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CNN.com - Transcripts Return to Transcripts main page THE SITUATION ROOM Sinking Ship Off Los Angeles; Marion Jones Pleads Guilty Aired October 5, 2007 - 17:00 ET THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. CAFFERTY: Tom in Illinois writes: "If Lavatory Larry is going to be brought up on ethics charges, then Diaper Dave Vitter needs to be right there with him. They both ought to go."

And Ken in Brooklyn: "Larry Craig should be allowed to serve his full term in the Senate as Latrine Queen. He would be in charge of flushing out all the gays and perverts that are lurking in our Senate halls, especially those with a wide stance."

Wolf.

BLITZER: Thank you, Jack.

And To our viewers, you're in THE SITUATION ROOM. We have some breaking news. We're following a ship full of tourists off the coast of Southern California. It's now taking on water. We're going to update you on what's going on.

Also happening now, the secretary of Housing and Urban Development the subject of a federal probe. Investigators looking into a questionable contract involving a friend.

A military mystery in Afghanistan. An American female soldier found shot to death on base. Now her family is demanding answers. And Mikhail Gorbachev visiting the United States and speaking his mind. You're going to find out why he says the breakup of the Soviet Union was a huge mistake and what he thinks of an apparent power grab by President Vladimir Putin.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM. But let's begin with that breaking news we're following this hour. A ship taking water off the coast of Southern California. Forty people are on board. A rescue operation underway right now.

Let's get some details.

Fredricka Whitfield is monitoring the story for us.

The pictures -- the live pictures we're seeing, Fred, are pretty dramatic.

FREDRICKA WHITFIELD, CNN ANCHOR: Yes, they are, indeed. Very harrowing moments there for this 130-foot long ship. It's a three- masted ship. You're looking at live pictures right now. You can see the kind of contingent of the rescue boats around it, escorting this, getting it closer to the harbor. We think that maybe it might just be inside the Los Angeles/Long Beach, California Harbor right now.

It started taking on water about six miles off the coast, pretty frightening because when we saw the close up views you can see that the crew on board that ship trying frantically to get a lot of this water that the ship was taking in off the ship.

Meantime, you could also see a number of these kids who make up many of the 40 people on board.

They're all wearing life jackets, all sitting very calmly, all kind of just sitting down on deck, kind of legs tucked in their safety positions.

At the same time you know that kids might look at this as either very frightening or very exhilarating and a lot of fun, as they see that all of this taking place on the ship that they were supposed to be enjoying, just a pleasure cruise.

It's called the American Pride. And as far as we can see right now, that their efforts to try to get this ship to shore seem to be successful thus far, Wolf.

But we're going to continue to watch the developments there off the California coast.

BLITZER: And we'll stay on top of this story.

The pictures are pretty dramatic. And we see those 40 people on board. We'll watch it. Hopefully there'll be a safe outcome to this story.

Fred, thanks very much for that.

There's another developing story we're tracking right now. The Olympic gold medalist track star Marion Jones pleading guilty just a short time ago to lying to federal investigators about taking steroids -- something she strongly denied doing in the past.

Our senior, correspondent, Allan Chernoff, is following this story in New York.

He was just in the courtroom -- and, so, update our viewers, Allan, what happened inside that building right behind you.

ALLAN CHERNOFF, CNN CORRESPONDENT: That's right, Wolf.

Just minutes ago, Marion Jones finished shattering her athletic myth. In a very composed fashion, she stated very loudly to the judge that, indeed, she had taken performance enhancing drugs and then she had flied about it to a federal agent. She pled guilty to that. In addition, she plead guilty to another charge in a totally separate case involving check fraud.

But let's talk about the steroid case. She said before the judge that her coach, Trevor Graham, in 1999, began giving her supplements. He said, she claimed, that it was flax seed oil. She said she didn't ask any questions, just took the enhancing drugs.

She later recognized that, indeed, it was a performance enhancing drug.

She said she took it prior to the Sydney Olympic Games from 1999 all the way to 2001. So after the games, as well.

You'll remember, she won five medals -- an incredible performance at those Sydney Games. But, obviously, she was being fueled, in part, by these performance enhancing drugs. A drug called "the clear," one of the -- one of these steroids that she was taking.

So she did take that. She admitted it in court. And she theoretically could face as much as 10 years in prison, though, of course, that is highly unlikely that she would face so much time in prison -Wolf.

BLITZER: What a story.

All right, Allan.

Thanks very much.

Allan Chernoff watching the story for us.

As you reported earlier, Marion Jones had firmly denied using steroids. In 2004, she went further, filing a $25 million defamation lawsuit against the owner of BALCO. That's the laboratory used to create the steroids she's now admitting taking. In the lawsuit, Jones said that Victor Conti falsely accused her of taking performance enhancing drugs. The case was eventually settled for an undisclosed amount. I wonder what's going to happen to that money now.

