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Letterman Extortion Scandal; Innocent Man Executed in Texas?; Afghanistan Strategy Showdown?; Health Care Horror

Aired October 2, 2009 - 23:00   ET



ANDERSON COOPER, CNN ANCHOR: Tonight, the drama swirling around David Letterman deepens. New details about the alleged extortion plot targeting the late show host. A long-time CBS News producer has been charged with the crime and one of Letterman's assistants is now part of the story line.

Also tonight, a tough re-election fight in Texas takes a sharp turn with an ugly accusation. Is the Republican governor trying to cover up the execution of an innocent man on his watch?

And later, reports that the White House and the Pentagon are on a collision course over troop levels in Afghanistan. New developments that could signal the generals on the ground may lose the battle over strategy with the White House.

We begin with tonight's top story: the CBS News producer accused of trying to extort $2 million from David Letterman. Letterman dropped the bombshell on his show yesterday, as you know, admitting he has had sex with women who work for him and describing how the extortion plot was foiled in a sting operation.

Well, to date the alleged extortionist appeared in court. That is him, just one of several developments in a fast-moving story Tom Foreman has been following all day -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Yes Anderson you know, we've had dramatic developments all day, as you said. David Letterman's theater is down the street from here; not too many blocks, a short little walk.

Media attention is focusing on two people primarily right now: Joe Halderman, the man accused in this extortion plot and his former live- in girlfriend, Stephanie Birkitt. First Halderman is 51, a long time employee of the same company as David Letterman, CBS. He's a producer for "48 Hours Mysteries."

And Birkitt now is Letterman's personal assistant. You may have seen her on the show. She's made several appearances on different skits there. This picture is from CBS from one of those appearances. And of course, in the middle of all of this is David Letterman himself.

Forbes says that in 2008 he made $45 million. Earlier this year he married a former employee, a woman he's been with for a couple decades now. And they have a son who is five. They also now have a stunning story swirling all around them.


FOREMAN: Halderman in court today charged with first degree attempted grand larceny. Prosecutors say he demanded $2 million from Letterman in exchange for what he presented as a screen play but what prosecutors say was a clear attempt to blackmail.

ROBERT MORGENTHAU, MANHATTAN DISTRICT ATTORNEY: The document related then that Mr. Letterman's, quote, "world is about to collapse" about him.

FOREMAN: This whole drama according to prosecutors played out over the past three and a half weeks largely right here in Manhattan, within a few blocks. September 9th, they say, Halderman goes to Letterman's home down here and he leaves a package before dawn. That package contains the note and it makes his demand.

Letterman calls his attorney who meets with Halderman that same day and then contacts the district attorney. Prosecutors say more meetings are arranged including one right up here at the Essex House in the south side of Central Park.

Halderman is secretly recorded and then just two days ago Letterman gives him a fake check for $2 million which investigators say Halderman deposits.

Letterman goes to the grand jury and then last night on his own show says he told them some creepy stuff.


DAVID LETTERMAN, HOST, "THE LATE SHOW WITH DAVID LETTERMAN": The creepy stuff was that I have had sex with women who work for me on this show. Now, my response to that is, "Yes, I have."


FOREMAN: Yesterday outside CBS News Halderman was arrested. He's pleaded not guilty. His lawyer says they will fight the charge.

GERALD SHARGEL, HALDEMAN'S ATTORNEY: This story is far more complicated than what you heard this afternoon. It's not the open and shut case that you just heard about.

FOREMAN: Halderman is out on bail now but if convicted could wind up in prison for 15 years.


COOPER: We don't know what the attorney meant by saying it's much deeper than people think. Attorneys often say that at this point. This guy must have been making - I mean this producer worked for CBS News. He must have been making pretty good money.

FOREMAN: Yes, he's been there for a long time, too. We do know that as of a couple years ago he had a contract for about $200,000 a year, more than that a little bit. And increases built into that.

But we also know that he had big bills. Some years ago there was a divorce settlement. He had alimony and child support payments every month pushing $7,000. So it doesn't take long to do the math there. You realize with taxes and everything and maybe half of his take-home pay was going to these payments.

There are a lot of details I think we're going to find out about this, Anderson, particularly more about this young woman and what her relationship is to these two people. We know that she knew them both. We knew she had a professional relationship with David Letterman and a personal relationship with Halderman.

We'll see how that plays out if at all.

COOPER: All right Tom thanks.

Well, the details are still coming out about this alleged extortion plot. And frankly, the details at this point read like a screen play on their own. But as stunning at some aspects of the story may be, the story itself is not really surprising.

Celebrities like David Letterman could be easy targets.

With tonight's "Crime and Punishment" report, here is Erica Hill.


LETTERMAN: This whole thing has been quite scary.

ERICA HILL, CNN CORRESPONDENT (voice-over): Scary, but for celebrities, sadly, not surprising. John Travolta, Bill Cosby, David Letterman, the list of victims of alleged blackmail plots is long and well known.

