The MacNeil/Lehrer NewsHour

MR. MAC NEIL: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Tuesday, Nik Gowing updates the situation in Bosnia, Stuart Taylor explains the break up of a big cocaine smuggling ring, Jeffrey Kaye reports from California on the criminal procedure known as "three strikes you're out," and James Stewart and Philip Elmer-DeWitt look at two big developments in show biz and computers. NEWS SUMMARY

MR. MAC NEIL: The Bosnian Serbs promised today to release some of the 250 UN peacekeepers they've still be holding hostage but there was no confirmation on a release. Serb authorities in Pale also denied their forces were holding the downed pilot of a U.S. F-16. A Pentagon official said today another 1500 U.S. soldiers would head to Italy in the coming weeks to prepare for possible rescue missions in Bosnia. Meanwhile, at least two people were wounded by sniper fire in Sarajevo today. We'll have more on Bosnia after the News Summary. Jim.

MR. LEHRER: President Clinton criticized Republican welfare reform plans today. He said they do not do enough to promote work and are too tough on children. He told a conference on children in Baltimore the government should be responsible for helping those who cannot help themselves.

PRESIDENT CLINTON: I think we have to empower people to make the most of their own lives, because that way we'll all be better off. That's what I believe, therefore, I don't think that you can sacrifice our responsibility to educate people and our responsibility to basic health and safety, security issues on the altar of deficit reduction. Don't kid yourself, from the point of view of the Congress, welfare reform has stopped being welfare reform primarily. Primarily, welfare reform is a way to cut spending on the poor so that we don't have to worry about it, and we can balance the budget in seven years and give a big tax cut largely benefiting upper income people who've done pretty well in the 1980's. That's what this is about.

MR. LEHRER: The President's administration came out today against a constitutional amendment on burning the American flag. A Justice Department official told the Senate Judiciary Committee it could infringe on free speech rights. The amendment is currently before both Houses of Congress. It would allow individual states to pass laws against flag burning.

MR. MAC NEIL: The House Ways & Means Committee has begun week- long hearings on overhauling the nation's tax code. Today the committee heard from business leaders and financial experts. Their testimony echoed recent congressional complaints of a complicated and bureaucratic system. The current tax system was established in 1913 by the 16th Amendment to the Constitution. The committee's Republican chairman, Bill Archer, opened the hearings on Capitol Hill.

REP. BILL ARCHER, Chairman, House Ways & Means Committee: Our challenge will do no less than pull the current income tax code out by its roots and throw it away so that it can never grow back. And when we abolish the income tax from the books, as an insurance policy, I would not at all mind seeing the repeal of the 16th Amendment to make doubly sure that the income tax won't rise from the dead and never again haunt the American people.

MR. MAC NEIL: Hearings later this week will focus on various reform proposals. Many Republicans are pushing for a flat tax or value added tax system. Democrats contend that such broad-based taxes are unfair to those with lower incomes. The Philip Morris Company agreed today to remove cigarette ads from sports stadiums. The agreement resulted from a Justice Department lawsuit contending the ads were strategically placed to be visible during televised events. It accused Philip Morris of circumventing a 1971 law barring tobacco ads on television. A federal court must approve the agreement.

MR. LEHRER: Japanese prosecutors today formally charged the leader of a doomsday cult with murder. Shoko Asahara and six of his followers were indicted in the gas attack on Tokyo's subways last March. Nine other members were charged with production of sarin, the gas used in the attack. Twelve people were killed, more than five thousand were made ill by the gas release. If convicted, Asahara could face the death penalty. The legislature of Japan, the Diet, has agreed to a World War II apology resolution. It will express deep remorse for Japan's acts of aggression against its Asian neighbors. Some oppose the move, saying it would dishonor Japan's war dead, but failure to reach an agreement could have forced the government to call for a general election.

MR. MAC NEIL: That's our summary of the top stories. Now it's on to an update on Bosnia, drug cartel indictments, three strikes you're out, and communications news. UPDATE - QUAGMIRE

MR. MAC NEIL: We lead again tonight with an update on the war in Bosnia and the fate of more than 200 UN peacekeepers being held hostage by Serb forces. Nik Gowing of Independent Television News reports.

NIK GOWING, ITN: Belgrade this morning. President Milosevic of Serbia receives the two Greek cabinet ministers, foreign and defense, who last night negotiated for six hours with the Bosnian Serb leadership in Pale. Throughout the day, as Milosevic wants, the momentum seemed to creep towards a further release of UN hostages but no guarantees, all signs pointing not to a full release of all hostages.

GERASIMOS ARSENIS, Defense Minister, Greece: And I believe that the prospects are quite good, and this impression, the discussions that we have had, I intend to convey to my colleagues, the ministers of defense at NATO, at the meeting we will have next Thursday.

MR. GOWING: Will there be a release of hostages?

MR. GOWING: There was no reply. The Greek ministers had come from a meeting in Pale, where in the presence of Jovic Stansic, President Milosevic's head of secret police, late last night the Bosnian Serb leaders had displayed in public an air of being desperate.

RADOVAN KARADZIC, Bosnian Serb Leader: We need help of every well-minded government to help us to get out of this crisis.

MR. GOWING: So what pressure and persuasion had Stansic and President Milosevic from Belgrade put on the Bosnian Serbs in Pale?

ZIVORAD JOVANOVIC, Deputy Foreign Minister, Yugoslavia: We, indeed, have not exercised threats, as it is not in our policy to utilize threats or pressures, but we have utilized arguments. Our chief argument is that a release of peacekeepers would contribute to a releasing of the pressure right now and would bring us closer to the atmosphere conducive to the peace dialogue.

