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CNN NEWSROOM

Missing Pilot Found; Madoff in Court; Oakland's Anger

Aired January 14, 2009 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
RICK SANCHEZ, CNN ANCHOR (voice-over): Making news right now: The officer who incensed an entire community is arrested after a video shows him killing a man needlessly. Was the cop in hiding? If so, where? And what's the reaction?

UNIDENTIFIED MALE: What would you say to all those people that lost money?

SANCHEZ: Why is this man not in jail? He's accused of scamming, even bankrupting charities. Why are those accused of white-collar crimes treated differently?

The pilot accused of faking his own death by crashing his plane is found.

UNIDENTIFIED MALE: They approached the campground. He was identified by the campground manager. And they made an approach on the tent.

SANCHEZ: Did he really try and slash his wrists? We have the answer.

UNIDENTIFIED MALE: I have never in my life seen anybody that could tell the dishonest untruths that he told.

SANCHEZ: And look at this map. Was he actually trying to ditch his plane in the Gulf of Mexico?

What you want to know on Twitter, Facebook, MySpace, and more.

Lunchtime in Oakland, 2:00 p. in Springfield, our national conversation begins right now.

(END VIDEOTAPE)

SANCHEZ: And hello again, everybody. I'm Rick Sanchez right here at the world headquarters of CNN in Atlanta.

We are going to get a statement any moment, we have just been told, from Barack Obama on his Treasury nominee's embarrassing dilemma having to do with taxes. We're going to have that for you in just a little bit.

But right now, as we begin this newscast, the feds are trying once again to get Bernie Madoff locked up behind bars. Here's what's going on. They say that they finally nailed him, this time red- handed, trying hide some of the wealth that he owes investors that he is accused of scamming.

They say that he's sending jewels to family members and writing them millions of dollars in personal checks as well. So, here's what's happening as we speak. There's a hearing in the U.S. District Court of Manhattan. This is video, as you can see there, of Madoff arriving today.

Allan Chernoff is there. He's following it for us. He's going to be joining us in just a little bit.

Now, when this truth comes out -- and it will -- Bernie Madoff may be revealed as the biggest swindler in Wall Street history. Think about that. And take a look at this.

Take a look at who he's fleeced thus far, Steven Spielberg, the Chais Family Foundation, New York's Yeshiva University, Nobel Peace laureate Elie Wiesel, U.S. Senator Frank Lautenberg, the Hadassah Jewish women's organization, Henry Kaufman, also known as the Wall Street's Dr. Doom, New York university. And the list goes on and on and on, including many charities, some bankrupt.

Joining us now from Los Angeles is the best person to possibly speak to about this story. This is Jordan Belfort, himself convicted of defrauding investors. So, he knows the story from the inside. He served 22 months in prison, earned the nickname the wolf of Wall Street, has written a book about it. And his attorney, by the way, was Ike Sorkin, the same guy now who is defending Bernie Madoff in this case.

Hey, thanks so much for being with us. We certainly appreciate it, Jordan.

Is this guy going to jail?

JORDAN BELFORT, AUTHOR, "THE WOLF OF WALL STREET": Today, or ultimately?

SANCHEZ: I think, ultimately, we have got the answer pretty much in the bag. The question is today or day after tomorrow. And I guess the reason I ask that is, why not?

(CROSSTALK)

BELFORT: Yes.

I mean, listen, that -- and the big thing, by the way, is that, when he does eventually get sentenced, it's basically a life sentence. He will be sentenced to 20 years-plus, when his guidelines are calculated, based on the amount of money that he allegedly stole. So, it's a life sentence.

So, one of the things, why he's out of jail today, it makes no sense to me. I understand why the judge did what he did, in the sense that he was already out of jail. And the violation that occurred with -- saying the jewelry, now, what it comes down to is that the truth is, I'm sure, and I can -- only supposition, that Bernie Madoff knew exactly what he was doing. This was no mistake. He was dissipating assets.

(CROSSTALK)

SANCHEZ: Well, let me ask you a question. I want to stop you for a moment, because you have been through this.

BELFORT: OK. Yes.

SANCHEZ: All right? I want to get in your head vis-a-vis his head. What is the process that goes on for something like this? There was a point where he knew what he was doing was terribly wrong. Why didn't he, you, just level with the investors and say, I have screwed up; what can I do to make this right?

BELFORT: Well, I'm sure what's going to come out in the end is that, in the beginning, he wasn't really trying to scam anyone. He probably started out legitimately.

And then, because the returns he was promising were only about 1 percent a month. It's not outlandish, based on what goes on in the market. So, he was probably, in some years, making more than 1 percent a month for his client, and pocketing the difference. And, in bad times, he put money back, which is illegal, but he really in his own mind said, I'm not really defrauding people.

Then he had a few bad quarters in a row. And next thing you knew, he had to try to make it up by doubling down. And slowly he fell behind the eight ball. And when he got to a certain point, the only way to keep it going was through a Ponzi scheme or to come clean with the investors.

And that is where the self-denial comes in, where he probably thought, well, I can make it back. If I just trade bigger and more aggressively and have one great year, I can get even on this whole thing.

SANCHEZ: You know, Jordan, I have got to tell you, there's a lot of people who don't live that Wall Street world that you do. And maybe some people watching this newscast do. But that's few and far between.

So, I guess what we want to know is, is this whole thing a game up there? Are there lots of Ponzi schemes? And let me refer to something you write about. This is an essay that you just wrote on Madoff.

Let me quote you. I think we have got a graphic we can put up, so the viewers can see it.

