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NANCY GRACE

FBI Joins Police in Kentucky in Search of Missing Persons; Search Continues for Trenton Duckett; Federal Judge Throws Out Conviction on Ken Lay

Aired October 18, 2006 - 20:00:00   ET

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


NANCY GRACE, HOST: Breaking developments tonight. We go live to Kentucky. Police searching desperately for a 9-month-old baby boy, apparently stolen from a state social worker, a grandmother-turned-social worker found brutally beaten to death, the perpetrators as of tonight not apprehended. In fact, just released, grainy surveillance video places the suspects at an Illinois gas station.
And tonight: Why did a federal judge threw out the Enron conviction, that conviction on multi-millionaire Enron CEO Ken Lay, leaving thousands out of money and pensions?

First tonight, to the Amber Alert for a 9-month-old Kentucky boy.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: When we entered, found the body of a female lying in the living room area of the house, obvious injury to the head. There may be other injuries, but we need the coroner to determine that. We are investigating this as a homicide. We have reason to believe that the woman who was in this house prior to this incident may have left with a 9-month- old child. We have put out a nationwide Amber Alert.

(END VIDEO CLIP)

GRACE: Good evening, everybody. I`m Nancy Grace. I want to thank you for being with us tonight. A grandmother-turned-social worker dead, a 9-month-old baby boy missing. Now grainy video emerging, placing the two persons of interest at an Illinois gas station.

Straight out to Beth Smith, reporter with"The Gleaner." Beth, what can you tell us?

BETH SMITH, "THE GLEANER: Well, Nancy, the latest that I have heard from Henderson police is that they are searching everywhere they can for these people, but with all of the tips that are coming in at this point, the only credible sighting has been the one in Illinois, which was 48 hours ago.

GRACE: Well, let`s get real, Beth. I mean, we know what the vehicle looks like. We know what the tag number is. How hard can it be to find the car and the tag?

SMITH: I can`t answer that.

GRACE: Well, tell me, what can you tell us regarding the funeral of this social worker?

SMITH: I have no information on her funeral arrangements at this time.

GRACE: Now out to Court TV`s Jean Casarez, also covering the case from the beginning. What were the conditions, Jean, surrounding the death of the social worker, a 67-year-old mother and grandmother bludgeoned to death?

JEAN CASAREZ, COURT TV: That`s right. Well, the medical examiner has just released the cause of death. It was blunt force trauma due to a beating, suffered during a beating. There were cuts and bruises all over her. They believe that she mounted an intense struggle to survive, but she didn`t.

GRACE: Back out to Beth Smith with"The Gleaner." I know this last sighting of these two -- them being Renee Terrell, 33 years of age, Christopher Luttrell, 23 years of age. I know that was the last credible sighting, Beth. What can you tell us about what police believe happened on Monday?

SMITH: Well, Nancy, they believe that Boni Frederick took 9-month-old Saige Terrell to his mother`s home for a visit. That visit was scheduled between 9:00 and 11:30 AM. At some point in that visit, Miss Frederick was killed and the baby was taken.

GRACE: Back to Jean Casarez, Court TV news correspondent. Jean, tell me, how many children did this woman have, Renee Terrell, 33 years of age?

CASAREZ: It`s believed she had five children. One allegedly died because of a crib death. Three others were taken away from her by social workers. We don`t know their ages. And then you had the 9-month-old, Saige Terrell, and he was taken away from her when he was only 13 days old.

GRACE: Whoa, whoa, whoa, whoa, whoa! The baby was taken away from the mom at 13 days?

CASAREZ: That`s right. And there were also allegations from the state welfare agency in regard to the mother, charges of assault, charges of neglect with her other children.

GRACE: Back to Beth Smith with"The Gleaner." Let me get it straight. So you`ve got one 13-year-old (SIC) baby, Saige, who is now missing. You`ve got one dead baby by crib death. Just out of curiosity, was there ever an autopsy on the baby that died allegedly of crib death?

SMITH: I have no information on that.

GRACE: OK. Then you`ve got three other kids that were taken away from the custody of the mother.

SMITH: That is my understanding.

GRACE: OK. Why were the other three taken away? And do we know why this baby, Saige, was taken away?

SMITH: Authorities have not released that information.

GRACE: You know, back to you, Jean Casarez. The vehicle -- there it is in this grainy, just-released video. It is a white 2000 vehicle, Kentucky plates 675-DRV. It is a four-door station wagon.

Jean, tell me more about how this grandma-turned-social worker was found dead.

CASAREZ: Well, she had gone for that official visit just Monday, and it was between 9:00 and 11:00. And she never returned back to work, and so people were concerned. And her body was then found late in the afternoon.

