captioning funded by cbs and ford-- built for the road ahead. >> bradley: you want to go to college? >> much as it kills me, yes. >> cooper: when ed bradley met richar anozier four years ago, it was for a story about the harlem children's zone, an inner city education program run by a remarkable man named jeffrey canada... >> good morning, boys and girls. >> cooper: ...and considered one of the most ambitious social experiments to alleviate poverty in our lifetime. >> if you work hard... >> cooper: but back then, there was no way to tell if the experiment was working. today, the results are in, and they're nothing short of stunning. just ask richar anozier, who's ten now. do you know what college you want to go to?

>> stanford. >> reporter: what do you want to do after stanford? >> i would like to earn my way to being a c.e.o. >> simon: how many games did you bet on? >> i think i bet on probably over 100 games. >> simon: over 100. and how many of those were you reffing yourself? >> a lot. >> simon: that's right-- he was an n.b.a. gambler with an advantage. he was an n.b.a. referee, which is why he was so good at it. 75% of his bets were right, and attracted the attention of the gambino crime family. >> they basically told me that i needed to give them the picks, and if i didn't that there's a possibility that somebody would go down and visit my wife and kids in florida. >> simon: wow. and you believed them. >> yes. >> i'm steve kroft. >> i'm lesley stahl. >> i'm bob simon. >> i'm morley safer. >> i'm anderson cooper. >> i'm scott pelley. those stories and andy rooney

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>> pelley: now, cnn's anderson cooper on assignment for "60 minutes." >> cooper: for years, educators have tried and failed to get poor kids from the inner city to do just as well in school as kids from america's more affluent suburbs. black kids still routinely score well below white kids on national standardized tests. but a man named geoffrey canada may have figured out a way to close that racial achievement gap. what he's doing has been called one of the most ambitious social experiments to alleviate poverty of our lifetime. his laboratory is a 97-block neighborhood in harlem, which he's flooded with a wide array of social, medical, and educational services, available for free to the 10,000 children who live there. it's called the harlem children's zone. ed bradley first reported on geoffrey canada three and a half years ago, but back then, there was no way to tell if his children's zone was working. today, however, results are in, and they are nothing short of stunning.

so much so that the white house is now taking notice. for geoffrey canada, however, it is just a start. >> geoffrey canada: you grow up in america, and you're told from day one, this is the land of opportunity, that everybody has an equal chance to make it in this country. and then you look at places like harlem, and you say, "that is absolutely a lie." >> cooper: so you're trying to level the playing field between kids here in harlem and what, middle class kids in a suburb? >> canada: that's exactly what we think we have to do. you know, if you grow up in a community where your schools are inferior, where the sounds of gunshots are a common thing, where you spend your time and energy not thinking about algebra or geometry, but about how not to get beat up or not to get shot or not to get raped-- when you grow up like that, you don't have the same opportunity as other children growing up, and we're trying to change those odds. >> cooper: he's trying to change those odds on a scale never before attempted.

his goal-- to break the cycle of poverty in an entire neighborhood by making sure all the kids who live there go to college. >> ♪ that's what it's all about... >> cooper: you really believe that's possible, to break that cycle? >> canada: i absolutely know we're going to do it. >> cooper: canada remembers well what it was like to be a kid in the inner city. he grew up not far from harlem, in another tough new york neighborhood-- the south bronx. abandoned by his father, he and his three brothers were raised by their mother, who was barely able to get by. >> canada: when i first found out that superman wasn't real, i was about maybe eight. and i was talking to my mother about it, and she was like, "no, no, no, there's no superman." and i started crying. the chaos, the violence, the danger-- no hero was coming. >> cooper: canada got lucky, however. as a teenager, his grandparents moved to the suburbs, and he went with them. he got into bowdoin college, and then the harvard school of education. >> canada: good morning, boys and girls. >> cooper: he's been working with kids in harlem virtually ever since.