LETTERMAN: I was worried for my family. I felt menaced by this.

HILL: Why are celebrities seemingly ripe targets? Is it all about the money?

LISA BLOOM, CNN LEGAL ANALYST: Extortion is usually a demand for a large sum of money in exchange for keeping quiet, embarrassing information. But it doesn't have to be about money, it can be property that's being asked for. It can be a promise for a job. It can be anything of value that's requested by the extortionist.

HILL: In the case of John Travolta and Kelly Preston being here right now in the Bahamas, the two defendants are accused of trying to extort $25 million from the couple as they were grieving the loss of their 16-year-old son Jett. The alleged extortionist claimed to have information showing Travolta was somehow culpable in his son's death.

Star couple Tom Cruise and Katie Holmes, were also preyed upon by men accused of demanding more than $1 million for stolen photos of their wedding. One of the men was fined and placed on probation, the other died before his case went to court. And in 1997, a woman claiming to be Bill Cosby's illegitimate daughter was sent to prison after she vowed to ruin his reputation if he didn't give her $40 million. Those stories make the headlines.

But insiders say there are plenty of shakedowns and payoffs we never hear about for one reason...

HARVEY LEVIN, EXECUTIVE PRODUCER, "TMZ": And I hear about this stuff where people will take information off the market. And it does happen probably way more than you would imagine in this town. And it happens in odd, crazy ways where, you know, people would much rather just make it go away.

HILL: Of course, it isn't always that easy, even when a plot is foiled. For David Letterman, speaking out could come with a price.

LETTERMAN: I have had sex with women who work on this show. And would it be embarrassing if it were made public? Perhaps it would.

HILL: Embarrassing or not, many believe he did the right thing.

BLOOM: I think when an extortion story breaks the public overwhelmingly has sympathy for the celebrity. The embarrassing behavior takes a backseat to the fact that someone was a victim of a serious crime, criminal threats, demands for money, blackmail. That usually trumps whatever the embarrassing behavior was.

HILL: Either way, the public will be watching.

LETTERMAN: It's been a very bizarre experience.

HILL: Erica Hill, CNN, New York.


COOPER: Let's "Dig Deeper" now with Lou Palumbo, a former law enforcement agent, director of the Lead Intelligence and Protection Agency and Stephen G. Rodriguez, a criminal defense attorney in Los Angeles.

Lou, I want to start with you. You've worked on a couple of these kinds of cases. Bottom line, you should never pay the extortionist?

LOU PALUMBO, RETIRED LAW ENFORCEMENT AGENT: Absolutely not. You never -- you never comply with any of their requests. As I explained to you a little earlier, I had my own methodology in diffusing the situations. And I usually arrange a meeting with the individual that's attempting to perpetrate this act.

And through persuasive argument and pointing out the lack of merit and the consequences, I instruct them to go on their way and never rear their head again. The unfortunate part is that if I were to go out and have them sign police reports and start criminal proceedings, you blow your client. Now, the client loses either way. And, you know, part of this is to me is a thinking man's game. In the instance with David Letterman, you know, I'm sure that he consulted with attorneys and publicists and agents and management groups. And they decided that the appropriate course of action in this instance was to go to the authorities and set up their own, so to speak, sting operation with Halderman.

COOPER: I want to talk with you about other options as well as well with our attorney. We're going to take a quick break. We'll have more on the other side of the break.

Also curious now what you think at home about the extortion plot but also about David Letterman having sex with members of the staff. Join the live chat happening now at

We'll talk more about all of this after the break as I said.

Also ahead, the Republican who ran John McCain's campaign, makes a stunning announcement about Sarah Palin. What he said about her and a possible ran for the White House in 2012.

And the governor of Texas up for re-election and under fire tonight, is he covering up for the execution of an innocent man? We're "Keeping him Honest."


COOPER: We're talking about the latest developments in tonight's top story, the alleged extortion plot targeting David Letterman. It's been unfolding over the last three and a half weeks but only became public yesterday when Letterman revealed it to his viewers.


LETTERMAN: It's been a very bizarre experience. I feel like I need to protect these people. I need to certainly protect my family. I need to protect myself. Hope to protect my job and the friends and everybody that has been very supportive through this.


COOPER: Joining me again former law enforcement agent Lou Palumbo and criminal defense attorney Stephen G. Rodriguez.

Stephen, you come at it from a different angle. You actually represent a lot of people who are not celebrities who have people trying to extort money from them.

What kind of cases do you deal with? And how do you handle it? Because obviously, if someone is not a celebrity, the public disclosure may be less of an issue?

STEPHEN G. RODRIGUEZ, CRIMINAL DEFENSE ATTORNEY: Well, exactly. I mean with the people that I represent and they're all non-celebrities, they're working class people. And usually they're demanding something like $10,000 or $20,000. Most people in Los Angeles who don't have a lot of money and are not willing to suffer the repercussions, will just pay it off. But in some cases, it gets a little complicated.