But what was gone was her car, which was parked out front, and that`s the vehicle that police believe is in this video right here. But Nancy, more than that, there was a credit card purchase at that gasoline station, and police are saying they have traced that credit card to the couple. And so they believe that they were in Illinois Monday night. Now there is an all points bulletin. The FBI is getting involved. The Amber Alert is still in force to find this 9-month-old boy.

GRACE: OK, Jean, are you telling me they used the social worker`s credit card?

CASAREZ: It said that it was a credit card traced to the couple themselves, so I don`t think it was the social worker`s credit card. But that credit card, I`m sure they`re looking to see what other charges they can find to see what their route may be in this country.

GRACE: It is the victim`s vehicle though, correct?

CASAREZ: Yes, that is correct. They believe it is the victim`s vehicle.

GRACE: Out to Mike Brooks, formerly D.C. cop, formerly with the FBI task force. Mike, how -- how stupid can they be?

MIKE BROOKS, FORMER D.C. POLICE, SERVED ON FBI TERRORISM TASK FORCE: I tell you...

GRACE: They`re out in the vehicle belonging to the dead victim, found bludgeoned in her home. The baby`s gone. There they are, pulling up right under the lights and the camera, getting gas. Hi, guys. We`re looking for you! I don`t understand why they haven`t been apprehended yet, Mike.

BROOKS: Well, I`ll tell you what, Nancy. They were able at least to go back and get the -- and find out that it was them in the credit card. You know, many times, they will go ahead and cancel the card. But as an investigative tool, you know, as long as they keep using that credit card, they can try to track them.

But I guarantee you, law enforcement from Kentucky, Illinois, Indiana, Iowa, Minnesota -- right now, they are in the system. It`s going to take old-fashioned police work, Nancy, because what they need to do is, they need to go to hotels, need -- every place else to try to find this car because this seems to be their only mode of transportation. It`s just a matter of time. I believe they will go ahead and catch them.

But this child is in danger. You look at the history of these two, Nancy, it`s just unbelievable. This -- her boyfriend, Christopher Luttrell, he`s a convicted felon. You know, these are both just stellar performers.

GRACE: All right, joining us right now, with the Henderson Police Department, Detective Ron Adams. Detective Adams, thank you so much for being with us. Where are you in your investigation?

DET. RON ADAMS, HENDERSON POLICE DEPARTMENT: Right now, we are just following up on leads that are coming in to us via the Amber Alert.

GRACE: You know it, takes a lot to steal a baby and beat a grandma like this in order to get that baby. How many tips are coming in from the tip line?

ADAMS: Right now, probably 10 to 15 an hour.

GRACE: That tip line is 270-831-1295. And it`s not just the bludgeoning of the grandmother, the social worker. This baby is with them, this 9-month-old baby boy.

Let`s just take into account this woman`s history, Renee Terrell, age 33. She`s got one baby dead, allegedly of crib death. I`m still interested in whether an autopsy was performed on the baby. She`s got one baby she`s kidnapped, and she`s got three children that were taken away from her, taken away by state welfare workers.

Take a listen to what police had to say.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The scene was absolutely a brutal attack. It was very obvious that there was one or maybe more injuries that could have proven fatal, which is really an aggressive type of attack on somebody, when there`s more than one injury that appears could have been fatal. So it`s going to be very important that the autopsy results get back to us and we can determine the cause of death. But absolutely, it was a vicious attack on this person, a brutal attack.

Overnight, a warrant was issued for the non-custodial mother for kidnapping. We also understand that there`s a warrant out of Jefferson County, Kentucky, the local area for the boyfriend, for a parole violation. So there are felony warrants for both of the persons in this car. And again, with the Amber Alert, our main concern right now is locating this vehicle and making sure that the child is OK.

(END VIDEO CLIP)

GRACE: Ellie (ph), update on the credit card?

UNIDENTIFIED FEMALE: Right. Well, we don`t know exactly whose credit card this was. They haven`t released this information yet. But they believe that it was linked to this couple...

GRACE: OK.

UNIDENTIFIED FEMALE: ... and used in Illinois.

GRACE: Let`s go to the lines. Casey in Tennessee. Hi, Casey.

UNIDENTIFIED FEMALE: Hi.

GRACE: Hey, dear. What`s your question?

UNIDENTIFIED FEMALE: I`m about to pass out because you`re my hero! But my question is...

GRACE: Thank you. Thank you very much. I certainly don`t deserve that. But what do you think about this case? What`s your question?

UNIDENTIFIED FEMALE: My question is, is what is the boyfriend on parole for? And what is her record?

GRACE: He is on parole -- and I`m referring to Christopher Luttrell - - for theft and burglary. Ellie, does he have more of a rap sheet.

UNIDENTIFIED FEMALE: He sure does. He`s got...

