive editor, Bill Keller, defended the paper's decision. And he said this: "I think it would be arrogant for us to preempt the work of Congress and the courts by deciding these programs are perfectly legal and abuse-proof, based entirely on the word of the government."

Why should "The Times" and "Wall Street Journal" and "The L.A. Times," and anyone else for that matter, accept the government's word?

KING: Well, by their own analysis, "The Times" has, first of all, acknowledged that the program is working, the program has been effective, and the program is legal. And, in time of war, I don't know what purpose it served by disclosing that, when "The Times" itself is not alleging any type of illegality.

And when you have people, not just the government, also people like Tom Kean and Lee Hamilton, the co-chairs of the 9/11 Commission, Congressman Jack Murtha, an anti-war Democrat, coming forward, to me "The New York Times," in time of war, owes a certain deference, a certain presumption of being right, to the government in that instance.

COOPER: Do you feel, though, that -- that real damage has been done? I mean, you have this White House former counterterrorism official, Roger Cressey, saying that, you know, the -- the White House is overreaching when they say that "The New York Times" committed a crime against the war of terror, that it's been in the public domain before.

There was this U.N. report. You go on to a U.N. Web site, you can read about this. You can even read about the -- the SWIFT program. And the Bush administration has repeatedly talked about monitoring financial records of terrorists. Wasn't this information already out there?

KING: First of all, "The New York Times" can't have it both ways. They can't say they had to go public with this because it was so secret, and, then, at the same time, say there's no problem because everybody knew about it. So, you know, they're -- they're being totally contradictory in what they're saying.

But the fact is, al Qaeda did not know the full extent of what we had done as far as the SWIFT program. They were not aware of the full extent of it. Obviously, they knew that we were trying to crack down on terrorist financing, but not the extent to which we were. Any doubt they have, now "The New York Times" has removed that. You should never let your enemy know any more than they absolutely should know.

COOPER: Why are the Republicans focusing so much on "The New York Times" and not "The Wall Street Journal"?

KING: Well, for one thing is, they're repeat offenders. They're recidivists. They're serial criminals on this.

I mean, back in December, what they did to me was totally wrong. They have done it again. And, also, on this, as we understand it, certainly, as I understand the facts right now, it was "The New York Times" that went with it first.

But, having said that, I think that the attorney general should go after those who leaked this. And, to do that, he should bring in the reporters for "The New York Times," "The L.A. Times" and "The Wall Street Journal," put them in before the grand jury, ask them who their sources were. And, if they refuse to disclose them, they should cite them for contempt and put them in jail.

COOPER: There are those, though, who -- who simply do not believe this administration much longer, or -- or who gave them the benefit of the doubt after 9/11 and -- and feel like that there is this constant state of war that -- that really has no end in sight. And -- and one can cite the war on terror forever as a justification for -- of an ever -- of an ever-more powerful executive branch, and -- and there are those who argue that -- that the executive branch in past cases has overstepped their bounds, so why shouldn't the media, why shouldn't "The New York Times," "The Wall Street Journal," you know, be a watchdog on -- on executive power?

KING: First of all, nobody elected them to anything.

Secondly, this is a program that, by all accounts, is legal and is effective. Now, at least back in December, with the NSA terrorist surveillance, "The New York Times" could make the argument that they thought it was illegal. No one is saying -- no one credible is saying that this is illegal.

So, to me, this was clearly a gratuitous shot by -- you know, by "The New York Times" at the Bush administration, and it just, to me, was irresponsible.

COOPER: Congressman Peter King, appreciate you joining us. Thank you.

KING: Anderson, thank you.


COOPER: Well, Washington is certainly keeping a close eye on another conflict right now, not too far from where U.S. troops are fighting, this one between Israelis and Palestinians.

Breaking new developments tonight -- a Palestinian militant group that had claimed to have kidnapped an 18-year-old Jewish settler now says it has killed him. The news broke this evening on Israel's Army Radio, which did not elaborate on how it obtained that information.

CNN's John Vause joins us now from Gaza City with the latest on that and the Israeli offensive today.

John, what do you know?

JOHN VAUSE, CNN CORRESPONDENT: Anderson, a short time ago, Israeli security sources confirmed to CNN that a body was found in the West Bank city of Ramallah. It appears to be the 18-year-old Jewish settler who went missing from his West Bank home on Sunday night.

