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CNN NEWSROOM

The Jersey Shore Rebuilds; Cellphone Theft on the Rise, New Feature May Help; Recreational Marijuana in Colorado; Rutgers Athletics in Trouble Again

Aired May 27, 2013 - 15:30   ET

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


UNIDENTIFIED FEMALE: Oh, it's great. It's really good to see everything back to where it used to be, almost close to where it used to be.

POPPY HARLOW, CNN CORRESPONDENT: "Almost" because the rebuilding continues, nearly seven months after Sandy tore up much of the Jersey Shore.

Vincent Storino's family owns Casino Pier. Before Sandy, it held 38 rides.

How much progress have you guys made?

VINCENT STORINO, MANAGING MEMBER, CASINO BEACH PIER: On three months, we did what should have taken three years.

HARLOW: It hasn't come cheap.

Millions?

STORINO: It's millions.

HARLOW: Tens of millions?

STORINE: I would say tens of millions.

HARLOW: The new boardwalk alone cost nearly $8 million.

MAYOR BILL AKERS, SEASIDE HEIGHTS, NEW JERSEY: We did what we had to do to get the doors open, to let the people know that seaside height is open, but there's so many things we have to do.

HARLOW: Like more benches and lights.

But Mayor Bill Akers is satisfied.

AKERS: You can walk the boardwalk north to south and it seems like we got a few people up here today enjoying it.

HARLOW: A few people less than a typical Memorial Day weekend.

CHARLIE DRAPER, MANAGER, ADRENALINE PIERCING & TATTOO: I would say we're doing about half of what we did last year.

HARLOW: But that hasn't dampened spirits.

DRAPER: Look around. You couldn't ask for better weather. You couldn't ask for more people. This is great.

STEVE WHALEN, OWNER, LUCKY LEO'S ARCADE: This is the golden goose, Lucky Leo's. We knew it was going to be slow, but just the idea that we're here and that really is the remarkable thing.

HARLOW: What a way to ring in 100 years.

AKERS: I guess we're doing the same thing they did back 100 years ago. They needed to build a boardwalk. We're building it.

(END VIDEOTAPE)

HARLOW: And just to give our viewers some perspective here, the New Jersey shore brings in about $19 billion a year in tourism revenue. That is huge. That is more than half the entire state brings in from tourists.

Last year, they had 7.5 million people here on the Jersey Shore. You know what? A lot of progress here, 85 percent of the businesses are open, even with all that they've gone through from Hurricane Sandy.

Want to bring you one of the business owners, Steve Whalen. You saw him in our piece.

We were lucky enough to spend many time with you leading up to this big weekend. You own Lucky Leo's, which is a big arcade. It's been around 60 years.

How has it been so far for you guys?

WHALEN: Actually it's just been absolutely phenomenal.

HARLOW: Wow.

WHALEN: Yeah, the last two days, the weather has broken. It's been absolutely gorgeous. We look like incredibly smart businessmen because of this great weather. And it's very encouraging.

HARLOW: I have to say one of the things that I have seen in this town and in the towns nearby is that a lot of the houses still are really, really damaged, uninhabitable.

So the mayor here is telling me that is going to hurt in terms of being able to rent those out to tourists who come back for the summer. Is that going to impact business?

WHALEN: Sure, that's going to have some kind of impact, and we hope to get them on board as soon as possible.

But, you know, like I said, it's nice having 85 percent of the businesses open. People are back at work, you know, working hard, paying taxes and making money for the Jersey Shore. HARLOW: Yeah, and you've had a lot of spotlights. Prince Harry was here a few weeks ago. You've got President Obama coming tomorrow with Governor Chris Christie.

So good luck to you. Thanks for joining us. Appreciate it.

WHALEN: Thank you so much. Thank you. Appreciate it.

HARLOW: All right, Joe, you know, there's a reason they call it "Jersey Strong" here and it's because of people like Steve Whalen working hard to get business back.

JOE JOHNS, CNN ANCHOR: Poppy Harlow, thanks so much for that. Enjoy the rest of the day.

Up next, thieves targeting your cell phone, it's a growing problem. One congressman is proposing the idea of a cell phone "kill switch."

We'll tell you how that works, next.

(COMMERCIAL BREAK)

JOHNS: When you're out on the street using an expensive cell phone, it can make you an easy target for thieves. And believe it or not, some stolen phones can fetch up to a thousand dollars on the black market.