MR. GOWING: Meanwhile, across the treacherous Mount Igman Road overnight traveled French peacekeepers taken hostage 10 days ago and released over the weekend, finally returning to their Sarajevo base, a long, circuitous route through Serbia and Croatia to resume their peacekeeping mission and rejoin their colleagues. "The mandate must change. We are at a big crossroad," said the commander. The French white-painted peacekeeping vehicles are being modified with a generous coating of mud as camouflage against Serb gunners on the Igman Road. Senior western sources have made clear the blue beret/white vehicle UN image will no longer be sacrosanct in the Bosnia operation. Today in the German port of Emden, heavy British army equipment -- bridge layers, along with armored reconnaissance and personnel trucks -- were being loaded onto ships for the build-up of the rapid reaction force in Central Bosnia.

LT. COL. PETER WALL, British Army: They do deliver a significant ability to upgrade the mobility of the armored force that is currently deployed in Bosnia, and they can do that, of course, whether they want to go forwards or backwards.

MR. GOWING: This equipment has been painted UN white in the past few days for the journey through Croatia to the British base at Vitez, but once there, senior sources say it is probable a large number will be repainted camouflage green to signal the new and robust aggressive role of the rapid reaction force, two brigades, still neutral under UN command, but no longer willing to ignore Bosnian Serb obstruction or armed attacks. The principle of peacekeeping, as opposed to peace enforcement, will be pushed right to its limit. That limit is a clearly defined peacekeeping line. Russia, their foreign minister, Andrei Kozyrev, in London today to meet Douglas Hurd, is insistent must not be crossed by the new force.

DOUGLAS HURD, Foreign Secretary, Britain: I've explained the purpose of the reinforcements, the purpose of the new brigade which we are sending, not to alter the character of the force, not to change its mandate, but to increase its ability to carry out that mandate.

MR. GOWING: Tonight in New York, senior military officials will agree details, while in Sarajevo, the Bosnian Serbs continue to use their sniping rifles and heavy weapons, denying this city and the safe areas security the UN seemed determined to uphold.

MR. MAC NEIL: Still ahead on the NewsHour, drug cartel indictments, California's tougher sentencing, and news in the communications industry. FOCUS - CALI CONNECTION?

MR. LEHRER: Now the Cali Drug Cartel story. Yesterday, three former U.S. officials and fifty-six others were charged with being part of a big drug conspiracy. One of the three was Michael Abbell, who ran the Justice Department's international affairs unit until 1984. He was, in fact, in charge of bringing cartel members to justice. For more on this story, we go to our regular legal analyst, Stuart Taylor. He's a senior writer for the magazines "Legal Times" and the "American Lawyer." Stuart, the prosecutor in this thing in announcing these indictments yesterday called it "the single most significant prosecution in history against the Cali Cartel." What does he mean?

STUART TAYLOR, American Lawyer Magazine: Biggest in terms of number of defendants. There are about 60 defendants, fifty-eight or sixty defendants, biggest in terms of the amount of cocaine that this cartel has moved. The government tells us that some 80 percent of the cocaine in the United States is moved by the Cali Cartel, that they are larger in their impact here now at least than the Medellin Cartel, which, which had a bigger name perhaps in the news a few, a few years ago.

MR. LEHRER: 80 percent of all the cocaine that comes into the United States comes from this one cartel from Colombia, is that what they say?

MR. TAYLOR: That is what the government says, and the people they've indicted include leaders of what's called in the indictment a faction of the cartel who are still in Colombia, who presumably will stay in Colombia, because Colombia will not extradite the leaders. But they also include dozens of other people, many of whom, some 20 some of whom are now in custody in the United States, and, of course, it has several lawyers being indicted, including the former Justice Department officials you mentioned.

MR. LEHRER: All right. Let's talk about them, because that's the one that's gotten the most attention. Tell us about Abbell first. What is he accused -- what did he do when he worked for the U.S. government? What is he accused of doing now?

MR. TAYLOR: He was head of the Justice -- he was a Justice Department official for many years, 17 years or so, I think, and at the end --

MR. LEHRER: Was he a career man?

MR. TAYLOR: A career man. And in the early 80's, he was head of the Office of International Affairs of the criminal division. And among the things he dealt with was extraditing suspects, including members of the Cali Cartel. He once, for example, signed a letter to Switzerland, trying to extradite one member of the Cali Cartel who later became his client after he left the Justice Department. Now, he is not charged with anything relating to his Justice Department service. What he's charged with doing for the Cali Cartel in recent years that is alleged to be criminal is helping them cover up their activities, helping them thwart investigations by doing such things as getting people who are arrested, members of the cartel, to sign false sworn documents, knowingly false, the charges on the part of Mr. Abbell.

MR. LEHRER: In his capacity as a private lawyer, after having left government service.

MR. TAYLOR: Yes, sir.

MR. LEHRER: That's very important.

MR. TAYLOR: Yes, sir. He's not charged with anything relating to his government service, although it will certainly be relevant to the case if there's a trial in this case, the prosecutors will certainly make hay out of the idea that this man is a turncoat, and they will have that opportunity. But on a formal basis, at least, none of the charges against him depend on his former government service.

MR. LEHRER: Now, tell us about the other two former federal prosecutors.

MR. TAYLOR: One of them is named William -- I'm sorry -- I've got that wrong, there are so many lawyers indicted in this case.

MR. LEHRER: Right, right.

MR. TAYLOR: You need a list. One of them is named Donald Ferguson. He allegedly did some work with Mr. Abbell, and like Mr. Abbell is charged on a variety of charges, most of which involve trying to help the cartel cover up what happened and trying to prevent arrested members of the cartel from fingering their superiors by such things as going to the jail, helping them get representation, paying for their representation on the condition that they not cooperate with prosecutors and the like. A third former federal prosecutor named Joel Rosenthal has already pled guilty in this case on charges of money laundering, which is another charge that the other lawyers are hit with, taking money they know is drug money and using it to pay lawyers, for example, and two other lawyers --

MR. LEHRER: Excuse me. Is that -- is that a crime? If you -- a lawyer represents a criminal of any kind, in this case people charged with drug trafficking, and their fees come, do they have to know that it came from illegal proceeds in order for it to be illegal for them to take it?