GRACE: Let`s take a look at that rap sheet, Liz. Go ahead, El.

UNIDENTIFIED FEMALE: He`s got a couple of burglary convictions, making terroristic threats, receiving stolen property...

GRACE: OK. We`re showing the whole resume on the screen. There`s your answer, Casey. Why is he out from behind bars? Don`t know.

To Jerry in Indiana. Hi, Jerry.

UNIDENTIFIED FEMALE: Hi, Nancy.

GRACE: Hey, dear.

UNIDENTIFIED FEMALE: I just wanted to know, where is the biological father in all this? Does he have...

GRACE: Good...

UNIDENTIFIED MALE: ... anything going on with that?

GRACE: ... question. To Beth Smith, reporter with"The Gleaner." Do we know who the biological dad is?

SMITH: I have no information on who the father is.

GRACE: And Beth, we tried to find out, as well. At first, we thought this guy, Christopher Luttrell, was the biological dad. Couldn`t confirm that. Then Luttrell family stated had he only known this woman for, like, three months. The baby is 9 months old.

Let`s go back out to Detective Ron Adams, joining us from Henderson police. Detective, again, thank you for being with us. Not only do I want justice for the family of this elderly social worker, but the baby is in danger, actually in grave danger. We`ve already got one dead baby out of this household, a newborn like this child, three taken away from her from the state social workers.

What should people be looking for, Detective?

ADAMS: They should be looking for these two individuals, Chris Luttrell and Renee Terrell. They should be looking for the white 2000 Daewoo with Kentucky tags 675-DRV. These people were last seen in Illinois, and they may be traveling on the interstates of -- basically, they could be anywhere.

GRACE: It`s 675-DRV. Liz, let`s take a look at the map. Detective Adams, how far away was the sighting from Henderson, Kentucky?

ADAMS: I believe it was about 160 miles.

GRACE: And they were there 48 hours ago?

ADAMS: Approximately 48 hours ago was the last credible sighting, which occurred there.

GRACE: Take a listen to what police had to say.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: She`s believed to have been at the home when the visitation occurred. It was a court-ordered two-hour visitation of the child to the mother. That`s what the social worker was doing there. We have no reason to believe that the mother was not there when the social worker arrived. Certainly, we believe that the mother may have been present and probably was present when this attack occurred on the social worker. So the mother`s definitely a suspect on the homicide, as well as a warrant being issued for kidnapping.

We consider it to be a hot investigation, which means we`re getting a lot of phone calls, getting a lot of information on the phones. We`re really glad for the phones to be ringing. We want them to ring because the more phone calls we get, the better the possibility is we`re going to get some information that we can act on.

We have our entire investigative division working on this, of course, our evidence collection officers. We`ve asked our training sergeant to go down and assist with the investigation today. So it`s a very active investigation, very important that we find this 9-month-old child.

(END VIDEO CLIP)

GRACE: OK, let`s unchain the lawyers. Tonight joining us, defense attorney out of Miami, Hillah Mendez. And we are welcoming back again tonight on the show our special friend, Dan Horowitz, defense attorney. You know, Dan, when and if this ever goes to trial, the whole flight aspect is going to look very bad for the defense.

DAN HOROWITZ, DEFENSE ATTORNEY: I think so, Nancy. This is a case where she has such a history of violence towards her own children -- and I`m not going to be as careful as you -- crib death, three babies taken away. Why is this little infant even visiting with her after all of this? This social worker, a kind person, is bludgeoned to death, and then she runs? Forget it, Nancy. She has no defense, and it scares me because that means she has nothing to lose.

GRACE: Interesting. Interesting. I don`t think either of them have a job. They`re in a stolen vehicle. Don`t know what they`re doing for money. Hillah Mendez, it`s amazing to me they`ve managed to outwit authorities so far. But this whole aspect, when and if this goes to trial, of flight -- how can a defense attorney explain that to a jury?

HILLAH MENDEZ, DEFENSE ATTORNEY: Well, what will be interesting to see is whether or not a defense attorney for the mother puts forward a defense saying she acted under duress as a result of something that maybe her boyfriend, Mr. Luttrell, did or something that he committed the crime, and in the heat of all of them running and getting scared, he convinced her that possibly he -- or she were going to get in trouble and that she would be responsible because the victim was found deceased in her home. So obviously, you would expect her to have been there for the time, knowing that the visit with her baby would have occurred.

GRACE: OK, I see where you`re going. But you know what, Hillah? I`m not drinking the Kool-Aid, all right? I see where you`re going. You`re saying she didn`t know what was going on, she`s out of her mind, and he leads her down the garden path. She had no idea about the social worker bludgeoned to death, the grandma in her home. And they take off with the baby. But you`re right, I do believe that`s where the defense will head.

