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ERIN BURNETT OUTFRONT

Did Broadwell Reveal Classified Info?; Security Questions Over Petraeus Affair; Timing Of Resignation: Does It Add Up?; Fifty Days Until The Fiscal Cliff; Red Cross Sandy Response Under Attack

Aired November 12, 2012 - 19:00   ET

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


ERIN BURNETT, CNN ANCHOR: OUTFRONT next, the scandal that brought down CIA Director David Petraeus. We have new details about how FBI investigators stumbled upon his affair.

And is the timing of his resignation just days before he was to testify about Benghazi add up?

Plus, who is Paula Broadwell, the woman at the center of the scandal? Tonight, how she became so close with Petraeus along with the warning signs that something may have been wrong?

And an OUTFRONT investigation tonight into complaints the Red Cross is not doing enough to help victims of superstorm Sandy. Are donations getting to the people who need them? Let's go OUTFRONT.

Good evening, everyone. I'm Erin Burnett. OUTFRONT tonight, a risky affair. There are new questions about the affair that led CIA Director David Petraeus to resign and whether the affair actually posed a national security risk?

Here's what we can tell you right now. The affair came to light during an FBI investigation of so-called "jealous e-mails" sent by Paula Broadwell to a woman in Tampa named Jill Kelley.

A U.S. official confirms to CNN, Petraeus told Broadwell to stop sending harassing e-mails to Kelley, who along with her husband has known Petraeus and his family for more than five years. That couple met the four-star general when he was served as Cent Com commander and was stationed at Medil Air Force Base in Tampa.

A description of the e-mails from Broadwell to Kelly seems to validate what one long time friend of Petraeus tells us, that Petraeus felt Broadwell had shown a possessiveness toward him.

As to whether Broadwell gained any classified information during her affair with Petraeus, that's the big question and here's something we found. A speech she gave at the University of Denver on October 26. While she was under investigation by the FBI for those harassing e-mails, here's what it had to say.

(BEGIN VIDEO CLIP)

PAULA BROADWELL, AUTHOR, "ALL IN: THE EDUCATION OF GENERAL DAVID PETRAEUS": I don't know if a lot of you heard this, but the CIA had actually had taken a couple of Libyan militia members and they think that the attack on the consulate was an effort to try to get these prisoners back. It's still being vetted.

(END VIDEO CLIP)

BURNETT: It's still being vetted and knowing about those prisoners being there in the first place, wasn't something you heard about on the news. How did she know?

Suzanne Kelly is our intelligence correspondent. And Suzanne, I know you've been reporting on this throughout the day. What are the concerns that Broadwell had or has classified information?

SUZANNE KELLY, CNN INTELLIGENCE CORRESPONDENT: Right, well, something like you just showed, Erin, it's a perfect example of the problem with someone who has such a close relationship with the director of the CIA.

You don't really know what her source is on something like that and what she said about the CIA holding prisoners in Benghazi and that prompted the attack there that led to the death of Ambassador Stevens, that's really a bombshell revelation right there.

And so you have to wonder, is she getting that information directly from Petraeus because she has better access to him than many journalist do or is it coming from somewhere else?

That's the real nature of the problem with the entire relationship and the entire affair is trying to figure out where information was coming from and that was one of the things that the FBI focused on early on in their investigation.

Did she have classified information that she shouldn't have had and was it inappropriate? And they ultimately found that she did not have information that would have warranted any legal action.

BURNETT: And when Paula, you know her and spoke with her, she told you she was writing another book about David Petraeus. And obviously what she was known for was the one book she wrote with the co-author about General David Petraeus? What did you think when she told you she was writing a second book about him?

KELLY: Well, we spoke at the security forum over the summer and she's very open about talking about her relationship with General Petraeus in terms of the access that she had.

The first book she had written and very much looking forward to writing the second book, which would be a larger story about General Petraeus' legacy. And we know from people who have worked closely with him in the past, that his legacy was always something that was very important to him.