MR. TAYLOR: That's the critical thing. If you can prove that the lawyer knowingly took for his fee or somebody else, knowingly took drug proceeds, technically at least --

MR. LEHRER: Or proceeds from a bank robbery or a hold-up or anything like that, right?

MR. TAYLOR: Yes. That is a prosecutable crime. It is very rarely prosecuted. And one reason it's very rarely prosecuted is that the prosecutors in the Justice Department recognize that defense lawyers are supposed to give the benefit of the doubt to their clients. So if the client has some kind of story that this is not drug money, many prosecutors will say, okay, I'm convinced, and they'll take the money. It's very rare to prosecute them, and the government certainly has the burden of proving that they knew it was drug money to make it stick.

MR. LEHRER: And the government's case here is based on the idea or on the premise and on the charges that these, these lawyers who have -- there are other lawyers too, besides these three involved, right, weren't there three other lawyers also indicted for various offenses?

MR. TAYLOR: Three lawyers have -- by my count, there are four lawyers who were indicted yesterday, it was unsealed yesterday, including two former Justice Department officials and two others, one of them is a Colombian, and there are three other lawyers, for a total of seven, who have already pleaded guilty in this case, and two of them, in fact, all of them were associated with the lawyers who were indicted yesterday, including Mr. Abbell.

MR. LEHRER: And the point that the government is making is that what these lawyers did was separate and apart from anything they might have done as legitimate lawyering on behalf of their clients, correct?

MR. TAYLOR: Exactly. The government's position is, if you want to go into court and try to make a case for your client, that's fine. What they are charging these people with is being basically consigliares to the criminal organization, of being lawyers for the cartel, not the lawyers for individual defendants, and trying to use their status as lawyers in order to persuade individual defendants to cover up and stonewall for the cartel, not to finger their superiorities, not to cooperate with the government. Those are the charges, but there's a very fine line there as to what a lawyer can properly do and what he can't do. And these particular lawyers have very prominent members of the Criminal Defense Bar who were defending them and who have been loudly accusing the government of waging a war against aggressive defense lawyers just to intimidate them.

MR. LEHRER: And that's what -- those statements have come out in the last 24 hours claiming that, correct?

MR. TAYLOR: Yes. And they've all been made, mostly been made by people like Roy Black, who defends Mr. Abbell, but people like Albert Krieger, who defends one of the other lawyers, very prominent members of the Bar, although they are, of course, speaking for their own clients. What remains to be seen is whether the Criminal Defense Bar nationally, people not involved in the case, will see this as a cause celebre they want to jump on and say you can't attack defense lawyers like this, or will say, well, wait and look at the evidence, and say, well, maybe we don't want to - - we don't want to ratify what they've done.

MR. LEHRER: Stuart, hasn't this kind of thing arisen -- the thing, at least based on my very limited memory here, that this has arisen in the past mostly in organized crime cases, has it not, where lawyers who represent "the mob," then later get indicted for crimes that they committed in addition to representation, isn't that where it's come out before?

MR. TAYLOR: Yes. And there's been a smattering of that around the country, but in the Miami area, in Florida, it's a little bit of its own world, because that is the capital of cocaine importation. And there have been quite a number, I'd say over a dozen maybe, that's conservative, of lawyers prosecuted in the last decade or so in the Florida area for basically becoming co-conspirators with their clients, often on money laundering charges, because if you - - because that's the easiest one for the government to prove, is to try and prove that this lawyer knew the money he took -- particularly if he used it to pay another lawyer to represent another client, i.e., you're taking the lawyer from the head -- money from the head of the organization to use it to represent some underling.

MR. LEHRER: And then maybe the fees are very high, and the money comes out again at the very end back to the client, isn't that how usually money laundering works in these deals?

MR. TAYLOR: Yes. But the lawyers are usually charged in money laundering cases either for passing the money to other lawyers to pay for the representation of underlings in the conspiracy or for accepting the money, themselves, to represent someone in the conspiracy, knowing that it's drug money.

MR. LEHRER: Now, who are the other people in general terms? You don't have to go through all the names.

MR. TAYLOR: Thank you.

MR. LEHRER: Okay. But who, in general, are these other, other people that amount to 60 who've been indicted in this thing?

MR. TAYLOR: There are about four at the top who are Colombians, Miguel, Rodriguez, Orjela, I'll try that name, and his brother, Gilberto, and a couple of other Colombians who are alleged to be the leaders of this faction of the cartel and the people who are running the organization -- running the organization. They are the lawyers, of course, and then there are dozens of players, Americans, Colombians, people who started businesses to import cocaine in container ships, as the indictment says it was brought in with shipments of concrete posts, with shipments of okra and broccoli, with shipments of --

MR. LEHRER: Through Miami, most of them through Miami?

MR. TAYLOR: Mostly through Miami, and they would set up various businesses to receive it, to transport it, to send it around, to launder the money, and, and it was -- and a large enterprise, it's alleged, this cartel, with lots of spin-off operations in the United States that helped distribute the cocaine and launder the money. Most of the people are people who were, who were managers and bit players and foot soldiers in those organizations.

MR. LEHRER: Can you tell from reading the indictment -- I understand -- how many pages -- it's a huge -- it's a huge thing - - but can you tell from reading this thing and other sources how they broke this? Was this using undercover people and -- or turncoats or what? How did they do this?

MR. TAYLOR: They, they got started with a particular arrest, I think, of a big distributor in Miami a few years ago, and I'm not sure how they got on to him, but they found a huge quantity of cocaine, and they did what they usually do. They arrested a bunch of people. They tried to get them to cooperate, to finger others. Some of them did, and there also were some searches and seizures, an unusual feature of this investigation is five law offices were searched last autumn, four in Miami and one in the United States, including the office of Michael Abbell, who we spoke about earlier, for their records, presumably for the purpose of trying to find that they had the knowledge that this was drug money and that statements they were making were false and that sort of thing.