Very quickly, to Beth Smith. Isn`t it true this guy walked away from a halfway house in order to get the baby and leave?

SMITH: I have not heard that.

GRACE: Jean Casarez, can you tell me anything about that?

CASAREZ: Yes, he did walk away from his halfway house. You see, Nancy, he was convicted of burglary in 2004 and was sentenced to five years. Well, he just got out on parole in April of this year, was sent to that halfway house, never came back to the halfway house one night, and that`s when the warrant was issued for his parole violation. And law enforcement hasn`t heard from him since.

GRACE: So how long had he been missing from the halfway house, Jean?

CASAREZ: From June to October. So what is that, four months.

GRACE: And so nobody can figure out where he is, and he pops up at his girlfriend`s house.

Very quickly, tonight we are helping in the search for a 9-month-old Kentucky baby boy. I hope you can help us. That tip line, 270-831-1295.

Let`s go to tonight`s "Case Alert." In a parent`s worst nightmare, the search goes on for a 2-year-old Florida boy tucked into his crib, mom in the next room. She says the bedroom window screen slashed, baby Trenton gone. Almost immediately, police name Melinda Duckett prime suspect. Tonight, Trenton`s dad takes step number one, launching his own search with the official opening of Team Trenton Headquarters. If you have info, please call 877-TRENT-65.

(BEGIN VIDEO CLIP)

JOSH DUCKETT, MISSING BOY`S FATHER: My name`s Joshua Duckett and I`m the father of Trenton Duckett and (INAUDIBLE)

The name of the center is Team Trenton Headquarters. It`s just basically another option for people to contact us to give us any of their information without having to directly contact law enforcement.

Don`t give up. I mean, we`re not giving up at all. We`re continuing to move forward just as much as we have from the start. We`re staying positive and we need the community to say positive and back us.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Frederick had been a social worker for 15 years and was extremely passionate and dedicated to her job.

UNIDENTIFIED MALE: The scene was absolutely a brutal attack. It was very obvious that there was one or maybe more injuries that could have proven fatal.

(END VIDEO CLIP)

GRACE: A 67-year-old grandmother-turned-social worker bludgeoned to death. The baby she was handling, a 9-month-old baby boy, is gone. Tonight, the search is on for the perpetrators we believe to be Christopher Luttrell, age 23, Renee Terrell, 33.

Out to Jean Casarez. What can you tell us about Boni Frederick?

CASAREZ: Well, Boni Frederick -- she was 67 years old. She`d been a social worker for 15 years, and they say she was one of the most loyal to her job. She was a mother. She was a grandmother. She was a very loyal friend. And she was going on what the purpose of her job was. She was an aide. And she would actually take the child for the visit with the parent that had lost the custody, the child that was in state custody or even in a foster home.

GRACE: Take a listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We were amazed yesterday when the Amber Alert went out how many people started calling. Many of the truck -- semi truck drivers have computers in their vehicles. The Amber Alert went out to truck drivers, to law enforcement all across the country, to the media. Some people called us to say their cell phones went off with the Amber Alert. They have that set into their cell phones. So we think that was critical, getting that information out right away, and we`ve received many phone calls based on the Amber Alert itself.

(END VIDEO CLIP)

GRACE: Amber Alert still in effect. Joining us tonight is a very special guest. With us is Paul D`Agostino. He is a child welfare social worker expert. Sir, thank you for being with us. One of the most unappreciated people in the system, social workers who are doing their jobs. How did this happen with Boni?

PAUL D`AGOSTINO, CHILD WELFARE SOCIAL WORK EXPERT: It`s difficult to answer that in a particular case, but social work involved in child welfare has some inherent dangers to it. When you`re dealing with domestic violence, you`re dealing with the strong potential for violence. Child abuse is a form of domestic violence, so it is a situation that has some inherent dangers to it.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I would hope a mother wouldn`t hurt their child. Of course, you would also hope that a mother would not viciously attack or be present for an attack on a social worker that resulted in death.

(END VIDEO CLIP)

GRACE: Tonight, the unrelenting search for a 9-month-old baby boy out of Kentucky.

Let`s go to the lines. Peggy in Louisiana. Hi, Peggy.

UNIDENTIFIED FEMALE: Hi, Nancy. Thank you for taking my call.

GRACE: Yes, ma`am.

UNIDENTIFIED FEMALE: My question is, does the mother have any history of mental illness, or is this just out of the blue?

GRACE: To Jean Casarez. Any history that we know of?

CASAREZ: We don`t know about a history of mental issues, but we know a history with the welfare agency of abuse and neglect. And it was just last week, the neighbors are saying, that she told them that she knew her little baby was going to be put up for adoption. And allegedly, she said she had it all planned that she was going to take the child and they were going to go to New Mexico.