COOPER: But what kind of cases? I mean, your clients and the people actually -- you just mentioned this now -- are you're clients are the people like actually asking for money?

RODRIGUEZ: No, my clients -- yes exactly. No, my clients are the people accused of extortion.

COOPER: And usually why are they -- what are they accused of extorting, I mean, under what circumstance would somebody be extorting money from somebody else?

RODRIGUEZ: Ok. I'll give you an example of a case I had where the wife was having an affair with someone else and her current husband found out. And he goes to the person she's having an affair with and says I want, you know, $10,000, otherwise, I'm going to reveal it to your family.

And this guy paid off and there was taped conversations and anyway, the case went from there. But that's typically what we get in Los Angeles in a non-celebrity situation.

COOPER: And Lou in terms of celebrities, how common is this? I mean, we hear about it only occasionally when it bubbles up. I guess, there are probably more cases that we don't hear about.

PALUMBO: Well, I mean, I can definitely tell you there were more cases, because I've handle a number of them myself with professional athletes and people out in Hollywood. And unfortunately, every now and then someone gets a pipe dream of thinking that this is a good idea.

COOPER: So you've gone to people who are trying to extort money. And say -- what do you say to them?

PALUMBO: Basically, I try to outline for them in a persuasive argument, the lack of merit in what they're doing. And that...

COOPER: Is that how you phrase it?

PALUMBO: Oh, yes pretty much. I try to say this articulately and as gently as I possibly can without seeming threatening. And I just explain to them the legal ramifications that it's a felony for example that you can spend up to 15 years in jail.

And even if you get the minimum of the 15 and one-third, you're still in for five years. Are you sure this is the course of action you want to take? And, you know, these aren't people, Anderson, like you have stalking cases where people are -- what we called EDPs, emotionally disturbed people.

They are of fairly sound mind, they just think that this is a good way to do business and you just have to persuade them that they need to go away and not rear their head again.

COOPER: Yes, Stephen, from your perspective what's the best way to handle them? If someone who is extorting money -- even if you're not a celebrity?

RODRIGUEZ: Well, in other words -- if just someone came to me and I was representing the person being extorted? Is that what you're asking me?


RODRIGUEZ: Well, what I would do is, I would go to law enforcement. You have to go to law enforcement because the risk you run is that if you're paying $5,000 today, then in a year they're going to ask you for another $10,000. And it's a bottomless pit.

So I think, you really have to go to law enforcement.

COOPER: And the people you represent, I mean, wouldn't a direct approach with them work?

RODRIGUEZ: Well, usually when they come to me, the case has already been filed. And, again, there are odd cases here in Los Angeles when they're non-celebrities. There aren't a lot of them. But you do see them here in L.A. but the amount of money their asking sometimes, is you know, a couple thousand, up to $10,000 or $15,000.

COOPER: How would you defend...

RODRIGUEZ: ...certainly not in the -- yes...

COOPER: a defense attorney, how would you defend this guy who's now going to -- has charges brought against him in the Letterman case?

RODRIGUEZ: Well, as a criminal defense attorney, I mean they have to prove, number one, they have to have some kind of evidence to show that this communication occurred, the attempted extortion.

You would also have to show that some money changed hands; that, you know, that the person that the victim actually delivered the money. But these things can be defended because sometimes it could just be, like, there could be lack of evidence or it could be a misunderstanding...

COOPER: Right.

RODRIGUEZ: ...and not really an attempt to extort. So...

COOPER: Right -- Lou?

RODRIGUEZ: there are difficult cases.

But if the case is not defendable -- defensible, Anderson, I think what has to happen is, we have to plea negotiate.

COOPER: Yes, Lou. PALUMBO: You see, in a conventional sense, I happen to agree with this gentleman that if you're a non-celebrity, there are different avenues of addressment. The unfortunate part when you are an individual of notoriety in our country and they try to leverage you because of say, sensitive information like we're talking about with David Letterman...

COOPER: Right.

PALUMBO: know, obviously, David has a little boy Harry. And he's been married a couple of years now. You know, the damage to him not just within his family but in collateral damage could be devastating.

And, you know, my approach has been, as I said to you earlier, if there's a way to diffuse it and keep it off the radar screen, I do it.

COOPER: Right.

PALUMBO: ...the last thing I want to do is go to the authorities. Because once I have a client sign a deposition, a complaint...

COOPER: It's public.

PALUMBO:'s now public information.

COOPER: Right.

PALUMBO: And the media runs with it.

And what Mr. Letterman has to know is the depending on how he chooses to address or manage this crisis going forward is going to determine how much time we get to play with this.


PALUMBO: In other words, if he can arrange a plea with this guy to where the informations and the letters...

COOPER: Right.

PALUMBO: ... and so on and so forth.

COOPER: Right, when you go to the trial, a lot more information comes out.

RODRIGUEZ: And everything is out...

COOPER: We've to leave it there, Lou Palumbo, I appreciate your expertise and Mr. Rodriguez, as well. Thank you very, I appreciate it.

RODRIGUEZ: Thank you.