You say: "Is there a club at the SEC?" the Securities and Exchange Commission. "You're damn straight there is. And Bernie Madoff was a powerful member."

Now, this is interesting.

BELFORT: Right.

(CROSSTALK)

SANCHEZ: Are you saying that he was so powerful, that they didn't keep an eye on him because he was an insider?

BELFORT: It's not so much that he was so powerful, but he was so part of the establishment, that they have very limited resources at the SEC. They have much too many lawyers and not enough investigators. So, what little assets they have, they look at a guy like Bernie, who was, you know, chairman of the Nasdaq. He was a member of that club, so to speak. And he was considered to be basically an honest guy. They gave him a hall pass.

(CROSSTALK)

SANCHEZ: You're saying the organization that is commissioned with watching these guys is doing a crappy job?

BELFORT: Absolutely. I think that they need to be eliminated. I think they need to be rolled into -- in my opinion, into the attorney's office, where the weigh of their investigations carry criminal consequences. I think they're just understaffed. Their turnover is dramatic.

No one stays that long, not nobody, but there is a very large turnover. In my case, back in the '90s, I went through four sets of investigators in two years. Each time a new set of investigators took over, they had to start from scratch. They had no experience.

(CROSSTALK)

SANCHEZ: It's just amazing to hear you say this. It's amazing to hear you say that the thing that we think should be working the best really hardly works at all.

We're going to stay on top of this, Jordan. Thanks so much for being with us.

Obviously, the decision still needs to be made on this case. It's a developing story. And we're going to follow it. My thanks do you, Jordan Belfort.

The police officer who set off a day of violence in the streets of Oakland has now been charged. We're all over this one. Why did he shoot and kill an unarmed man? The charge against him in this case, by the way, may surprise you.

And you're not going to believe what Governor Blagojevich did today, or maybe we should say had to do.

(COMMERCIAL BREAK)

SANCHEZ: We welcome you back. Mike Brooks getting ready to gear it up here because we're moving into a new part of the story, this story having to do obviously with what's going on in Oakland, California.

You heard about the BART police officer who shot an unarmed man. It has set off a wave of violence in Oakland. We have now just received part of a news conference where police have actually announced what they're going to be charging this police officer with. There, you're seeing the start of the video, by the way. And Mike and I are going to be going through this once again.

And the question here is, why in the world, when he's just breaking up an argument at a train station, would he take out a gun and shoot a man in the back? It's what people in Oakland have been frustrated over. It's what many law enforcement officials have been trying to figure out. And now we have charges.

Here now, the district attorney in Oakland just moments ago making a decision.

(BEGIN VIDEO CLIP)

TOM ORLOFF, ALAMEDA COUNTY DISTRICT ATTORNEY: Murder charges were filed because, at this point, what I feel the evidence indicates is an unlawful killing done by an intentional act. And, from the evidence we have, there's nothing that would mitigate that to something lower than a murder.

That doesn't mean that evidence might develop in the future that, particularly as it develops at trial. But, at this point, when you have a homicide that is intentional, and there's no mitigation, it's more or less presumed to be a second-degree murder.

(END VIDEO CLIP)

SANCHEZ: All right. Let's try and figure this out now.

Dan Simon is standing by. He's in California.

Dan, no mitigating circumstances, and he used the word intentional. What is he saying?

DAN SIMON, CNN CORRESPONDENT: Well, that's exactly right here.

What he's saying is, when you look at that cell phone video, and when you talk to the witnesses, they interviewed some 21 witnesses in this case, that there was absolutely no reason for the officer involved, Officer Mehserle, to take out his weapon and fire a shot.

(CROSSTALK)

SANCHEZ: Let me just -- I'm going to stop you for just a minute, Dan, just to kind of bring the viewers back to the story that everybody was talking about last week, that it was possibly a mistake, that he got confused, that maybe he thought he was reaching for his Taser, instead of his gun. What about all that? SIMON: Well, we really don't know, because the officer has not given a statement. Of course, investigators would like to talk to him. But, through his attorney, he has basically said no comment. He's invoked his Fifth Amendment privileges.

As you alluded to, there's a lot of speculation that perhaps he may have been reaching for his Taser weapon and instead grabbed his gun and then fired the shot.

SANCHEZ: Yes.

SIMON: But, bottom line here, according to the DA, there was absolutely no reason in this case to use deadly force.

SANCHEZ: Unbelievable.

Hey, Dan, hold on real quick. I want to bring in Mike Brooks into the situation.

Have we learned anything since you and I have had discussions about this over the past week about the incident itself? You have looked at the video. Where are we with that?

MIKE BROOKS, CNN SECURITY ANALYST: Time and again, looking at this video, Rick, what we did find out afterwards, apparently, one of the witnesses there heard him saying: "Don't Taser me. I have a 4- year-old child."

(CROSSTALK)

SANCHEZ: There it is. There it is. We're looking at it now.

BROOKS: Right.

SANCHEZ: Take us through this.

BROOKS: Apparently, again, all my law enforcement experts, I still think that possibly he was reaching for his Taser, because you saw the one officer right before the shooting step away from him.

And then you see him pull it. You see him go to tug it, tug it out again, pulled it out, stuck it right to his back, and pulled the trigger. That's the only feasible explanation that any law enforcement officials I have talked to have.

SANCHEZ: Now, let's switch over to the other video.

Hey, Dan, if you have the video of the disturbances that took place after this, where really the people in this community just went nuts, they took to the streets, they couldn't stand what was going on, and suddenly there was this confrontation with police officers there, they're saying a couple of things. One of them is that the DA hasn't been straight with them.