BURNETT: And what do you know do you know about David Petraeus' relationship with Jill Kelley, the other woman here. The woman, I guess, who in a sense started all this because of what had been called harassing e-mails sent by Paula Broadwell to her, to Jill Kelley. KELLY: Right. It's a really interesting twist in the story, Erin. The nature of that relationship appears to be a family friend. Now a government source says that Kelley has been known to be on the Washington social circuit.

It's possible they had socialized here. The source though has not spoken to Kelly, but say that friends are describing her as feeling like she's sort of an innocent victim in all of this.

And that a friend of Petraeus' who spoke with him throughout the weekend and also today, Erin, says that the general, the retired general has assisted to his friends who have reached out to offer him support that he only had one affair. There was only one other woman.

BURNETT: All right, well, Suzanne is going to stay with us and let's tackle the big question tonight. Who knew who and when about the Petraeus affair and does the timing of his resignation add up?

Here's what we do know. In the early summer, the FBI began an investigation. By the late summer, high level official at the FBI and the Justice Department were notified that investigators uncovered what appeared to be an affair between Petraeus and Broadwell.

Now, according to the "Wall Street Journal," Attorney General Eric Holder is among those who were informed. Now, October 21st through November 3rd, that's the first time FBI agents interviewed both Broadwell and Petraeus.

Then on October 31st, an FBI agent who is a friend of Jill Kelly, the woman Suzanne was just referring to alerted House Majority Leader Eric Cantor's office. Eric Cantor passed on the concerns to FBI Director Robert Mueller.

Now, on November 2nd, the FBI said there's no evidence that Petraeus committed a crime and they rule out charges, then it is Election Day when the president's director of National Intelligence, James Clapper is first informed of the investigation. That was at 5:00 Eastern Standard Time.

Clapper called Petraeus that night and advised him to resign. It wasn't until after the election, November 8th, that the president was actually notified and on November 9th, of course, Friday, he accepted Petraues' resignation after sitting on it for a day.

House and Senate intelligence leaders are then informed. Suzanne Kelly stays with us. Bob Baer also joins us, former CIA operative and CNN contributor.

Bob, let me ask you about this FBI investigation. It began in the early summer. The president though apparently was only informed after the election. His director of National Intelligence only informed at 5:00 on Election Day.

Congressional leaders on the intelligence committees were informed even after the resignation. Defense Secretary Leon Panetta was asked today about whether Capitol Hill should have been notified sooner and more involved.

And he said, I just want to quote him, Bob, "that's another issue we ought to look at because as former director of the CIA and having worked closely with the intelligence committees, you know I believe there is a responsibility to make sure they're informed." Did the FBI handle this right?

BOB BAER, CNN CONTRIBUTOR: No. Somebody dropped the ball and I don't know who it was obviously. You never blind side the president. When a senior official in his administration under investigation when e-mails are being read, you inform the White House at a very high level.

The national security adviser, his council even the president himself. You always do that. It's a standing protocol inside the federal government, never blind side the president. And as far as I've seen this president was blindsided.

BURNETT: And do you think part of it had to do with the fact that it was Petraeus who was involved, you know, given the -- his reputation and how many people looked up to him, admired him, the cult of Petraeus as it's been called?

BAER: It was there, but the FBI hates these sorts of things. They don't like to look into affairs. They don't like to -- you know, they like to deal in crimes that they can define and in this case, there wasn't a crime.

Suzanne was absolutely right. When they first saw this, they said, my, stuff is getting leaked out. This woman is out there talking, quoting Petraeus in Denver, by the way, saying that if you look at the rest of the transcript.

It says, you know, David Petraeus can't go to the press, but -- so they were probably very worried at that time, what did she know and what was she is going to say. So they went on the investigation, went ahead with it, but they did not inform the White House as it's been reported, which is a huge mistake.

BURNETT: And Suzanne, it sounds like when we were talking about what happened in Denver when Paula Broadwell was referring to Libyans being held in Libya for the Benghazi attacks, I mean, it's possible, right, that she may have had classified information. Still, we don't know.

KELLY: Right, I should also note to you that an intelligence official told us today, just adamant about that being false information. It would be a really big deal, Erin, because the CIA is not really allowed to detain people anymore.