Multiple investigations, meanwhile, underway right now into private U.S. security contractor, Blackwater. But Secretary of State Condoleezza Rice isn't waiting for them to finish. She's ordering immediate steps the State Department says will improve contractor accountability.

Our State Department correspondent, Zain Verjee, is here.

She's watching the story for us.

All right, what's the secretary ordering -- Zain.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, it was a really rapid reaction, Wolf, by the State Department. Less than a week since Secretary Rice ordered a high level official to Iraq, a major shakeup.

(BEGIN VIDEO TAPE) VERJEE (voice-over): The State Department is under fire, accused of losing control of its private guards in Iraq. Secretary of State Condoleezza Rice is ordering tighter supervision, effective immediately. From now on, State Department employees, diplomatic security agents will ride along with each Blackwater contractor convoy protecting U.S. diplomats. Cameras will be installed inside vehicles and all radio transmissions recorded, keeping an electronic record of what happens on the road. Convoys will also keep closer contact with U.S. military units.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: And she wants to make sure that those people responsible for the lives of our diplomats are doing it in such a way that we actually further our foreign policy and national security interests.

VERJEE: The review was triggered by this September 16th shootout involving Blackwater contractors that killed at least 11 Iraqis. The Iraqi government said Blackwater fired indiscriminately. Blackwater says it responded to hostile fire.

Lawmakers want to get to the bottom of it.

REP. HARRY WAXMAN (D), CALIFORNIA: Is the government doing enough to hold Blackwater accountable for alleged misconduct?

(END VIDEO TAPE) VERJEE: There are at least three different investigations into the Blackwater incident -- a probe into overall security, the FBI is leading an investigation and a joint U.S./Iraqi commission on the role of contractors, Wolf, is also in place.

BLITZER: So if these diplomats want to go out and about, they have these convoys.

Who's going to take charge of these convoys?

Would it be Blackwater, the private security contractors or diplomatic security, the official government security personnel?

VERJEE: Right. Well, that's a good question. A senior State Department official that we spoke to said basically Blackwater reports to us. But the officials added that depending on each specific mission, they're going to assess the situation day by day and then make a judgment on who actually has operational control. And they'll do that in the 24-hour period before that.

BLITZER: Zain, thanks for that.

Zain is watching this story.

Meanwhile, some lawmakers are outraged over the hiring of a Blackwater employee who lost his job after killing an Iraqi guard.

Our senior Pentagon correspondent, Jamie McIntyre, is following this story -- Jamie, what can you tell us about this?

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Wolf, CNN has confirmed that 27-year-old Andrew Moonen of Seattle, Washington, is the Blackwater contractor accused of killing a bodyguard when Iraq -- of an Iraqi vice president after allegedly drinking too much at a Christmas Eve party in Iraq.

At a Congressional oversight hearing earlier this week, the head of Blackwater, Erik Prince, insisted it would be very unlikely for a fired employee like Moonen to ever work in a clearance capacity for the government again. So Committee Chairman Henry Waxman was outraged to learn from a CNN investigative report that Moonen was hired just two months later by another firm, Combat Support Associates, a Pentagon contractor in Kuwait. A spokesman for the company confirms Moonen was employed from February to August of this year, but he would not say if his job required any special clearance.

Waxman cited CNN's reporting in an angry letter he fired off to the State Department, questioning

whether it withheld facts from the Pentagon, accusing it of being too anxious to give out cash to the victims of the shooting instead of holding Blackwater accountable. The State Department disputed that. It says the Department will comply happily with Waxman's request for more information -Wolf.

BLITZER: Jamie at the Pentagon.

Jamie, thanks very much.

Let's go back to New York and Jack Cafferty for The Cafferty File -- Jack.

CAFFERTY: When it comes to anti-smoking laws, California might soon be entering some uncharted territory. Two cities there are considering legislation that would ban smoking in apartments and condos. The city council of Belmont, California is scheduled to vote on a measure next week that would mean fines and evictions if neighbors complain about smokers and if the offenders don't listen to repeated warnings.

Also, Calabasas, California looking into a similar measure.

These proposals are very controversial, so much so that they've caused death threats to be made against lawmakers in both cities. And it actually goes back to a mostly voluntary movement among landlords and condo associations. In fact, experts say that tens of thousands of apartments and condos in California have gone smoke-free in the last five years. But not everybody thinks this legislation is a good idea. Critics say that these bans would violate civil liberties, personal property rights. They say you should be able to do whatever you want in your own home.

So the question then is this -- two California cities considering a smoking ban inside apartments and condos -- is that going too far?

E-mail your thoughts to caffertyfile@CNN.com or go to CNN.com/caffertyfile -- Wolf.

BLITZER: I'm sure you've noticed sometimes in apartments, especially if they're close to each other, if somebody is smoking in one you can smell it in the apartment next door.

CAFFERTY: I find it ironic that while the government scurries around banning smoking here and banning smoking there, they don't do anything about outlawing cigarettes, which are a known carcinogen. These things kill people. They cause heart disease. They cause all kinds of problems. But we ban the behavior but we leave the product alone.

