July 27, 2002

Stephen M Case, architect of America Online and Time Warner merger, becomes target of growing criticism by analysts and investors after chairman Robert W Pittman resigns; Securities and Exchange Commission has opened probe into accounting practices at AOL that may have inflated past revenue; some analysts say Case's role as merger's architect makes him liability as AOL Time Warner tries to rebuild its credibility; company's directors, with Pittman's departure from board, are now evenly divided between Time Warner and AOL members; photo (M)

The House approved the largest reorganization of the federal government in decades, the creation of a Department of Homeland Security. Article, Page A8.

Market value of Citigroup tumbles 25 percent, or $45 billion, in two days as Senate committee begins investigating whether it and main rival J P Morgan Chase enabled Enron Corp to disguise amount of debt it actually had on its balance sheet; Sanford I Weill, who built Citigroup into $1 trillion conglomerate, defends its actions and predicts vindication; photo (M)

General Electric Co will break GE Capital, by far its largest business, into four segments, effective August 1; reorganization effectively eliminates job of GE Capital chairman Denis J Nayden, as each new unit's chief will report directly to General Electric chairman Jeffrey R Immelt; photo; graphs (M)

New York Jets will start quarterback Vinny Testaverde in training camp and likely on opening day, barring injury; photos (M)

4 Jewish Settlers Killed Four Jewish settlers were killed in an ambush in the West Bank, part of a surge in Palestinian violence following Israel's Gaza attack. PAGE A3 Tough Trial Ahead Zacarias Moussaoui faces the task of proving that while he is a member of Al Qaeda, he was not involved in the Sept. 11 plot. NEWS ANALYSIS, PAGE A8

Both Dow and S.& P. Gain, Ending the Week Positive The Dow Jones industrial average and the Standard & Poor's 500-stock index rose, finishing the week higher. It was the first positive week in three for the Dow and the first in four for the S.& P. The Nasdaq composite index also rallied, but it finished the week down, its fourth consecutive weekly dip. The Dow rose 78.08 points, or 1 percent, to close at 8,264.39, while the S.& P. 500 was up 14.16 points, or 1.7 percent, to 852.84. The Nasdaq climbed 22.04 points, or 1.8 percent, to 1,262.12. For the week, the Dow was up 3.1 percent and the S.& P. 500 up 0.6 percent. The Nasdaq was off 4.3 percent. [Page C4.]

Justice Department probes 1999 deal in which Enron sold part-interest in electricity-generating barges in Nigeria to special-interest entity established by Merrill Lynch; Senate Permanent Subcommittee on Investigations looks more deeply into role financial institutions may have played in hiding Enron's true financial condition (M)

Draft assessment of New York City Police Department's response to September 11 attack conducted by McKinsey & Co concludes it was effective in many areas but suffered from lapses in leadership and coordination and lack of proper planning and training; finds many officers did not know who was in charge or whom they should report to, and that some acted without direction from field commanders; emphasizes that no one could have anticipated September 11 and that primary goal of evacuating World Trade Center, which saved thousands of lives, was achieved; chart (M)

Yolanda Billingslea, Brooklyn woman who police say was high on drugs, stabs her 7-year-old daughter to death and critically wounds a friend who intervenes in stabbing; she later turns pair of scissors on herself; photo (M)

New York Gov George Pataki, discussing site plans during news conference, essentially rules out idea that rebuilt World Trade Center site must include all office space, retail stores and hotel rooms that once existed there; says Port Authority, which he jointly controls, should look to other places in downtown Manhattan to rebuild commercial space, and that Lower Manhattan should remain a world financial center but also 24-hour community; Port Authority plans have been roundly disparaged as creating overly dense and unattractive development (M)

Official statistics provided by police in Gujarat, only major Indian state governed solely by Hindu nationalist Bharatiya Janata Party, show that state government failed to take basic steps to halt religious riots by Hindu mobs against Muslims last spring; violence, which claimed almost 1,000 lives in Ahmedabad, was sparked by Muslim mob's attack on train loaded with activists from World Hindu Council; party and council deny charges; photos; map (L)