And, apparently, they want murder one in this case, I mean, capital murder. How does this work in California? They're charging him with murder, but does that mean premeditated or does it mean some form of manslaughter? What do we know, Dan?

SIMON: Yes, that was the question I had, Rick.

Here in Alameda County, when they file a murder charge, it's just that. It's a murder charge. And, then, ultimately, if he is convicted by a jury, then the jury would decide what degree it would be, first- or second-degree murder, or, in this case, it could actually be a manslaughter charge.

(CROSSTALK)

SANCHEZ: That's interesting.

(CROSSTALK)

SANCHEZ: Hold on just a second. Mike wanted to ask you...

(CROSSTALK)

BROOKS: But we did hear just moments ago from the district attorney's office. And he said right at the end, second degree.

SANCHEZ: Second degree.

BROOKS: Second degree, which says to me no premeditation.

SANCHEZ: All right, you were going to add something, Dan. Go ahead. Pick it up.

SIMON: Yes, about the Taser weapon suggestion, we should tell you that BART police officers -- BART stands for Bay Area Rapid Transit -- BART police officers have only been carrying Tasers for about two weeks. At least when the incident happened, they had only been carrying Tasers for about two weeks, which suggests that he may not have been totally familiar with the weapon, where it was placed et cetera -- Rick.

SANCHEZ: Is that a possibility, Mike? If you're not used to having it -- it may have been two weeks, it may have been two months, whatever it was.

(CROSSTALK)

BROOKS: My sources from Taser were telling me they have had them for a little less than a year, and there's 40 Tasers that they sold a little less than a year ago to BART Police Department.

And when you -- if you're carrying a Taser, you have to go through standardized Taser training to be able to carry one of these and to use it.

SANCHEZ: And it all seems to want to always come back to training.

BROOKS: Yes. SANCHEZ: Dan, let me go back to you on something. We understand that this town is still very tense, that people are still very angry. We know that there have been protests. We know that in fact the feds have sent some people in to do some, I suppose, talks with members of the community and police there.

Is there any possibility that this thing can escalate once again to what we saw there five, six days ago?

SIMON: I don't think so. I think the fact that you do have a murder charge today, that that will take the wind out of the sails, if you will. There is a planned protest. And I don't even know if you can call it a protest anymore.

But, nonetheless, there is a gathering this afternoon here in Oakland. About 1,000 people are expected to attend this gathering. And I would -- I would think that now that there is a murder charge, that's what they have been pressing for, that the anger may not be quite as great.

SANCHEZ: That's interesting.

Dan Simon, great job. We appreciate it. We will be hooking back up with you as we continue to follow the protests.

And my thanks to you, Mike. You are going to be back in just a little bit as you take us through the pilot shooting -- or the pilot who is accused of faking his own death.

(CROSSTALK)

SANCHEZ: Flip that camera around, Robert. We're going to get a shot of that comment that's coming in just behind you that I was looking at there just moments ago.

No, let's go to the Facebook one, a little bit over to the other side. There you go.

"Why would it be OK if the officer were using his Taser on someone that is handcuffed on his back? Why are you guys trying to make a case for this to be an accidental Tasering?" I'm getting," as you can see there, "teed off about this."

Let me bring you back. You have got 20 seconds to answer that.

BROOKS: Sure.

Well, there was no indication that I saw that he was handcuffed. They were trying to get his hands behind his back. So, he was on his chest. And they were trying to get him to comply. And that's why you would use a Taser, because you could use a Taser for compliance...

(CROSSTALK)

SANCHEZ: That would have been the procedure that he's supposed to use. BROOKS: Exactly. Right.

SANCHEZ: All right, my thanks again to Mike Brooks.

(CROSSTALK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: So help you God.

Let the record note that it was responded in the affirmative.

(END VIDEO CLIP)

SANCHEZ: That man, we're used to seeing him in uniform, is General Eric Shinseki. He was one of the few who told Cheney and Rumsfeld they were wrong and paid for it with his job. Is today his day of vindication? That's coming up.

(COMMERCIAL BREAK)

SANCHEZ: We welcome back to the world headquarters of CNN. I'm Rick Sanchez.

Boy, people are really angry about the situation going on in Oakland, California. In fact, let's go to our Twitter board, if we can. We have been getting a lot of comments that have been coming in. I want to share a couple of them with you.

"Let's say the BART shooting was an accident and justified. Then why did the officer quit? We must stop denying this stuff."

I think we have got time. Let me get another one in here, again, same theme. "The cops are one big brotherhood, and they all cover for each other. As long as you talk to cops, you will never get the truth."

Interesting, the level of frustrations over this.

By the way, there's something else I want you to take note of. Take a look at this picture. That is Governor Rod Blagojevich. He's presiding over the opening of the Illinois Senate, you know, Blagojevich, as in Blago. He's the man the feds accuse of shaking down a children's hospital, shaking down a newspaper to silence critics and to control reporters, and trying to sell the seat vacated by president-elect Barack Obama.

He's already been impeached. And now the Senate, the state Senate, is going to try him on this impeachment. This is the same Senate that Blagojevich took part in swearing in today. That's what you're looking at. Talk about uncomfortable, or, as my daughter says to me, "Dad, that's really awkward."

(BEGIN VIDEO CLIP)

HEATHER STEANS (D), ILLINOIS STATE SENATOR: Our first order of business in this new session will be to conduct an impeachment trial of our governor. This proceeding has profound implications for the immediate leadership of our state, as well as our ability to protect the public trust and ensure that the sound rule of law prevails, both now and in the future.