They lost that privilege in 2009, so to say that the CIA is holding three people prisoner and that launched the attack is pretty huge. I mean, it's not like you're just going out there and saying the general likes to run every day. I mean, these are really potentially explosive things.

BURNETT: Bob, what about -- go ahead.

BAER: I'd like to add is that, you know, we have to parse this. The CIA, it does not hold prisoners, but that compound in Benghazi was more than the CIA. There were several contracting groups, the Pentagon.

There was a military unit in the area at the time. It was not Delta Forces as reported, but there was a military unit. I've been assured they did not hold prisoners. Maybe the Libyans picked him up an accused people at the consulate -- we just don't know. We don't have the details.

BURNETT: Bob, are we not going to get answers on the Benghazi investigation because of this, because he is not testifying now? I know some want him to, but --

BAER: You know, Erin, why would the CIA have a fire base in Benghazi, Libya? Why was it not better protected? Why did we not know that whole base was ringed by al Qaeda related militias? You know we're just not getting answers.

And why did this investigation start in the first place because a harassment complaint to the FBI is -- it just never goes in any way unless it's co-married with another piece of information. And we don't have what that other piece of information is. It's sensitive and that's why we're asking so many questions.

BURNETT: And we're going to keep asking them until we get some answers. And Bob, thank you very much for taking the time and Suzanne as well.

Still to come, we have more on the Petraeus scandal. Just who is Paula Broadwell that goes to the heart of this question about what she knew and how it matters? How did she get so close to the director of the CIA?

Plus, an OUTFRONT investigation tonight into the Red Cross response to Sandy. Are the millions of dollars donated to the charity, the ones every time you go online, you see donate to the Red Cross. Are they getting to victims of the storm?

And how will the president and Congress avoid the fiscal cliff. Erskine Bowles, yes, he is the Bowles in Simpson-Bowles. He's OUTFRONT next. He comes out swinging.

(COMMERCIAL BREAK)

BURNETT: Our second story OUTFRONT, 50 days until we fall off the fiscal cliff unless Washington acts. While both parties claimed to be optimistic about a deal to avert the end of the year combination of an increase in tax rates and an across the board slash in spending, neither side has been very specific on how exactly they'll get it done.

Now, we do know there are a lot of meetings scheduled. Tomorrow, the president will be meeting with leaders from the labor community. Wednesday, leaders from the business community and then Friday, there's a bipartisan meeting at the White House with Senate Majority Leader Harry Reid, Minority Leader Mitch McConnell, House Speaker John Boehner and Minority Leader Nancy Pelosi.

So, will we get a deal? One man getting a lot of attention as the fiscal cliff looms is Erskine Bowles who along with former Senator Alan Simpson created the Simpson-Bowles plan on deficit reduction.

I have to start by asking you, Erskine, did you ever think your name would be part of pop culture? I mean, you are the Bowles in Simpson-Bowles.

ERSKINE BOWLES, CO-CHAIR, NATIONAL COMMISSION ON FISCAL RESPONSIBILITY AND REFORM: It's better than being -- you know, Alan always says it's better being Simpson-Bowles than Bowles-Simpson, since everything is known by its initials here in Washington.

BURNETT: So, when you talk about things -- people call them sacred cows, untouchables, whatever the word might be, in your initial Simpson Bowles proposal, the proposal that Paul Ryan decided not to back, the proposal that Barack Obama decided not to back.

You had an increase in the federal gasoline tax of 15 cents a gallon, you had caps on mortgage interest deduction, which of course is a very popular one, charitable donations and retirement contributions. These were all tough choices that you made.

You also increased the eligibility age for things like Medicare and Social Security. You reduced benefits for wealthier seniors. Some of those things I've heard Democrats and Republicans say they agree on. Others -- gosh, they loathe them. Is there anything that should be untouchable?

BOWLES: You know, I don't think so. The problem's real, the solutions are all painful. There's no easy way out. You know, we've got to come up with at least $4 trillion of deficit reduction.

And that's not the maximum amount we need to do, it's not even the ideal amount. It's the minimum amount we need to reduce the deficit in order to stabilize the debt and get it on a downward path, as a percent of GDP.