>> canada: you know, one of the first things kids ask me when they really get to know me, they say, "mr. canada." i say, "yes, sir." "are you rich?" and i say, "yeah, i am." and they're so excited, because they think, "i finally know somebody who has power." what they really want to ask is, "is there any way that you can help me figure out how to... to get a nice car and maybe get a house? and i think they want someone to say, "yes, you can. i got out, you can get out. there's a way, and... and i'm going to help you do that." >> ♪ i can do it, i can do it. >> cooper: to do it, geoffrey canada decided to build his own school in the children's zone. right now, there are some 1,200 kids enrolled from kindergarten through the tenth grade. it'll eventually expand all the way through the 12th grade. >> canada: we've created a school to help you all become the smartest boys and girls in the country. >> cooper: it's a charter school, so canada is able to run it his way, free from the bureaucracy and restrictions of the public school system. there's one adult for every six students, classes are smaller and school days longer. kids come in on saturdays.

and summer vacation? that only lasts three weeks. >> we will always ask permission before leaving the group. >> cooper: discipline is strict, and so is the dress code. to teach kids healthy eating habits, there are cooking classes using ingredients from the school's own organic garden. and if any of the kids get sick, this on-site clinic provides free medical, mental health, and even dental care. canada calls his school the promise academy, and this is what he tells parents at the start of each year. >> canada: we promise our families, if your children are with us, we guarantee they're going to get into college, and we're going to stick with them through college, right? so that's a promise. >> cooper: how can you, though, actually promise that they will go to college? >> canada: if my kids don't go to college, people who work for me are losing their jobs. and there's just no way around that. >> cooper: you'll fire the teachers... >> canada: i will fire the teachers. i'll fire the after-school workers. i'll fire the directors.

everybody understands that this thing is our job, as the adults, and we're not going to hold the kids responsible, right? and are some of my kids belligerent? yes. do some of them come in and don't try hard? yes, they do. do they come from broken homes? yes. is there poverty and drugs and crime? yes, it's all those things. those kids are still going to college. >> richar anozier: my name is richar anozier. >> cooper: richar anozier wasn't too sure about college when ed bradley first met him back in 2005. he was just in kindergarten. >> bradley: you want to go to college? >> anozier: much as it kills me, yes. >> bradley: much as it kills you. why would it kill you going to college? >> anozier: because they got people... words that i don't know. >> bradley: but you'll learn new words every year. trust me, you'll be okay. >> anozier: okay. >> cooper: today, richar is in the fifth grade, and seems a lot more confident about college. do you know what college you want to go to? >> anozier: stanford. >> cooper: what do you want to do after stanford?

>> anozier: i would like to earn my way to being a c.e.o. >> cooper: why do you want to be the c.e.o.? >> anozier: to tell you the truth, i think you get paid better when you're the c.e.o. >> cooper: i think you're right. to make sure his kids succeed, geoffrey canada will do just about anything. >> canada: who in this group went to disney world this summer? >> cooper: for the younger kids who ace their state-wide tests, there are free trips. and he pays high schoolers up to $120 a month if they get near- perfect attendance and grades. aren't you kind of basically bribing them? >> canada: i love to bribe kids. ( laughter ) >> cooper: you love to bribe kids. >> canada: i love to bribe, because this is... look, people say, "well, geoff, don't you want kids to do it for the intrinsic value of ed..." sure, i'd love them to do it for the intrinsic value. and until then, i'd love them to do it for money. i don't care, i just want them to do it. >> cooper: tuition at the promise academy is free, but there's not enough room for all the kids who live in the zone, so admission is by lottery. >> canada: so let me tell you how this lottery is going to go.

>> cooper: this august, we watched as anxious parents waited to hear if their children would get in. there were 210 slots open for a new kindergarten class, but 375& kids had applied. >> mikaila phipps. phillip pantene iv. >> cooper: as the slots filled up, some parents left waiting began to realize their child's chances of success in life had just been reduced. >> these are three-year-old children and their brains is just starting to develop. >> cooper: there were a lot of very angry parents. >> canada: they were angry, and they were accusing me, right-- "geoff, how could you do this to a three-year-old?" "this is not right, geoff." and i would say, "no, no, you're right, it's not right." >> i was sitting here for nothing. >> canada: you look into those mothers' eyes and those fathers' eyes, and you see the fear and the terror and the clear understanding that the system is designed so that their kids are probably not going to make it if they don't get in. who else? >> cooper: to help ensure that the kids who don't get in still make it to college, canada has created a pipeline of free

programs targeting all 10,000 children in the zone. he sends recruiters out door to door, trying to sell sometimes suspicious families on what service's he's offering. >> do you have a moment? >> no. >> cooper: canada's pipeline begins at birth, at the baby college, a nine-week workshop that teaches new mothers and fathers how to parent. >> you know, you're hitting, and then after that, you come and hug the child-- it's sending mixed messages. >> cooper: it also teaches them how to prepare their kids for elementary school. >> so you have the routine of reading books. >> cooper: for toddlers, there are free pre-kindergarten classes that focus on developing language skills, even in french and spanish. ♪ canada's also put reading labs in public elementary schools in the zone, and created an s.a.t. tutoring center for teens. >> and you have to round it up to this one. >> cooper: 90% of the zone's public high school students who participated in canada's after- school programs now go on to college. >> canada: we get them in the pipeline, we seal it.