(END VIDEO CLIP)

SANCHEZ: It's so bizarre, so uncomfortable.

After hearing that, Blagojevich told the senators -- quote -- "I hope you will find the truth and sort things out."

A lot of the senators, as we were watching that today, as we were preparing this story, you could see them as he was talking almost fidgeting and squirming in their chairs, never, of course, making eye contact with their governor, which they're about to try for impeachment.

When we come back: Oakland still an angry town, another protest tonight. And we will talk to a woman who says she wants police executions to stop.

(COMMERCIAL BREAK)

SANCHEZ: We're spending a little more time on this story because of what's taking place in Oakland, California. It's tense there. People are angry. Most would argue that they have a right to be.

You can see in the videotape -- I don't know if you have got it, Dan -- once again, it's an officer who's asked essentially to break up a fight. Instead, while he has the man down, facing the ground, he takes out his gun and shoots him in the back. A lot of people are saying he would not have obviously shot the man in cold blood if he really intended to do so. And he would not have looked so surprised.

Yet, people in the community are furious. And they have taken to the streets, among those, Dereca Blackmon. She's with the Coalition Against Police Executions. And she's good enough to join us now.

We understand that there will be another protest today. There are also protests around the country as a result of this shooting and others that we have been bringing to your attention.

Explain to our viewers what it is that you don't like the way it's being handled. Specifically, what?

DERECA BLACKMON, COALITION AGAINST POLICE EXECUTIONS: We have been very concerned about the way the district attorney has handled this case from the inception.

He has not brought -- he did not bring Officer Mehserle in for questioning. There was no interrogation. And even in this instance of the arrest, he was arrested in Nevada. We were told he had been under 24-hour surveillance. What was he doing in Nevada?

(CROSSTALK) SANCHEZ: I guess he got away. You raise a good point.

I want to bring your attention to something now. We have got all kinds of people from all over the country, some 60,000, 70,000 people who are following this newscast and what we're talking about.

And one of them just wrote us from San Francisco. This is Josh Stewart. He's watching this newscast. And he's on Facebook. He says: "I'm a frequent rider of BART. I think the fact that the officer was white and the victim African-American is contributing to this lynch mentality. Rick, after hearing today that the BART Police was only equipped with Tasers for a couple of weeks at the time of the shooting, and after looking at the officer's facial expression immediately after the shot was fired, it makes it plain obvious that it was an unfortunate accident."

Many people believe the officer accidentally shot that man in the back. And, today, that officer was charged with what appears to be second-degree murder. Is that not enough for you?

BLACKMON: I don't think it's about what's enough for us.

I think that there's a broader issue here of use of excessive force. I do not think the use of a Taser in this situation was justified. We clearly see Oscar Grant III with his hands raised. The idea that the officers were in fear is ludicrous when you watch the videotape.

We have to look at police accountability in this country for excessive force, not just in Oakland, but in New York and Los Angeles, where we see police constantly using brutal tactics and not being accountable.

SANCHEZ: Why do you think they do that?

BLACKMON: You know, I think that there is a climate that the media contributes to that dehumanizes young people, and young people of color especially. There's a long history of antagonism between communities of color and the police.

And what we haven't had is, in this instance, if the officer -- if it was an accident, where is the apology? Where is the guilty plea? Why the clam-up?

SANCHEZ: But is it just a color issue, or is it some issue that may involve a person with power and a uniform, as opposed to someone without power and a uniform? Couldn't that just as well have been a white teenager who would have been perhaps mistreated and have been around the country?

BLACKMON: I certainly believe there are white teenagers that have been mistreated around the country. You will have to show me some evidence that they have been shot in the back while face down.

SANCHEZ: Let me ask you a question, what do you want done? What would you like to see happen as a result of your anger and the anger that you represent for so many people in your community?

BLACKMON: Well, I want to be clear that it's just not anger. Our organization is about accountability and healing. And that's not just healing for the residents of Oakland. It's healing for everyone around the country that is feeling the pain of this violence, when our tax dollars are being used to perpetuate violence, instead of healing.

So, what we want done, we have five demands. They are clearly around not just the arrest of Officer Mehserle, but also around the full prosecution. We're going to follow this out to the end, because in so many of these cases, we do not see a prosecution. We want all of the officers involved investigated for excessive force.

We want a civilian review board for the BART Police Department. And we want healing centers for the young people of our community, so they have a positive way they express the pain that they experience when violence happens. And we're looking at the possibility of a recall for District Attorney Orloff for the sloppy handling of this case.

SANCHEZ: Dereca Blackmon, we thank you for taking time to -- taking us through this.

BLACKMON: Thank you.

SANCHEZ: And we will obviously stay in contact with you and follow the protests as they go, not only in Oakland, but around the country, as a result of this incident.

BLACKMON: Thank you for having me.

SANCHEZ: Let's do this now. Let's switch gears, if we can.

We understand now that Allan Chernoff is able to join us. He's been following -- and we mentioned to you at the beginning of the newscast that the case of Mr. Madoff was in court. And the question is, will he be going to jail? Maybe Chernoff has the answer for us.

Allan, what you got?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Rick, the answer is no. Bernard Madoff will be remaining out on bail, $10 million bail. And he will remain in his luxury penthouse apartment on the Upper East Side.

Judge Lawrence McKenna just a few minutes ago said the government had not proven its argument that Mr. Madoff could dissipate more of his assets. The government's argument here, argument that he had violated terms of his bail, was based pretty much exclusively on the fact that Mr. Madoff and his wife on Christmas Eve mailed packages of worth more than $1 million of gold and diamond jewelry and watches to friends and family.