BURNETT: It's interesting you say it that way, because you said it's not the maximum, it's barely even the minimum. Bill Gross from Pimco was saying to me, look, I think it's 16 trillion is what we need to do, which was not to be negative about your plan, but just to say, people who think your plan is tough -- your plan is getting us started on this path. It's not solving everything.

BOWLES: Absolutely. He's 100 percent right. I don't know if 16's the number, but I'd be a lot happier at 5 or 6 trillion, because I think that's what we really need in order to solve this problem long-term.

BURNETT: So why do you think we can get this done now, when for two years it's been failure? BOWLES: Erin, I think this is truly the magic moment. We've got a second-term Democratic president who is willing to put entitlements op the table. We've got a Republican speaker who really gets it, who understands the dangers we face and is willing to put revenue on the table.

We've probably got as many as 50 members in the Senate, equal number of Republicans and Democrats who are for a balanced plan. But most importantly, what we have, we have this fiscal cliff, this crisis, which really will create chaos if we go over the fiscal cliff and we don't immediately get a deal thereafter. I'm really worried about that.

BURNETT: That brings me to something Paul Krugman wrote to the president on Friday in his op-ed. The title was, "Let's Not Make a Deal." And what the comment was, "Nothing very bad will happen with the economy if agreement isn't reached until a few weeks or a few months into 2013. So there's time to bargain.

A stalemate would hurt Republican backers, corporate donors in particular, every bit as much as it hurts the rest of the country. As the risk of severe economic damage grew, Republicans would face intense pressure to cut a deal after all." A few weeks -- a few months into next year?

BOWLES: I think that's crazy. You know, why would you bet the country, really bet the country by going over this fiscal cliff? If we go over this fiscal cliff, you'll see another 2 million people lose their jobs.

You'll see the unemployment rate go up to, let's say 9 percent, and you'll see the rate of growth slowed anywhere from 3 to 4 percent, which is enough to put us back in recession.

Now, we could go over the cliff and immediately get a deal -- that would be OK. But if we go over the cliff and don't get a deal, really right away, I think you're going to really create an enormous problem.

BURNETT: Now, on revenue -- I want to try and understand where you sit on this, and I know, as part of plan, you assumed the Bush tax cuts rates would go up, you also assumed that loopholes would close.

But let me ask you this, is there room for compromise around how we define revenue, that if you were to close a lot of loopholes affecting the wealthy, but not increase the tax rates, would that be a deal that you think could be struck or no?

BOWLES: Yes. I think it should be. What we should be concerned about is, for revenue and making sure the revenue comes from the right sources, it comes from people at the upper ends of the tax bracket.

And I think you can do that. You could do it either by raising rates, or you can do it by broadening the base and simplifying the code and wiping out these tax expenditures, particularly those that go to upper income individuals. BURNETT: And a final question to you, sir: Tim Geithner is leaving as Treasury secretary at the end of the year. Your name obviously has been floated ferociously and furiously. Would you like that job, if you had to do it?

BOWLES: Well, if they'll move the Treasury to Charlotte, I would. Otherwise, I think I'm going to stay at home.

BURNETT: That's the thing -- they'd have to move your domicile?

BOWLES: I'd have to leave Charlotte, and I don't want to leave Charlotte. I've been married 42 years. I've lived in the same town as my wife for 22. I think it's time for me to stay home for a while.

BURNETT: All right, well thank you very much. We appreciate it.

BOWLES: Thank you so much. Good to talk to you.

BURNETT: A man unafraid to mince words and say what he thinks. We need people like that.

OUTFROND next, the Red Cross receiving millions of dollars to help the victims of Sandy, but is relief getting to those who need it? An OUTFRONT investigation is next.

Plus, how those around Petraeus suspected something more was going on between him and his biographer. The warning signs coming up.

(COMMERCIAL BREAK)

BURNETT: Our third story OUTFRONT, the Red Cross under attack. America's largest private relief organization is facing growing criticism for its response to Sandy. Despite raising more than $100 million for Sandy victims, many across the northeast are still reeling and asking why.

We asked Susan Candiotti to take a look and follow the millions and millions in donations pouring into the Red Cross for Sandy relief.

