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Fugitive al-Qaida leader Ayman Al-Zawahiri has released a new audio message about Yemen at a time of escalating fighting in the country that one Yemeni official on Tuesday described as "all-out war."

The release of the audio comes just two days after White House counterterrorism adviser John Brennan visited the Yemeni capital of Sanaa to meet with its new president, Abed Rabbo Mansour Hadi, to discuss ramping up the battle against al-Qaida affiliated militants who now control large swaths of the country's southern region.

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While there is still no public translation of the new Zawahiri audio message, a U.S. government official familiar with the contents tells NBC News it was clearly recorded before the news broke last week about a foiled plot to blow up a U.S. airliner with more-sophisticated underwear bomb.

The message discusses the transition from exiled former Yemeni president Ali Abdullah Saleh to Hadi, said the official, speaking on condition of anonymity.

Watch world news videos on msnbc.com

NBC News terror analyst Evan Kohlmann notes that there is typically a two- to three-week lapse between the events described in Zawahiri’s messages and their public release.  (Kohlmann's Flashpoint Intel service is working to translate the message, but he gives the title as, "Yemen: Between a Fugitive Puppet and a Collaborating Stooge," apparent references to Saleh and Hadi.)

Read more reporting by Michael Isikoff in the 'Isikoff Files'

Over the past week and a half, Yemeni forces -- backed by U.S. military trainers and drone strikes -- have dramatically escalated their attacks on al-Qaida militants in the south.

A Yemen government official estimated as many as 20,000 troops were now involved in the battle, supported by approximately 50 to 60 U.S. trainers.

"We have begun to reintroduce small numbers of trainers into Yemen," a Pentagon spokesman, a Navy Capt. John Kirby, told reporters this week. 

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SAN FRANCISCO -- To prime itself for the U.S. debut of legal online poker, MGM Resorts International, owner of such Las Vegas Strip monuments as the MGM Grand, the Bellagio and the Mirage, wanted a partner that knew the ropes.

So last October it hooked up with Bwin.Party Digital Entertainment Plc, a London-listed, Gibraltar-based specialist that rakes in more from Web betting than any other publicly traded company. MGM Resorts took 25 percent of a new venture 65 percent owned by Bwin.Party, with smaller Las Vegas casino operator Boyd Gaming getting the remaining 10 percent.

"We'll be out of the gate as soon as anybody," MGM Resorts Chief Executive Officer Jim Murren boasted to investors in February. 

Online expertise isn't the only thing that distinguishes Bwin.Party. In 2009, an earlier incarnation of the company paid $105 million while admitting to U.S. prosecutors it had run an illegal gambling operation and engaged in bank and wire fraud.

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Among its principal backers: a California-born woman who made a fortune in phone sex and Web pornography businesses that, like the pioneering online-gambling company that became Bwin.Party, faced multiple allegations of wrongdoing.

MGM Resorts' choice of Bwin.Party as a partner while applying for online poker licenses in Nevada might seem unusual. It isn't. The alliance reflects the calculated risks that major casino operators, Native American tribes and social-gaming giants Zynga and Facebook are weighing as they angle for a slice of a market valued at billions of dollars a year. 

Caesars Entertainment Corp is prepping for online poker by tying up with an Israeli company that in 2007 acknowledged settlement talks with the U.S. Justice Department over alleged breaches of anti-gambling laws.

A group of Native American tribes in California has signed up to use software from another Israeli company, run by a man who served prison time for stock manipulation and bribery. Another tribe last week announced a deal with Bwin.Party.

Zynga, eager to convert some of its tens of millions of virtual poker enthusiasts into cash gamblers, also has been in talks with Bwin.Party and others that have had brushes with the law, according to people familiar with the matter.

Meanwhile, offshore gambling outfit PokerStars is considering buying its chief offshore rival, Full Tilt, and making a run at the U.S. market even though founders of both were indicted by the Justice Department last year on charges of illegal gambling, bank fraud and money laundering, according to people familiar with the situation. 

All this comes as Nevada prepares to license the first online poker operators and software suppliers late next month -- and as California, New Jersey, Iowa, Massachusetts, Delaware and other states debate similar moves.

Many of the cash-starved states, encouraged by intensive industry lobbying, have felt freer to act since December, when the Justice Department declared that one federal anti-gambling law, the Wire Act, would no longer be enforced beyond sports betting.

But casino operators, Indian tribes and Internet powers bent on offering online poker lack experience delivering it. Online poker is a business that involves processing billions of dollars worth of bets and battling the fraudsters, cheats and robot-player software that can ruin the games. Hence the casinos are cozying up to some tech-savvy offshore partners whose pedigrees might give regulators pause. 

Most states have "suitability" rules designed to keep crooks out of the gambling industry. Nevada requires that successful license applicants and their large shareholders possess "good character, honesty and integrity." Nevertheless, the big casino operators and their offshore partners are betting that regulators will look favorably on their license applications for two good reasons: tax money and high-tech jobs.

Early indications are that they are right.

At a hearing on a Caesars deal with the Israeli company last year, Mark Lipparelli, chairman of Nevada's Gaming Control Board, said: "I don't think as we look at companies that we can have perfection as the standard, because I think that would be a disservice to the state in attracting business here." The board unanimously recommended approval of the venture.

Gambling foes warn that states are putting fiscal worries ahead of public safety, exposing a huge and vulnerable population to the potential for compulsive betting. "The governments are so desperate for revenues that they will partner with these lawbreaking outfits," said Les Bernal, executive director of the nonprofit Stop Predatory Gambling Foundation in Washington, D.C. "They will create addiction in order to feed off of it." 