Palestinian militants have apparently claimed to have executed Eliahu Asheri. Earlier, they held up his I.D. (AUDIO GAP) he would be butchered if Israeli forces did not withdraw from the Gaza Strip -- Anderson.

COOPER: What does this mean now?

We lost our connection with John Vause. But he has confirmed, according to Israeli sources, Israeli intelligence sources, that that settler has in fact been executed.

John Vause now joins us again.

John, what does this mean now for developments between Israel and -- and the Palestinians?

VAUSE: Well, we will most likely see an escalation of (AUDIO GAP) military operation already under way in the Gaza Strip. It's been going on for the last couple of days now.

What we have seen is regular shelling into the Gaza Strip from Israeli forces. Israeli troops are stationed around the southern city of Rafah. Palestinians to the north report that tanks and Israeli troops have made a limited incursion up there. There have been airstrikes throughout much of the last 24 hours, mostly targeting Hamas training grounds.

But this is also being expanded to the north of here, to Syria, Israel sending a warning to the president there, Bashar al-Assad, by sending warplanes to buzz his home. Israel accuses Syria of being the paymaster and protector of Hamas, the militant group which has claimed responsibility for kidnapping an Israeli corporal.

So, all this rescue mission is under way, but the Israelis will most likely carry out some kind of retribution for the killing of this 18-year-old Jewish settler in the last 24 hours -- Anderson.

COOPER: John Vause, appreciate the -- the update. Thank you very much.

New developments today in the half-a-billion-dollar Capitol Visitor Center that lawmakers are in love with. It is, of course, way behind schedule. Critics say it's money poorly spent, half-a-billion dollars, after all. A Senate committee held a hearing today. We are "Keeping Them Honest" tonight.

Plus, the pursuit of fugitive polygamist Warren Jeffs may gain some traction, thanks to a grand jury probe. A former insider tells us what she knows about how Jeffs makes his money and still may be making his money, even though he's on the run and on the FBI most- wanted list.

That's when 360 continues.


COOPER: He's one of the FBI's most wanted, polygamist leader Warren Jeffs. Tonight, exclusive new details on the allegations that he scams both outsiders, as well as members of his own flock -- when 360 continues.


COOPER: Well, you got to love how Congress works. Yesterday, we told you how it's spending more than half-a-billion dollars of your taxpayer dollars, of course, on a Capitol Visitor Center for when you -- you know, you visit to see how they're spending your tax dollars.

Typically for federal spending, the project seems to treat the budget as kind of a suggestion and deadlines as -- well, as something to miss. Today, the Senate held another hearing on all of it.

CNN's Joe Johns is "Keeping Them Honest."


JOE JOHNS, CNN CAPITOL HILL CORRESPONDENT (voice-over): The mammoth Capitol Visitor Center is taking shape. It's the biggest addition to the U.S. Capitol since the Civil War era, an underground complex, part reception area, part meeting hall, part safe house, in the event the Capitol is attacked.

The construction just goes on and on. It's over budget. It's behind schedule. The original opening date was 2005, then 2006, then April 2007, and, now, yet another delay.

TERRY DORN, GOVERNMENT ACCOUNTABILITY OFFICE: The project opening date has slipped two-and-a-half months, from April to July 2007. Based on our analysis and interviews with project staff, we are not confident that this will be the last slip.

VAUSE: The immediate problem is getting fire alarm systems online, but there have been countless others -- and, hanging over all this, the specter of cancer-causing asbestos. It's in the old utility tunnels under the Capitol complex.

And now as many as 10 workers in the tunnels, who have worked down there for years, are worried about their health. The attending physician of the Capitol basically said there's nothing to worry about.

DR. JOHN EISOLD, ATTENDING PHYSICIAN TO CONGRESS: We have people who we have cleared to work in that environment, and we have no adverse consequences noted that could be due to asbestos.

UNIDENTIFIED MALE: Do you believe a second opinion would be appropriate, and if so, who should perform this?

EISOLD: I think that in this particular case, I don't think a second opinion is necessary. Because the objective to that is fairly clear.