MR. LEHRER: So this was no surprise to anybody, except the public, is that right? In other words, these guys knew they were under investigation then?

MR. TAYLOR: Yes. And, and the people who were watching the investigation closely could see it coming, those searches, but it's one thing to search the office and pick up whatever you can pick up, and then they had to go through the material under judicial supervision because of the problems with the attorney-client privilege. When you, when you take a computer out of a law office, it's got all sorts of stuff about all sorts of clients on it, and including many clients who have nothing to do with the Cali Cartel, so it's a very delicate area. They went through this stuff under judicial supervision. The judge said, you can look at this, but you can't look at that; you can use this, but you can't use that. And ultimately, they figured they had enough to indict these people, although I'm sure there will be a furious defense, saying that they don't have much at all.

MR. LEHRER: In two areas, first in the lawyering area, is this likely to turn out to be a big case?

MR. TAYLOR: I think it's, it could be a big case in the lawyering area, because there's been a low grade war going on between a lot of people in the Criminal Defense Bar, particularly drug defense lawyers, and the federal government, the prosecution, where there have been subpoenas for fee records, because we think it's dirty money, the government is saying, where there have been efforts to forfeit fees that they think are dirty money; there have been a handful of prosecutions. I think what this case does, it doesn't change the numbers all that much, although seven lawyers is a lot. The prominence of some of the lawyers involved, the prominence of their defense lawyers, the publicity it's attracted I think will, will make the Defense Bar decide whether they want to fight this battle against the Justice Department and make it a big PR counteroffensive, or whether they want to let these cases work out their course, whether some people want to say, hey, I represent criminal defendants, but I don't want to be associated with people who are accused as the House lawyers for the Cali Cartel.

MR. LEHRER: Speaking of the Cali Cartel, that's the second thing. Is this likely to affect the supply of cocaine in the United States of America?

MR. TAYLOR: I have not heard it claimed by any of the government officials in this case that it will have any immediate effect or even any long-term effect, because most of the leaders of the cartel or in Colombia, and they can't get them extradited, so there -- unless the Colombian government changes its policy, nothing is going to change there, and they seem to be very good at lining up new people to replace the old people who go off to prison in terms of their underlings.

MR. LEHRER: Okay. Stuart, thank you very much.

MR. TAYLOR: Thank you. FOCUS - THREE STRIKES YOU'RE OUT

MR. MAC NEIL: Now an update on California's "Three Strikes and You're Out" law. The law to crack down on repeat felons took effect a year ago. Jeffrey Kaye of public station KCET-Los Angeles reports.

JEFFREY KAYE, KCET-Los Angeles: For many television viewers, scenes of hectic activity outside the downtown Los Angeles Criminal Courts Building, the site of the O.J. Simpson double murder trial, are common. Less familiar are the often crowded courtrooms unconnected to the Simpson case inside the building. Judge James Bascue's court is particularly busy. As supervising judge, he assigns cases to the other judges. Bascue's task has become daunting in the last year as the number of trials has increased by 30 percent.

JUDGE JAMES BASCUE, Los Angeles Superior Court: So we're seeing a dramatic increase in the number of cases that are going to trial. Trials are lasting longer and now delaying getting the cases to trial, we're certainly seeing that impact.

MR. KAYE: The California "Three Strikes" law, which led to the bottleneck, was passed by the legislature last March and endorsed by voters in November. It mandates a sentence of 25 years to life for a third felon conviction. With such high stakes for guilty pleas and verdicts, felony defendants don't want strikes on their records and most are refusing to plea bargain, i.e., plead guilty in exchange for a shorter sentence. The result is a logjam, not just in the courts but in every facet of the criminal justice system, according to County Supervisor Yvonne Burke.

YVONNE BURKE, Los Angeles County Supervisor: Those people who are in jail stay there longer if they're awaiting trial because they plead "not guilty." We have a district attorney who has more responsibility because he has more cases to try. We have a public defender who has to then provide defense for more people, and of course, our courts are just totally bogged down.

JUDGE BASCUE: [in courtroom] Thank you. Thank you. I'll mark this ready for trial.

MR. KAYE: The defendants before Bascue have reached a legal time limit. Within 60 days, prosecutors must either bring defendants' cases to trial or dismiss charges. Bascue must assign these so- called "last day" cases to trial immediately, unless the defendants agree to a postponement.

JUDGE BASCUE: Mr. Caruso is here has announced ready for trial, Ms. Gonzalez has announced ready for trial. This is a third strike, 25 year-life case.

MR. KAYE: It's the job of John Iverson, Bascue's coordinator, to find available court space.

JOHN IVERSON, Los Angeles Courts Coordinator: [on phone] Hi. This is John. I've got a third strike, five-day time estimate case here on our calendar out of your court. Are you going to be in a position to start it today?

MR. KAYE: With the criminal courtrooms often in use, Iverson has to intrude on civil courts, which usually hear private disputes.

MR. KAYE: How often do you wind up using the civil courts?

JOHN IVERSON: We use the civil court almost every day for our last day cases.

MR. KAYE: No matter what's going on in civil court?

JOHN IVERSON: Certainly, last day criminal cases have priority. They must go to trial today. We have some districts where at times no civil trials are going on because of the crush of criminal cases.

JUDGE BASCUE: This matter is assigned forthwith to Department 1, Civil, for trial. Please transfer the file upon completion of the minute order.

MR. KAYE: Judge Bascue sent Michael Barnes' case to the civil courthouse across the street. As with other cases, where criminal trials are moved to civil court, the judge assigned to the matter will have to interrupt his workload of civil cases.

COURTHOUSE OFFICIAL: [speaking to Caruso] On Barnes, we'd like to assign you up to Judge Richard Kaloustian, Department 41.