GRACE: Whew! To Dr. Jeff Gardere, psychologist and author of "Love Prescription" and "Smart Parenting." Dr. Gardere, what can you tell us about, for instance, post-partum syndrome, illnesses mothers have, psychological problems after giving birth? This baby`s only 9 months old.

JEFF GARDERE, PSYCHOLOGIST: Yes. There may be the possibility, of course, that there is some post-partum syndrome going on, but I think this is a woman who`s had a history of mental issues, not necessarily insane -- please don`t -- don`t...

GRACE: Yes, don`t even go there.

GARDERE: That`s right. No, no, I`m not going there!

GRACE: She knows how to kill a lady and jack a car, according to reports.

GARDERE: I`m not going there. Sure. I`m not going there. But she does have a history of some incompetence. She has very low intelligence, and she has that history of neglect of the children. So there is something going on with her emotionally.

(COMMERCIAL BREAK)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It`s not unusual for us to get a call to social services and say, "We have to be at a certain location at 2:00. Would you please send an officer with us?" And we do that. We`re happy to do that.

I do know they have a tough job. They`re dealing with emotional issues, family issues, and it can be a very stressful situation to be in, but anytime social services calls and requests it, we always make the attempt to go with them to ensure that there`s not a problem there.

Our first call that I`m aware of was when social services called and said they had a worker that was overdue returning, and they wanted to know if we could go by and check on the welfare of both the child and the social worker.

(END VIDEO CLIP)

GRACE: Welcome back. The search for a 9-month-old baby boy out of Kentucky now expanding into Illinois, possibly heading toward New Mexico. Joining us, former D.C. cop and former fed Mike Brooks.

Let`s be realistic. How far can they travel? They`re in a stolen car, for Pete`s sake.

BROOKS: They can go a long way on the tank of gas, Nancy. They`ve already been 168 miles from Henderson. And it looks like they`re heading north. Doesn`t look like heading towards New Mexico. But, I mean, just like the detective said earlier, they could be going anywhere. And, Nancy, you know, talk about the safety of these social workers.

Number one, the safety procedures need to be re-evaluated in all states. When you have someone -- first of all, she shouldn`t even have had visitation, as far as I`m concerned, of this child. But all states have to take a look and re-evaluate what they`re doing, and maybe why don`t they have the mother come to the state, get a center that is secure, do a search of the parents, that kind of thing, if they want to make visits? But this 67-year-old woman should not be going out to a house alone.

I can tell you, when I was a patrol officer, I got calls many times to assist social services because they got to a location in situations such as this and then things went sour.

GRACE: You know, that`s a really good point. Let`s go back to the lawyers. Joining us, Hillah Mendez out of Miami, Daniel Horowitz, trial lawyer out of San Francisco.

To Daniel Horowitz, it seems to me that our society puts the interest of the parent before the interests of the baby or the child, because the child`s already been taken away. Why? Allegations of neglect and mistreatment. So why do we have to jump through hoops to make this estranged parent happy at the expense of the child?

HOROWITZ: You know, Nancy, I completely agree with you. I had a case years ago where a child died and was sewn in a mattress and left there for six months, and still the courts entertained giving the remaining children back to the mother. We are so cock-eyed.

GRACE: Yes, I was wondering how you were going to connect that back up to this. So did they get custody?

HOROWITZ: I represented the children, by the way. I represented the children, not the mother.

GRACE: Did they get custody? Did they get visitation?

HOROWITZ: No, we won. We won. I got the children taken away and put somewhere safe. But still the fact that I even had to fight that battle is crazy. And we are just so parent and family oriented in our minds that...

GRACE: No, parent, parent.

HOROWITZ: ... we ignore the fact that this woman is not a parent. She is just a producer of babies and then an abuser. There should not have been any chance this child ever touched her once it was born, in my opinion.

GRACE: And, Hillah Mendez, also this is making me very curious about the cause of death of the first baby. I mean, when you see a pattern here, three kids taken away from neglect, the fourth one taken away, now kidnapped, and one dead baby by crib death?

MENDEZ: Oh, Nancy, there`s no question about that. I think that the questions with regards to the death of that first child have become very, very important now, especially with possibly what, in fact, could happen to this 9-month-old baby who now may very well be with the mother and the mother`s boyfriend.

As well as, why were the other three children taken away? Were they taken away as a result of the death of the first one or because there were circumstances themselves that she did with those three children, which is why those children were taken away?

GRACE: Good question. Jean, do we know why now four children were taken away? All we`ve got is a blanket statement of neglect.

CASAREZ: That`s right. And that`s all state welfare agency officials are saying. They`re not saying the ages of these other children, if they have been adopted, if they are in foster care, or what the conditions were as to why they were removed.