(BEGIN VIDEOTAPE)

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): As the storm clean-up began, the man in charge of the besieged borough of Staten Island said he'd had enough with the American Red Cross.

WILLIAM MOLINARO, STATEN ISLAND BOROUGH PRESIDENT: All these people making these big salaries should be out there on the front lines. I am disappointed. My advice to the people of Staten Island, do not go to the American Red Cross.

CANDIOTTI: William Molinaro is outrage lasted only one day. He backed off his criticism soon telling CNN that all was just fine.

MOLINARO: It was killing me. I spoke out.

CANDIOTTI: But Molinaro's outburst it turns out wasn't the only assault on the Red Cross, a private charity that's considered the gold standard in American disaster relief. Some old questions are being asked again about what happens to all the money donated to the Red Cross by generous Americans.

UNIDENTIFIED MALE: At the end of the day, there is little oversight in this whole system.

CANDIOTTI: Ben Smilowitz heads a watchdog group called "The Disaster Accountability Project." Red Cross executive salaries he says are very high and they're tax filings prove it. Its CEO receives over $500,000 annually and its top 11 executives get pay packages that begin at $275,000 a year.

BEN SMILOWITZ, DISASTER ACCOUNTABILITY.ORG: You've got an organization that's in fundraising mode. They're run by their PR operation right now. They're putting on their best face. They don't want to invite scrutiny.

UNIDENTIFIED FEMALE: Teaming up with the American Red Cross --

CANDIOTTI: All those telethons on ABC and on NBC have helped raise nearly $120 million in donations for Sandy relief and corporate commitments already pledged will elevate that total to nearly a quarter of a billion dollars according to Smilowitz. Money the Red Cross says will be spent on the ground.

SUZY DEFRANCIS, AMERICAN RED CROSS: We understand that people get frustrated, we understand the criticisms. We know where they're coming from, but by and large what most people say to us is thank you.

CANDIOTTI: Charity ratings organizations give the Red Cross high marks. On the ground, it's all about visibility.

(on camera): Right here in the disaster zone, there are questions as well about the Red Cross and it effectiveness, are there enough volunteers? Did they send out enough food trucks? Where can you find them? How can you find them?

(voice-over): We found mixed reviews. This woman says the Red Cross has been superb.

DEBORAH GIBSON, SANDY VICTIM: They're out here every day. They're easily to find. You don't have to go looking and searching. You know they're here.

CANDIOTTI: For a church group organizer also helping victims, a different take.

(on camera): Steve, as you drive around donating supplies, how much of a Red Cross presence have you seen?

STEVE APONTE, CHURCH OF CHRIST MINISTRIES: Very little. I've been talking to a few of them and they're telling us that they're trying to get as many people out, but they're stretched very thin.

CANDIOTTI (voice-over): The Red Cross is a huge institution and its leaders say Sandy will cost the organization $100 million by the time all the numbers are in.

In its appeals for Sandy, the Red Cross insists every penny goes to storm victims, yet on its web site, the Red Cross says only that donations will go towards storms like Sandy. Susan Candiotti, CNN, for OUTFRONT.

(END VIDEOTAPE)

BURNETT: Let us know what you think of Susan's excellent reporting. More to come on Sandy on the second half of OUTFRONT.

Today, I went out to the Rockaways, one of the hardest hit areas. We're going to show you what we saw there.

Plus at the center of the David Petraeus scandal, who is Paula Broadwell? How did the two meet and how did she get so close to the director of the CIA?

(COMMERCIAL BREAK)

BURNETT: We start the second half of our show with stories we care about, where we focus on our reporting from the front lines.

And we start with Iran's English language press TV. They are saying the country is conducting a series of military drills. The report says 8,000 troops will be involved.

Professor Anthony Cordesman of CSIS tells us these defense exercises tend to be exaggerated and rather rehearsed. He says it's more of an exercise in communication between the revolutionary guard and other military units. The drills come after Iran fired an unmanned drone earlier this month.

Well, it's been nearly a week since Americans went to the polls and, hey, the world's strongest democracy, some races though we don't know who won.