JOHNS: Nevertheless the workers we spoke to off-camera say they're extremely concerned and looking for answers. The biggest questions are how long it took to alert the workers to the problem and what steps were taken to protect them and when. The office of the architect of the capitol was made aware of the asbestos six or seven years ago. And as of yesterday, a safety investigator said the tunnel workers had not been briefed on proper decontamination procedures, and neither had contractors working in and around the tunnels.

PETER EVELETH, CONGRESSIONAL OFFICAL OF COMPLIANCE: It was reported to us that they were not properly being decontaminated. But that that was the intention of the architect, to be sure that the contractors as well were briefed on these procedures. Because otherwise, the contractors could be tracking asbestos out of the tunnels.

JOHNS: As for all the delays and the huge additional costs, the guy responsible for the visitors' center project is architect of the capitol Alan Hantman.

ALLAN HANTMAN, ARCHITECT OF THE CAPITOL: While changing schedules are frustrating for us all, the many scope changes that are mandated are being successfully incorporated into an already-complex construction project that is well under way. And this is being done in an expeditious and historically sensitive way which will be a credit to the capitol, the congress, and the American people for generations to come.

JOHNS: But the spiraling price of the project under the capitol has some in congress alarmed that it's a money pit that's becoming a symbol of out of control spending. It's now at $584 million. And the more it's delayed, the more the price goes up. Government investigators say this may not be the final delay, or the final cost. Keeping them honest, we'll let you know what the price of admission really is when visitors finally get to enter the capitol's newest attraction. Joe Johns, CNN, Capitol Hill.


COOPER: Another construction site, this one in Nevada, is grabbing the attention of investigators hunting for polygamist leader Warren Jeffs. Coming up, how Jeffs could be making a big fortune, millions of dollars, off this development. And how a grand jury is trying to get some answers right now.

Plus we'll hear from a woman who used to belong to Jeffs' secretive sect and says that her relatives did construction work for him. She gives us an inside look at exactly how Jeffs' money trail apparently works when 360 continues.


COOPER: New developments in a story we've been following closely, the search for fugitive polygamist Warren Jeffs. Ten residents of Hildale, Utah, a polygamist town that's a home base for Jeffs' sect, are being called to testify before an Arizona grand jury. Now Jeffs you'll remember is one of the FBI's ten most wanted fugitives charged with child sexual abuse in Arizona and being an accomplice to rape in Utah. The sect he leads has been hiding in plain sight for decades now but it's really front and center in several investigations targeting Jeffs and the assets of his church. The latest subpoenas were just part of a wide net officials are casting. Mike Watkiss is an investigative reporter for KTVK, he's been covering Warren Jeffs longer than just about anybody. He joins me from Phoenix. Michael good to see you. What about this grand jury, what are they focusing on?

MIKE WATKISS, KTVK REPORTER: I can tell you this grand jury has been impaneled Anderson for weeks now, it's been very active and literally it's just looking at a wide swath of various issues that America is now coming to grips with. The child sexual abuse, the driving of the young boys out of the community. And a lot of the finances of Warren Jeffs. It is a federal grand jury and sources close to that grand jury continue to cite the times when grand juries have been used against the mafia. That's exactly the way they're going after Warren Jeffs and his group.

This is a criminal enterprise empire led by Warren Jeffs and Warren Jeffs is the recipient of all kinds of money, from various funnels. They've been tapping into the school district, the land they own there, all of his followers are forced to tithe to him. So this is a guy with just almost unlimited resources. And this grand jury has been impaneled here in the state of Arizona for weeks. Following about every trail, every shred of evidence that they can find. As you mentioned, they have actually called several of Warren Jeffs' followers down to testify, including one of his brothers. Those men have refused to testify. And they've thrown them in prison as a result of refusing to testify to this grand jury.

COOPER: They've also been talking a lot about these construction companies. What's the significance of them?

WATKISS: They're builders. These guys are builders that your reporters have been to Colorado City, the various homes, these large homes that they put the polygamist families in, are always in a state of construction where they're adding on rooms to add new wives and new children. These guys are builders by trade. So he's got a bunch of contractors, contracting outfits that work for him, led by his followers. They're building homes all over Nevada, all over Utah. So again, this is another one of those conduits of money that flows in. Because the money that his followers make go right into his pocket. He dictates everything about what goes on in their lives. So he controls their lives, he controls the purse strings.

COOPER: This grand jury that we've been talking about, is that the only case focusing on the FLDS?