GRACE: I want to get back to child welfare social work expert Paul D`Agostino joining us out of the Florida jurisdiction. Paul, again, welcome to our program tonight.

D`AGOSTINO: Thank you.

GRACE: How does a social worker get in this position where they`re in the home with a mom that has clearly neglected children in the past? She knows the baby`s going to be put up for adoption. How does that work?

D`AGOSTINO: Actually, there are really some precautions that need to be taken up front. One of them, of course, is that the individual have really professional social work education and training. This helps them to really evaluate the extent of danger that might be in that home and also to help diffuse it.

GRACE: Well, this poor lady, Paul, was just an aide. She was a social service.

D`AGOSTINO: She was an aide.

GRACE: And what is that?

D`AGOSTINO: An aide is usually somebody who provides assistance to the social worker themselves.

GRACE: I see.

D`AGOSTINO: They usually have not had professional social work education.

GRACE: I see.

D`AGOSTINO: You would wonder why, I mean -- I really would question why...

GRACE: I smell a big...

D`AGOSTINO: ... they would bring a child to a home, a particular home that had this level of violence in it, to do that unaccompanied. And the standard practice would be that that visitation would occur at a more neutral setting.

GRACE: And supervised. I smell a big, fat lawsuit coming right now, although you`ve got sovereign immunity. It`s very difficult to sue the state. Let`s go out to the lines. Liz, who`s our caller? Lori in Ohio, hi, Lori.

CALLER: Hi, Nancy. I just had a question. You`ve covered a little bit of it. I`m a foster parent in the state of Ohio.

GRACE: God bless you.

CALLER: All our visits are done at the agency. There are no home visits. And I was just wondering if Kentucky has a different law, because our visits are done at the agency under supervision of a caseworker.

GRACE: You know, that`s an excellent question. Let`s go to -- do we still have Detective Ron Adams with us, Liz? Detective, how did this happen that this poor lady, a 67-year-old grandma, ends up in the woman`s home?

ADAMS: You know, I really don`t know the answer to that. The home visits were scheduled by social services, and social services was facilitating that visit. How they actually come about, I don`t really know.

GRACE: You know, that`s an investigation for us to find out why this literally little old lady was in the home of this woman, her body found bludgeoned. The baby, who we perceive to be in great danger tonight, is gone.

Let`s quickly go to tonight`s "Case Alert." Former political powerhouse Florida Rep. Mark Foley, who resigned after explicit e-mails emerged written to young boys serving as House pages. As some sort of an excuse, Foley claims he himself was molested as a teen. He added on that he`s gay and, just for good measure, threw in he`s an alcoholic. Foley now says he will reveal the name of the Catholic priest he claims molested him. Well, Mr. Foley, we`ve been waiting since about 9:00 a.m.

(NEWSBREAK)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CHARLES PRESSWOOD, LOST SAVINGS FROM ENRON COLLAPSE: I lost $1,310,577 and some few cents. We were told the company has never been any stronger, and we believed them things. When I retired, I thought I had all my I`s dotted and the T`s crossed. It`s a nightmare trying to struggle and pay your bills with that little of money.

(END VIDEO CLIP)

GRACE: That was Enron victim senior citizen Charles Presswood. He couldn`t be with us tonight because he`s giving a sermon. He lost everything because of Enron, and today, to add insult to injury, a federal judge throws out the conviction on fat cat CEO Ken Lay. Why?

Out to Michael Shiloh, investigative reporter. Why? This means nobody can get the money, right?

MICHAEL SHILOH, INVESTIGATIVE REPORTER: Not true that no one can get the money. This is just another stumbling block for the prosecutors, the investigators, and those who were trying to recover the money from what prosecutors are calling the Enron fraud.

GRACE: Well, when you say nobody can get the money, I`m sure Ken Lay`s family has gotten the money, but what about the victims?

SHILOH: Well, the victims can still get the money. The Enron task force is trying to get $183 million in recoveries now. The problem is, they were trying to rely on the conviction of Ken Lay for those 10 counts of bank fraud and conspiracy and fraud, and that is no longer one of the tools they can use to recover this money.

And the numbers are mind-boggling. You have to remember that the creditors in the Enron case are due $40 billion; only $10 billion of that has been recovered yet. And then, of course, that money does not necessarily go to the victims.

GRACE: To Russ Alba, corporate securities expert, also attorney with mergers and acquisitions, Russ, you`ve covered this from the very beginning. I don`t understand it. I do not understand why this federal judge did this. And do you believe it will be appealed?

RUSS ALBA, CORPORATE ATTORNEY: No, Nancy, I don`t.

GRACE: First of all, I`m not sure Ken Lay`s even dead, all right?

ALBA: Well, Nancy, I read...