This is how the race currently stands. For the House, 196 Democrats and 234 Republicans. Five races we still say are too close to call. Democrats do have a narrow lead in all of them right now, though. One of them is for Florida's 18th district where Democratic challenger Patrick Murphy declared a victory over Republican incumbent Allen West. West has conceded and is pursuing legal action.

Well, a couple of weeks ago, you may recall we told you about a company Ameridose. They are recalling all their products because the FDA had concerns about the sterility of the company's testing process. Well, today, we know what the FDA found during those inspections. Insects within 10 feet of where sterile products were manufactured, walls that were cracked and corroded and areas where sterile drugs are prepared, and a bird flying in a building where sterile products are stored.

Ameridose was inspected because it's a sister company to the New England Compounding Center. That's the pharmacy whose steroid injections have been link to the fungal meningitis outbreak that's killed 32 people.

Well, the International Energy Agency says the United States -- are you ready for this, everyone? Sit down. The United States could pass Saudi Arabia to become a world's largest oil producer by 2020. That is pretty incredible, everybody. The agency says 10 years after that, the United States could be a net oil exporter. That means we export even more than we're getting out of the ground. That's also something that's incredible. But yes, pigs are flying.

And here's the thing, right now, if you want to export U.S. crude oil, it's actually really hard to do. You have to cut through a lot of red tape. Washington does not make it easy to export any energy from the United States no matter how lucrative it could be.

We spoke to Jamie Webster of PFC Energy. He says this will be an issue for the oil markets within the next 18 months. He says, right now, you're already starting to see pressure from sellers who want to export to places like Canada. And he says pressure will increase as we see light sweet crude inventories grow.

Well, all that money could help with this problem. It's been 466 days since the U.S. lost its top credit rating. What are we doing to get it back?

Exporting energy would help. So would a deal to keep us from falling over the fiscal cliff, much more imminently crucial.

Erskine Bowles told me earlier that this is truly the magic moment to make a deal, Congress. Let's get it done.

And now, our fourth story OUTFRONT: the woman behind the resignation of General David Petraeus. Tonight, there are growing questions about Paula Broadwell, the 40-year-old biographer of General Petraeus.

CNN has learned the affair started two months after Petraeus took over the CIA, back in September of 2011 and it ended about four months ago.

OUTFRONT tonight, Pentagon Chris Lawrence on who she is, the woman at the heart of this investigation.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): Holly Petraeus and Paula Broadwell were separated by just five seats at David Petraeus' confirmation hearing to become CIA director. The affair wouldn't begin for another couple of months, but the attraction was there.

A long time friend of Petraeus says years in the war zone had left him isolated. Petraeus didn't have anyone on his level he could talk to candidly. So when Paula Broadwell came along, quote, "He enjoyed her company. She was an attractive gal and they had things in common." But the friend tells CNN, after the affair destroyed Petraeus' career, he reflected on the relationship and Petraeus came the realize Broadwell may have been obsessed and perhaps felt she was warding off the competition and sending e-mails to Petraeus family friend, Jill Kelley.

PAULA BROADWELL, PETRAEUS BIOGRAPHER: I'm not in love with David Petraeus.

LAWRENCE: Broadwell is a West Point grad like Petraeus. She's appeared often on CNN, including several times on this program discussing security issues.

BROADWELL: Well, sure, it's probably a signal, Erin, that we do have visibility on what's going on on the ground there.

LAWRENCE: Petraeus cultivated smart, competitive people around him.

In high school, Paula Broadwell was student council president and valedictorian, a homecoming queen who would later compete in the Ironman triathlon and earn a PhD from Harvard.

Petraeus and Broadwell started running together when he was stationed in Florida, running U.S. Central Command. She went to Afghanistan when he took over the war and some close Petraeus staffers couldn't understand why she got such unprecedented access.

But ISAF headquarters is a cramped cluster of compartments where Petraeus had little to no privacy. And officials say nothing inappropriate happened while Petraeus was still in uniform.

(on camera): Sources tell us that Paula Broadwell was here in Washington celebrating her birthday with friends and family when all of this news broke wide open at the end of last week. In fact, one of the last postings on her Twitter account is retweeting one of the rules of leadership by David Petraeus.