WATKISS: Anderson, you need a scorecard at this point to keep track of the various law enforcement agencies and prosecutorial offices that are now following Warren Jeffs. We've been screaming for action as we've told you for the better part of a decade. Just in the last year and a half a lot of state officials, a lot of government officials, have stepped up and realized there are terrible abuses in this community. This grand jury, led by the U.S. attorney here, Paul Charlton, very active in investigating. But we also have state criminal charges in Mojave County against eight of Warren Jeffs' followers.

Also similar charges in Utah. And it's an extension of those cases. Several of his followers are charged with taking underage brides and having sex with them. They then as an extension of those charges charged Warren in those very cases for facilitating those marriages. So Warren Jeffs faces trouble criminally and being investigated. Literally you need a scorecard at this point to follow all of the agencies now tracking Warren Jeffs and his followers. COOPER: Prosecutors though recently said that some of the multiple trials regarding sexual assault within the FLDS sect may actually be postponed. Why?

WATKISS: They may actually be thrown out of court. It's a terrible situation. This has been the traditional problem that prosecutors have faced. Again, this is not new. Certainly not here in Arizona and Utah. Whenever they charge one of these men, the problem is, the women who are the victims don't want to testify in most cases because you've got to remember, you're hearing from a handful of very brave women who have gotten out. But there are still dozens, hundreds, thousands of women still in that culture. They were raised there, they were told that their only value is to do what the prophet says, marry the man that he says, and then have as many children as they can.

They don't want to testify. So they're called the Colorado City eight, the men that were charged here in Mojave County. They have witnesses that are going to step forward in two of those cases, we believe. But in the other six they don't have any witnesses. First trial begins Wednesday of next week. And they may not be able to put anybody in the witness box. So the prosecutor, the problem for the prosecutor is he has to go in and just on paperwork, birth certificates, this is when this young woman was born, this is when she had a child, there's no question about paternity. And he's already married to another woman. Can they make a case with just paperwork? That's what we're going to find out when they go to court on Wednesday.

COOPER: And of course the bottom line, where is Warren Jeffs? And the answer to that is no one really knows. People are talking Texas, maybe. Do you think Texas is the best bet?

WATKISS: Texas is the best bet. He for the last two years now he has been building this huge apocalyptic temple and compound there. Unlike Colorado City that you can drive into, that's private land. He has security guards and no trespassing signs posted everywhere. So you can't get on there. And law enforcement officials in Texas, very frankly, keep thinking about Waco. And they don't want to go storming in there unless they get pretty good probable cause that he's there, they can get him without some sort of blood bath.

COOPER: It is fascinating. Appreciate it, Michael. Always good to talk to you, thank you Michael Watkiss reporting from Phoenix tonight. Earlier this month Arizona's attorney general said he believes that Warren Jeffs has recently been back to the Utah/Arizona border to perform more marriages involving even more underage girls. So far as Michael was pointing out, he's alluded capture. By all accounts Jeffs has an extensive support network which is exactly why the FBI is doing what reporters often do as Michael Watkiss said a moment ago, they are following the money. So is CNN's Randi Kaye.


RANDI KAYE, CNN CORRESPONDENT: From a distance, this Nevada construction site looks ordinary. But law enforcement says it's hardly what you imagine. They believe this site may be the beginning of a money trail that funnels millions of dollars to FBI fugitive polygamist Warren Jeffs. Even while he's on the run.

GARY ENGELS, SPECIAL INVESTIGATOR MOHAVE COUNTY, AZ: He's probably bringing in close to $2 million a month.

KAYE: If true, that would be $24 million a year. How does it work? Carolyn Blakemore Jessop a former member of Jeffs' church says Jeffs orders men from the sect to work for construction companies owned by FLDS church leaders. But those men don't see a penny.

CAROLYN JESSOP, FORMER FLDS MEMBER: These specific companies that he would assign them to work for very often just didn't give them a paycheck. They didn't give them anything at all.

KAYE: And where did the money go instead of in the worker's pocket?

JESSOP: It went to Warren.

KAYE: Jessop says her son was assigned a construction job when he was just 12 and never got paid. Instead, families donated 100 percent of their earnings to Jeffs. That put them on welfare, money out of your pocket, while Jeffs got rich. And even though the man they call the prophet is in hiding, investigators believe it's still business as usual.