GRACE: Died at a friend`s house, cremated the body. Shh.

ALBA: Nancy, I read the autopsy report. He appears to be very dead.

GRACE: Autopsy report? Yes, somebody`s dead. But how do we know it`s him? Do you think this guy doesn`t have enough money to fake it all out and run to Cuba and live in a mansion? Are you kidding me?

ALBA: Don`t know. But in terms of the action of Judge Lake in Texas, he actually followed the law of the Fifth Circuit. And the law is based on two notions, basically the concept of finality, that before one can be labeled a convicted felon, one is entitled to the right to appeal the full appeal, and that one`s day in court isn`t complete until those appeals have been exhausted.

GRACE: Well, if that`s true, Daniel Horowitz, a final appeal may not be for 20 years, when you finally make it to the U.S. Supreme Court.

HOROWITZ: Nancy, it`s the correct statement of the law. The U.S. Supreme Court has taken two contradictory positions on this issue. Their first case, they said, definitely, if there`s an appeal pending and you die, even if you commit suicide, then everything is wiped clean. But then they had another case where they said, well, maybe not. It`s not clear. So nobody really knows where they stand.

There has to be an appeal. And the Supreme Court has to be told, "Look, this is a huge money case. It will cost the taxpayers 10s, and 20, 30, 40, $50 million maybe to redo this case on the civil side, just to get the money that Ken Lay stole that was already proven." So this has got to go to the Supreme Court. They`ve got to fix this problem.

GRACE: Joining us, David Tonsall, formerly Enron employee. He lost about $200,000. Sir, is it Tonsall?

DAVID TONSALL, FORMER ENRON EMPLOYEE: Yes, it`s Tonsall.

GRACE: Tonsall. I`m stunned. What`s your response to the judge`s ruling today? You heard what Horowitz said. The Supreme Court has conflicting rulings on this very issue. This judge didn`t have to do this.

TONSALL: Right, he didn`t have to do it. And from my standpoint, it`s simple. It`s just another stumbling block to the creditors and the people who lost in this.

GRACE: Tell me, how did you lose the $200,000 in retirement?

TONSALL: Basically, my previous job, I rolled it all into Enron.

GRACE: You mean like you rolled your 401(k) and all that, that you`ve been working on all these years, when you went with Enron, you rolled it into that one?

TONSALL: Yes, sir. Yes, ma`am, excuse me. I believed the hype, so I`m just another victim out here.

GRACE: What hype was that?

TONSALL: Like the gentleman said coming on, I believed them. I looked at all the financial statements and I believed them to be true.

GRACE: Mr. Tonsall, did you believe Ken Lay specifically?

TONSALL: Did I believe him specifically?

GRACE: Yes.

TONSALL: Yes, he actually came back and had a pep rally one day and told us to, you know, stand behind -- the company was strong, and so I did believe him.

GRACE: How long did it take you to save up all that money?

TONSALL: I was at the company five years.

GRACE: And previous to that, all the money you rolled into it?

TONSALL: I was at the other company 10 years.

GRACE: Fifteen years.

Out to Lynn Brewer, a former Enron executive and whistleblower. Have you changed your mind? Do you think Ken Lay did not know about the fraud?

LYNN BREWER, FORMER ENRON EXECUTIVE: Well, two weeks before his death, I met with Ken Lay in his office in Houston. And much to my surprise, I, like everyone else, had believed that Ken Lay knew what was going on. But what I clearly realized is that I saw the shock in his eyes when he realized that I knew more about what was going on at that company than he did and just how out of touch he was.

GRACE: How long did you meet with him?

BREWER: I met with him for two and a half hours on June 21st.

GRACE: So, in two and a half hours, you managed to be convinced of his innocence because he had shock in his eyes?

BREWER: Well, I think that there were a number of things. I showed him evidence that I had discovered when I was with the company, and he was surprised. I think that what I...

GRACE: How do you know he was surprised?

BREWER: His response was genuine. The very first thing he said to me when I walked in is, "How are you doing?" I mean, there was genuine concern.

GRACE: And that did it, "How are you?"

BREWER: No, that didn`t "do it," but it was a different response than I had anticipated. And when I showed him the evidence that I had -- bank fraud, espionage and this manipulation of power prices -- he was shocked. He was genuinely shocked, Nancy.

GRACE: How do you think he got to be the CEO of the company? You really believe that, while he was making the CEO money, and going on CNBC, and taking all the kudos, he didn`t know that it was all a pipe dream, it was a house of cards? How could he not know?

BREWER: Well, actually, Nancy, if you look at the whistle-blowing reports inside the company, remember the chief controls officer was then Rebecca Carter, now Rebecca Skilling. And the chief controls officer received these reports. And while Ken Lay was in charge and responsible for oversight, those reports were flat.