CNN's Dan Simon looks into one possible remedy they're calling a "kill switch."

(BEGIN VIDEOTAPE)

DAN SIMON, CNN CORRESPONDENT: This surveillance video shows a woman getting robbed of her cell phone while in the middle of a conversation, a crime so common that type in "cell phone theft" on YouTube and you'll find tons of surveillance video of people having their phones ripped off.

San Francisco's police chief says in many cases, users are asking for trouble.

CHIEF GREG SUHR, SAN FRANCISCO POLICE: Think if you took $300 out of the ATM machine, you would not walk down the block for several blocks counting the twenties.

SIMON: The problem is becoming so rampant, that it is estimated that stolen devices cost consumers $30 billion a year.

So pressure is mounting for cell phone carriers and the device makers to figure out a way to deter theft.

San Francisco District Attorney George Gascon wants to see a so-called "kill switch" on phones.

GEORGE GASCON, SAN FRANCISCO DISTRICT ATTORNEY: So when they get reported stolen, they could be rendered inoperable. SIMON: He accuses the industry of dragging its feet to what he calls a technological solution.

GASCON: Every time a phone gets stolen, we go back and replace a phone. So the carrier gets to make another sale, the manufacturer gets to make another sale, and their profit margins continue to build.

SIMON: The nation's largest carriers are getting more aggressive, now participating in a new nationwide database for stolen phones to prevent them from being activated.

Critics say it is yet to have a meaningful impact because stolen phones often wind up overseas and fetch more dollars.

GASCON: Late model iPhone, right down street from here, can bring $300. If it gets exported to Latin America or Asia or Africa, it can bring in as much as $700 to $1,000.

SIMON: But is a "kill switch" even possible?

We went to arguably the leading mobile security company in the world, Lookout, which makes a popular app for smartphones.

The notion of just being able to render a phone useless, can that happen?

UNIDENTIFIED MALE: It is technically plausible. A phone is just a computer. If you destroy the operator system that the phone relies on, the phone can't be used.

SIMON: So if it is technically possible, why isn't it happening?

UNIDENTIFIED MALE: Because it's not an easy thing to do.

SIMON: Now Apple's iPhone does have a feature that will track stolen phones and erase the data, sometimes more valuable than the phone itself.

Lookout has a similar feature for phones using Google's android.

The point, according to critics, is the entire industry needs bolder thinking. For now, police say the best advice is to be aware of your surroundings, and use that software that allows you to lock and wipe your phone clean if you happen to find yourself in a situation like this.

Dan Simon, CNN, San Francisco.

(END VIDEOTAPE)

JOHNS: The athletic department at Rutgers University is back in the spotlight, under scrutiny again.

You might remember the university fired Coach Mike Rice after video showed him throwing things, hurling expletives at players.

Now questions are swirling about the new athletic director who was hired to clean the mess up.

That story is coming up.

(COMMERCIAL BREAK)

JOHNS: In Oregon, officials with bomb-sniffing dogs are scouring West Albany High School for explosives after the arrest of a student for allegedly planning an attack on the school.

Prosecutors say 17-year-old Grant Acord had six different types of explosives hidden in a secret compartment in his bedroom.

They say the high school junior was planning an attack he hoped would rival the Columbine school shootings. He is in custody and police say he will be tried as an adult.

Crews have been pulling vehicles and debris from the water below the I-5 bridge that collapsed in Washington state last week. Workers are using cranes and hydraulic shears that are like strong scissors.

They reported heavy traffic all weekend as drivers try to navigate a detour route off the interstate and along county roads.

The summer movie season has exploded onto the scene with the biggest box office ever for Memorial Day weekend, a reported $314 million.

Leading the pack of blockbusters this weekend, "Fast and Furious 6," which took in $120 million according to "Entertainment Weekly." "The Hangover Part 3" came in second with $51 million. And "Star Trek Into Darkness" took third, bringing in $47 million this weekend.

You know, the last thing Rutgers University needs is another controversy in its athletic department, but that's exactly what the university has, this time involving accusations against the new athletic director, Julie Herman.

John Berman has more.

(BEGIN VIDEOTAPE)

JOHN BERMAN, CNN CORRESPONDENT (voice-over): Rutgers University faced tough criticism in the days after a video surfaced of its head basketball coach being abusive towards players.

The video captured former Coach Mike Rice's aggressive behavior, hurling basketballs at players and yelling homophobic slurs.