Porn and cards
Jim Ryan, co-chief executive officer of Bwin.Party, acknowledged in an interview that when the company was looking for U.S. partners, its history was a chief concern of MGM Resorts and other U.S. companies. 

"Suitability is the very first question on all of their minds," he told Reuters during a recent business trip to San Francisco.

It's easy to see why. 

Bwin.Party grew out of PartyGaming, a brainchild of San Francisco-area native Ruth Parasol, who has a history as colorful as Las Vegas. After earning a law degree, Parasol first prospered in the 1990s through 1-900 phone-sex and other services that were sued by multiple states for aggressive billing and collection practices. In North Carolina's suit, the judge ordered a company she co-founded to pay $270,000 in damages.

Then Parasol put her money behind Internet Entertainment Group, which gained notoriety for releasing an early Pamela Anderson sex video and promising an initial public offering that never happened. Employees accused the company of routinely overbilling customers, and Chief Executive Seth Warshavsky fled to Thailand as authorities investigated. Warshavsky didn't respond to an interview request.

Parasol managed to emerge unscathed, and in 1997 founded Starluck Casino in the Caribbean, providing online gambling to customers in the U.S. and elsewhere. The company had a big hit with its PartyPoker website, which became the dominant force in U.S. online cards, and then renamed itself PartyGaming.

Parasol, who has been living in Gibraltar for most of the past decade, declined requests for an interview.

In 2005, PartyGaming's IPO became the largest London had seen in four years, valuing the company at more than $8 billion. Just then, debate over the U.S. legal status of online gambling flared.

Poker players sue to get to bottom of online cheating scheme

The Justice Department had long argued that Internet poker violated the Wire Act and other federal and state laws. Despite the success of PartyGaming and other offshore companies, no U.S.-based companies offered alternatives for fear of prosecution. 
In 2006, Congress clarified the matter by passing the Unlawful Internet Gambling Enforcement Act, or UIGEA, explicitly barring processing interstate or international poker transactions where state laws forbade such gambling. PartyGaming responded by pulling out of the U.S., leaving two-thirds of its players behind to be claimed by privately held offshore companies.

The law didn't snuff out online poker in the U.S. as players migrated to other offshore providers. Research firm H2 Gambling Capital estimates the U.S. accounts for about $400 million of global annual online poker revenue of nearly $5 billion, or 8 percent. Depending on how many states ultimately legalize online cards, that share could rise to as high as 28 percent in five years, the company says.

PartyGaming's problems didn't end when it left the United States. In 2008, co-founder Anurag Dikshit pleaded guilty to gambling via the wires in federal district court in New York. He forfeited $300 million and agreed to cooperate with prosecutors, leading PartyGaming itself to settle in 2009. The company paid $105 million to avoid prosecution for pre-UIGEA violations. Dikshit couldn't be reached. His lawyer didn't return calls seeking comment. 

In 2010, prosecutor Arlo Devlin-Brown told the court that the probe was continuing and referred to documents under seal. He recently told Reuters he could not comment further, leaving open the possibility that Parasol could be charged if she returns home to the United States. 

PartyGaming's fortunes recovered as it began to focus on non-U.S. customers. Last year it bought rival Bwin Interactive of Austria and changed the merged company's name to Bwin.Party, with annual revenue of 691 million euros, or $902 million. 

During the merger talks, the regulatory suitability of PartyGaming and Parasol became an issue. Parasol and her husband, Russell DeLeon, agreed that the board could force them to restructure their more than 13 percent stake in the merged company or sell it if "required by any gaming regulatory authority in connection with business opportunities," according to merger documents filed with regulators. 

That clause wouldn't apply, however, if the licensing process is "more burdensome to the principal PartyGaming shareholders than the licensing requirements currently imposed by the state of Nevada." That means the couple's stake could, in effect, block deals in states with tougher standards. Bwin.Party's Ryan said he couldn't imagine the couple standing in the way. DeLeon couldn't be reached for comment.

Now partnered with MGM Resorts, Bwin.Party has applied for a Nevada license to offer Internet poker software and services. Co-CEO Ryan said the joint venture will handle all U.S. games where players pay to play and can cash out their winnings. 

In the meantime, he said, Bwin.Party will promote its brands through a social game, to be announced soon, without the ability to cash out. Ryan said negotiations with Facebook, a likely game platform, are continuing.

Facebook declined to comment. MGM did not respond to repeated interview requests about its choice of Bwin.Party.

'Prettiest girl in town'  
One of Bwin.Party's top rivals is also listed in London but based in Israel. That company is 888 Holdings, founded by a dentist inspired to put poker on the Net after a 1996 trip to Monte Carlo. The late Aharon Shaked and his brother Avi mortgaged their homes to fund the company, and their families and a co-founding family still have majority control.

In 2006, 888 joined PartyGaming in pulling out of the U.S. market. But for a time before that, 888's Casino-on-Net gambling website was among the top 10 buyers of banner ads aimed at U.S. home Internet users, reaching more than 10 percent of them in a single week, according to Nielsen/NetRatings.

In 2007 the company acknowledged it was in settlement talks with the Justice Department over suspected breaches of pre-2006 anti gambling laws. No charges were filed.

The 888 deal with Caesars that Nevada regulators approved last year was a trial run of Caesars-branded online poker in the British market, where such games have been legal for years. Caesars, operator of the Strip's Caesars Palace, Harrah's and Rio, has since expanded its relationship with 888, agreeing to use its software in the United States once states approve.