Chris Lawrence, CNN, the Pentagon.

(END VIDEOTAPE)

BURNETT: And I want to bring in three reporters who have been looking into the relationship between Paula Broadwell and General David Petraeus.

Fred Kaplan, he's "Slate's" "War Stories" columnist and author of the upcoming book, "The Insurgents: David Petraeus and the Plot to Change the American Way of War."

Spencer Ackerman is also OUTFRONT. He's senior writer for "Wired", who covers the FBI and national security matters for the "Danger Zone" blog.

And, Eli Lake, senior national reporter for "Newsweek" and "The Daily Beast." Great to have all of you with us.

I just want to alert all of you -- and, Spencer, I'll start with you -- of a "Washington Post" has just posted an op-ed by Vernon Loeb, who co-authored the book with Paul Broadwell, "All In". The first sentence, "My wife says I'm the most coolest person in America." He says he had no idea about the affair even though he worked with her on this book for 16 months.

What are you hearing now about when and how this started?

SPENCER ACKERMAN, SENIOR REPORTER, WIRED: I'm hearing a lot of what Chris mentioned in the lead in. A lot of people close to Petraeus for a long time have found it strange that Paula Broadwell got to amount of access compared to her relatively thin journalistic resume. But none really thought or at least were talking at the time, that there was an inappropriate relationship there. At the same time, when the announcement came he was resigning and admitting to an inappropriate relationship, it seemed to ricochet really quickly across people who were in Petraeus' circle that it was probably Ms. Broadwell.

BURNETT: Fred, Vernon Loeb writes there was no protege more ardent than Broadwell. He talks about himself. He had only one contact with Petraeus. She had all the contact for the book.

They had a lot in common.

FRED KAPLAN, SLATE'S "WAR STORIES" COLUMNIST: Well, you know, Paula Broadwell has said that they met when she was in grad school at Harvard and Petraeus came to give a talk and she approached him afterwards, expressing great interest, wanting to talk about him more about the subject.

You know, if Paula Broadwell had been the dowdiest young man that could possibly imagine, Petraeus would have been interested in cultivating a person without C.V. as a possible protege. He was very much into mentoring. He came out of a tradition that social science department at West Point which cultivated mentor relationships with young men, which found new things, positions for them to have.

So it was not at all surprising that he found her attractive in that sense, initially.

BURNETT: And what is your understanding as to when this started? Obviously, it's very crucial for viewers who aren't aware, whether it started before or after he was at the CIA. Before, it's really not -- it's against the law in the military for him to have had an affair. At the CIA, it would be different. So, there are different legal ramifications as to when it started.

KAPLAN: Yes, that's true. And that may be one reason why some of his friends are so adamant that it was after.

I do know that there were a lot of people in Kabul, as Spencer just said, who were kind of disturbed at the kind of access that she was getting, and how she was traveling around with him a lot, going on early morning jogs with him a lot, being brought into meetings that even though -- listen, Petraeus got along with reporters. He liked cultivating reporters.

BURNETT: He did with all of us. He made us all feel special. How quickly he would respond to e-mails. Yes.

KAPLAN: Yes, first, he liked them, I guess.

BURNETT: Yes.

KAPLAN: But, second, he saw it as information operations. In military terms, this was to get the message out. But she was being treated on a level a little bit different.

BURNETT: And, Eli, what is your understanding as to the security risk? Because that's the big question here about this FBI investigation and we were talking about how the University of Denver, she was recently speaking about how there could have been Libyans held prisoner in Benghazi related to the Benghazi attacks, something that no one else had talked about. If true, could have been classified inappropriate and a violation.

What's your understanding as to what she might have known?

ELI LAKE, NEWSWEEK/DAILY BEAST: The CIA denies that claim, but the rest of that speech, she does speak as if she is almost speaking for David Petraeus. And at times, kind of acting as a government official would, confirming things that were in press reports, discussing sensitive details. At the very end of her answer on Benghazi, she says as a former military intelligence official -- officer, I'm saddened to see so many sources and methods disclosed in that sense.