MR. KAYE: Barnes' public defender, Vito Caruso, believes that for many defendants, the third strike doesn't always deserve such a lengthy prison term. He points to his client, who was arrested for possession of what he describes as a small pebble-sized rock of crack cocaine.

VITO CARUSO, Defense Lawyer: I certainly find it hard to believe that most people in the state of California would want a person charged with one gram or less, one pebble of rock cocaine to go to prison for 25 years to life, regardless of his past, regardless of his priors. If they're talking about costs, it's going to be an enormous cost to house this man in prison for the rest of his life for possession of a small rock of cocaine.

MR. KAYE: Statewide, the majority of third strike charges have been for non-violent and non-serious crimes. Although many third strikers like Barnes have violent criminal histories, the law allows prosecutors some discretion in their handling of such cases.

JUDGE BASCUE: This is "People Vs. Michael Barnes."

MR. KAYE: Prosecutors could either disregard prior convictions or file lesser charges.

PROSECUTOR: That's all that we have alleged, the two prior robbery convictions.

MR. KAYE: But in Los Angeles, they are vigorously enforcing the "Three Strikes" law. LA District Attorney Gil Garcetti recognizes the strain on the system but says the public is demanding he enforce the letter of the law.

GIL GARCETTI, Los Angeles District Attorney: They are saying here is the wake up call, we want to be protected, we want people who've committed at least three felonies, two of them violent or serious, to understand there are real consequences involved. I hear that, and if other elected DA's don't hear, they'd better start listening to what the community is saying.

MR. KAYE: But there's anecdotal evidence that some juries may be balking at non-violent third strikes, and as the Barnes trial got underway, Lawyer Vito Caruso was hoping jurors might feel sympathy towards his client.

VITO CARUSO: So combining him being in this county jail outfit and the fact that this is an obvious third strike case for this very minute piece of cocaine, I'm hoping that the jurors will refuse, some jurors will refuse to convict this man, knowing that he's going to go to prison for 25 years to life for possession of a small rock of cocaine.

MR. KAYE: The law is having a profound impact on the already strained Los Angeles County Jail system. Budget cuts forced the closure of minimum security facilities. The "Three Strikes" law has meant even more minimum security inmates are being released early.

PRISON OFFICIAL: I'll give you your card, and I'm going to send you right out the door here, right out the gate, and you'll contact Deputy Woods, okay? All right. Listen up. Jacobs.

JACOBS: Here!

MR. KAYE: Men serving terms of one year or less are being turned out so that prisoners awaiting trial on "Three Strikes" cases can be kept in custody. The third strikers are considered higher security risks, according to LA Sheriff Sherman Block, who runs the county jail system.

SHERMAN BLOCK, Los Angeles County Sheriff: In the past, these people may come in on serious charge but they have an opportunity to negotiate pleas, to modify the sentence, and so forth. That's been taken away from them with the "Three Strikes," so it makes them a more hostile, more dangerous population who has little to lose by not behaving, if you will, in the system.

MR. KAYE: As a result of Block's early release policy, prisoners convicted of less serious charges generally serve less than 50 percent of their sentences.

SHERMAN BLOCK: It does make a mockery of the system. It takes away the deterrent effect that incarceration was intended to have, and people who are involved in criminal activity figure, even if I get caught and convicted, so big deal, you know, I'll do a little time in the county jail.

MR. KAYE: The jail is supposed to house defendants awaiting trial who have not made bail, but the sheriff has also decided not to detain many pre-trial prisoners.

SHERMAN BLOCK: We have been forced to become more selective in who we accept before trial, and in order to maintain some reasonable balance, we have had to set a bail minimum of $25,000 before we will accept anyone.

MR. KAYE: Judge Bascue believes that the public at large is likely to feel the consequences of the early release policy.

JUDGE BASCUE: The misdemeanor type of offenses, there's many more of those that affect the quality of life, such as the battery on a neighbor, the drunk driver, these affect really the quality of life, and so what we're seeing is this early release or not even taking them into custody I think certainly has an impact on the quality of life in our county.

MR. KAYE: Los Angeles county supervisors are finding that the "Three Strikes" law also has an impact on the cost of the criminal justice system. They are being besieged for extra funding to pay for defense lawyers, jails, courts, and prosecutors.

GIL GARCETTI: I will simply have to go back to the Board of Supervisors and say, I need to hire another 50 lawyers.

MR. KAYE: And if they say no?

GIL GARCETTI: They're not going to say no. If we can demonstrate, as we have demonstrated, that there's an incredible need, they have no choice, as I have no choice. They're going to have to continue to add money to the criminal justice system, unfortunately right now at the expense of libraries, health, education.

MR. KAYE: But Supervisor Mike Antonovich says the logjam and expenses brought on by the "Three Strikes" law will not be long- lasting.

MIKE ANTONOVICH, Los Angeles County Supervisor: It's a short-term problem, and that was to be expected. When you had a system where people would commit crimes and not be punished, of course, if you reverse that and start putting people in prison, you were going to have a problem.

MR. KAYE: Antonovich says "Three Strikes" will save money by cutting crime.

MIKE ANTONOVICH: Currently, about 8 percent of our criminals connect 80 percent of the crimes, and we do know that there is a cost savings if you incarcerate the criminal, the habitual criminal.

MR. KAYE: But there is far from unanimous opinion about the impact of the "Three Strikes" law on crime. The public defender for LA County, Michael Judge, says the crime rate was dipping before "Three Strikes."

MICHAEL JUDGE, Los Angeles Public Defender's Office: It's a matter of demographics. We're in a trough right now where that proportion f the population that is in the young group that prolifically commits crimes is smaller than normal, but that will right itself and the crime rate will go right back up again.

MR. KAYE: Are you suggesting that "Three Strikes" has had no effect on the crime rate?

MICHAEL JUDGE: No effect whatsoever.

MR. KAYE: Why? Doesn't it stand to reason if you're getting career criminals off the street, they're not able to commit as much -- as many crimes?