You don't suppose tobacco companies contribute to the political campaigns of these people, do you?

BLITZER: They contribute a lot of money to the...

CAFFERTY: Oh. Maybe that's it.

BLITZER: Yes. All right, Jack, thanks very much.

Up ahead, a member of the president's cabinet under investigation right now by the FBI. The accusations and what he says.

That's coming up next.

Also, a military mystery in Afghanistan -- an American female soldier found shot to death on base.

She gave her family an ominous warning.

Plus, was the breakup of the Soviet Union a mistake?

The man who presided over it says yes. Mikhail Gorbachev now visiting the United States and speaking his mind to CNN. Stay with us.

You're in THE SITUATION ROOM. (COMMERCIAL BREAK) BLITZER: A U.S. soldier killed in Afghanistan, but this case shrouded in mystery. The victim, a woman, was found dead on the base, shot in the head. And now her family is demanding answers.

Let's go to CNN's Kathleen Koch.

She's standing by live -- what is the military saying, Kathleen, about this case?

KATHLEEN KOCH, CNN CORRESPONDENT: Well, Wolf, not much -- at least publicly. And this has been very tough on the family because after being told that she was killed in action, they learned that that actually was not the case.

(BEGIN VIDEO TAPE) KOCH (voice-over): The Massachusetts National Guard delivered the news that Army Specialist Chiara Durkin had been killed in action in Afghanistan September 28. The family was devastated.

PIERCE DURKIN, BROTHER OF SLAIN SOLDIER: It was my body on the 27th, on Thursday. And we found out on the 28th. And it was at 1:00 a.m. On the 28th that there was a voicemail on my phone. I just missed her call. And she was, she said, "Hey, little bro, I love you very much. I can't wait to see you." Then she started singing Happy Birthday.

KOCH: Then the family says word came from military officials that Durkin had been found shot in the head near a church inside a secure area of Bagram Air Base.

MAURA DURKIN, SISTER OF SLAIN SOLDIER: We need answers. We'd like answers. We want to know how our beloved Ciara spent the last moments of her life and why was she taken from us.

KOCH: Right now, the Pentagon will only say that Durkin's was a non-combat-related death and that within minutes, Army Criminal Investigation Division agents were on the scene.

Thirty-year-old Durkin was lesbian and never complained of harassment. But her family says on her last visit home she made a frightening comment.

STEVE RALLS, SERVICE MEMBERS LEGAL DEFENSE NETWORK: That should something happen to her, to demand an investigation, because she had uncovered something in her unit that apparently made many of her fellow service members anxious or upset.

KOCH: The Service Members Legal Defense Network, which represents gays in the military, is now helping the family. Durkin, who worked in finance and processed payroll for her unit, never told her family what she had discovered.

(END VIDEO TAPE) KOCH: Both Massachusetts Senators, John Kerry and Ted Kennedy, are calling for an investigation, the service members legal defense network is urging those who served with Durkin who want to pass on information anonymously to go to their Web site www.sdl.com.

And, Wolf, Durkin's wake is today and her funeral tomorrow.

BLITZER: Kathleen, thanks very much.

As of September 1st, 12 women have been killed in Operation Enduring Freedom in Afghanistan, 13 women have been wounded. The tolls in Iraq much higher. Eighty servicewoman killed and 528 injured. That, according to the Pentagon.

A member of President Bush's cabinet is now under investigation. The housing secretary, Alphonso Jackson, is pledging to cooperate with a probe into a no bid contract that was awarded to a friend.

Let's go to Brian Todd.

He's here in THE SITUATION ROOM looking into this story. What are you finding out -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, Alphonso Jackson is an old political friend of the president and it got him appointed to a cabinet post. But now the FBI is investigating whether he improperly rewarded another friend.

(AUDIO GAP) BLITZER: All right, it looks like we have some technical problems.

We want to apologize for that.

Brian, so let's just talk about what's going on. Give us the background of this investigation into the housing secretary, Alphonso Jackson.

TODD: Well, what authorities are looking into, Wolf, is the awarding of a contract, 400,000 some dollars to a friend of Alphonso Jackson's named William Hairston. The FBI is investigating this to see whether this was improperly awarded or not.

Jackson says he's going to go along with the investigation, that he's going to try to clear his name.

The magazine, "The National Journal" reported -- they were the ones who revealed Hairston's name.

They said that he got a no bid contract after Jackson asked for Hairston and two other people to be referred to federal officials overseeing this project. That's what the FBI and other agencies are looking into right now.

BLITZER: And so this investigation is really only beginning. It's at the very early stage.

TODD: That's right. The president's press secretary, Dana Perino, was asked if her boss still has confidence in him. She said she's not going to comment on that. They're not going to comment while an investigation is going on, but they expect that Alphonso Jackson is cooperating. Their counsel has made sure that he is. And beyond that, they're not going to comment.

BLITZER: And this was a $400,000 deal, is that right?