once they get in, we don't let you out. you get out with a college degree. that's the point. >> cooper: none of this comes cheap, however. the children's zone annual budget is $76 million, two- thirds of which comes from the private sector, and much of that from wall street. it comes to about $5,000 per child per year. $5,000 per kid-- that's a lot of money. >> canada: yeah, it's a lot of money. until you see what it costs us when we fail these kids-- in new york city, jail: $60,000 a year. >> cooper: $60,000. >> canada: juvenile detention-- $100,000 plus a year. we're spending the money on these kids and we're not getting anything in return. ♪ >> cooper: canada has long argued investing in the harlem children's zone would show a return and, now, for the first time, there's scientific data to prove it. >> dr. roland fryer: he has done a remarkable job. >> cooper: dr. roland fryer is a professor in the economics department at harvard. he's conducted the first independent, statistical study

of geoffrey canada's efforts to close the racial achievement gap in his school. what is the racial achievement gap? >> fryer: black kids in our schools are not performing at even close the rate as white children in our schools. the average black 17-year-old reads at the proficiency of the average white 13-year-old. four year difference in effective reading skills-- that's huge. >> cooper: but when dr. fryer analyzed four years worth of promise academy test scores, he discovered something remarkable. >> fryer: at the elementary school level, he closed the achievement gap in both subjects, math and reading. >> cooper: actually eliminating the gap in elementary school? >> fryer: we never seen anything like that-- absolutely eliminating the gap.& the gap is gone, and that is absolutely incredible. >> cooper: last year, according to new york state data, 100% of canada's third graders scored at or above grade level in math, narrowly outperforming their white peers in the city's public schools. even more impressive-- canada's impact on middle schoolers, kids who enrolled in the promise academy in the sixth grade.

they started out far behind grade level, but dr. fryer found that, within three years, they had virtually eliminated the achievement gap in math, and reduced it by nearly half in reading. >> fryer: these are kids that a lot of people had given up on, and he showed that it's never too late. >> cooper: does it change the way you look at the problem? >> fryer: it does because... here's an analogy. we're ten touchdowns down in the fourth quarter. we kick a field goal and everyone celebrates, right? that's kind of useless. we're... we're still 67 points down. >> cooper: you're still losing. >> fryer: okay, we're not just losing, we're getting crushed, all right? what geoff canada has shown is that we can actually win the game. >> cooper: geoffrey canada may be winning, but he's nowhere near declaring victory. reversing the black-white achievement gap and then closing it in elementary school, that's huge. >> canada: it's about an hour's worth of celebration huge. you know, i've got kids who might be shot tomorrow. we've still got a lot of work to do before i can feel comfortable that they're all going to be okay.

>> cooper: according to canada, four kids in the children's zone were shot to death this past year; four others were wounded. there's been an up-tick in violence? >> canada: yeah, there's been an up-tick in violence. >> cooper: and the economic crisis has hit canada hard, as well. donations are down and he's laid off staff. his endowment also lost $4 million to bernie madoff. and that money's just gone? >> canada: we have basically written that money off. it's basically gone. >> cooper: but canada's experiment did receive a boost earlier this year when president obama announced plans to create 20 "promise neighborhoods" across the country, modeled after the harlem children's zone. >> president barack obama: if the harlem's children's zone can turn around neighborhoods in new york, then why not detroit or san antonio or los angeles...? >> canada: and a lot of students came to school on saturday... >> cooper: there are other charter schools getting similar positive results, but replicating the harlem children's zone in its entirety may be difficult, in part, because it's hard to determine

exactly which ingredient is the key to geoffrey canada's success. >> fryer: i feel like i've gone to a phenomenal french restaurant-- the dish tastes good, but i'm not sure exactly what they did to do it. >> cooper: he... he's doing so many different things. >> fryer: yeah. >> cooper: he's got this all- hands-on-deck approach. >> fryer: he does, he does. and i think the... the key step forward from here is that we need to kind of demystify the success. i want to boil him down to pill form so i can transport him to other places. because if folks say, "well, this is just geoff canada, this is just harlem, and this is just a special deal," they're less likely to adopt it in omaha and places like minnesota. >> canada: and we're going to stick with them through college... >> cooper: so, how will you measure success? how will you know when the children's zone has worked? >> canada: when i see my kids, by the thousands, with degrees, i will say, "this is what we set out to do and we've done it." we've got our kids in the best schools in america. they're going to be successful. they'll be competing with everybody else all over the country. people will be looking for kids from harlem, saying, "oh, those