The university fired Rice after a public outcry, and the athletic director was also forced to resign.

UNIDENTIFIED MALE: I was deeply disturbed by the behavior the video revealed.

BERMAN: This time, the university's president will have to answer to Governor Chris Christie, after reports surfaced that the new athletic director, hired to turn the university's image around, is herself accused of being an abusive coach. The governor's spokesperson said in a statement, "He's not going to be making any judgments at this time but he expects to be talking with the Rutgers administration this week to get the details."

It has emerged that back in 1996, all 15 members of Julie Hermann's volleyball team at the University of Tennessee wrote her a letter. The players wrote, in part, "The mental cruelty that we as a team have suffered is unbearable. We have been lied to, publicly humiliated, and ripped apart as both players and people."

They said the coach had called them "whores, alcoholics and learning disabled." One of the players provided "The Star Ledger" with a copy of the letter. The paper says Hermann responded, quote, "I never heard any of this. Never name calling them or anything like that whatsoever."

Hermann has promised she will bring a new era to Rutgers.

JULIE HERMANN, RUTGERS ATHLETIC DIRECTOR: It is a new day. It is already fixed. And there's no one that doesn't agree about how we treat young people with respect and dignity and build trust.

BERMAN: But at that news conference, Hermann was asked about a jury award of $150,000 to former assistant coach Ginger Hineline back in 1997. Hineline claimed she was fired because she was pregnant. In 1994, Hermann was a bridesmaid at Hineline's wedding and in the video the coach said this about her becoming pregnant.

HERMANN: I hope it's good tonight. I hope it's not too good because I don't want you to come back in February with any surprise. You know, the office and all, and it would be hard to have a baby in there.

BERMAN: Hermann responded.

HERMANN: There's a video? I'm sorry, did you say there's video? There's no video, trust me.

BERMAN: Hermann is even seen here catching the bouquet. The university says its attorneys had investigated that case before Hermann was appointed. But as it prepares for the Big 10, Rutgers has another big headache.

(END VIDEOTAPE)

JOHNS: Hermann was a top athletic administrator at the university of Louisville for 15 years before accepting the A.D.'s job at Rutgers. She told the "New Jersey Star-Ledger this morning she has no plans to quit.

She also told the "Star Ledger" she never called players whores and is unsure why her turmoil with the team in the 1990s is coming up now.

Now that marijuana is legal for recreational use in the state of Colorado, that could mean big bucks for businesses in the state who grow pot.

Making money off of marijuana legally, that is the story coming up next.

(COMMERCIAL BREAK)

JOHNS: Next January, the state of Colorado is going to take a huge step into unchartered territory. Despite strict federal laws, marijuana will be made available in the state for recreational use.

CNN's Jim Spellman talked to one grower who is more than a little nervous about the future.

(BEGIN VIDEOTAPE)

JIM SPELLMAN, CNN CORRESPONDENT (voice-over): Like many small businessmen, Shaun Gindi has employees, a warehouse, retail stores and his fair share of headaches.

SHAUN GINDI, COMPASSIONATE PAIN MANAGEMENT: I make this business work paycheck to paycheck.

SPELLMAN: But his product is anything but usual. Gindi grows and sells marijuana.

GINDI: This is a flower room looks like.

SPELLMAN: He grows the cannabis in this warehouse in Denver and has two medical dispensaries in the suburbs.

GINDI: I have about 20 people working for me. They do anything from growers to trimming to working as caregivers in the stores.

SPELLMAN: So far, his business has been limited to medical marijuana, selling only to Colorado residents with a doctor's recommendation and state-issued red card. But last year, voters passed amendment 64 legalizing recreational use of marijuana.

The state is still working out regulations ahead of January 2014 when recreational marijuana stores are expected to open. Dispensaries like Gindi's are expected to be able to convert and sell to anyone over 21, but there are several catches.

This is still against federal law. That must create an unbelievable amount of stress for you.

GINDI: Yes, it does. I'm talking to you right now. There is a voice in the back of my head that, there is an innate nervousness to being in this business.

SPELLMAN (voice-over): A bill in Congress would bar the federal government from going after people in states that have legalized marijuana, but it is unclear if the bill has a chance of becoming law.

Are you afraid that all that you've built here will be taken away from you?

GINDI: Yes. I can't even keep my face straight saying that. That's such a real fear. SPELLMAN (voice-over): Nate Laptegaard runs the warehouse.