Ambitions are running high at 888. "The most exciting market opportunity for the industry must be that of the States, and we are definitely the prettiest girl in town, with everybody keen to have discussions with us," 888 Chief Executive Officer Brian Mattingley told investors last month. Officials at 888 declined interview requests, as did those at Caesars.

Lipparelli, the Nevada Gaming Control Board chairman, said scrutiny of the initial Caesars venture was lower than what it would have been for a U.S. venture. He said current investigations of Bwin.Party, 888 and more than 20 other license applicants would be far more rigorous than anything the overseas outfits had experienced in their home countries. "Some will probably not make it through," Lipparelli said. 

He said confessions of pre-2006 wrongdoing wouldn't automatically prevent licensing, though. Gambling executives say they expect smooth sailing in Nevada because regulators want to add local technology jobs. Concern about past lawbreaking "has all gone away," one casino executive said. 

One big test could come in the case of PokerStars, based in the Isle of Man, and Full Tilt Poker, based in the Channel Islands, which together snapped up most of the U.S. market after the 2006 law was passed and PartyGaming ran for the exits.

Last year, on an April day known in online poker circles as Black Friday, federal prosecutors unsealed indictments alleging illegal gambling, bank fraud and money laundering against the founders of PokerStars and Full Tilt. Preet Bharara, U.S. Attorney for the Southern District of New York, said Full Tilt had operated as a Ponzi scheme, relying on new players' deposits to cover payouts to older customers while executives and advisers took hundreds of millions of dollars from player accounts.

The indictments prompted Wynn Resorts Ltd to drop a weeks-old "strategic relationship" with PokerStars. The main owner of Station Casinos, which serves Las Vegas locals at 11 casinos off the Strip, abandoned a similar tie-up with Full Tilt. Neither Nevada company returned calls seeking comment.

Full Tilt has shut down while it negotiates with the Justice Department. But PokerStars remains the biggest site worldwide, with what others in the industry believe tops $1 billion in annual revenue. It harbors hopes that a deal with prosecutors could pave the way for a return to the U.S. 

People familiar with the situation say that as part of the settlement talks with the Justice Department, PokerStars is considering buying Full Tilt and refunding U.S. players hundreds of millions of dollars missing from their accounts. PokerStars confirmed the settlement talks but declined to comment on Full Tilt or its American aspirations. Full Tilt officials couldn't be reached for comment. 

'Concerned about probity'  
In California, casinos and gambling-software companies already are scurrying for deals with the tribes and others that would be eligible for direct licenses under a bill pending in the state senate. Caesars manages the Rincon tribe's Harrah's casino and is hoping to build on that with software from 888. 

A coalition of tribes and card rooms known as the California Online Poker Association has signed up to use software from Playtech Ltd, a London-listed British company. About 40 per cent of Playtech is owned by Teddy Sagi, an Israeli billionaire who pleaded guilty to stock manipulation and bribery in 1996 in a scandal known as the Discount Affair. He was sentenced to nine months in prison. Playtech didn't respond to a request for comment.

The tribes are aware of the risks of choosing partners that won't satisfy the state Justice Department, which the current bill would empower to approve license applications.

"We are very, very concerned about probity," said Joaquin Fletcher, president of the Pechanga Development Corp, owner of the Pechanga Resort and Casino in Temecula, California. "We don't want whoever we pick to just create more nightmares down the road." 

Similar concerns are on the minds of social media companies.

Zynga, the dominant provider of recreational games on Facebook, has 36 million monthly average users of its Texas HoldEm Poker, the second most popular game on Facebook after its CityVille, according to market research firm AppData.

The card game doesn't require regulation because players don't receive cash payouts, though they often pay for extra chips to play with. Those virtual chip purchases have made the game one of Zynga's top earners and opened the company's eyes to the potential of the real thing. 

Lazard Capital Markets said in March that it expected Zynga to move "aggressively" and capture an extra $100 million in annual profit by offering online poker with cash payouts and prizes. 

Zynga has held talks with Bwin.Party, 888, multiple California tribes and card rooms, and the big brick-and-mortar casinos, people familiar with the discussions said. The company might experiment first with poker in well-regulated overseas markets such as the United Kingdom, they said. Zynga declined to comment.

The gambling majors have seen the promise of social networking as well. MGM Resorts, like Bwin.Party, is planning its own game without cash payouts but with social networking built in. Caesars recently bought game application developer Playtika, which has a popular free slot machine app on Facebook called Slotomania, and it launched a Caesars-branded casino game suite there, too. 
Despite the enthusiasm, the risks of a regulatory, legal or public-relations setback for Zynga and Facebook are substantial, even if they partner well. 

With millions of free players, "it's very likely these people can be converted" to playing for real money, said one longtime offshore poker executive. "But do they want a headline saying some kid lost $10,000 playing poker on Facebook?"

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By Mark Lagerkvist
New Jersey Watchdog

New Jersey Gov. Chris Christie — a rising star in the national Republican Party — called an overhaul of the state pension system his "biggest governmental victory." He now faces embarrassment from flaws his reforms failed to fix.

The sweeping new laws increase contributions from public workers, decrease benefits and halt cost-of-living hikes. According to Christie, the changes should save the state $120 billion over the next 30 years.

But his reform did little to stop the age-old New Jersey practice of double-dipping, in which employees "retire," start collecting a pension, and then are rehired, often the next day. Christie's own deputy chief of staff collects $219,000 a year from the state — a $130,000 salary as a top aide to the governor plus $89,000 in state pension.

Worse for Christie, a criminal investigation is under way involving his running mate, New Jersey Lt. Gov. Kim Guadagno.