TODD: That's right. It was awarded right after the time of Hurricane Katrina. This William Hairston is a construction contractor in South Carolina. He reportedly got this contract right after Hurricane Katrina to oversee some reconstruction projects down there.

BLITZER: Thanks very much.

All right, Brian, thank you.

Brian Todd watching this story.

Up ahead. A month's long standoff between federal agents and a New Hampshire couple convicted of income tax evasion. Now it's over and we're going to show you how it ended.

A car dealer is making people angry.

Hard to believe, isn't it?

But people aren't upset for the reasons that you might think. We're going to take a closer look at a controversial TV ad.

Stay with us.

You're in THE SITUATION ROOM. .

(COMMERCIAL BREAK) BLITZER: A month long standoff between federal agents and a New Hampshire couple convicted of income tax evasion is now over. The pair was taken into custody at their home last night by two undercover agents posing as supporters. Ammunition, weapons, explosive devices and booby-traps were reportedly found in and around the home. In April, the couple was sentenced to six years in prison. They say there's no valid law requiring them to pay income tax.

The New Hampshire couple barricaded themselves in their house for months. But that didn't stop supporters for rallying for them online.

Let's bring back our Internet reporter, Abbi Tatton.

She's following this story for us -- Abbi, what have they been doing in there for all these months?

ABBI TATTON, CNN CORRESPONDENT: Wolf, there are MySpace pages and blogs by supporters of this couple that take you right inside the standoff. Take a look at the video from inside this the house. This is dated last month, as the couple discuss their legal strategy. Then there's video that you also find linked off these sites with a carnival like atmosphere from the house over the summer, with all the supporters gathered to listen to them speak.

Also online, an essay attributed to Elaine Brown that describes living with no electricity, no phone after the government cut it off and lays out the couple's claim that the federal income tax is not legitimate.

It's a claim that's got them quite the following online, with blog posts in support of them going back to the beginning of this year.

Of course, it was deputy U.S. Marshals posing as supporters that made the arrest last night -- Wolf.

BLITZER: All right, thanks very much.

A fascinating story, indeed.

All right, I want to go back to the story we were following right at the top of the hour, this ship with 40 people on board. There you see it. It was taking on water.

And we've got a spokesman from the Coast Guard now on the line who's going to help us understand what's going on as we look at these pictures.

Andrew Munoz, who is a lieutenant from the U.S. Coast Guard, is on the phone for us.

Lieutenant, tell us what happened, how this developed and what's going on right now.

LT. ANDREW MUNOZ, U.S. COAST GUARD: It was about two hours ago that the tall ship American Pride called the Coast Guard saying that they were taking on water. At that time, they were about seven miles south of Long Beach harbor.

BLITZER: Forty people on board this boat?

MUNOZ: Right. Forty people on board. It's a 130-foot, three- masted tall ship.

BLITZER: Was there water coming on, enough that it was really endangering these people and endangering the vessel?

MUNOZ: You know, whenever we get a report of a vessel taking on water, we have to take it absolutely serious. And that's why we sent out every available rescue boat available in the port of Long Beach in Los Angeles. We had Coast Guard, fire, police, as well as private vessels responding.

BLITZER: We're looking at these live pictures now.

How close is the vessel now to shore?

It was about seven nautical miles when you got word of what was going on, is that right?

MUNOZ: Right. They've now returned to the ports and they are moments away from reaching their home dock. Luckily, this was a -- we responded in time and the flooding was able to be contained.

BLITZER: Coast Guard Lieutenant Andrew Munoz, good work.

Thanks for joining us.

And, fortunately, everything ends well with this incident.

Thank you very much.

Up next, President Bush addressing a sore subject for the first time, calling it baseless gossip and propaganda. You're going to find out what he's talking about.

Plus, former Soviet leader Mikhail Gorbachev speaking today to CNN. He's speaking his mind.

What does he make of the apparent power grab by Russia's president, Vladimir Putin?

Stick around.

You're in THE SITUATION ROOM. (COMMERCIAL BREAK) BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now, an hour of historic opportunity in Myanmar. That's how a U.N. special envoy to the country is describing the military government's offer to meet with pro-democracy leader Aung San Suu Kyi. The government now admits to detaining more than 2,000 Buddhist monks during protests last month. But dissident leaders say the real number is much higher.

President Bush is reiterating his administration's stance that the government does not torture detainees. The comments follow a "New York Times" report that the Justice Department endorsed the harshest interrogation techniques ever used by U.S. intelligence officers.

And Senator Larry Craig of Idaho is under fire from fellow Republicans for his decision to stay in the U.S. Senate. Craig had said his intention was to resign unless the judge let him change his guilty plea stemming from a bathroom sex sting. The plea was upheld yesterday, but Craig now says he's changed his mind about stepping down.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM. President Bush is speaking out for the first time about growing speculation his administration is

planning military action against Iran. He confronts the issue head-on in an interview with the AlArabiya television network.

Let's go to our White House correspondent, Suzanne Malveaux.