I want to learn more about exactly how you grow marijuana on essentially an indoor farm. Where does it start?

NATE LAPTEGAARD, COMPASSIONATE PAIN MANAGEMENT: It starts in the lab.

SPELLMAN (voice-over): With cuttings known as clones.

LAPTEGAARD: Get a little gel on there.

SPELLMAN: That go into these tanks for about two weeks then to this room for about five weeks under simulated sunlight in a CO2 rich environment.

Each of these plants gets in its own bar code? LAPTEGAARD: That's right. Every single plant when it comes out of the corner, once it gets into here it's coded individually. We're able to trace that plant from this stage all the way to the end product.

SPELLMAN (voice-over): Then the light is cut back, to simulate the shorter days of autumn triggering the plants to flower and finally it's off to be trimmed and dried. The entire process is regulated by the state.

After a criminal background check employees are issued a Colorado marijuana worker I.D. card. Every time a plant is moved, the employee logs it using this software. A fingerprint scanner tracks the employees at every turn.

LAPTEGAARD: There's no scar face here. There's no AK-47s, none of that stuff. We have inspectors from the state in here all the time.

SPELLMAN: Even though Gindi pays sales and income tax, marijuana is still against federal law so expenses cannot be deducted from federal taxes and FDIC-backed banks won't take their money.

GINDI: There's nothing glamorous about this business. It's a struggle trying to operate without a bank account, trying to run a business without being able to take deductions.

SPELLMAN: At his dispensary, Gindi operates in a highly competitive marketplace. About 500 medical marijuana dispensaries in Colorado compete for the business of the 108,000 people on the medical marijuana registry.

Have they become more kind of sores about their marijuana?

LEAH, BUDTENDER: Definitely, definitely. You don't ever see a, quote/unquote, "swag" any more. It's all chronic. It's all hydroponic.

SPELLMAN (voice-over): Competition has driven prices down to half of what they were just three years ago, creating razor thin margins. But could that change when more people, even pot tourists from out of state are able to legally buy weed? Gindi isn't so sure.

GINDI: There's a risk that comes along with it.

SPELLMAN (on camera): That might push the federal government into acting where they were comfortable not acting with medical marijuana.

GINDI: Right. And I have to make that choice.

SPELLMAN (voice-over): These marijuana pioneers will probably never convince all of their critics that pot should be legal, but they see themselves as the good guys.

LAPTEGAARD: Every single person that comes here that works for me, when they clock in, they put their finger on a sensor. And they know they're committing a federal crime. So every single person that works in this industry are all here for one reason and one reason only, we believe marijuana prohibition is immoral and we have to do something about that.

SPELLMAN: Jim Spellman, CNN, Denver.

(END VIDEOTAPE)

JOHNS: Tomorrow, part two of our "Pot Boom" series. Meet a guy who has five drivers working around the clock delivering marijuana.

We'll be right back.

(COMMERCIAL BREAK)

JOHNS: Next, a CNN special with Jake Tapper coming up, next.

But first a look at the hand-picked soldiers who stand sentry over the Tomb of the Unknowns.

(BEGIN VIDEO CLIP)

SPECIALIST NATE CHARTIER, TOME SENTINEL: It's an honor being able to work in Arlington National Cemetery.

There's some days where you get that like hair raising on the back of your neck feeling that like this is just right, that it's just perfect, that you wouldn't want to work anywhere else for the rest of your life. Everyone will to work on each other's uniforms evenly. You'll have somebody else around you, taping you off, making sure there's no lint debris. It may not look as good or look uniform to the other soldiers on the plaza.

UNIDENTIFIED MALE: Let's see your pants.

CHARTIER: The reason why some of us may have certain things going on at the door is because it just works for us during training to kind of calm us down before we go out the door.

One of those things that just gives you motivation.

You're like, hey, I'm just going to crush this guard change. This guard change is going to be amazing. You have the sun hitting the plaza and then, with it being so bright, it bounces off and hits you back and it just feels like the temperatures even warmer than it is, like if you're in regular clothes.

I did not think I was ever going to be guarding the Tomb of the Unknown Soldier. I want people to realize that that their freedom isn't free. It really isn't. You have thousands of soldiers died for our country.

I don't look at it as three unknown soldiers that I'm guarding. I'm guarding the 300,000-plus soldiers that gave their life for this country.

(END VIDEOTAPE)