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As a county sheriff in 2008, Guadagno made false statements to enable her chief officer to pocket nearly $85,000 a year in retirement pay while drawing an $87,500 annual salary. The double-dipping scheme first was reported by New Jersey Watchdog in 2010.

The state's investigation is assigned to the Attorney's General's Division of Criminal Justice, a unit where Guadagno once served as deputy director. Despite the apparent conflict, Christie has not appointed a special prosecutor.

A spokesman for Christie and Guadagno declined to comment. The Attorney General's Office did not respond to questions.

Pension abuses are so rampant in New Jersey that even the agency investigating Guadagno has its own controversy.

Twenty-three supervisors and investigators for the Attorney General’s Office and DCJ are using legal loopholes to draw salaries and pension pay, New Jersey Watchdog found. On average, each pockets $164,000 a year — $96,000 in salary and $68,000 in pension.

Most "retired" for just one night. Those officers left their positions with the Attorney General’s Office only to return to the same employer the next morning with new job titles — and two paychecks instead of one.

In a continuing series of investigative reports, New Jersey Watchdog exposed similar double-dipping practices involving 125 officers employed by prosecutors, 18 officials from a state Homeland Security Unit and 44 county sheriffs and undersheriffs — in addition to the Guadagno story.

Democratic State Sen. Fred Madden is a "triple-dipper" who collects more than $241,000 a year from public coffers — $49,000 as a legislator, $106,983 as a police academy dean and an $85,272 pension as a State Police retiree.

"I don't have a problem with it at all," said Madden.

The Guadagno controversy
While Madden and others profit from loopholes in pension rules, the circumstances surrounding Christie's second-in-command raise questions of fraud and deception. 

Guadagno was elected sheriff of Monmouth County in 2007. She previously worked as an assistant U.S. attorney and as an assistant New Jersey attorney general. From 1998 to 2001, Guadagno served as deputy director of the DCJ — the unit now assigned to investigate the case in which she's a major figure.

In 2008, Guadagno hired Michael Donovan Jr., a retired investigator for the county prosecutor, as the sheriff’s “chief of law enforcement division.” She announced the appointment in a memo to her staff.

But there was a problem. As a sheriff's chief officer — a position covered by the pension system — Donovan would be required to stop receiving pension checks and resume contributions to the state retirement fund.

Guadagno fudged the job title, so Donovan could double-dip. In county payroll records, the oath of office and a news release, Donovan was called the sheriff's "chief warrant officer" — a low-ranking position exempt from the pension system.

A chief warrant officer oversees the service of warrants and other legal documents. In contrast, the sheriff's official website identified Donovan as "sheriff's officer chief," supervising 115 subordinate officers and 30 civilian employees.

On Guadagno’s organizational chart, Donovan was listed as chief of law enforcement — and the position of chief warrant officer was conspicuously absent.

The ruse allowed Donovan to collect an $87,500 salary from Monmouth County in addition to an $85,000 pension as a retired county employee.

A Conflicted Investigation
When Guadagno was elected as Christie's running mate in the 2009 election, she resigned as sheriff.

In 2010, state Treasury pension officials began to ask Monmouth County about retiree Donovan's employment. "I would respectfully request that former Sheriff Guadagno be contacted..." replied her successor, Shaun Golden, in a letter forwarded to the Treasury.

The Treasury denied the existence of any correspondence or email contact with Guadagno or Christie regarding Donovan. Officials also rejected requests for records of the Treasury's inquiry.

In response, New Jersey Watchdog filed a formal complaint with the state Government Records Council, a body consisting of gubernatorial appointees and cabinet officials. One year later, the council has yet to render an advisory opinion.

Meanwhile, the state Police and Firemen's Retirement System's Board of Trustees took action of its own.

"It's a double-whammy," said PFRS chairman John Sierchio. "If you're going to retire under one job title and come back under another title, we have a problem with that. The chief of sheriff is a covered title under the pension system — and they should be contributing instead of drawing out."

The PFRS board voted in May 2011 to call for a criminal investigation of Donovan and parallel instances involving John Dough, of Essex County, and Harold Gibson, of Union County. The case was referred to DCJ.

However, the investigation is riddled with a maze of potential conflicts of interest:

• DCJ is probing allegations involving its own former deputy director, Guadagno.
• Nearly two dozen DCJ investigators and supervisors are "double-dippers" who collect state paychecks and pensions.
• Attorney General Jeffrey Chiesa, a Christie appointee, is ultimately in charge of the probe of fellow cabinet member Guadagno. Chiesa is also former chief counsel to Christie.
• Despite evidence of possible wrongdoing by his lieutenant governor, Christie has not appointed a special prosecutor or authorized an independent investigation.

One year later, the PFRS board remains in the dark. "I keep asking, but we haven't been told anything," said Sierchio.

Sean Conner, a spokesman for Christie and Guadagno, refused to listen to questions about Guadagno's role or the need for a special prosecutor.

"Let me stop you right there," Conner told New Jersey Watchdog. "If it was referred to DCJ, you need to call DCJ."

The Attorney General's Office did not respond to questions about the investigation.

Back in Monmouth County, Donovan has another new job title — but he’s still a double-dipper. In February 2011, Golden named him undersheriff in charge of law enforcement — a strikingly similar position, but one apparently exempt in the labyrinth of pension rules. Donovan currently gets an $86,000 annual pension on top of his $92,000 salary.

While sheriff's chief, Donovan pocketed $227,000 in retirement checks. Since he did not re-enroll in the pension system, he avoided $18,000 in contributions to the retirement fund. If state authorities ultimately determine Donovan violated pension rules, he could be forced to repay $245,000.