She's standing by.

What's the president saying, Suzanne, about a possible war with Iran?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, you actually talked to Seymour Hersh just a week ago about that article in "The New Yorker" essentially saying that there was some sort of plan to shift the strategy from all out war with Iran to perhaps targeted specific areas of attack. Well, the White House Press Secretary Dana Perrino has been trying to knock down that speculation all week. Well today President Bush in an interview with Al Arabiya saying very specifically that that is not going to happen in January or February or any time soon.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: This issue, before I move to Iraq, which also a lot of Iraq is waiting for this. There are some leaking to the press and particularly the Arabic press. Is it true that you have issued orders, Mr. President, to your senior generals in the American military to prepare for a major and precise strike that could happen during the end of January or February?

BUSH: An empty propaganda. Evidently there's a lot of gossip in parts of the country and the world that, you know, that try to scare people about me personally or my country or what we stand for.

And that kind of gossip is just what it is. It's gossip, its baseless gossip.

(END OF VIDEO CLIP) MALVEAUX: But Wolf, you'll notice the president, as well as White House officials very careful not to rule out any options on the table, including a military strike, but they emphasize that they're working on this diplomatically and want to try to push the UN Security Council members plus Germany for harsher sanctions against Iran to give up its nuclear ambitions. Wolf?

BLITZER: Thank you Suzanne. Suzanne's at the White House.

He presided over the demise of the Soviet Union and won the Nobel Peace Prize. Unquestionably one of the most influential leaders of the end of the 20th Century. Today Mikhail Gorbachev is in New Orleans talking about the environment and a lot more. Let's go right to CNN's Sean Callebs, he's joining us live from New Orleans. You had a chance to sit down with Gorbachev earlier today, Sean, what did you talk about?

SEAN CALLEBS, CNN CORRSEPONDENT: It was a fascinating day. He is 75 years old now and it's been more than a decade since he ran for president in Russia. As you mentioned he's (INAUDIBLE)

chiefly credits him with a peaceful dismantling of communism in the former Soviet Union and its satellite nations. And as you may imagine, he does have his thoughts about Russia's move toward democracy.

(BEGIN VIDEOTAPE) CALLEBS (voice-over): He's in the United States to trumpet the possibility of rebuilding a blighted New Orleans in an environmentally friendly fashion.

UNIDENTIFIED MALE: (INAUDIBLE) energy efficient and can stand 130-mile-per-hour winds.

CALLEBS: Mikhail Gorbachev says he's the child of a peasant family who grew up working the lands and that in part prompted him to start his environmental organization, Green Cross International. I had a chance to sit down with the former soviet leader and ask about world events, including an apparent power grab by Russian President Vladimir Putin, accused of clamping down on opposition, threatening prospect of democracy. Gorbachev says Putin has kept Russia from sliding into chaos.

MIKHAIL GORBACHEV: Putin is a person who was able to do a great deal, a lot of positive things during his two presidencies and that saved Russia from chaos. That saved Russia from further disintegration. When you face problems like these, then you don't act according to the democracy textbook because you have to save the nation.

CALLEBS: Polls show Putin wildly popular in Russia, favorable ratings near 80 percent. Putin says he may become prime minister and in essence, appoint a hand-picked successor.

GORBACHEV: I would say that we're about halfway, we're about halfway, but we need to go the second part of the road, but I'm sure that the next elections will be different. There will be a real debate, I'm sure.

CALLEBS: Critics in Russia say Gorbachev weakened the country by splitting up the former Soviet Union. Gorbachev says disintegration of the country was a mistake. And the former USSR should have stayed together, with autonomy for those republics that eventually split away.

GORBACHEV: The center should have been left only with things like a common currency, foreign policy and defense. That would be it. And the people suddenly supported that.

(END OF VIDEOTAPE) CALLEBS: And Mr. Gorbachev told me there was actually a ceremony scheduled on August 20th, 1991, to sign a measure that would have preserved the former Soviet Union. But remember what happened? The coup on August 19th. Gorbachev was basically under house arrest and his vacation (INAUDIBLE), Wolf, as they say, the rest is history.

BLITZER: I was there, I was watching that history unfold in Moscow. I went there right after the aborted coup and I went back in December when that red flag went down from the Kremlin the last time, ending 74 years of communist rule in the then Soviet Union, which, as you know, disintegrated.

Gorbachev not very happy about it. He was the last communist leader of the Soviet Union and a lot of our viewers probably were therefore pretty surprised recently to pick up a glossy magazine and there you see him doing an advertisement for Louis Vuitton. I want you to show our viewers that ad and that picture. You spoke to him about it today, didn't you?

CALLEBS: Yeah, here's the ad. If you look at it, it's a picture by (INAUDIBLE) it's a very -- it's an

amazing picture. He's driving by the Berlin Wall in a limo with a very expensive Louis Vuitton bag sitting right next to him. I had a chance to say, what was going through your mind driving by this icon of communist rule? He said, well, he said it would happen pretty quickly. Here's what he had to say.