PALUMBO: Thank you. COOPER: Still ahead on the program tonight, was an innocent man put to death in Texas and is the governor now trying to cover it up? We're "Keeping them Honest."

And later, Brazil gets a huge boost; the 2016 Summer Olympics are headed for Rio. So how come some conservatives in America are celebrating the defeat for America? At least for Chicago, President Obama has failed last minute efforts to change minds. Well, some folks are celebrating that.

We'll explain ahead.


COOPER: Coming up, did Texas execute an innocent man and is the governor trying to cover it up? We'll "Keeping them Honest." But first, Erica Hill has the "360 Bulletin" -- Erica.

HILL: Anderson, an Olympic defeat. Chicago today, losing its bid for the 2016 Summer Games; the decision, a shock to many.


UNIDENTIFIED MALE: The City of Chicago, having obtained the least number of votes, will not participate in the next round.

UNIDENTIFIED MALE: Chicago is out. Chicago is out? Madrid is still in? Tokyo is still in? Wait a minute. Did we hear that right?

UNIDENTIFIED MALE: Pandemonium here in the broadcast center here.

UNIDENTIFIED FEMALE: You've heard it though it was difficult and shocking. Chicago eliminated in the first round of voting.

UNIDENTIFIED MALE: On the first round. And that absolutely flies in the face of every prediction that we heard.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: When the announcement came through, there was almost momentary confusion, to say that somebody leaned over to me and said did they just eliminate Chicago? Dumb founded.

UNIDENTIFIED MALE: George Stephanopolous, this is a real sort of, I guess, kind of kick in the pants for the president.


HILL: Olympic organizers picked Rio de Janeiro to host the games. The city also beat out Madrid and Tokyo. President Obama says, he is disappointed that his adopted hometown of Chicago lost but that he does not regret making a personal pitch for the games.

From Indonesia tonight, powerful video: a 19-year-old girl and a teacher pulled from the rubble of a college, pulled out of there alive. At least 40 hours after an earthquake hit the region, rescue crews continue to search for victims. At least 1,100 people died in the disaster.

A proof of life video of Israeli soldier Gilad Shalit released more than three years after he's abducted by Palestinian militants. Israel released 19 Palestinian female prisoners in exchange for that video.

And this guy could perhaps earn the title of worst date ever. Meet Terrance McCoy. He's facing two years in prison in Detroit for stealing a woman's car after he skipped out on paying the dinner bill. You see, he told his date he left his wallet in her car. So he got her keys and then he drove off. His attorney says his client is really just a nice man who made a bad decision.

COOPER: Oh that's the defense?

HILL: She's probably feeling like she made a bad decision that night.

COOPER: Yes. How did they meet, I wonder?

HILL: That's a good question. I don't know.


A showdown over the war is coming up. Major shift in strategy in Afghanistan is now the discussion at the White House. Will more troops be sent?

David Gergen and Peter Bergen weigh in.

And later, strong words again Sarah Palin: what John McCain's former campaign manager says will happen if she runs for president in 2012.


COOPER: There are reports tonight that White House is considering a seismic change in the strategy for the war in Afghanistan; a new direction that puts it at odds with the Pentagon. "The Washington Post" says, officials in the Obama administration think bringing in more troops is not the answer or a priority.

Instead, the "Post" says, the White House believes the focus should be on training Afghan forces, targeting Al Qaeda leaders for assassination and working with Pakistan to defeat al Qaeda. It's a stunning development and it comes as President Obama met with General Stanley McChrystal on Air Force One in Denmark.

McChrystal, who is the top U.S. commander in Afghanistan, wants thousands of more troops on the ground and he wants them soon; two very different points of view being debated at the White House, for a war that most Americans want war to end.

A lot to talk about tonight in "Raw Politics:" with me now senior political analyst, David Gergen and national security analyst, Peter Bergen.

David, what's you're understanding of what's going on inside the White House right now? DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, there are just very much -- I'm sure there are dagger points, Anderson. But there is clearly a sharp division. And it's a rift that could be the sharpest break we've seen in years between a president and his commanding general in the field.

As "Washington Post" is reporting, there are at least several people arguing in front of the president on Wednesday to not embrace what General McChrystal wants, a big buildup in troops...

COOPER: In particular, Vice President Biden?

GERGEN: And led by Vice President Biden. But others in -- it sounded like on the political side of the White House who do not want this big buildup. Instead they want to fight, you know, with drones from afar and take out top al Qaeda leadership. It was a so-called counter terrorist strategy.

At the same time, Anderson, General McChrystal has now ratcheted up his views on this because, you know, he had this paper that came out and saying if we don't go with big troop increases, that we could well lose the war.

But he just yesterday came out and actually attacked the Biden alternative, strategy. He said it will be very shortsighted. And he said it could leave Afghanistan in chaos. And he used an interesting word. He said "Chaosistan," that's what we may leave behind.