Reform...except for double-dipping
Pension fraud and widespread abuse are nothing new in New Jersey.

The federal Securities and Exchange Commission accused New Jersey of pension fraud in 2010. It was the first time the SEC had taken action against a state government over public pension funds.

According to the SEC, New Jersey misled its bond investors from 2001 to 2007 by failing to disclose it had not met its obligation to fund public workers' pension funds. The lawsuit was settled with a cease-and-desist order, which the state accepted without admitting or denying the charges. The alleged fraud occurred on the watch of four previous governors.

Christie vowed to overhaul the pension system. With the state facing a $45 billion pension shortfall when he took office, the new governor spearheaded legislation that he signed into law last year.

"We are putting the people first and daring to touch the third rail of politics to bring reform to unsustainable system," stated Christie in a news release. “We are once again showing the people of New Jersey that our state is leading the way on the biggest challenges before us and remains unafraid to do what is hard, but necessary."

But the reforms did little to halt widespread double-dipping by numerous public employees, including Christie's deputy chief of staff.

Louis Goetting gets $219,000 a year from the state — $130,000 in salary as a top aide to the governor plus $89,000 in state pension payments from an early retirement deal. Christie hired Goetting in 2010 as a budget guru to help trim the cost of government.

In addition, Goetting (pronounced “getting”) received two golden parachutes from public coffers before joining Christie — severance packages of $190,000 from Brookdale Community College in 2009 and $180,000 from University of Medicine and Dentistry of New Jersey in 2002.

The bottom line: Goetting has gotten more than $1.1 million in pension and severance pay — and he still draws a six-figure salary from the state.

In answer to questions about Goetting's double-dips, the governor's press office has reiterated a statement Christie issued last year: "There is no one in my administration, myself included, who understands about the operation of this government better than Lou Goetting does. And so the people of New Jersey have gotten an incredible bargain.”

Pension reforms will not be complete without an investigative staff to monitor potential abuses, according to PFRS chairman Sierchio. He noted there are 275,000 retirees — but no investigators assigned to review complaints.

"We don't have anybody watching the store," said Sierchio. "We've got an $80 billion pension system, and nobody to investigate anything. Once you get your pension, you never have to look over your shoulder."

New Jersey Watchdog is a news website devoted to public service journalism. Read more about veteran investigative reporter Mark Lagerkvist.

 

ANALYSIS

The judge’s ruling was written on the lawyers’ faces.  Last Friday, after Catherine Eagles denied John Edwards’s motion to dismiss the six felony charges against him at the close of the government’s case, the former Democratic senator’s lead attorney sat red-cheeked and grim.  To his right, the typically stiff lips of the federal prosecutors curled into small grins.  

While Edwards’ request to have the case thrown out for lack of evidence was a long shot, the decision highlights the ever increasing peril Edwards faces and previews what’s to come. The transcript of the argument is a worthy read for anyone whose interest in the trial is more than passing and, thanks to NBC News, it’s available here. For Edwards case followers in a hurry, here are four ways the seemingly routine motion is actually a big deal. 

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Odds of Edwards going to prison just increased
When Edwards decided to contest the government’s claim that he violated the Federal Election Campaign Act (FECA) rather than reach a plea deal, his risk analysis included the hope that a judge would end the case long before jury deliberations began.  While such court-ordered judgments of acquittal are infrequent, they are not unheard of.  Indeed, in May 2011 a district court judge from the same appellate circuit (the Fourth) stopped the prosecution of a corporate lawyer on obstruction of justice charges because of the government’s failure to prove its case.  

Edwards’ hope for a similar outcome rested primarily on the novelty of the government’s theory: never before has money from third-parties (Fred Baron and Rachel “Bunny” Mellon) to other third-parties (Andrew and Cheri Young with a smaller amount to Rielle Hunter) led to a candidate’s indictment under the FECA.  Last fall, Edwards spent hundreds of pages briefing that argument (i.e, that he had no “notice” that such an arrangement could be illegal and thus no criminal intent) plus other reasons for dismissal…and lost.   Last week, Edwards attorney, Abbe Lowell, spent 90 minutes again beseeching Eagles to end the prosecution…and lost. 

For years, Edwards the plaintiffs’ attorney fought as hard as he could to overcome opponents’ efforts for judge-directed dismissals so the outcome of his clients’ personal injury claims could be determined by a jury.  Ironically, if Edwards the defendant had known for sure that his own case would go all the way to the jury, I’m not sure he would have rejected whatever the government’s best plea deal was. 

How judge's ruling was unnerving for Edwards camp 
In the run up to his motion argument, Lowell gently expressed to Eagles his hope that she would devote the weekend or at least much of Friday to considering his arguments before ruling.  Rather than rejecting the motion after days or hours of pondering, Eagles did so in minutes.  Moreover, the judge allowed that the “closest questions in my mind have to do with some of these venue issues” (i.e., did the crimes Edwards is accused of have a sufficient connection to the district where he is being tried).  Both the speed and substance of her decision suggest that Eagles has little concern about the prosecution’s theory or the quality and quantity of evidence presented in the government’s case. 

Full trial coverage from NBC News and msnbc.com

Analysis by Hampton Dellinger

More bad news in battle over experts?
In the face of Friday’s setback, the defense doesn’t appear to be shrinking from its chief argument for dismissal: that the government has not proved and cannot prove “that Mr. Edwards acted with knowledge that his actions would violate campaign laws.” Late Friday, the defense submitted its witness list for Monday.  Appearing first: Scott Thomas, the former Federal Election Commission chairman, who is prepared to testify that the prosecution “is without precedent in federal election law and that the FEC would not support a finding that the conduct constituted a civil violation much less warranted a criminal prosecution.”  The problem for Edwards is that the government is contesting vigorously the right of Thomas to testify as an “expert witness” and Eagles on Friday suggested she thought several FEC-related issues were “pretty straightforward.”  Such phrasing is not suggestive of a judge likely to let the former FEC chair testify broadly.  But at this point, Edwards will likely consider it a win if Thomas is allowed to take the stand at all.  