(BEGIN VIDEO CLIP) GORBACHEV: Well, they shot it very quickly. They told me what their concept was and they said that it will be in good taste. And that, indeed, Gorbachev is a person who travels a lot around the world and this kind of thing is useful, is useful for him. And, so, this captures a moment when I enter the car and this bag is here.

(END OF VIDEO CLIP) CALLEBS: And, Wolf, for those of you who think this former communist icon now becoming a Madison Avenue pitchman, it's not quite that great. He's actually, all the money from this ad went to his charitable organization. So he didn't pocket any money from the Louis Vuitton ad. He did one other commercial some time ago. Can you remember what company he pitched for?

BLITZER: No, help me.

CALLEBS: Pizza Hut, 1996. He was with his granddaughter, so he's a veteran. But he's such an engaging individual to talk to. He really warms up when you sit down and speak with him one on one.

BLITZER: I remember when they opened up Pizza Hut in Moscow in the late 1980s and during that coup and during the collapse we used to run over there and get pizzas and we paid dollars so we didn't have to wait in long lines. All right, thanks very much, Sean reporting for us from New Orleans.

When we come back, you're going to see and hear from Marion Jones. She breaks down, she cries after that court appearance today. She is now, she is now acknowledging that she did take those steroids. You're going to want to see her reaction when she emerged from that court. We'll take a quick break. Marion Jones and her tearful outburst.

(COMMERCIAL BREAK) BLITZER: Only moments ago Marion Jones emerged from a courtroom after pleading guilty to lying about the use of steroids. The Olympic gold medal winner spoke to reporters outside the courthouse and got very emotional.

(BEGIN VIDEO CLIP) MARION JONES: Good afternoon, everyone. I'm Marion Jones Thompson and I'm here today because I have something very important to tell you, my fans, my friends and my family. Over the many years of my life as an athlete in the sport of track and field, you have been fiercely loyal and supportive towards me. Even more loyal and supportive than words can declare, it's been my family and especially my dear mother who stands by my side today. And so it is with a great amount of shame that I stand before you and tell you that I have betrayed your trust. I want all of you to know that today I pled guilty to two counts of making false statements to federal agents. Making these false statements to federal agents was an incredibly stupid thing for me to do and I'm responsible fully for my actions. I have no one to blame but myself for what I have done. To you, my fans, including my young supporters, the United States Track and Field Association, my closest friends, my attorneys

and the most classy family a person could ever hope for, namely, my mother, my husband, my children, my brother and his family, my uncle and the rest of my extended family, I want you to know that I have been dishonest. And you have the right to be angry with me.

I have let them down, I have let my country down and I have let myself down. I recognize that by saying that I'm deeply sorry, it might not be enough and sufficient to address the pain and the hurt that I have caused you. Therefore, I want to ask for your forgiveness for my actions and I hope you can find it in your heart to forgive me. I have asked almighty God for my forgiveness. Having said this, and because of my actions, I am retiring from the sport of track and field, a sport which I deeply love. I promise that these events will be used to make the lives of many people improve. That by making the wrong choices and bad decisions can be disastrous. I want to thank you all for your time.

(END OF VIDEO CLIP) BLITZER: Marion Jones the Olympic gold medal winner acknowledging now she did lie about the use of steroids, making that emotional statement saying she and she alone is responsible for that, pleading guilty to two counts of lying to federal investigators.

We're going to continue to watch this story, much more on it coming up at 7:00 p.m. eastern here in THE SITUATION ROOM. Coming up next, a big deal is being made over a tiny pin. Why all the candidates are talking about their lapel right now. Stay with us.

(COMMERCIAL BREAK) BLITZER: Senator Barack Obama's campaigning in Iowa today, but some critics are focusing in on something Obama doesn't have. Let's go right to CNN's Susan Roesgen, she's following this story for us. So Susan, what's missing?

SUSAN ROESGEN, CNN CORRESPONDENT: Well, you know, Wolf, you probably heard the expression, don't wear your heart on your sleeve, but Senator Barack Obama says he won't wear his patriotism on his lapel.

(BEGIN VIDEOTAPE) ROESGEN (voice-over): Senator Barack Obama was as dapper as ever this week in Iowa City, Iowa, but a sharp-eyed reporter noticed how plain his dark suit looked with nothing attached to the lapel.

Where was the little American flag pin that many politicians wear as religiously as a wedding ring?

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: I decided I won't wear that pin on my chest, instead, I'm going to try to tell the American people what I believe will make this country great. And hopefully that will be a testimony to my patriotism.

ROESGEN: After the terrorist attack of 9/11, Obama says he wore a flag pin as a symbol of patriotism, but he says he stopped wearing it while others still do. President Bush wears a flag pin, Vice President Cheney does, too. Ditto for Democratic presidential candidate Bill Richardson.

SEN. BILL RICHARDSON, (D) PRESIDENTIAL CANDIDATE: I love this thing. I love this country. I wear it, but patriotism is what you do, not what you say. It's what you do.