We're in the car about an hour north of Las Vegas, in Mesquite, Nevada, and like the investigators we are trying to follow the money. We're heading to a construction site where some members of the church work to see what they have to say about where the money is going. Immediately, we spot men who, like members of this sect, are dressed from their necks to their ankles despite the searing heat. I'm Randi Kaye with CNN, are you affiliated at all with Warren Jeffs and the FLDS church? We try again. Are you a follower of Warren Jeffs?

UNIDENTIFIED MALE: I don't have anything to say.

KAYE: Are you affiliated at all with the FLDS church?

UNIDENTIFIED MALE: We don't have anything to say. We're just doing work here.

KAYE: Is any of the money from here or all of the money here, do you donate any of it to the church, to Warren Jeffs?

UNIDENTIFIED MALE: I don't have anything to say.

KAYE: In minutes the supervisor arrives. We're with CNN and we're doing a story here and we're following the money on Warren Jeffs.


KAYE: Do you know who these guys all work for, who contracts them out?

ARRINGTON: Yeah, they're working for Prism or Paragon.

KAYE: Prism and Paragon. Just two of the many companies, investigators and Carolyn Jessop say are owned by Jeffs' church members. CNN has also learned Day Grove Trust and one of its owners Guy Allred who investigators say is a sect member, is of interest to them. We tried to talk with him at his company headquarters in Nevada and ask about his brother David who bought property used by church members.

I was told neither one of them would be willing to talk with me and that we should take our cameras and go, which is what we're doing now. But the hunt for Jeffs continues. Investigators are keeping an eye out for new construction, banking on the fact Jeffs wouldn't be too far away. We made calls to both Prism Contractors and Paragon Contractors. The man who answered the phone at Prism, as soon as we identified ourselves as CNN, told us "no comment." We left several messages at Paragon. They have not returned our calls. Randi Kaye, CNN, Salt Lake City, Utah.


COOPER: Well Carolyn Jessop you just heard from her in Randi's report grew up in Warren Jeffs' sect. She was forced to marry an older man when she was just 18. One of this guy's wives, after 35 years she escaped from the sect. Coming up we'll talk to her about how Jeffs makes his money and controls his followers.

Also on a very different note, remember Sam, the ugliest dog in the world, though he was beautiful to many of us. Well can't be this year, he died of course. So who's the son of Sam? Find out next on 360.


COOPER: Well just before the break, we were looking at the money trail that the FBI is hoping will eventually lead them to this guy, fugitive polygamist Warren Jeffs. The money trail leads through construction companies with ties to Jeffs' sect. One of the people we heard from in that report was Carolyn Jessop, a former member of Jeffs' sect who says her son and her brother-in-law worked for one of the construction companies connected to Jeffs. I spoke to her earlier.


COOPER: So Carolyn, how does this work? How do construction companies affiliated with the FLDS make money?

JESSOP: Well, they hire people to work for them, and very often they pay them next to nothing for their work. And if the employee complains and wants to quit, then Warren, who's now in charge, refuses to let them quit. They are assigned who to work for. And their only option is to work for that person unless they can be reassigned to someone else. And the companies across the board, they just refuse to pay their employees.

COOPER: And they're taking the money that they're making, that they would be paying the employees, and paying it to Warren Jeffs?

JESSOP: Yes. And that's why Warren supports them in not paying the employees. And then the employees go get on benefits because they have no income.

COOPER: So the construction workers who are actually working long hours, not getting paid, they're on welfare? So we're paying for it twice -- I mean people are paying for the construction company, but then they're also paying welfare money for these people?

JESSOP: That's correct. And then the profits and most of the income that's created or generated from the construction jobs go directly into Warren's pocket. And the employees are being told that they're doing this job for the prophet, the sacrifice for the prophet. And that they should be willing to turn all earthly possessions over to the prophet.

COOPER: So they see it as a religious act?

JESSOP: Oh, absolutely.

COOPER: Your brother-in-law worked for a construction company in Colorado City. How much was he making, how much was he working?

JESSOP: From what I talked to my sister, the most that I'm aware of that he would ever make was around $600.

COOPER: $600?

JESSOP: $600 a month.

COOPER: In one month?

JESSOP: And he was working extremely long hours. And the type of work that he was doing, they were actually bidding on that work around $60 an hour. That's what they were charging the people that they were doing the job for.