kids are so great from harlem. we need more kids from harlem to come in." then, we'll be successful. >> cbs moneywatch update sponsored by prescription flomax. >> mitchell: good evening. kuwait sold its 4.1 billion stake in citi group today making a profit of more than i billion dollars. regulators shut down six more banks this weekend raising the total for the year to 130. and "the blindside" won the weekend box office. i'm russ mitchell, cbs news.

>> simon: tim donaghy was at the top of his game. a referee in the national basketball association, he loved the limelight, was considered one of the n.b.a.'s better refs, and was making almost $300,000 a year. but he was also living a secret life-- during the last four

years of his 13-year career, he committed a personal foul. he betrayed the fans and the league by betting on n.b.a. games, including some he was officiating. donaghy won about 75% of his bets, an incredible percentage, confirmed by the f.b.i. tonight, tim donaghy speaks out publicly for the first time, telling us why he bet on n.b.a. games, how he won so often, how his world collapsed. and what a world it was. it was your dream job. >> tim donaghy: yes. >> simon: why? >> donaghy: i had the opportunity to run up and down the court with the greatest athletes in the world. i just loved the game of basketball growing up, and my goal was to somehow be a part of it. >> simon: so, everything was going just fine? >> donaghy: it was a dream situation all around. >> simon: and then, you committed the cardinal sin. you started betting on n.b.a. games, including games that you were reffing yourself. >> donaghy: yes. >> simon: what were you

thinking? >> donaghy: obviously, i wasn't thinking to cross that line. >> simon: why do you think you did it? >> donaghy: because i fell into an addiction of gambling. >> simon: how did it begin? >> donaghy: playing golf at country clubs and card games at country clubs and people's houses. and it just evolved from those type of situations to betting on athletic contests. >> simon: from card games to athletic contests to the n.b.a. >> donaghy: yes. >> simon: donaghy was betraying everything he and his family stood for. his father had been a respected ref in college basketball. tim followed in his footsteps, and went even further, making it to the n.b.a. but tim said betting was more powerful than all of that, and winning was ecstasy. and did betting on the n.b.a. give you a higher high than betting on other sports? >> donaghy: i think it gave me a higher high, because i was able to predict the outcome of the games. and i think, when you talk about

gambling and the euphoria that comes with it, making winning picks is what excites you. >> simon: euphoria? really, euphoria? >> donaghy: uh-huh. >> simon: and as far as you know, you were the only ref who was placing bets? >> donaghy: as far as i understand, yes. >> simon: how many games did you bet on? >> donaghy: i think i bet on probably over 100 games. >> simon: over 100. and how many of those were you reffing yourself? >> donaghy: a lot. >> simon: and here's what you may find difficult to believe-- donaghy says that, while his betting may have been illegal, his reffing was always honest. you're insisting that your betting did not influence the way you called a game. why should we believe you? >> donaghy: because the fbi did a thorough investigation, and even the n.b.a. concluded that i did not fix games in the n.b.a. >> simon: that's right. a 29-year f.b.i. veteran, special agent philip scala, led the investigation of donaghy. he told us that donaghy convinced him.

>> scala: he said, "knowing the information that i had, i didn't have to do anything on the court to pick a winner. i could pick a winner 80% of the time just knowing what i knew an hour before the game." and watching the tapes, we could see that there was never something outlandish, where you could see he called a foul or he omitted a foul because he wanted to see a certain team win. we never saw that. >> simon: the n.b.a.'s investigation came to the same surprising conclusion. "it seems plausible to us that donaghy may not have manipulated games. we are unable to contradict the government's conclusion." when you were reffing a game, didn't it come to your mind that you'd bet on one team and not on the other? >> donaghy: i tried to put it out of my mind, and i think that that i was able to do that. >> simon: in one game, you were betting on san antonio, but you threw their coach, greg popovich, out of the game.