COOPER: Peter Bergen, in terms of just -- well, let's leave the politics aside -- in terms of the actual strategy, McChrystal is going for a full on counter insurgency, pour in more troops, protect the civilian population, try to change the way we are fighting this war.

This counter-terrorism strategy, it sounds good the idea of just using predator drones to hit targets, to hit al Qaeda leaders in Pakistan to just focus on training Afghan forces. Is that possible? Can that work?

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Well, I think the critics of the kind of counter insurgency, larger strategy have to answer basically two questions. One, if it goes back to being just a kind a counter-terrorism mission, how is that different from the first several years of the Bush administration's occupation of Afghanistan which brought back the Taliban resurgence and also very much influenced by al Qaeda?

The second question they have to answer is, if we start drawing down our commitment -- the commitment in Afghanistan, the United States, what sort of signal does that send to Pakistan? And how would that change Pakistani calculations about their support or acquiescence for the Afghan Taliban on their territory?

We have seen in the past that, if there is a -- if there is a feeling that the United States is not in it for the long term or is drawing down in some way, the Pakistanis, of course, are going to amp up their support or their acquiescence in the Afghan Taliban on their territory.

COOPER: David Gergen, as Peter and I saw firsthand when we were there on the ground just recently, whatever you call the McChrystal strategy -- and there are many names for it -- essentially...

GERGEN: Right.

COOPER: ... what we are doing and what we would be doing under his strategy, even in a bigger way, is nation-building. I mean, we would be committed to rebuilding, at a village level, Afghanistan.

GERGEN: That's true. And -- and -- and, as has been pointed out, Afghanistan is like the third poorest country in the world. So, you saw firsthand just how incredibly difficult that would be.

But what McChrystal is saying is, we don't have much choice. And, by the way, General Petraeus has, you know, told us for some time, hey, it actually seemed to work in Iraq at the end. You know, we had -- we kept looking for a strategy to succeed in Iraq. And we finally found it in this sort of approach.

But you're right, Anderson. And I think General Petraeus knows exactly that this is a -- to do what General McChrystal is asking to do is no guarantee of success. There is a very, very high possibility that there are probably -- not a probability but a possibility it -- will not work. But McChrystal is saying it's the only thing we've got.

COOPER: Well, I thought, Peter, in the McChrystal interview that he did on "60 Minutes," I thought he said something very interesting. He said, "We can do good things in Afghanistan for the next 20 years and still lose." I mean that -- it is such a bottomless pit of need that you can do good things and still not win this thing.

BERGEN: It depends on what winning looks like. I think, Anderson, there is a model for success in Afghanistan. It's a fairly low bar, which is what Afghanistan looked like in the 1970s which was a country at peace with its neighbors, at peace internally.

It was still a very cool country. It was something of a vacation destination in the '70s. There is a model for success. It's not Dream-a-vision. It's happened before.

And if we think of that as a model, I think then winning or losing, which are very vague terms, I think it becomes a little clearer what an end state would look like.

COOPER: We're going to have to leave it there. I appreciate both of you being on.

Peter Bergen has a good article in "Time" magazine. I think we have a link to it on our Web site, also, right now about the options in Afghanistan.

Coming up next on the program, evidence an innocent man was executed in Texas. An accusation as the governor who's running for re-election is trying to cover up the truth. Is that the truth? Well, we're "Keeping Them Honest" tonight.

And David Letterman did it, but can you? Office affairs, the dangers and what you need to know about the risks of being involved with someone you work with.


COOPER: Moments before Cameron Todd Willingham was executed in Texas, he gave a last statement. He said he was an innocent man convicted of a crime he did not commit. Willingham was put to death in 2004 for killing his three daughters in a fire that he was found guilty of starting.

But for years striking evidence from experts and investigators has been mounting that Willingham was innocent. A state panel was supposed to begin looking into the forensics of the case this week. But in a last-minute move, Governor Rick Perry dismissed three commissioners on that board. Why? And why did he do it now?

With tonight's "Keeping Them Honest" report, here's Randi Kaye.


RANDI KAYE, CNN CORRESPONDENT (voice-over): This is the question: is Texas Governor Rick Perry, a Republican in a tough re-election fight, trying to cover up the execution of an innocent man on his watch?

SCOTT COBB, TEXAS MORATORIUM NETWORK: This is a clear case of the governor sabotaging a public agency in order to cover up the findings for his own political advantage.

KAYE (on camera): Here's what happened.

At 9:30 this morning the Texas Forensic Science Commission was supposed to hear the latest findings on what really happened in the small town of Corsicana, Texas, nearly 18 years ago in 1991.

Still a question because the original investigators said an arson fire killed three baby girls. It took a jury less than an hour to convict their father of arson homicide. But since then, three forensic investigations found there was no evidence of arson -- none.

(voice-over): One of those reports even came before Cameron Todd Willingham was executed. Still, the governor stands by his decision.

Today, for the first time, the state's own hand-picked expert was to present a scathing report that showed, once again, no evidence of arson. But just 48 hours before today's meeting, Governor Perry stopped the entire process, removing three of the commission members.