GRACE: So you think the jury got it wrong?

BREWER: Well, I`m not saying they got it wrong. I think Ken admitted that he used the money that he borrowed from the bank to purchase stock, which was in violation and committed bank fraud in doing that.

GRACE: OK.

To Russ Alba, any doubt in your mind that Lay knew exactly what he was doing?

ALBA: Nancy, none whatsoever. If you`ll recall, Lay sold about $77 million worth of Enron stock back to the company in the months before its decline. That, in and of itself, indicates his conscious awareness of the company`s financial situation and a desire to take care of his interests over the interests of his shareholders and employees. That proof in and of itself is damning.

GRACE: And, of course, we have some old footage of the Enron execs on their way to court. Let`s roll that footage. Oh, there they are. There`s Skilling, Lay, and all the other CEOs that ripped off people like Charles Presswood.

Back to David Tonsall, former Enron employee. When you first -- you can take down the pig footage. Thank you, Elizabeth, and for the sound effect. To David Tonsall, Mr. Tonsall, what was your first reaction when you heard the judge vacated the order? I was sick.

TONSALL: Yes, I definitely was sick. It made me sick to my stomach. It actually -- wondering what the powers that be are thinking when they let this guy go.

GRACE: And back out to Russ Alba, what was Lay`s estate worth? And if he wanted to secrete funds overseas where they couldn`t be found, how would he do it?

ALBA: Nancy, his estate is believed to be worth about $43.5 million at present. The Department of Justice...

GRACE: Sorry, I had to choke on that one. Go ahead.

ALBA: The Department of Justice has attempted to freeze those assets. In fact, there`s a $5 million bond on real estate that precludes those assets from being transferred. So there`s no evidence to date that Lay has moved or secreted funds in an attempt to evade them.

GRACE: That`s why I say "secreted," Russ. "Secreted," it comes from secret. That`s why you don`t find out where the funds are because it`s done in secret.

ALBA: Thank you, Nancy.

GRACE: You`re welcome, Russ.

And, Michael Shiloh, what about the co-defendants? Does this have any effect on them?

SHILOH: Well, it probably won`t, at least it looks that way at this point. We have to point out, though, you have to remember that, on September 8th, there was a settlement by the Lay estate for $12 million. So that would be, I guess, about the end of their legal obligation to start paying back this money. And don`t forget: There are powerful tools that the prosecutors can use still against those who committed fraud.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESSWOOD: I had everything in Enron stock, like we were advised to do. We wasn`t too enthused about any type of, you know, separating it out and diversifying and stuff, because the money we were making on our stock, you couldn`t make it nowhere else, you know?

(END VIDEO CLIP)

GRACE: There is Ken Lay and Skilling on their way to the trough, the trough being filled day after day by Enron employees and investors. It was all a house of cards, and we thought the bacon was fried. The jury came back with a verdict of guilty. Not so. Today, a federal judge vacated that order, leaving millions and thousands of people out in the cold, losing millions of dollars.

Out to the lines. Penny in Texas, hi, Penny.

CALLER: Hi, Nancy. Love your straightforward attitude.

GRACE: Thank you.

CALLER: If we can let Ken Lay`s name be cleared, how can we prosecute the following people?

GRACE: You know what? I agree. Michael Shiloh, in my mind, she`s absolutely right. Is there a good chance this will be reversed, or do you think it will stand on appeal?

SHILOH: From what I understand, the prosecutors aren`t even really mounting any kind of an argument against this arrangement, I guess, you might say that was made, the ruling by the judge yesterday, the judge, Sim Lake, in this case. So I`m not sure that any reversal will occur.

GRACE: You`re saying you don`t think there will be an appeal?

SHILOH: Well, the indications I`m getting so far is there won`t be.

GRACE: You know, I`m stunned. David Tonsall, the attorneys that took this case to trial are working for you. They are government prosecutors. What do you say to them tonight?

TONSALL: Give a plea to them. Please make an appeal on our behalf. I mean, I think the big companies who lost the $40 billion, maybe they`ll, you know, push those guys along, as well. But...

GRACE: You know what? If you can get them to appeal, maybe I can get them to show me proof of death of Ken Lay. I say he`s living it up in Argentina tonight.

Let`s stop for a moment to remember Navy Petty Officer David Roddy, 32, of Aberdeen, Mississippi. In the Navy`s elite bomb unit, he was awarded the bronze star. Leaves behind a family, including a grieving widow, daughter, and twin boys. David Roddy, American hero.

Thanks to all our guests, and a special good night tonight from the founder of the Macon Cherry Blossom Festival. She`s here in the studio with me, Carolyn Crayton. Good night, everybody. Thank you for being with us. See you tomorrow night. And until then, good night, friend.

END

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