>> donaghy: i didn't think about the bet during the game. and in my mind, he needed to be ejected. >> simon: losing their coach cost san antonio the game, and cost donaghy his bet. but that didn't happen very often. donaghy claims, and the f.b.i. concurs, that he won 70% to 80% of his n.b.a. bets. you told the f.b.i.-- this is a quote-- "you don't realize how easy this was for me, knowing what i knew." >> donaghy: uh-huh. >> simon: what exactly did you know? >> donaghy: i knew that there were certain relationships that existed between referees and players, referees and coaches, and referees and owners that influence the point spreads in games. >> simon: what's a point spread? >> donaghy: a point spread is where a team is favored to win or lose by a certain amount of points. >> simon: you say that certain refs like or dislike certain players, certain coaches, certain general managers? >> donaghy: and certain owners.

>> simon: you told us, "i knew these guys. knew who they liked, who they despised, and who they would help or screw over." for example, donaghy cited tempestuous superstar allen iverson. some refs liked him, some did not-- natural enough. but donaghy said several refs would let their feelings influence their calls, by either favoring iverson or favoring his opponents. and that would affect the score. >> donaghy: and i knew those relationships, whether they were positive or negative, had an effect on the game. >> simon: so, you know when iverson was playing, and you knew which refs were there. you knew whether to bet on the iverson team or on the other team? >> donaghy: yes. >> simon: iverson wouldn't talk to us; he didn't want refs to get mad at him. but his manager told us that the way the refs were treating him-- some for, some against-- made him sick. >> donaghy: i do believe allen iverson knew this. and i believe all the players know this. that certain referees treat them

much better than others. >> simon: donaghy told us that, two years ago, iverson had incurred the wrath of the refs. >> donaghy: he had threatened one of our officials, and the n.b.a. fined him $25,000. and we felt, as a group, that he should have been suspended, and because he wasn't, we felt like we would teach him a lesson. >> simon: during that time, you worked an iverson game-- january 6, 2007-- so you bet against iverson's team. >> donaghy: correct. >> simon: because you knew that all the refs were gunning for him? this was openly discussed? >> donaghy: openly discussed. and i knew that the other two referees and i sought out to do a little justice of our own. >> simon: the refs quickly called curious fouls on iverson, including rarely called fouls for palming. it threw his game off, and his team lost. according to the game's announcers, even late in the game, you kept hurting iverson's team by letting defenders bludgeon him without calling any

fouls. watch. >> tim donaghy will not call a foul when iverson goes to the basket. that's three in a row when iverson was fouled, we thought, but no call. >> simon: what are we looking at? >> donaghy: we're looking at a foul that was let go. obviously, in the pre-game meetings, we came to the conclusion that we were not going to give allen iverson any marginal plays for the basket. and that absolutely should have been called a foul that i and the other referees passed on. >> simon: did anyone in the nba know about it? >> donaghy: there was a group supervisor at the game that came in at half time who was laughing and stated that he felt that iverson had gotten the message. >> simon: so, the supervisor approved of your punishing iverson. >> donaghy: yes. >> simon: the n.b.a. would not let that supervisor or any of its refs talk to us. in that game, donaghy did make calls that helped him win his

bet. but he insists that wasn't the point; he says all he wanted to do was punish iverson. but, yes, he did win his bet. special agent philip scala, who retired from the fbi last year, told us donaghy would bet on a game when he knew who the refs were, and that they felt strongly about certain players. what does that tell you about how certain refs call games? >> scala: most of the refs, we believed, were honest and calling the game as they had seen it. there was this aspect of judgment. a person should understand his bias and make sure he leaves that on the sideline. >> simon: but, obviously, that wasn't the case, or else donaghy wouldn't have been picking 80% of the games. >> scala: there seemed to be some bleeding in that area. >> simon: "some bleeding" sounds to me like an understatement? >> scala: could be. >> simon: now, you say that donaghy cooperated with you. if he had lied to you, he would have faced a much longer sentence, no?