GOV. RICK PERRY (R), TEXAS: Those individuals' terms were up. So we replaced them. It's not -- nothing out of the ordinary there.

KAYE: Governor Perry's critics suggest he's trying to delay and maybe even derail the state's own investigation. Willingham died by lethal injection after Governor Perry refused to grant him a stay, even though he was presented new evidence the fire was not arson.

Scott Cobb heads a group pushing for a moratorium on executions. Cobb says Perry's move was politically-motivated.

COBB: Governor Perry saw the writing on the wall. He moved to cover that up.

KAYE: If the commission had proceeded, the state's final report may have been released just weeks before the governor's primary election. And if it found it was not arson, critics say that would prove Perry is the first governor in history to preside over the death of an innocent man.

COBB: And I think that's what he's afraid of.

JEFFREY TOOBIN, CNN LEGAL ANALYST: There really is no excuse for a delay. Here finally is a case with overwhelming evidence that an innocent man was executed by the state of Texas.

KAYE (on camera): "Keeping Them Honest," we tried to interview Governor Perry. But his office said they couldn't make it work. He has said there was overwhelming evidence Willingham was guilty. But one of the investigators who reviewed the case over the years called it BS -- bad science.

(voice-over): As for the state's expert, who was supposed to formally deliver his finding today, he said the fire marshal who testified at Willingham's trial had an attitude characteristic of mystics and psychics.

So will the commission ever hear this report? Maybe not. Governor Perry's new commission chairman, a political ally, is the man who postponed today's hearing indefinitely and told CNN he couldn't begin to guess when it might be rescheduled.

Five years ago, when Cameron Todd Willingham was executed, he said, "I am an innocent man convicted of a crime I did not commit." Governor Rick Perry's future may depend on a dying man's last words.


KAYE: And it is worth mentioning the new head of the commission is a hard-line conservative prosecutor who has a history with Governor Perry. That was one of the many things we wanted to ask the governor about, but as we told you in the report, he declined to make time for an interview.

That doesn't mean that we're going to stop asking. In fact, we will keep asking until the governor gives us some time, Anderson, so we can get those answers.

COOPER: All right. Randi Kaye thanks; A lot of questions there. Still ahead, David Letterman admitted he slept with women on his staff, even joked that the revelation could be embarrassing to them. But is it more than that? We'll talk to Dr. Drew Pinsky about workplace romance and when an office fling crosses the line.

Also ahead, Sarah Palin taking some shots from John McCain's former campaign manager. Find out what he thinks would happen if Palin were to get the 2012 nomination -- tough words. "Raw Politics" ahead.


COOPER: Let's take a closer look at what David Letterman told viewers last night. But the focus isn't the extortion plot; it's the confession, his confession that he had sexual relationships with female staffers on the show.

Letterman is not alone, of course. According to one survey, nearly 40 percent of people have dated a co-worker. It may be common, but is it right? And in some cases is it legal?

"Up Close" tonight, here's Brian Todd.


BRIAN TODD, CNN CORRESPONDENT (voice-over): The David Letterman case opens a window into what can sometimes be a very thorny issue: workplace affairs. One attorney says there's nothing illegal about Letterman's romances, but...

DEBORAH KATZ, SEXUAL HARASSMENT ATTORNEY: The question is whether the romances were unwelcome to the women he was having them with. If there was a consensual relationship, then he's not in legal trouble for sexual harassment; poor judgment, undoubtedly, but not legal trouble.

TODD: What is illegal, Deborah Katz says, is exerting undue pressure, using a position of authority to require someone to have unwanted sex. Letterman's production company says there have been no claims like that against David Letterman. Indeed, he recently married a former employee of the show.

But a psychologist gives this warning...

JEFFREY GARDERE, CLINICAL PSYCHOLOGIST: Even if these women said, "Ok, I want to be involved with you, David," the fact is that he is a powerful person. He is the boss.

And maybe, even subconsciously, they're giving in to his sexual advances because it could be a quid pro quo situation or a situation where they may feel that, if I don't do this, then I won't be able to move up in the ranks.

So that's not healthy.

TODD: What rules do employers set regarding office romance? Deborah Katz says some companies require disclosure and steering clear of each other in the workplace. Less common, she says, are policies regarding bosses dating subordinates.

The person in the higher position cannot be exerting any kind of influence or power with respect to the employment of the person that they're having the relationship with.

TODD (on camera): Deborah Katz says CBS or Letterman's production company could undertake internal investigations into the show's workplace environment. When we asked about that, a CBS spokesman declined to comment. A spokesperson for Letterman's company said it has a written policy on harassment, and David Letterman did not violate it.

Brian Todd, CNN, Washington.



COOPER: All right. Let's dig deeper with addiction specialist Dr. Drew Pinsky.

You know, there are these surveys that show about half of all Americans have been involved in an office romance at some point in their career. I guess, though, the risk -- the particular risk comes when it's somebody who's in an upper position and somebody who's in a lower position in the workplace.