Closing arguments previewed
Friday’s motion hearing made something clear and it's bad news for Edwards: Andrew Young’s story sounds better when someone else tells it.  Skilled federal prosecutor David Harbach opened his oral argument reading excerpts from Young’s most Edwards-damning testimony.  Whether presented via the prosecutor, or Young’s wife, Cheri, the former political aide’s claim that Edwards orchestrated the sex affair cover-up is more compelling when separated from Young's hazy memory and admitted misstatements.  Similarly, Harbach was able to transform the testimony of other witnesses potentially off-putting to jurors (such as the long-winded Wendy Button) into an efficient, effective litany of evidence of guilt.  While Lowell is holding his own as quarterback of the defense team, Harbach’s ability to serve as a likeable standard bearer for the prosecution’s witnesses has to be making Team Edwards nervous -- very nervous -- as closing arguments fast approach.  

The spy who helped Western intelligence agencies thwart a plot to bomb a U.S.-bound airliner was a British national of Middle Eastern origin, sources tell NBC News.

The sources, speaking on condition of anonymity, also say that British intelligence was "heavily involved" in recruiting the spy, who has not yet been identified publicly, and penetrating the plot by al-Qaida in the Arabian Peninsula to detonate a new, more sophisticated underwear bomb aboard a U.S. jetliner.

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A senior U.S. counterterrorism official, also speaking on condition of anonymity, would say only that multiple friendly security services were involved in the operation. Saudi Arabia's counterterrorism operation also were involved, other U.S. officials have told NBC News.

U.S. and British officials have long reported that AQAP has wanted to recruit Muslims with Western passports to carry out attacks like the one revealed this week. As an example, the officials cited AQAP’s recruitment of Umar Farouk Abdulmutallab, who failed in the Christmas Day 2009 attempt to bring down Northwest Airlines Flight 253 over Detroit.

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U.S. officials have said previously that the bomb -- a refined version of an “underwear bomb” used in two previous failed terror plots -- was driven out of Yemen by the insider into Saudi Arabia. It is now in the hands of U.S. bomb experts at the FBI labs in Quantico, Va., where experts have been examining it for a week, the officials said. The infiltrator also is safely out of Yemen.

The insider also provided information that allowed the U.S. to launch a Predator drone strike that killed AQAP's operations chief, Fahd al-Quso, senior U.S. officials told NBC News on Tuesday.

Evan Kohlmann, NBC counterterrorism analyst, said he found earlier reports that the spy  was a Saudi national not very credible.

“AQAP was going to give a suicide bomb to someone with a Saudi passport?” Kohlmann asked rhetorically. “AQAP has been looking for bombers with Western passports, not those who would raise suspicions.”

He noted that Abdulmutallab, who tried to detonate an earlier version of the underwear bomb aboard the Northwest flight, better  fit the profile AQAP was looking at: a young upper class college student with a Nigerian passport and a multiple-entry U.S. visa. A British national would attract even less attention, he said.

Robert Windrem is a senior investigative producer for NBC News; NBC News Justice Correspondent Pete Williams and Jonathan Dienst of WNBC-TV contributed to this report.

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Just days before the news broke about the CIA's takedown of a plot involving a sophisticated new underwear bomb, al-Qaida’s affiliate in Yemen publicly boasted that it had vastly expanded and improved its capabilities for making such devices.

That boast -- contained in a largely overlooked passage of Inspire, the online propaganda organ of al-Qaida in the Arabian Peninsula (AQAP) -- has fueled concerns that there may be other versions of the seized device and more bomb makers assembling them, according to U.S. security officials and members of Congress who have been briefed on the case.

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"They have a team of engineers, scientists and doctors. It's a little spooky,"  said Rep. Mike McCaul, R-Texas, a member of the Homeland Security Committee who was briefed this week on the intelligence operation that U.S. officials say thwarted an AQAP plot to bomb a U.S.-bound airliner. "In my view, it’s very likely they have produced more of these."

One hint at the expansion of AQAP's bomb-making capabilities can be found in passages in an article entitled "Wining on the Ground," found on the 57th page of the latest 59-page edition of Inspire, released by AQAP last weekend.

In 2009, AQAP had only a "very modest and small laboratory in a rural area" to make bombs, the author of the article –identified as Yahya Ibrahim -- wrote.

That was the year AQAP dispatched a suicide bomber to use a chemical underwear bomb to attempt to assassinate Prince Mohammed bin Nayef bin Abdul Azizbin, director of Saudi Arabia’s counterterrorism program, and later deployed another operative from Nigeria to try to blow up a U.S. airliner bound for Detroit. Neither device detonated properly, though the bomber in the first attack was killed.

But now, after obtaining “a large deal of chemicals from military laboratories" in a key city in southern Yemen -- "the modest lab has transformed into a modern one," the Inspire article stated.

"Hence, no wearisome measures are taken anymore to obtain the needed large amount of chemicals for explosives," it said. "Also, the operations now do not lack money as before." 

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This was not the first time AQAP has signaled that its bomb-making capabilities may be greater than U.S. officials have suggested.