MICHAEL JUDGE: Many of the people that we're getting off the street are already past their serious crime-committing careers and are on the down slope, and most criminologists recognize that.

MR. KAYE: As for Michael Barnes, a jury deadlocked on his cocaine possession charge. The case was set for a retrial. And while Californians debate the effects of the "Three Strikes" law on men such as Barnes, other states are promising and implementing similar legislation designed to crack down on repeat felons.

MR. LEHRER: The Barnes retrial never took place, by the way. The prosecutor agreed not to consider one of Barnes's prior convictions as a strike and in exchange, Barnes pleaded guilty to cocaine possession, to the cocaine possession charge and was sentenced to 32 months in prison. FOCUS - LET'S MAKE A DEAL?

MR. MAC NEIL: Next tonight, two blockbusters in the communications industry, one in computers, one in Hollywood. The first is IBM's $3.3 billion offer for the Lotus Development Corporation. The second is entertainment giant MCA's new ownership and quest for new leadership. We have two reporters to guide us through the stories: James Stewart writes about the entertainment industry for the "New Yorker." Philip Elmer-DeWitt is the senior technology editor at "Time Magazine." Philip, let's take the IBM/Lotus bid first. What happened today?

PHILIP ELMER-DeWITT, Time Magazine: Well, today IBM went ahead and did what it promised yesterday that it was going to do. It made a tender offer for the shares of Lotus. It moved to oust the board of directors, and it moved to counteract the poison pill defense. Basically, it's moving ahead to buy Lotus.

MR. MAC NEIL: Even though Lotus has said it doesn't want to do that?

MR. DeWITT: Right. It's the first hostile takeover in IBM's history or the software industry, surprisingly.

MR. MAC NEIL: Will it go through the Justice Department?

MR. DeWITT: Ironically, yes. I mean, it's really bizarre, because here's IBM, the original computer giant, who for three decades was the target of antitrust suits by the government, was, you know, was the monopoly that they were trying to break up, and even five years ago, it would have been unimaginable that IBM could go acquire as important a company as Lotus, but it's a measure of how far they've fallen that this will sail through, whereas, Microsoft just a few weeks ago was sued by the Justice Department to prevent an even smaller merger.

MR. MAC NEIL: Why is the difference -- how do you understand the difference, why the Justice Department would look benignly on one and not on the other?

MR. DeWITT: Well, there's a couple of things. One is that Microsoft's acquisition of Intuit was, was a big company trying - - that had tried to beat Intuit in the market for so-called electronic tech books and failed so as an alternative was going to buy the company it was competing against, and that's just classic monopoly activity. Also, Microsoft has 80 or 90 percent control of the operating system market, which really gives it effective control of the personal computer industry. Microsoft has an operating system budget -- and IBM also has only 10 percent of the business.

MR. MAC NEIL: IBM.

MR. DeWITT: IBM.

MR. MAC NEIL: Only has 10 percent of the business.

MR. DeWITT: Right.

MR. MAC NEIL: The stock -- the story today was the Lotus stock was selling at higher than the $60 that IBM was offering for the shares. That suggests, analysts were saying, people expect a bigger offer or a different offer.

MR. DeWITT: A white knight to come in and protect them from IBM. That's a possibility, although the leading candidate for that, AT&T, has already said for the record that it is not interested. Oracle is another possibility. The -- it strikes me as unlikely, but, you know, basically there -- Lotus and IBM are now sort of having this mating dance, and probably negotiating for some kind of settlement.

MR. MAC NEIL: Well, assuming that it goes through, as you seem to be suggesting, how will it change the balance in the computer industry? What is IBM gambling on in this?

MR. DeWITT: It's a really interesting move on IBM's part. Basically, this behemoth has been trying to reinvent itself for sometime. It used to own the computer industry, which is the main frame, the traditional, the big computer that was behind the glass wall run by guys in white jackets, sold by guys who only wore black suits and ties and white shirts. The computer industry went off in this other direction, invented the PC's, built networks. IBM was stuck still selling main frames, and even when it got into PC's, it kind of gave away the shop to Microsoft, gave them the operating system. Well, in the last couple of years, IBM, seeing itself, its position erode, has made some fairly dramatic moves, probably the most important of which they hired this guy from a cigarette and biscuit company, RJR Nabisco, to run their company, someone who knew nothing about computers, and he did sort of the easy things, cost cutting by laying off people, spending some fancy money for ads, which are actually very nicely done, loosening the corporate atmosphere, saying that you could come in in jeans and T-shirts one day a week, but what everybody was waiting for was some sense from him that he knew what was going on, this kind of sea change that's gone on in the computer industry, that he was hip to it. And this, this is a very interesting move in that regard. First of all, it's a very aggressive move, to go spend $3.3 billion for Lotus, but also the product that he went after is very interesting. Lotus Notes is the quintessential network client-server, Internet, sort of the product that's built to run on these growing computer networks, where the idea of it is if you've got a lot of people spread out all over the land, they don't have to be in the same place, but they can work on the same document or the same chart or the same design as if they were in the same place. And it actually works very well, and it's the first of the kind of programs you can expect if this thing they're building really happens where people can -- don't have to come into cities, don't have to work in skyscrapers, can be spread all over the land, and work together as if they were in the same place. Lotus Notes is the leading edge of that. IBM is saying we want to be in that business, we want it to be open, we want it to run on everybody's hardware and everybody's software, a very different kind of company than the IBM that owned the hardware, owned the software, and you did it IBM's way or you didn't do it at all.

MR. MAC NEIL: I was intrigued by a line I read in an AP story that said some of the Lotus innovative spirit could be lost. IBM has a history of stalling innovation. Now, when they buy Lotus, do they buy the creators and the innovators too?