The attorneys argue that this, basically, the defense attorney said, look, it was stupid. It was a mistake. It should not have happened. And the judge said, look, it doesn't seem as if it's likely to happen again. The government has not made its argument.

So the bottom line here -- Bernard Madoff can remain out on bail while he awaits possible trial or a possible resolution of plea negotiations. Remember, he is facing right now one charge of securities fraud for allegedly for running a multi-billion dollar Ponzi scheme.

SANCHEZ: You know, and I can't help but mention that people watching this newscast right now are collectively shaking their heads and wondering why it is that when people who don't have money and aren't involved in white collar crimes, they almost immediately go to jail and are sent there after every hearing. And a guy like this can go to hearing after hearing and the judge says it's OK, you don't have to go to jail -- not in your case.

It's amazing to watch.

But we thank you, Allan Chernoff, for being on top of that story for us.

This is the palatial home that he left behind in Indiana. Accused swindler Marcus Schrenker is a cross-country failure. He failed at faking his own death, failed at crashing his plane where he wanted and has now failed in a matter that involves life and death even more so.

We have exclusive details coming up on the pilot, Marcus Schrenker. Oh, and we have an interview, as well, coming up with one of the guys who actually invested money with Schrenker.

How would you like to be him?

He's talking to us.

That's ahead.

Oh, and look who's on his way to the Obama cabinet. I'll tell you who that guy is and why you'd never see him in any Bush administration. Stay right there.

(COMMERCIAL BREAK)

SANCHEZ: And we thank you for coming back to us.

I'll tell you, just moments ago we were talking about the Madoff story and we said that there would be people around the country who would be making comments about this -- the fact that the judge is saying he doesn't have to go to jail. No, not him. Not Bernie Madoff.

Bang. Let's go here to MySpace. This is Rachel. She is watching our newscast right now. And she says: "Madoff is still out on bail? If this was me," she says, "I'd be under the darned jail."

We told you a little while ago that we would be receiving tape of the president-elect making a comment about the embarrassing situation that he now finds himself in as a result of his appointment for Treasury secretary and the fact that the Treasury secretary's appointment -- or the nominee, I should say -- may owe tax money.

All right. Let's hear what Mr. Obama had to say about this just moments ago.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D), PRESIDENT-ELECT: You know, look, is this an embarrassment for him?

Yes. He said so himself. But it was an innocent mistake. It is a mistake that is commonly made for people who are working internationally or for international institutions. It has been crested. He paid the penalties. And as I've said before, if my criteria -- whether it was for cabinet secretary or vice presidents or presidents or reporters -- was that you've never made a mistake in your life, none of us would be employed. So my expectation is that Tim Geithner will be confirmed.

(END VIDEO CLIP)

SANCHEZ: That's interesting.

As that comes in, we're preparing to do a segment on that. Patricia Murphy is standing by.

Patricia, are you there?

PATRICIA MURPHY, EDITOR, CITIZENJANEPOLITICS.COM: I'm here.

SANCHEZ: Hang tight. There's two things I want to talk to you about. I know you've been following these.

Two nominees today on the Hill. One of them, of course, is Tim Geithner, the nominee for Treasury secretary, who, as you just heard the president-elect refer to, is in a bit of a pickle. We don't know just how big that pickle is at this point.

And the second is the case of Eric Shinseki -- General Eric Shinseki, one of the few guys who showed real, real courage and stood up to Donald Rumsfeld and Dick Cheney when they were saying they had the answers to the problems in Iraq. He told them flat out they were wrong. And as a result, he lost his position. Some of that is arguable. But I want you to watch this report by our Pentagon correspondent, Jamie McIntyre.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): For better or worse, General Eric Shinseki's distinguished 38-year Army career has been largely reduced to these 29 words uttered in a Senate committee almost six years ago.

(BEGIN VIDEO CLIP FROM JANUARY 2003) GENERAL ERIC SHINSEKI: I would say that what's been mobilized to this point, something on the order of several hundred thousand soldiers are probably, you know, a figure that would be required.

MCCAIN: That off-the-cuff guesstimate, just a month before the invasion, of how many U.S. troops it would take to secure Iraq turned Shinseki into a poster boy for Bush administration critics. For years, they've argued the general sage advice for a larger ground force was ignored by his civilian bosses, then Secretary Donald Rumsfeld and his deputy, Paul Wolfowitz, who famously dismissed the high end estimate as wildly off the mark.

In naming Shinseki as his pick for Veterans secretary, President- Elect Obama suddenly seemed to be subtly rebuking Rumsfeld, calling Shinseki someone who always stood on principle.

OBAMA: No one will ever doubt that this former Army chief of staff has the courage to stand up for our troops and our veterans.

MCCAIN: But Shinseki has his critics, too, who say, in fact, he never stood up to Rumsfeld, never pressed for more troops for Iraq and when asked in a private meeting of the Joint Chiefs if he had concerns about the war plans, never said a word, according to two people who were in the room.

Asked by "Newsweek" two years ago to respond to the criticism he didn't press his concerns, Shinseki e-mailed back: "Probably that's fair. Not my style."

(END VIDEO TAPE)

MCCAIN: The myth about Shinseki is that he spoke truth to power and was punished for it. The facts suggest a different, less complimentary narrative that, well aware his views were unwelcome at the Pentagon, he simply kept them to himself and retired a few months later.

Jamie McIntyre, CNN, the Pentagon.