DR. DREW PINSKY, ADDICTION SPECIALIST: That absolutely is where things can get very messy and really, frankly, damaging to people.

The rules and regulations that are in place are there to protect the person who's in a position of lower power. And oftentimes the people that are in those positions that seek out people in positions of authority for romantic attachments, have some stuff going on, have some boundary issues going on themselves, and are really very injured when those relationships don't work out.

COOPER: It's also just prime for allegations of inappropriateness or pressure or something.

PINSKY: Absolutely. It's a prime for exploitation or misuse of power. And for me, the paradigm relationship is really two that I look after the prime examples of these kinds of relationships, is the patient and the doctor, the student and the teacher. And when the person, when the patient or the student, is inappropriately taken advantage of by the person in authority, it is very damaging to them. This has been shown over and over again.

And, in fact, even the -- the perception of impropriety can result in very, very serious legal action; the same thing, of course, in the workplace. But as you say, the point is, though, that most people do have romantic relationships in the workplace, because the fact is that's where we meet people.

COOPER: Especially, I mean, for a guy like David Letterman. He's not going to be going out to bars and hanging out. I guess that is -- a place of employment is where he would come in contact with most people. A lot of companies, though...

PINSKY: And...

COOPER: Go ahead.

PINSKY: I was going to say, as anybody that has work or where their work is their life. That's the predominantly people they're going to interact with on a daily basis. And it's only natural that people should form intimate attachments to people in that environment. We see that all the time.

And, you know, we wouldn't -- we wouldn't sort of raise our eyebrows if we said, "Jeez, you know, people live on college campuses or people in high school together, they seem to have these romantic attachments, because that's their life." But there needs to be very careful structured boundaries around these relationships for the very reasons we've been talking about so far.

COOPER: And we've just heard Brian Todd's piece. A lot of companies require disclosure of an office relationship. Is that more for the company or the employees?

PINSKY: Well, I think ultimately these things are put in place for the employees. But, of course, the companies are going to be sure that these things are enforced to protect themselves.

Yes, the fact is there are many -- listen, even if it's a relationship that works out, just think about it this way; a relationship that works out in the workplace and ends, that's a very unpleasant workplace environment now. And a lot of allegations can fly around as a result of that.

COOPER: What advice do you have for people who are involved in one right now, in terms of how to conduct themselves, what to do if and when it does come to an end?

PINSKY: I think coming clean very quickly. And if you have violated any ethical or guidelines that are there in your workplace, you've got to talk to somebody in the Human Resources Department about this. You need to come clean about it. You need to tell people about it.

And the fact is, you need to be talking between yourselves about what would happen if this relationship shouldn't work out. I mean, it could be very unpleasant for people. Is there somebody's job going to be jeopardized by this? Are we going to be able to live together with this sort of thing?

Unfortunately, people don't discuss these things early in the relationship. Later, unfortunately, it's already too late.

COOPER: All right. Good advice. Dr. Drew thanks.


COOPER: When did my hair become whiter than Dr. Drew's? Anybody know when this happened? So sad. HILL: I haven't been keeping track. I'll have to go back and look at the tapes for you.

COOPER: I just -- I just realized that. I always thought -- wow, he's got really white hair. And I just realized...

HILL: Yours is whiter.


HILL: Maybe it's the lighting.

COOPER: I used to have salt and pepper hair. What happened to all the pepper?

Anyway, all right. Up next, she was his running mate. Now John McCain's former campaign manager is saying it would be catastrophic -- catastrophic -- if Sarah Palin got the GOP nomination in 2012. Does he have a point or is this just sour grapes? Hear his comments and you can decide for yourself.

Also a health care horror: a woman with insurance ends up owing -- owing tens of thousands of dollars for cancer treatments. How could that happen? 360 MD Sanjay Gupta is "Keeping Them Honest."


COOPER: Tonight, a piece of the health care reform debate that we've heard a lot about: how a serious illness can bankrupt you even if you have health insurance. We buy insurance, of course, for peace of mind, to protect us. That's what the family you're about to meet thought they were buying. But it's not what they ended up with.

360 MD Sanjay Gupta is "Keeping Them Honest."


DR. SANJAY GUPTA, CNN CORRESPONDENT (voice-over): Four years ago, Leslie Elder staggered into an emergency room with a stabbing pain in her abdomen. The doctor's diagnosis: grim.

LESLIE ELDER, DIAGNOSED WITH CANCER: Your right kidney is -- is breaking apart. You have a tumor. All I could think of is -- I have no insurance. What am I going to do?

GUPTA: Her problem started nearly 20 years before. In 1987, Elder and her husband Jim, middle class homeowners, bought a comprehensive health insurance policy. They paid their premiums faithfully. A year later, Leslie got sick. It was breast cancer.

(on camera): Did you worry about paying for it? Paying for the medical care?

ELDER: No. At that time I had good coverage.