In an issue of Inspire in late 2010, the group appeared to mock comments by U.S. officials focusing on the critical role of its top bomb-maker, Ibrahim Hassan Asiri -- who has been widely credited with designing the underwear bombs.

"Isn't it funny how America thinks AQAP has only one major bomb maker?" an article stated. 

Gregory Johnsen, a highly respected Yemen scholar who specializes in AQAP at Princeton University, said the propaganda outlet’s statements are likely true.

"We have to assume that there is not only one bomb-maker," he said. "It makes sense that he (Asiri) is somebody who has taught others" about making such bombs.

Johnsen said that the expansion of AQAP's bomb-making operations would be just one example of the dramatic gains the group has made in the past few years. As a result of the internal chaos in Yemen, and its shrewd exploitation of civilian casualties caused by U.S. air strikes, AQAP has made major advances, Johnsen said.

By U.S. intelligence estimates, the number of AQAP fighters has tripled to more than 1,000. It has also seized swaths of territory in southern Yemen, where it runs its own court system, deploys police officers and provides electricity to some towns, Johnsen said.

U.S. intelligence officials say they have no specific information indicating that other improvised explosive devices (IEDs) similar to the one that was turned over by a CIA informant last month have been produced and possibly spirited out of Yemen.

But John Brennan, President Barack Obama's chief counterterrorism adviser, said Tuesday in an interview with PBS that U.S. officials are taking additional measures "to prevent any other type of IED similarly constructed from getting through security procedures."

At the same time, the U.S. Department of Homeland Security issued new "guidance" calling for enhanced security at foreign airports, including additional pat-downs and random searches, as well as other steps aimed at detecting such bombs.

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On the dust jacket of his new book, "The Tyranny of Clichés: How Liberals Cheat in the War of Ideas," best-selling conservative author and commentator Jonah Goldberg is described as having "twice been nominated for a Pulitzer Prize."

In fact, as Goldberg acknowledged on Tuesday, he has never been a Pulitzer nominee, but is merely one of thousands of entrants.

When this bit of résumé inflation was pointed out by a reporter for msnbc.com, Goldberg said he hadn't meant to mislead anyone and removed the Pulitzer claim from his bio at National Review Online. (Here's the page before and now.) And he added, "I never put it in the bio in the first place."

His publisher, Penguin Group (USA), said the error was unintentional and it would remove the Pulitzer word from his book jacket when it's time for the first reprint, "just like any other innocent mistake brought to our attention." (Update: On Wednesday morning, the  publisher removed the claim from its own website.)

What's surprising in Goldberg's case is that he has been called out for the same résumé padding before, when his previous book was published.

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Goldberg's "The Tyranny of Clichés" was published May 1 and is ranked in the top 100 in sales on Amazon. A fellow at the American Enterprise Institute, Goldberg is the founding editor of National Review Online. He is a Fox News contributor, and has appeared as a guest on MSNBC and NBC. (Msnbc.com is a joint venture of NBCUniversal and Microsoft.)

An entry form and $50
It's not uncommon for Pulitzer entrants to claim to be nominees. Here's how it works: Though there are only three nominees, known as nominated finalists, in each Pulitzer category each year, there are more than 2,000 entrants. One could say that all of them were "nominated" by someone. If all Pulitzer entrants could be called nominees, any publisher could give all its authors that honorific by submitting an entry form and a check for $50.

The Pulitzer rules make clear that the only people to be known as nominees are those finalists chosen by the Pulitzer juries. From those nominated finalists, the Pulitzer board chooses the winners. Everyone else is just an entrant. As the Pulitzer board's online list of frequently asked questions explains politely, "Work that has been submitted for Prize consideration but not chosen as either a nominated finalist or a winner is termed an entry or submission. ... We discourage someone saying he or she was 'nominated' for a Pulitzer simply because an entry was sent to us."

Besides violating the official rules, such claims mislead the public. Tell readers that you're an Academy Awards nominee, and they'll understand that you're one of the few finalists, not one of the many entrants submitted by movie studios. It's exactly the same with the Pulitzers.

And in addition to misleading the public, such false claims rob honor from the actual nominees. This year's non-winning nominees include journalists and authors revealing failure to enforce safety standards at aging nuclear power plants, exploring the heartache of dealing with a sick spouse, and capturing in photographs the chaos and exuberance of the Arab Spring.

Being a "two-time Pulitzer Prize entrant" won't sell many books. Claims to Pulitzer nominations have showed up in the bios of well-known sportswriters Bill Plaschke and Buster Olney, NPR host Michele Norris and others not listed on the Pulitzer site among the nominees, including a good number of university professors.

(See below for a version of Where's Waldo: Find your own Pulitzer fakers by comparing Wikipedia bios with the list of nominees for recent years on the Pulitzer Prizes website.)

'I don't recall'
When Goldberg's "Liberal Fascism" came out in January 2008, his employer National Review Online announced that Tribune Media Services, which carries Goldberg's opinion columns, had "nominated" Goldberg for a Pulitzer in commentary.

The liberal blog Daily Kos then pointed out that the Tribune doesn't choose Pulitzer nominees, writing about "Goldberg's faux Pulitzer."

Commenters on Amazon took up the baton, attaching to Goldberg's Amazon profile several lengthy notes pointing out the puffery. The book sold well, reaching No. 1 on the New York Times hardcover list in March 2008.

A cartoon circulated mocking Goldberg for the claim. The punch line has Goldberg saying, as he opens a sweepstakes envelope, "I was just informed I might be winning ten million dollars." Here's a link to the online cartoon, by August J. Pollak, who draws "Some Guy With a Website."

After the hubbub, Goldberg's speaker's bureau removed the Pulitzer claim from his online bio, as documented by Daily Kos.