>> scala: yeah. as long as he was completely honest and omitted nothing, the f.b.i. would stand by him. if we ever found out that there was a lie, that cooperation agreement would be ripped up... >> simon: and that never happened. >> scala: that never happened. >> simon: donaghy told the f.b.i. and us that n.b.a. headquarters inadvertently helped him pick winners by sending refs instructions before a game. for example, he says he won several bets in a row by putting his money on the los angeles lakers because he knew the league was going to favor their star, kobe bryant. he knew it because the lakers had complained that refs had missed calling fouls on defenders who'd been blocking bryant. >> donaghy: the lakers had sent in a cd of 25 plays that they felt calls were missed when kobe bryant went to the basket. and i understood from the n.b.a. office that 22 of those plays

were missed by the referees. and i knew that kobe bryant was basically going to be given the opportunity to go to the foul line if somebody as much as breathed on him. >> simon: the n.b.a. says its instructions to refs are meant to improve officiating. but donaghy says those directives made it easy for him to pick winners. >> donaghy: because it was inside information along the lines of knowing that a certain stock was going to be bought out before the opening bell on the stock market. so, it's... it's, you know, almost a guarantee. >> simon: here's more of what you did. you would telephone refs who were about to officiate a game and pump them for information before the game. what kind of information were you looking for? >> donaghy: if there was a situation where there was a payback in order from a previous game. >> simon: injuries? >> donaghy: injuries certainly played a factor. just little gossip, conversations that i would use in making a pick. >> simon: but the other refs did not know that you were using this information to place bets. >> donaghy: no.

>> simon: so, you were betraying your fellow referees. >> donaghy: unfortunately, yes. >> simon: one former ref who feels betrayed is mike mathis, who used to head the referees' union. he told us that refs speak openly among themselves about their personal prejudices. >> mike mathis: in locker rooms, okay, referees do talk about players. if a guy is sitting there, saying he don't like so and so, and this guy does this, and he won't you know keep his mouth shut-- "dada, dada, dah"-- i can see where he could take that information and use it. >> simon: but mathis said he was stunned that donaghy actually did use it to place bets. what do you think of what donaghy did? >> mathis: it's reprehensible. it took a career of mine, 25 years, and sort of washed it down the toilet. >> simon: so, donaghy really spoiled the reputation of all you guys? >> mathis: no doubt. >> simon: mike mathis is a man you respect, right? >> donaghy: sure. >> simon: mathis said your

betting on n.b.a. games was reprehensible. do you agree? >> donaghy: absolutely. >> simon: did you feel that you were doing something wrong? >> donaghy: sure. but, obviously, it was... it was easy and it was exciting. and i actually didn't realize the consequences of my actions. >> simon: you didn't know that you were doing... doing something that could get you into trouble? >> donaghy: obviously, it was in the back of my head. but i think you just go with the notion that you're not going to be caught. >> simon: thought you could get away with it? >> donaghy: yes. >> simon: and donaghy might well have gotten away with it. he might still be reffing and betting today, but he fell in with the mob. how the mob brought him down when we come back. sometimes, the little things in life feel like our biggest enemies.

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>> simon: tim donaghy, the nba ref who bet on games he officiated, was placing those bets through a friend. he was too scared of getting caught to do it himself. and their winning streak went on uninterrupted for three years. but in the fourth year, that friend let slip that he was getting his betting tips from an n.b.a. ref. the mob found out about it and wanted in on the action. that's when donaghy discovered what it means to be really scared. it started outside this hotel in philadelphia. the f.b.i. says two men associated with the gambino crime family requested a meeting with donaghy. they took him for a ride. >> donaghy: they came down and picked me up. >> simon: they picked you up? >> donaghy: uh-huh. >> simon: and what happened then?

>> donaghy: they basically told me that i needed to give them the picks. and if i didn't that it's a possibility that somebody would go down and visit my wife and kids in florida. >> simon: wow. and you believed him? >> donaghy: yes. >> simon: were you scared? >> donaghy: sure. >> simon: from then on, his picks were relayed to the mob. how did you communicate your bets? >> donaghy: i would discuss it with a high school friend of mine, who would pass the information along to them. >> simon: and was there a code? >> donaghy: yes. the code was, if i want them to bet the home team, i would discuss his brother chuck. and if i wanted him to bet the visiting team, i would mention his brother johnny. do you have any notion how much the mob made off of donaghy? >> scala: the f.b.i. is very, very conservative in those aspects. we felt comfortable saying it was at least a few million dollars. >> simon: at least? >> donaghy: conservatively. >> simon: a few million? >> donaghy: that went into the coffers of organized crime.