MR. DeWITT: They're trying to. One of the reasons why there hasn't been a hostile takeover in the software business is that really the heart and soul of that business is the two or three master programmers who write this stuff. It really finally boils down to a couple of guys, and this -- Lotus Notes was written by a guy named Ray Ozzie, who nobody thinks will work for IBM, not that he would work for --

MR. MAC NEIL: So in other words, they could buy the existing software, but they could fail to have the people who could really keep developing it and innovating for the future?

MR. DeWITT: Yeah. The -- what they really want right now is that, is that brand name, that product, and those thousands of loyal customers who are already using Notes to build on. They'll have to find other ways to get good software developers probably.

MR. MAC NEIL: Let's turn -- thank you -- let's turn to James Stewart and discuss the MCA business. Why should it be huge news that a top talent agent will not be the head of a Hollywood studio? Why should be big news page news everywhere?

JAMES B. STEWART, The Ne Yorker: Well, first of all, Michael Ovitz is not just any top agent. He has become "the" preeminent deal maker on a wide front in the entertainment industry, and the quest for someone to run MCA has taken on great proportions, because there is something of an epic struggle going on in the entertainment industry now over who is going to control Hollywood, the money people who increasingly own these studios, or it's somewhat analogous to the software issue, the creative people who are making the movies and making the product, that would include talented stars as well whose power has increased dramatically. So how this is resolved, who is finally chosen and more importantly, on what terms, to run MCA is going to say a great deal about who really controls Hollywood today.

MR. MAC NEIL: Let's just back up a little bit. MCA was sold to the Japanese and now the Japanese have sold it to Seagrams, the Canadian-American huge distilling company.

MR. STEWART: That's correct. And this quest is going on -- yesterday Seagrams completed its acquisition of its MCA, so now it's in a position to replace the management, if it chooses, with its own selection.

MR. MAC NEIL: So what happened to sour the deal so that Michael Ovitz will not run MCA?

MR. STEWART: Well, no one seems to know for sure. The terms, the negotiations broke down at a point where reports say that the salary was in the neighborhood of $250 million, and that there were various issues of control and autonomy still on the table. I think the thinking is that if there was a problem, it wasn't so much the money, big as that sounds, but in this issue of power and control and whether Mr. Ovitz would really have completely unfettered discretion to do what he wantedrunning that studio. Now, it's perhaps not surprising in most industries that a new owner does not want to have spent all that money and give up all control to a hired manager but in Hollywood today success and ego is being measured on the part of the studio managers by how much power and autonomy they have. And when the Japanese came to Hollywood, the door opened in this sense, because they were distant owners. There was a language barrier. There was a cultural barrier, and into that void very clever, aggressive, and powerful managers stepped in and achieved a great deal of autonomy. Ultimately, I think the Japanese proved to be very unhappy with this arrangement, which is why Matsushita sold MCA in the first place.

MR. MAC NEIL: Why would having Ovitz running MCA get everybody so excited? What could he do -- what could he bring to making movies that he can't do now, which is essentially bringing talented people together and make deals? I mean, he can do that now.

MR. STEWART: Well, he does, but he's extracting -- he is the agent of this talent. He is extracting from the producers, from the movie companies the maximum possible amount of money and leverage he can on behalf of his clients. I think the thinking is if he could run and a studio, he could still put these marvelous packages together, but now his obligations would be to his new employers, not to the stars that he is hiring, and so that the balance of power there would shift from the talent agencies and the talent, itself, to the studio. It would be maybe a little bit tilt back to the old days which of course is still the romance of Hollywood, where the studio bosses controlled, you know, everything. It'll never go back to that. There will be other top talent agencies.

MR. MAC NEIL: Was Ovitz the one who put together the deal on, on "Forrest Gump" that has, that has resulted in the movie "Forrest Gump," that has resulted in Tom Hanks I think making $31 million so far, and the, and the director making $31 million?

MR. STEWART: I'm not really sure. Those were -- those were good deals, although, again, some of the talent like Tom Hanks, what they've been doing is foregoing some money, some certain money in the front for a greater share of the proceeds.

MR. MAC NEIL: I just -- you mentioned the ability to extract huge amounts of money from the -- from the studios on these deals. Is it such a big loss? Are there no other smart, aggressive contenders for that job?

MR. STEWART: Well, one thing I would say is that Michael Ovitz could be back in the picture. Nothing ever seems to be forever there, that Michael Ovitz has surfaced periodically as a candidate, and perhaps there's still some time, that perhaps these negotiations will be -- resume at some point. But, of course, there are -- there is other talent. He is one of the very few marquee names. You hear names like Barry Diller, Terry Semmel. I don't believe either one of those is in the running for this job. But there is -- there's other talent in Hollywood. I don't know that a studio must have someone who is already a household name to execute a successful management and creative product strategy?

MR. MAC NEIL: Just because we have the two of you sitting here, doing two different stories, is there any connection between these two stories?

MR. DeWITT: Well, we have two guys holding out for more money. [laughter] There's a -- there's a lot of shake-up going on, as the communications industry and the entertainment industry are sort of reinventing themselves with the new technology.

MR. MAC NEIL: And, and forminghuge new conglomerates all the time, concentrating more and more. Is there a lot of that still to go on would you say?

MR. STEWART: I think we're just seeing the beginning of this revolution.

MR. MAC NEIL: Really. It's been going on for about 10 years now.

MR. STEWART: Yes. But it's going to keep going, and I do think there is the broadest sense, there is a similarity here in that Lotus is a software manufacturer, MCA in the world of entertainment is a software manufacturer. This is sort of the creative side of these worlds.

MR. MAC NEIL: We're all software.

MR. STEWART: We're software. IBM is a hardware manufacturer. Matsushita was a hardware manufacturer. Sony was a hardware manufacturer. Seagrams is -- well, we don't know what to call Seagrams --

MR. DeWITT: A liquid manufacturer.

MR. STEWART: But in any event, the hardware people are investing in the future by trying to buy software. It is perceived, right or wrongly, that growth in today's world is going to come in the area of ideas, information, creativity.