(END VIDEOTAPE)

SANCHEZ: Patricia Murphy, you were there. You would almost think that given that there is now a democratic administration, that Shinseki would be not only a cinch for confirmation, but that he'd almost be given a bit of a hero's welcome.

Was he?

MURPHY: He was given a hero's welcome, actually, by Democrats, but most especially and even surprisingly, by Republicans.

Senator Kay Bailey Hutchison, who is a Texas Republican, said that she has never admired anybody more in the armed services than Eric Shinseki. And that was really typical of the types of comments he was getting really across the board. You couldn't really expect a hearing to go more smoothly than it went for him today. SANCHEZ: Really?

MURPHY: Yes.

SANCHEZ: How did his staunch defiance of Cheney and Rumsfeld play into the equation?

MURPHY: Well, in this hearing, very little. Only two Democrats raised it. Nobody else did. And they only raised it not to re-litigate the Iraq War, but to say -- actually, Senator Rockefeller said you don't know how not to tell the truth.

So what it does is give him kind of -- it gives him a reputation as being somebody who is very honest and somebody who will come to that committee -- and they requested this -- to come to them and tell them the truth.

If he's not getting what he needs, they said, please tell us the truth. We're in power now. You tell us what you need.

SANCHEZ: Well, that perception that during the Bush/Cheney years, it was a my way or the highway kind of strategy there during this administration -- is bringing Shinseki in a sign being sent by the Obama folks that, guess what, that's not the way we're going to do things, we may be a little more inclusive?

MURPHY: That -- yes, I think this is starting to be one of Obama's sort of signature personality traits. He went to dinner with George Will last night. He actually went to his house. And he has said he -- actually, he said he does not read as much of his positive press as his negative press. He wants to see if his critics have a point.

But I think that Shinseki -- this was seen as very apolitical because the Department of Veterans Affairs is in a real, real tough way. They have budget shortfalls. They have incoming populations of Iraq and Afghan veterans with very serious head trauma injuries. They've got a crisis going on there and he's seen as somebody who's very competent and very respected and will get what he needs.

SANCHEZ: All right. Let's talk about the nominee now for Treasury secretary.

MURPHY: Right.

SANCHEZ: And this one can be a little more dicey.

Why...

MURPHY: A little more dicey, yes.

SANCHEZ: Yes. He owes -- apparently owes $42,000 in taxes that may have been an oversight. It depends on how you look at this situation. Apparently, he hired a housekeeper who was undocumented, as well. That never plays well. We're talking about Tim Geithner for Treasury secretary.

First, of all, what did he do?

I mean, in a few words, other than the fact that the $42,000 and the secretary, was it a big deal?

MURPHY: Well, he's got two problems. They are the two classic problems you never want with secretary nominees. He has a tax problem. He worked for the IMF -- the International Monetary Fund -- and didn't pay his withholding taxes. He paid his income taxes, but not withholding. They're considered self-employed people. It's a very technical area and it's being described as -- it's been described as an innocent mistake by the Obama people.

SANCHEZ: Well, but there was one guy -- I read from Grassley. Grassley said it is relevant to his position, essentially. And I think Senator Jim DeMint of South Carolina said the problem with this is it may have been intentionally done.

Does he have a big enough problem that he may not be confirmed if some Republicans like this say forget about you?

MURPHY: That's unclear. He has a big enough problem that Senator Grassley has moved to delay his confirmation hearing. The Democrats wanted it done very quickly -- done this Friday. And Grassley stepped in and said not so fast. I want to think about this. I want the court of public opinion to think about this.

And so they are delaying this until after the inauguration. He's going to have to dangle out there for several more days.

SANCHEZ: Thank you so much...

MURPHY: No problem.

SANCHEZ: ...Patricia Murphy, for that full and comprehensive report.

MURPHY: Thank you.

(BEGIN VIDEO CLIP)

JOE WURZELBACHER: You guys read -- report where our troops are at. You report what's happening day to day.

(END VIDEO CLIP)

SANCHEZ: Joe the war correspondent in Israel -- formerly "Joe the Plumber." He's bashing now real war correspondents. And I've got a message that he may want to hear. You'll want to hear it, as well.

(COMMERCIAL BREAK)

SANCHEZ: We welcome you back.

Boy, we've got a lot to get to.

First things first. We just got some video of Bernie Madoff leaving court and going back to his house. That's right -- back to his house being the key words here. A lot of people were expecting that the judge might say, sorry, but you have to go to jail -- not necessarily because you're a flight risk, but perhaps because of the violations of sending some of the jewels and some checks that apparently were written by him to family members -- perhaps trying to hide things that he's not supposed to be hiding, since this is, by the way -- pardon me about that, Mike. Since this is, by the way, a Ponzi scheme investigation.

Obviously, we'll be getting a lot more information on that for you as this story goes through.

Meanwhile, something else to take note of today. I want to share with you the thoughts of Samuel Wurzelbacher -- you know, "Joe the Plumber" -- now Joe the war correspondent. Yes, he's been in Israel filing reports.

And here's his analysis, as reported by the Associated Press. You're going to love this: "I don't think journalists should be anywhere around war. I mean you guys report where our troops are at. You report what's happening day to day. You make a big deal out of it. I think it's asinine. I think media should be abolished from, you know, reporting, war is hell."

There you have it.

Samuel, let me talk to you directly.

First, I was born in a communist country, so I'm familiar with people like you -- and Fidel Castro, by the way -- not to name drop -- who also think "that media should be abolished."

Number two, I've covered wars. And while I can't speak for war correspondents who put their lives on the line every day, I can tell you, what they do is requisite -- essential to our democracy.