ROESGEN: On that presidential candidate Senator Hillary Clinton agrees. She wears a flag pin sometimes.

SEN. HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: There are so many ways that Americans can show their patriotism. Wearing a flag pin, flying the flag, pledging allegiance to the flag.

ROESGEN: Of course, the ultimate way to show patriotism is to vote, the vote in Iowa will be crucial.

(END OF VIDEOTAPE) ROESGEN: You know, Wolf, it may not mean much to voters, but bloggers are having fun with this, some say they admire Obama's decision not to wear the pin. While others say it reminds them of that Seinfeld episode in which Kramer refused to wear an AIDS ribbon. Remember that one, Wolf? So some say that it's best to just go with the flow and he should wear the pin anyway. But, again, that's what bloggers are saying today. Don't know if it's having much effect on voters.

BLITZER: I think I've seen every "Seinfeld" episode about a dozen times. Thanks Suzanne very much.

ROESGEN: Me too.

BLITZER: He is a man that wears many hats, author, humorous, songwriter, musician, he's even tried his hand in politics. Now he's selling cigars, promoting a new book and thinking about running again for governor of Texas.

Joining us now here in THE SITUATION ROOM, Kinky Friedman, an old friend, a good guest. He's got a new book entitled, "You Can Lead a Politician to Water, But You Can't Make him Think, 10 Commandments for Texas Politics." Kinky last time we spoke you were running for governor of Texas, what you wound up with about 13 percent of the vote which isn't too shabby.

KINKY FRIEDMAN, AUTHOR: Over 600,000 votes, yeah, but, you know, I don't think God would have won as an independent in Texas, Wolf. So if I ever do it again, it would definitely be as a crip or a blood.

BLITZER: That's not going to happen. But what about as a Democrat or a Republican?

FRIEDMAN: Well, I thought about running as a Democrat, somebody told me last week that I look like Ann Richards in drag and I've given it some thought and I think that's what the Democrats are missing. Ann Richards and Molly Ivans and that kind of spirit. And I would also like to see the death penalty abolished in Texas.

BLITZER: I know that was one of your big issues. You're not only a politician, I guess.

FRIEDMAN: I'm not a politician.

BLITZER: Musician. Nothing wrong with being a politician.

FRIEDMAN: Well there are lots wrong with it.

BLITZER: You write in the book, let me read to you this paragraph from page 100. I've hung out often in my life in rooms full of musicians and rooms full of politicians. The musicians have honesty, integrity, humanity, creativity and a sense of humor. The politicians, as a general rule, have none of these qualities. All right, name names, who are you thinking about when you wrote that?

FRIEDMAN: Well, I guess the great leaders in our country, you know, have never put party first.

Today, that's all these people are doing. So I would say of all the candidates running, which ones inspire you?

BLITZER: I'm asking you.

FRIEDMAN: Does any living person inspire you that are in politics?

BLITZER: Do you like any of these Republicans or Democrats?

FRIEDMAN: I like Hillary, I've met her a few times. I like McCain I think has elements of greatness and I think Ron Paul is probably telling the truth, nobody's listening.

BLITZER: He raised $5 million in the last quarter.

FRIEDMAN: The rest of them are really the same guy admiring himself in the mirror. You know it's a government of the money, by the money and for the money.

BLITZER: So you don't really respect a lot of these politicians.

FRIEDMAN: No, none of us do. Eighty-six percent of us, the greatest crisis we've got in government, is nobody believes in it.

BLITZER: But you want to get involved in politics and you want to have a role, is that right?

FRIEDMAN: I'm not sure that I want to do this.

BLITZER: You did it once, you ran.

FRIEDMAN: I did it, I gave Texas my telephone number and she never got back to me basically. You know the crowd picked Barabas, that's all -BLITZER: You know what they say, it at first you don't succeed, try, try again.

FRIEDMAN: Well certainly I'm thinking about it. I really think education, health care and the death penalty in Texas are being, you know, the big issues of our day that really affect people's lives, the politicians are letting them slip through their fingers and what they're doing is criminalizing trivia like Kinky can't smoke a cigar.

BLITZER: These are your new cigars, right?

FRIEDMAN: These are new cigars.

BLITZER: They're not Cuban cigars.

FRIEDMAN: No, they're Honduran cigars made by Cubans in Honduras. Kinky Friedman cigars, KFC, this is the governor and this is the Kinky Crystal, there's also Texas Do Boy, the Willy, which has a twist on one end and a cute little red shag head on the other. And the utopian which benefits Utopia Rescue Ranch for animals, a ranch. And my message to young people is cigarettes bad, cigar good.

BLITZER: I'm not so sure about that. A lot of doctors say and medical researchers say cigars not so good either.

FRIEDMAN: No, you were listening to bureaucrats and politicians telling you, it's for your health, that's why we have all these smoking regulations. They're creating speak easy, these cigar bars are springing up everywhere. This is prohibition all over again. Look, Wolf, I'll give you an example.