Goldberg told msnbc.com on Tuesday that he didn't recall any of this. "In all honesty, I don't recall ever being 'called' on this."

When contacted on Tuesday by email, Goldberg replied at first, "Nominated by the Tribune syndicate. Never said I was a finalist. There's a distinction."

When told that he's not a nominee either, and isn't listed among the nominees on the Pulitzer website, Goldberg replied, "I'll check it out and have 'em remove it if you're right. Happily. If it's not kosher, I shouldn't have it in there. Period."

Two hours later, after appearing on a radio show about the Tuesday primary voting, Goldberg sent a longer answer in email, but insisted that it be off the record. He was asked to provide a comment on the record, but declined.

'Just like any other innocent mistake'
Then, later Tuesday, his publisher issued a strong defense of Goldberg's integrity. Adrian Zackheim, president and publisher of Sentinel, an imprint of Penguin Group (USA), sent over this statement:

"There's no conspiracy here, just an innocent mistake at worst. In casual conversation, whenever a news organization submits one of their writers for a prize, people say that person was nominated. By that standard Jonah Goldberg 'has twice been nominated for a Pulitzer Prize.' You've brought it to our attention that the Pulitzer authorities don't approve of that usage, and that technically Jonah was 'entered' but not 'nominated.'

"We appreciate the notice, and we will treat it just like any other innocent mistake brought to our attention, such as a misspelled name or factual error. Specifically, Sentinel will correct the reference on future printings of The Tyranny of Clichés, and we will submit the correction to online retailers like Amazon and Barnesandnoble.com, which use our flap copy for their descriptive copy. Jonah is also correcting any other bios that have the error.

"However, it would be completely inaccurate for you to conclude that there was any intent to inflate Jonah's credentials or deceive anyone. His credentials are extremely impressive already and don't require any extra hype."

Attached to the publisher's statement was an internal note from the Penguin publicist, cautioning author Goldberg not to say another word.

And there was a note from Goldberg himself to the publisher, an internal email forwarded by mistake: "I think it's great," Goldberg said, apparently referring to Zackheim's statement. "It's a bull@!$%# story and I think this walks the line between acting in good faith and making that clear."

Goldberg, 43, is a son of literary agent Lucianne Goldberg, who became known after she advised Linda Tripp to secretly tape record Monica Lewinsky's conversations about sex with President Bill Clinton. She now has her own website, Lucianne.com. Jonah Goldberg got his start as an aide to commentator Ben J. Wattenberg at the American Enterprise Institute. Goldberg's columns are syndicated to newspapers nationally. For $2,000 to $7,500 per person, one can accompany the "Pulitzer-nominated columnist" and others from the National Review on a cruise to the Bahamas and Grand Cayman. His many liberal targets have included former Vice President Al Gore, whom he derided as a "serial exaggerator."

Find your own non-nominee nominees
Readers, here's a link to people whose Wikipedia biographies contain the word "Pulitzer" and "nominee" or "nominated."

Which ones aren't real nominees?

Here's a search form for actual winners and nominated finalists at the Pulitzer Prizes site.

It can be tricky to tell who's fibbing. A group of newspaper reporters, even an entire staff of a newspaper, could be nominated finalists in a category, without being named individually on the Pulitzer site. And nominees have been announced only since 1980.

The key questions to be put to a claimant are these: In what year were you a Pulitzer Prize nominee, and in what category? 

N.B. A couple of readers asked how this story got started, whether I was tipped off by some political opponent of Goldberg's. No, I was looking at the Amazon list of top-selling books, and wasn't sure if I recognized Goldberg's name. I clicked through, and saw his bio. As soon as I saw in the bio that he was a two-time Pulitzer nominee, I doubted it. -- Bill Dedman

Two congressional leaders vowed Tuesday to investigate how word of a successful operation to foil a bomb plot by a Yemen-based al-Qaida affiliate leaked to reporters for the Associated Press. 

“This leak could have been … devastating and still could have significant long term damage,” Rep. Peter King, R-N.Y., chairman of the House Homeland Security Committee, said after a closed door briefing on the operation. “I believe it's absolutely essential a full investigation is carried out as to who was responsible for this leak. 

“I can't emphasize how closed this was, how compartmentalized it was, and how secret it was, and yet the fact that it could have gotten out in any kind of detail at all, … that even a hint of it could have gotten out, is really, really shocking.”

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King’s words were echoed by Rep Charles “Dutch” Ruppersberger III of Maryland, the ranking Democrat on the House Intelligence Committee. 

 

“When you have a leak it could cost American lives, your allies’ lives,” he told reporters at the Capitol. “It also deters people from giving information. So, it's very important that we make sure that we have a sensitive investigation, it has to be a classified, need-to-know type of situation.” 

The Associated Press broke the story Monday of the foiled plot by members of al-Qaida in the Arabian Peninsula to detonate on a U.S.-bound airliner a refined version of an “underwear bomb” used in two previous failed terror plots. 

Insider thwarted underwear bomb plot, triggered drone strike, US officials say

The news service said it had learned about the plot last week but agreed to White House and CIA requests not to publish a story immediately because the sensitive intelligence operation was still under way. Once officials said those concerns were allayed, the AP said it decided to disclose the plot Monday despite requests from the Obama administration to wait for an official announcement Tuesday. 

If word of the operation had leaked out prior to the weekend, it could have disrupted an attack in Yemen by a U.S. Predator drone that U.S. officials say killed Fahd al-Quso, whom they described as director of external operations at AQAP, who was “involved (in the bomb plot) in an intimate fashion.”

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