Whether you've insulted them is up to them to tell you.

But I will tell you who you have insulted. Forty-one journalists were killed last year -- two already killed this year -- while trying to practice their craft. They can't speak for themselves, because they're no longer with us, Samuel.

And their children, their wives and husbands, their fathers and mothers -- they don't have a TV show.

So on behalf of them, Sam, let's see, you're not really a licensed plumber. You're not really a war correspondent. And your name isn't even really Joe. I think we all do know, though, who you are.

You know that guy who lives down the street -- the guy who shows up at the backyard barbecue when there's free food?

You know that guy?

He knows everything about everything, but really knows nothing, hates everything and everybody. He can't understand why anybody would find any fault with him. You know, the obnoxious guy -- there's always one at every party or every gathering on every block. You know that guy. We all know that guy.

Well, that guy wasn't made famous by John McCain and Sarah Palin. You were, Sam. So we're stuck with you. But it doesn't mean that we can't call you out.

In fact, I just did.

You can tell me what you think about that at CNN.com/ricksanchez or right now on Twitter, MySpace and Facebook.

The case of the missing pilot -- new details when we come back.

(COMMERCIAL BREAK)

SANCHEZ: What a development in the story about this missing pilot, who is not missing anymore. As a matter of fact, he has been found in Florida at a campground. We've got the video of the campground. We can take you through this.

This is the man, as we've been telling you about in the last couple of days, who tried to fake his own death by flying a plane into the ground. There's the campground.

They say he was found in a tent...

MIKE BROOKS, CNN LAW ENFORCEMENT ANALYST: Yes.

SANCHEZ: In that tent, apparently, he was found, as well, almost comatose, like he -- unresponsive is what the word police used. And he was bleeding profusely. They say if they had left him there and hadn't found him, he would have died an hour later.

BROOKS: Yes.

SANCHEZ: All right, for those of you -- just to catch you up, this is what we're talking about. Let's show the stills now. This is the man, what he looks like at home -- extremely wealthy. He handled other people's finances and apparently other people's money.

He was spotted, though, in an Alabama hotel a couple of days ago, which is interesting enough. And I think you'll see some video of him there all throughout.

Let me bring Mike into this -- Mike Brooks, as you look at this, what have you learned?

BROOKS: I'll tell you what, what -- I just got off the phone, right before I came up here, with -- with the U.S. Marshal's office. And apparently, when they found this guy, he was so -- he was in such bad shape, they immediately called for a lifeline helicopter. And it took him to a hospital in Tallahassee.

Now, when they found him -- he had his motorcycle there -- that red Yamaha motorcycle we had heard about. He had camping gear. He had plenty of food. He had a knife and he had $2,000 in cash.

SANCHEZ: Hmmm.

BROOKS: Also, I thought was interesting, was he had a laptop that they seized and they're going to look into it and investigate exactly who he contacted and maybe put together a time line in this whole escapade.

SANCHEZ: And see if there was somebody else involved.

BROOKS: That's right.

SANCHEZ: Hey, Dan, have you got that map?

I want to show you something, Mike.

Take a look at this map. All right, he starts from Anderson. Look where he's supposed to be going and look where the plane crashes.

BROOKS: Yes.

SANCHEZ: Do you know why they caught him?

Do you know why -- doesn't it -- doesn't it become apparent to you that this guy was going to plot -- try and crash that plane into the Gulf of Mexico, where they wouldn't be able to find the plane, because it would be in a thousand feet of water?

BROOKS: Right. It would give him a couple of extra days but one of the other things he did that's important...

SANCHEZ: But instead, the plane crashes into a swamp...

BROOKS: Yes.

SANCHEZ: ...and they say there's no body here, so obviously the guy is out there somewhere.

BROOKS: Near some houses.

SANCHEZ: Did the Feds bring him down?

Did they push him down?

BROOKS: No.

SANCHEZ: Did they -- did they cause him to go down?

BROOKS: No. No. In fact, he put out the may day call and said that his windshield -- his wind screen had imploded, he was bleeding profusely. They scrambled a military jet. The military jet came up and they saw that the door was open to the plane, nobody was in the cockpit...

SANCHEZ: So...

BROOKS: ...and they watched the plane just crash right into that swampy area.

SANCHEZ: So he put it on some kind of...

BROOKS: Auto pilot.

SANCHEZ: ...auto pilot...

BROOKS: At about 2,000 feet, they think.

SANCHEZ: And it just went down by itself.

BROOKS: Yes.

SANCHEZ: I want to bring somebody else into this conversation.

Mike Kenner, you are a former client, apparently, of the -- the pilot.

Did I say -- did I say that right?

Mike Kinney.

UNIDENTIFIED MALE: Uh, Kinney.

SANCHEZ: Mike Kinney.

I apologize for that.

Hey, were you shocked by the news when you heard about this?

MIKE KINNEY, FORMER SCHRENKER CLIENT: Yes and no. It certainly is a very dramatic, bizarre episode. But having known Mr. Schrenker over the years, he's capable of some pretty strange behavior.

SANCHEZ: How well did he invest your money?

KINNEY: Well, he put us -- he put me in a lot of annuity products that were very ill-fitted to my needs. The common denominator with them was that they all had very high commission rates for the agent...

SANCHEZ: Huh.

So did he...

KINNEY: ...which is how he made his money. And they locked my money in for long periods of time. I just didn't understand the product. It was very much misrepresented to me by Mr. Schrenker. And I was misled badly on that. So...

SANCHEZ: So you think -- so I guess what I'm trying to get at is, you know, he's obviously being charged with fraud already in -- in Indiana.