GUPTA (voice-over): She beat that cancer. Then the unthinkable: 13 years later, she was diagnosed with breast cancer again.

ELDER: As I'm recuperating, I receive $21,000 of bills that I was responsible for.

GUPTA (on camera): So same insurance and you're probably not thinking about the bills again?

ELDER: Of course I wasn't. But -- it would be the same as it was before, wouldn't it?

GUPTA (voice-over): No. Not exactly. Since Elder's first cancer diagnosis, the cost of health insurance had skyrocketed. A recent Kaiser Family Foundation Study found that over the past ten years a typical family insurance premium more than doubled. The Elders say theirs quadrupled.

ELDER: We're not poor. We didn't do this. I didn't plan all this cancer. What happened here?

GUPTA: The premium would have been even higher, except the Elders were playing a risky yet common game. To keep their premiums affordable, they kept raising their deductible. So by Leslie's second cancer diagnosis, the deductible was up to $5,000. And her story became the anatomy of a medical bankruptcy.

Elder is convinced that her carrier, Nationwide Insurance, raised her rate exorbitantly because of her history of cancer.

ELDER: They had me between a rock and a hard place. There's nobody else going to insure her; totally uninsurable, totally.

GUPTA: Nationwide denies any inference that the company inappropriately raised the Elders' rates. The company says that increases were done in full compliance with state laws.

But "Keeping Them Honest," we reached out to the Florida Office of Insurance Regulation," which oversees companies like Nationwide and is supposed to protect consumers like the Elders.

The agency said that in Florida there is no law that limits the amount of rate requested by an insurer. But that it tries to insure that premiums are not excessive or unfairly discriminatory.

The Elders ask, what does excessive really mean? After all, they're on the edge of bankruptcy. Although a relative paid for her kidney cancer treatment, she has depleted the family savings and is still paying for her second breast cancer treatment.

ELDER: There is no good policy. You're going to be paying and paying and paying.

GUPTA: The Elders eventually dropped their policy. They have no insurance. And Leslie says she hates the odds that she's facing.

Dr. Sanjay Gupta, CNN, New York.


COOPER: You're hearing more and more stories just like that.

Let's get caught up on some of the other stories tonight. Erica Hill has the "360 News and Business Bulletin -- Erica.

HILL: Anderson, the man who ran John McCain's presidential campaign has a warning about the possible future of Sarah Palin. Listen to what Steve Schmidt told John King.


JOHN KING, CNN ANCHOR: As someone who has won campaigns and lost campaigns and has worked very closely with her, does she have what it takes?

STEVE SCHMIDT, FORMER CAMPAIGN MANAGER: I think that she has talents. But, you know, my honest view is that she would not be a winning candidate for the Republican Party in 2012. And, in fact, were she to be the nominee, we could have a catastrophic election result.


HILL: Meantime, another Palin calling it quits on the job. Todd Palin has resigned from his oil job. That move coming two months after his wife stepped down as governor of Alaska. And also just weeks before the release of the new memoir, which is rumored to be worth millions. Todd Palin does still help run the family commercial fishing business.

Take a look at the job picture across America now. Unemployment rising to 9.8 percent last month after employers cut 263,000 jobs, a 26-year high now. Analysts say until Americans are confident the recovery is permanent they'll like keep laying off workers.

And a trustee trying to recover money for victims of Bernie Madoff's investment scheme now suing Madoff's brothers, sons and niece for nearly $200 million; that lawsuit claims the family used money from Madoff's business as a piggy bank to pay for new homes, vacations, and other expenses -- Anderson.

COOPER: Wow. All right, Erica, tonight's "Shot"...

HILL: Tonight's "Shot." I think we have an early one, don't we? Don't we? We have a little something?

COOPER: An early one?

HILL: OK. So you're a little worried about it, right?


HILL: It's a little bit whiter, but I think part of it's the lighting. You've got a little more light right there in the center of your head. Look, there's the pepper.


HILL: See, you found it. I was worried that you wouldn't find it. So Kevin helped me find some pepper for you. So I have the pepper, and also a "to go" pack; because you're a busy guy. So the next time you have, to you know, haul off to some foreign place, here's your pepper.


Are we done? Are we done? Show over yet?

HILL: Yes. But there's more to the show.

COOPER: We can actually do "The Shot" now?

HILL: We can.

COPPER: All right. It's been a long week. It's getting longer by the minute. How about something that will definitely make us all smile? Take a look at this.


UNIDENTIFIED MALE: Daddy is going to make you laugh now. Ready?





COOPER: The laughing babies and the mom. And you know, I know this video has been around for a while, but frankly, we don't care. It's so adorable. They're quadruplets. We don't -- I don't know their names.

HILL: They could be in high school now, probably.

COOPER: I know. This thing is so old. It's an oldie but a goody. You can't help but laugh when you see it. It's...

HILL: It's making everybody in the studio laugh.

COOPER: It is.

That does it for 360. Thanks for watching. Have a great weekend. I'll see you Monday at 10:00.

"LARRY KING" starts now.