>> simon: and how much were you making? >> donaghy: i was making $2,000 per correct pick. >> simon: $2,000 per correct pick. that seems like peanuts if they were making millions. >> donaghy: it was. >> simon: why didn't you ask for more money? >> donaghy: it wasn't about the money, at that point. >> simon: it wasn't about the money? >> donaghy: it was just about getting through the season and hoping that'd end it. >> simon: because the mob put a lot of money on his picks, they were not good losers. we told you that, in one game, donaghy threw out the coach of the team they were betting on. that cost the mob the bet, and they were not happy. >> donaghy: they had questions as to why i did it. >> simon: and what did you tell them? >> donaghy: i just told them that i wasn't making calls in games to win... influence the outcome. and, no, i'm not going to be able to, obviously, predict the winner every night. and, you know, they have to accept that that's what's going to happen. >> simon: did the mob accept that? >> donaghy: i'm not sure that they accepted it or not, but that was the information that i passed to them. >> simon: as it turned out, his mob connection brought him down.

the f.b.i., which was monitoring mob phone calls, heard that an n.b.a. ref was betting on games. the information made it to special agent phillip scala, who headed the f.b.i.'s gambino family task force. >> scala: one of the case agents had come into my office and said that they had information from a wire tap stating that there was huge sums of money being made, and that someone thought that a ref may be involved. >> simon: so, you got to donaghy through the mob, really? >> scala: ah, yeah. >> simon: so, if you hadn't gotten involved with the mob, you might still be out there reffing and betting on your own games. >> donaghy: possibly. >> simon: so, your big mistake was getting involved with the mob? >> donaghy: no, my... my big mistake was crossing that line where i... i bet in the first place. >> simon: tell me about the moment that you realized that the f.b.i. knew that you'd been betting on n.b.a. games. >> donaghy: a sickening feeling, you know?

the realization of that happening was just sickening. >> simon: once you were caught, you decided to come clean and cooperate. why? >> donaghy: i knew i did something that was, obviously, a bad choice. and i decided that, moving forward, it was not only in my best interest but my family's best interest to try and cut my losses. >> simon: you call it a bad choice. isn't that something of an understatement? >> donaghy: sure. it was a horrible choice. >> simon: he cooperated with the fbi to get a lighter sentence, but that exposed him to some dark problems. were you contacted by anyone in the mob? >> donaghy: there were threats made to my home phone. >> simon: what kind of threats did you receive? >> donaghy: death threats. >> simon: what did they say? >> donaghy: that i was going to be killed. >> simon: did you believe them? >> donaghy: i wasn't sure. >> simon: donaghy was sentenced to one year in prison, where he found he was not safe from the mob. he was threatened, then

attacked. >> donaghy: there was one guy who claimed that he was associated with the mob, and that he was going to get a gun and eventually blow my head off and break my knee caps. >> simon: his head was untouched, but months later, one knee still needs therapy. >> donaghy: he whacked me with a stick and did some damage to my knee. >> simon: and now that he's out, he is still worried about retribution from the mob. >> donaghy: well, certainly, it's in the back of my mind and... but i'm not going to live my life in fear. i was informed by the f.b.i. agents that they certainly had an eye on what they called "these wise guys" and if anything would come up, they would inform me immediately. >> simon: do you believe that you would be protected? >> donaghy: yes, i do. >> simon: convicted of wire fraud and passing betting tips across state lines, donaghy spent 11 months of his sentence in prison and was released last month. he could well have been sentenced to more than five years if he hadn't cooperated. his two mob cohorts-- thomas

"the doctor" martino and james "the sheep" battista-- denied ever threatening donaghy, and got sentences of 15 months and one year. donaghy not only confessed his own sins to the f.b.i.; he also blew the whistle on the n.b.a. he claimed that, in the playoffs, the n.b.a. does everything possible to extend series and to help big market teams advance. longer playoffs with those chosen teams means more money for the n.b.a. the n.b.a. denies it and says donaghy was making wild allegations, hoping to reduce his sentence. commissioner david stern declined to speak with us. he didn't want the league to participate in a report about donaghy. n.b.a. commissioner david stern and other referees say that you have no credibility. you're a convicted felon, not to be trusted. they say refs are professionals, and all this stuff about their personal feelings influencing the way they call games is nonsense. >> donaghy: i would say they

have a very valid point. but i would again point back to the investigation that the f.b.i. conducted, and the fact that i was 100% truthful with them. >> simon: the f.b.i. said that they believed you that you were honest, but that does not necessarily mean that you're correct. you may have believed the n.b.a. was tilting the playing field, but that doesn't mean that they actually did so. >> donaghy: i would answer with the fact that i was still able to pick the games at a 70% to 80% correct rate. >> simon: how much do you think you made in total? >> donaghy: over the course of four years betting on n.b.a. games, i think i probably profited around $100,000. >> simon: where is that money today? >> donaghy: some of it's at casinos, some of it's paid off football debts, some of it's paid off luxury items for our house. >> simon: now, donaghy has written a book titled "personal foul," published by the vti group after random house dropped it. it's about his betting scandal and his allegations against the