Take Israel, Japan, Korea, Portugal, Spain, France and Italy. All these countries have lower heart disease and lower lung cancer rates than America and much higher smoking rates. So what do we conclude from this? Speaking English is killing us.

BLITZER: Not necessarily. You write in the book, I virtually always have a Cuban cigar in my mouth.

I smoke about eight to 10 cigars a day. I'm quick to point out, however, that I'm not supporting the economy, I'm burning their fields. Those are your words.

FRIEDMAN: Well, these are, these are a financial pleasure, these bugars. They're much cheaper than Cuban cigars and soon you'll be able to get these in cigar stores everywhere.

Kinkyfriedman.com, you can get them right now.

BLITZER: You have one interesting proposal here that would shut down illegal immigration into the United States.

FRIEDMAN: Absolutely.

BLITZER: Give us the gist in 30 seconds.

FRIEDMAN: Well I have spoken to John McCain about it already, he likes it, he said it's better than anything we've got. It's called the five Mexican generals plan. You divide the border into five sections -BLITZER: The border between the U.S.?

FRIEDMAN: No, no, Texas and Mexico. You appoint a Mexican general in charge of each section.

You give each man a million bucks which they hold in escrow for him and every time you catch an illegal coming through his jurisdiction, you withdraw 10,000 bucks. That would shut down illegal immigration into Texas for a paltry $5 million.

BLITZER: Kinky Friedman, he was a politician, now he's just a musician and he's writer -- you got some best sellers under there.

FRIEDMAN: Yeah, I'm a dealer in hope.

BLITZER: The book is entitled "You Can Lead a Politician to Water, but you Can't Make Him Think."

Kinky, thanks for coming in.

FRIEDMAN: Wolf, may the God of your choice bless you.

BLITZER: Thank you, you too.

FRIEDMAN: Thank you very much.

BLITZER: Speaking of smoking, two California cities are considering a smoking ban inside

apartments and condos. Jack Cafferty, he asks is that going too far. Your email and Jack when we come back.

(COMMERCIAL BREAK) BLITZER: Here's a look at some of the hot shots coming in from our friends at the "Associated Press." In China, workers set some scaffolding at a construction site. In Hungary, Swedish players try to solve a rubics cube and qualify for this year's world championship. Some players tried to solve the classic cube while blindfolded with one hand or with their feet.

In Jerusalem, meanwhile, Palestinian Muslim worshippers wait to cross at an Israeli checkpoint.

Thousands of worshipers go to Bethlehem for Friday prayers. In Texas a week-old rhinoceros nuzzles his mother during his first public outing. Check it out, some of this hours hot shots, pictures worth a thousand words.

Let's go right back to Jack Cafferty he's in New York. Jack?

JACK CAFFERTY: Those rhinoceros are ugly little things, aren't they?

BLITZER: The babies are sort of cute. Look at that. Look at him.

CAFFERTY: I did, do I have to look at it again?

BLITZER: Yeah., it's cute the baby.

CAFFERTY: It's not pretty. Two California cities considering a smoking ban inside apartments and condominiums. The question is that going too far? Linda writes from New Jersey, "Why not have restaurants, condos and apartments for smokers and separate ones for non-smokers. If the legislators are so worried about us dying of smoke-related illnesses why don't they just make cigarettes illegal. As long as it's legal smokers should have some little corner of the world where they're not bothering anyone and where they can enjoy that personal freedom." Mary in Michigan writes, "Is the ban going too far? No. They will sell out of units. I am asthmatic from secondhand smoke. I would love to live in a smoke-free apartment building." George in New York, "If a smoker has the right to treat an apartment or condo as their own home, then they should have the right to do what they want in their personal living space, and that includes smoking a cigarette after a stressful day at work. Politicians shouldn't meddle with how people choose to live in their own space." Vincent in New York, "California's not going too far since there are already no-pet condo restrictions, just like no-pet condos are attractive to certain buyers, so will no-smoking become attractive to a certain clientele." How about no smoking and no pet restrictions? Wanda in Montana, "People should be able to smoke in their own homes, when you're renting, that's not your own home.

Somebody else is going to have to wash the yellow-nicotine stained walls, launder the stinky drapes, clean the toxic-ridden carpets, repair the burns on the countertops where somebody's left a cigarette burning, etcetera." Jay in New York, "The day some court finds it constitutional to tell me what the hell I can do and not do in my own apartment, I'm out of here. And I mean America." If you didn't see your email here, you can go to cnn.com/caffertyfile, where we post more of them online along with video clips of "The Cafferty File" and no pictures of them ugly little rhinoceros'.

BLITZER: Thanks very much. I still think that little baby was cute. See you back here in an hour. We have a lot more coming up at 7:00 p.m., one hour from now. Until then, thanks for watching, "LOU DOBBS TONIGHT" starts right now. Kitty Pilgrim sitting in for Lou. Kitty?

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