Do you think he was cheating you and people like you?

KINNEY: I think he was abusing clients, at least in my case, in a way that was putting them in very inappropriate investments that resulted in a lot of commission money for him and resulted in a lot of hardship for the client because of the nature of the investments -- very low return products. I mean, the common denominator was the high commission rate for him.

SANCHEZ: Wow!

KINNEY: We also had to place surrender charges on several occasions as he transferred us from one annuity to another. It was just...

SANCHEZ: If you could...

KINNEY: ...um...

SANCHEZ: ...if you could talk to this guy today -- I mean if I could hook you both up and you could talk to him -- look at him in the eye -- what would you say to him?

KINNEY: Well, I -- I would say I think you're about to face justice in this case. And I'm glad that he was not able to end his life and they were able to save him. I'm glad that his family won't have to go through that trauma. I think that was a good thing.

But I think it's time for him to face justice for some of the things he's done in his career to me and probably other people.

SANCHEZ: There you go.

Mike Kinney, a former client.

Mike Brooks, expert on law enforcement and cases like this one.

My thanks to both of you.

BROOKS: Thank you, Rick.

KINNEY: Thank you.

SANCHEZ: We've got Colbert. We've got Jon Stewart. We've got Chelsea Handler next on The Fix.

(COMMERCIAL BREAK)

SANCHEZ: We've seen a lot of comments that are coming in on Madoff. Hopefully, we'll be able to read some of those to you in just a little bit.

But let's stop really quick and go to my pal, Wolf Blitzer.

He's standing by in "THE SITUATION ROOM" to tell us what's coming up next -- Wolf, what you got?

WOLF BLITZER, HOST, "THE SITUATION ROOM": Thanks very much, Rick.

A big day, as you know, for Barack Obama. Right now he's getting ready to meet with justices over at the U.S. supreme Court. Why this visit is different from meetings other presidents-elect have had.

And a stunning development, indeed. A key figure from the Bush administration now says a detainee at Guantanamo Bay was tortured. And that because of that, the so-called 20th hijacker from 9/11 will not -- will not go on trial. We'll have the latest.

And it could become the first bill President Obama signs into law -- and it's something the Democrats have been trying to make happen for a long time.

All that, Rick, and a lot more, coming up right here in "THE SITUATION ROOM".

SANCHEZ: All right. Thanks a lot, Wolf.

And we'll be checking the markets, as well.

It looks like the market is a little bit down today on Wall Street.

You want your Colbert?

You want your John Stewart?

Here it is.

(BEGIN VIDEO CLIP FROM "CHELSEA LATELY," COURTESY E! ENTERTAINMENT TELEVISION)

CHELSEA HANDLER, HOST: George Bush wants to -- he wants to allow an extra 15 minutes to explain himself. National prime time this Thursday, to say goodbye to the nation. He said when I get out of here, I'm getting off the stage. I've had my time in the klieg lights. It's like no one's asking you to stay. Don't worry about it.

(LAUGHTER)

HANDLER: And he's like it's my time on the stage. It's not a Broadway play.

You were the president, OK?

(LAUGHTER)

HANDLER: So that my -- my time in the lights is over. You're not Katie Holmes.

(LAUGHTER)

(END VIDEO CLIP)

(BEGIN VIDEO CLIP FROM "THE DAILY SHOW WITH JON STEWART," COURTESY COMEDY CENTRAL)

(BEGIN VIDEO CLIP)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: Any disappointments?

Not having weapons of mass destruction was a significant disappointment.

(END VIDEO CLIP)

JON STEWART, HOST: No. No. No.

(LAUGHTER)

STEWART: Your TiVo not recording the "Project Runway" finale. That's a disappointment.

(LAUGHTER)

(BEGIN VIDEO CLIP)

BUSH: Abu Ghraib obviously was a huge disappointment.

(END VIDEO CLIP)

STEWART: No, no.

(LAUGHTER)

STEWART: These are not disappointments when the prize under your Diet Coke cap is a coupon for more Diet Coke, that is a disappointment.

(BEGIN VIDEO CLIP)

BUSH: And I am disappointed by the tone in Washington, D.C.

(END VIDEO CLIP)

STEWART: OK, I'll give you that one.

(LAUGHTER)

(END VIDEO CLIP)

(BEGIN VIDEO CLIP FROM "THE COLBERT REPORT," COURTESY COMEDY CENTRAL)

STEPHEN COLBERT, HOST: I'm finally feeling good about the Obama administration.

(APPLAUSE)

COLBERT: I, for one, like a lot of people, was afraid they would raise taxes. But apparently, Treasury secretary designate, Timothy Geithner, is so committed to lowering taxes, that he doesn't pay them.

(LAUGHTER)

COLBERT: Evidently, Geithner didn't pay self-employment taxes while working for the International Monetary Fund.

Well, why should he pay taxes for that?

It's international.

(LAUGHTER)

COLBERT: The same reason I won't pay sales tax at I-Hop.

(LAUGHTER)

(END VIDEO CLIP)

SANCHEZ: Explained in one word the Madoff situation, by the word -- by many of our responders today -- travesty is what I read in front of me.

Wolf Blitzer is standing by now.

He is in "THE SITUATION ROOM".

BLITZER: Thanks, Rick.

Happening now, new remarks by Barack Obama about his Treasury secretary nominee's tax troubles. We're going to hear at length from the president-elect. Stand by. That's coming up.

Plus, the president-elect courtside -- he's reaching out to America's top justices and possibly thinking about their replacements.

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