COOPER: And a lot of these construction workers, I mean they're highly skilled. They do good work, that's what they're known for.

JESSOP: They do excellent work. Some of the best construction work in the area is done from labor -- is done with labor from Colorado City.

COOPER: And what is it that they're particularly good at?

JESSOP: They're very good at creating a quality product in whatever they produce. And they're very effective, they're very efficient. They will get in, they meet their time deadlines. And it's not uncommon for these people to work over 16 hours a day. If that's what it requires to get the job done on time. COOPER: And I read that you were saying that some companies when they get -- another construction company gets behind on a job and they need someone to come in quick and finish off the job with a quality product, they call in some of these FLDS construction companies?

JESSOP: Yes, there's many people in the area, if they get in trouble on a job, they will turn to the people, the labor source from Colorado City to bail them out. And for a price, they'll do it.

COOPER: These people have been subpoenaed to appear in court July 12th. Do you think they'll show up?

JESSOP: I would be very surprised if they did. You're looking at people that for generations have lived outside of the law. The law has no place in their life. And for many years, there has been no consequences as far as ignoring it.

COOPER: We'll watch, we'll see what happens July 12th. Carolyn Jessop, appreciate you joining us, thanks.

JESSOP: Thank you.

COOPER: In a moment the shot of the day, a tiny dog and his newfound fame and boy is he ugly. But first Richelle Carey from "HEADLINE NEWS" has some of the business stories we're following. Richelle?

RICHELLE CAREY, CNN ANCHOR: Hello Anderson. Let's start with some good news from Wall Street. U.S. stocks advanced today as rising oil prices fueled gains in the energy sector. The Dow rose nearly 49 points. The S&P gained almost 7 points and the NASDAQ advanced nearly 12 points. But overall investors avoided placing any major bets just a day before the Fed is expected to raise its target federal funds rate.

The senate today cleared the way for Goldman Sachs Chief Henry Paulson to become the next Treasury Secretary. His nomination was confirmed in a voice vote just hours after the senate finance committee endorsed the Wall Street veteran. Paulson will be President Bush's third treasury chief and he's replacing John Snow.

And high-end auto brands including Porsche swept the top spots in the latest survey of 2006 cars. At J.D. Power & Associates Porsche came in first in the overall rankings, BMW second place, Mercedes Benz came in third and Lexus was fourth. The study surveyed more than 63,000 people 90 days after they bought or leased a new car. So it's pretty much a wish list of cars for most people Anderson, isn't it?

COOPER: Yeah, it certainly is. Take a look at the shot of the day. It really marks the passing of the baton, or maybe a doggy biscuit if you will. Meet Archie, the new ugliest dog in the world. He beat out 17 competitors this weekend at the ugly dog contest in Petaluma, California. He's 10 years old, he's a Chinese crested pure bred from Arizona. His owner adopted him from a shelter and he brought some formidable qualities apparently to the contest. Archie's practically hairless of course, except for that Mohawk. He also has only four teeth which is apparently why that ugly tongue of his hangs out so much. His stomach covered with splotches and his back with moles. Archie also has some pretty big paws to fill. He succeeds Sam, that's Sam of course. He held the title for three straight years until his death just last year. Sam was also Chinese crested and became an international celebrity. Aw, Sam. We're thinking Archie may be able to fill his paws. And that's the shot of the day. Thanks so much.

CAREY: Thank you Anderson. The thing is though, Sam I think did pass away very shortly after earning that title. Let's hope that doesn't mean bad news for Archie.

ANDERSON: Yeah we'll keep our fingers crossed.

CAREY: Thanks Anderson.

COOPER: Well sadly it's not an especially pretty picture either up or down the eastern seaboard. Towns underwater, rivers still rising, hundreds of thousands told to leave their homes. Plus new information from the sole survivor of the sago mine disaster. What Randy McCloy told investigators about the final moments of the doomed mining crew and why he thought they'd be rescued. In fact they all thought they were going to be rescued shortly.

And she took a cruise and never came back. A woman who simply vanished from an enormous ship. Did the cruise line do all it could to find her? Congress is now investigating, wants to pass some new laws. We'll take a look next on 360.


COOPER: Trapped by an explosion, new details tonight on what the sago miners did and what they said as they waited in vain to be rescued, next on 360.



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