n.b.a. but the league is striking back. >> donaghy: they keep trying to paint me as the rogue referee. >> david stern: we think we have here a rogue, isolated criminal. >> simon: aren't you the rogue referee? >> donaghy: i mean, i certainly made some terrible choices to do what i did, but the culture that existed within the game of the n.b.a. enabled me to be able to do this at a very successful rate. >> simon: you've said that, to you, basketball represented a discipline-- tradition, fairness and integrity. you betrayed all of that, didn't you? >> donaghy: yes, i did. >> simon: have you learned to live with yourself? >> donaghy: it's tough. >> simon: but you brought it on yourself? >> donaghy: i certainly did. >> simon: what is the moral of your story? what message are you trying to put out? >> donaghy: we all have choices to make in life. and when we decide to go down that wrong road, we'd be better off backing up and realizing that, not only do you affect your life with some terrible

choices, but the lives of people you love the most, and that's your family. >> simon: how did it affect your family? >> donaghy: ruined it. >> simon: his wife divorced him and she has custody of their four daughters. ironically, donaghy says his scandal has actually improved n.b.a. officiating, because the league has made various changes to prevent refs from letting their biases influence their calls. are you still watching basketball? >> donaghy: i haven't watched a game in two years. >> simon: you were involved in it for how many years? >> donaghy: my whole, entire life. >> simon: what do you think would happen if you turned on your tv and watched a basketball game? >> donaghy: i would wish that i was out on the floor refereeing it. >> simon: and that's something you'll never do again? >> donaghy: no.

>> hello, everyone, welcome to the cbs sports update presented by pfizer. i'm james brown in new york with scores from the nfl. the saints clinched the nfc south and remain unbeaten. the patriots lead over the dolphins and jets is just one game while cinci have afully game lead over the steelers. san diego wrapped up its 7th straight victory while the bough -- cowboyed drops into a tie with the eagles in the east. log on to cbssports.com.

>> pelley: now a few minutes with andy rooney. >> rooney: the letters i get

come in four general categories. it may be more or less, but say four. one-- i get a lot of good letters. they're the best kind; they're from people who liked something i said. i can always take that. two-- i get letters from someone trying to get me to promote something on "60 minutes." i never do that. never have. three-- i get letters from people who are mad about something i said. they usually think i was wrong. four-- i get a lot of letters about what i look like, letters pointing out something about my appearance. recently, i made some remarks about our mail and the u.s. postal service. a lot of people thanked me for supporting postal workers. you could tell they were all from mailmen because they called themselves "postal workers". i always called them "mailmen." the letters also referred to the "u.s. postal service," and i still call that the "post office." robert w. lovaasen, jr., writes: "i am a postmaster in a small

town in south louisiana. i greatly appreciate hearing your support for the u.s. postal service." the mayor of slater, missouri, says, "i totally agree with you on the fact that people do not correspond through the mail anymore, and i am curious if you ever received this letter." let me see. no, mr. mayor. i don't think i ever got your letter; maybe it was lost in the mail. i frequently get a lot of letters about what i look like. this one from dennis ryan in clifton park, new york, says, "i notice you wear your wristwatch with the dial facing inward. my dad did the same thing." yes, i wear it that way because it's easier to see what time it is, mr. ryan. didn't your father tell you that? my least favorite mail comes from people who want me to promote something. obviously, they don't know that i don't do that. i guess that's why someone sent me this michael jackson cutout paper doll book. here's a nice letter to the producer of "60 minutes" from someone named m. titus. mr. titus says about me: "he's not funny, he's not clever, he

makes me dislike old men in general." next week, maybe i'll do a funny and clever piece about you, mr. titus. >> pelley: i'm scott pelley. we'll be back next week with another edition of "60 minutes." 'tis the chevy red tag event. ♪ now's the time to get a chevy♪ and nobody has more consumer's digest best buys than chevy. ♪ more best buys, more best buys, nobody has more.♪ not toyota. not honda. not anyone. ♪ not anyone! not anyone! not anyone! not anyone! not!♪ ah...warms the cockles of your heart. now during the chevy red tag event, get 0 percent apr for 72 months on most '09 models. see red and save green. now at your local chevy dealer.

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