MR. MAC NEIL: Do you see, either of you, some obvious candidates for this kind of buying out, merging?

MR. DeWITT: CBS, all the networks would be clear possibilities.

MR. STEWART: Yes. Programmers in the entertainment area, and I think we'll see the communications companies, the phone companies have shown a great interest in some of the entertainment software providers.

MR. DeWITT: The -- yeah, in the business of wiring there are clear merger possibilities between the phone companies and the cable companies, each of which have what the other wants, and are prevented right now by law from merging but with a new telecommunications bill, you might suddenly see a --

MR. MAC NEIL: Which telecommunications bill is in Congress this week.

MR. DeWITT: Yeah.

MR. MAC NEIL: We must leave it there. Thank you both. ESSAY - HELPING HANDS

MR. LEHRER: Finally tonight, essayist Phyllis Theroux salutes some dedicated philanthropists.

PHYLLIS THEROUX: In the Book of Genesis, after Cain had murdered his brother, Abel, God asked Cain where Abel was. Cain replied, "I don't know. Am I my brother's keeper?" Human beings have been asking themselves that question ever since, and if the number of philanthropic institutions [on screen: The Robert Wood Johnson Foundation; W.K. Kellogg Foundation: NYCT; The Pew Charitable Trusts; The Duke Endowment; MacArthur Foundation; LWRD - Lile Wallace Readers Digest Fund; DWRD - DeWitt Wallace Readers Digest Fund] in this country is any indication, the emphatic answer Americans are still giving is yes, we are. In 1994, over 33,000 different foundations doled out over $9 billion to various groups and individuals who applied for help. Some, like the Rockefeller, Ford, and Carnegie Foundations, are well known, established by people who got rich in this country and wanted to give something back to it. Others are much less well known and poorer, but money is not what makes a philanthropist. A philanthropist could be defined as an altruist with assets, but if the money isn't there, a good idea will do. Three foundations, for example, have directed their philanthropic impulses towards the poorest country in the hemisphere -- Haiti. Gwen Mellon is the 82 year old widow of Larimer Mellon, who died six years ago. Heir to the Mellon oil and banking fortune, Mellon wasn't doing much with his life when at the age of 37 he read an article about the work of Dr. Albert Schweitzer. The Mellons decided to follow his example. A college dropout, Larimer Mellon, returned to school and received hismedical degree, using $1.5 million from his trust fund to build a hospital in Deschapelles. While he was finishing up medical school, Gwen Mellon went ahead to supervise its construction. The Albert Schweitzer Hospital opened its doors in 1956. By the time Dr. Mellon died in 1989, pediatric tetanus had been eliminated in the neighboring areas. The life expectancy of the community had risen from thirty to fifty-three, and a network of community clinics were established where none had been before, and they were being run by Haitians. But when Dr. Mellon died, his trust fund died too. Gwen Mellon told the staff that the hospital would stay open, even if she had to use oil lamps to light the rooms. Six years later, that doesn't appear to be necessary. The light from Dr. Mellon's life, now that it is over, has started to attract new sources of support to continue his work. Haiti may be the poorest country in the hemisphere, but only if you ignore their art. And it is Haitian art that supports another philanthropic impulse started by a former Peace Corps volunteer, Tim Carroll. On a visit to Haiti, he was told that eight out of the ten Haitians he saw on the streets were facing blindness because of a Vitamin A deficiency. Carroll hit upon the idea of art for eyes. The foundation was called "Eye Care." Beverly Sullivan met Carroll at his first Eye Care art show in Washington, D.C.. Today, she is one of the principal buyers for the foundation, making regular trips to Haiti, bringing medical supplies down, and art back, which they sell in various cities across the country. Half the money goes back to the artists and the other to provide support to Eye Care, which 17 years after it was founded is the largest provider of eye care in Haiti. The proceeds of the art have built, staffed, and equipped four urban Eye Care centers, eight rural hospitals, and fifty-one community outreach posts. And finally, there is Mr. Abner Noza, who is living proof that one doesn't have to be rich to be generous. Noza, a Haitian born cab driver in Silver Spring, Maryland, is the sole support of the Gethsemane Scholarship Institution School in Fond De Blanc, Haiti. It started with a dream, where a woman with three children asked Noza to help her three times. Three times Noza said yes, and when he woke up, he wondered what God was trying to tell him. Since 1982, despite his meager resources and his wife thinking him crazy, Noza has devoted himself to educating Haitians in Fond De Blanc. In 1988, he took all his savings, $900, and bought a piece of land upon which the school which now has seven teachers and two hundred and twenty-five children, stands. Three times a year he returns to Haiti with money for the teachers, clothes, and xeroxed copies of books. On a salary of about $26,000 a year, which has to support a wife and three daughters, Noza is not able to keep his school in any kind of style. Once a year, his church throws a yard sale or a fund-raising picnic with Haitian food to help out. But between the teachers' salaries, which come to $500 every three months, and his own plane fare to Port-au- Prince, Noza is one of the more strapped philanthropists around. "Whatever you can do," said the poet Goethe, "or dream you can, begin it -- boldness has genius, power, and magic in it."

MR. NOZA: This blueprint represents 10 classrooms for our school.

PHYLLIS THEROUX: Noza's next dream is to build a permanent school and clinic for the children. It will cost him $85,000. "But with that," he said, "I make good job for God." Spoken like a pure philanthropist. I'm Phyllis Theroux. RECAP

MR. LEHRER: Again, the major story of this Tuesday was Bosnia. The Serbs promised to set free some of the UN peacekeepers they've been holding hostage, but there's been no confirmation of a release. The Serbs also denied holding the U.S. pilot who was shot down over Bosnia last week. Good night, Robin.

MR. MAC NEIL: Good night, Jim. That's the NewsHour for tonight. And we'll see you again tomorrow night. I'm Robert MacNeil. Good night.