So one thing that always happens when you're looking at an investigation, kind of post-mortem after something like this, is that there is a process, an audit, if you will, at the CIA, to determine whether any classified information was inappropriately disclosed. And if there were lots of conversations with Paula Broadwell, she may have had the clearances to hear that, but if she shares that information with the public, then it would present a bunch of problems.

BURNETT: Right. That's a fair point.

And, Spencer, in terms of when this started, that crucial question, you write about an incident at a wedding.

ACKERMAN: It seems that at a wedding of some prominent aides to Petraeus, there was some concern -- I should say also former aide to Petraeus and people sort of in that circle -- there was some concern about the propriety of their relationship. There was some concern about some seeming closeness between the two of them.

Yet, it's difficult to find people who thought this was in fact something more than what it appeared like, like the close mentoring relationship that Fred described. And as Eli is talking about, an absolutely crucial question going forward is what information even if she's acting like an unofficial conduit for Petraeus, who she mentioned can't speak publicly as head of the CI, might also have been passed to her.

BURNETT: Yes.

ACKERMAN: At what point do people involved in that investigation as we found have since gone to Congress and been motivated with that concern.

BURNETT: All right. Well, thanks very much to all three of you. So many questions and these are the three reporters answering so many of them. We appreciate your time.

OUTFRONT next: flood waters take over Venice. Tonight, the majority of the Italian city is under water.

Plus, the long recovery from Sandy. Today, I spent the day on the Rockaways, a neighborhood in Queens where half the people live under poverty and have been wiped out by the storm that hit two weeks ago.

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UNIDENTIFIED MALE: We need help.

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BURNETT: We're back with tonight's "Outer Circle" where we reach out to our sources around the world.

And we go to Venice tonight, where nearly three quarters f the city is under water after being hit by storms and flooding.

"Reuters" reports high water reached five feet. That's the sixth highest level in 140 years. I asked Atika Shubert how people are faring.

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ATIKA SHUBERT, CNN CORRESPONDENT: Well, Erin, the canals of Venice make it one of the most romantic cities in the world, but also one of the wettest. Take a look at these pictures. About 70 percent of the city is reportedly under water after it was battered by storms and the water levels rose by more than five feet more than normal. In fact, tourists were seen literally swimming in some of the city's most famous piazzas. And wooden walkways had to be built to help get around the city.

And unfortunately, it's not just the problem of rainfall. The city is actually sinking by about two millimeters a year. And it's become such a chronic problem that locals have a special word for it -- "acqua alta", which means high water, Erin.

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BURNETT: Thanks very much to Atika. And now, let's check in with Anderson with a look at what's coming up ahead on "360".

Hey, Anderson.

ANDERSON COOPER, CNN ANCHOR: Hey, Erin.

Yes, we're keeping them honest tonight on the program, who knew what and most importantly tonight, when did they know it? FBI officials reportedly knew for months about the affair between the CIA Director David Petraeus and his biographer Paula Broadwell. The president wasn't told, neither were congressional leaders, until after Election Day. We're trying to look for answers tonight.

New York Congressman Peter King is, too. He'll be joining us. We'll also speak with retired Army Colonel Steven Boylan, who was General Petraeus' spokesman in Iraq and has spoken with Petraeus since the scandal broke.

Also ahead tonight, a full two weeks after superstorm Sandy leveled part of the East Coast, there are still 60,000 people without power in New York. Sixty thousand people have spent the last 14 days with no electricity, no heat, some without phone service, others without running water. It's pretty unthinkable.

One group that opened its doors to help those most in need, St. John's Episcopal in the Rockaways, they may now be out millions of dollars for doing the right thing. That's unthinkable as well.

Those stories, and, of course, we remember Veterans Day tonight -- Erin.

BURNETT: All right. Anderson, thank you very much.

And our fifth story OUTFRONT: still in the dark. You know, as flights come in from around the world full of people going to the bright lights of Manhattan to JFK, that's the airport, they fly over a neighborhood where we were today, in the dark, landing in the midst of a community we saw desperate for help.

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NIA GARCON, STORM RELIEF WORKER: Milk, juices, cookies. There will always be a clothes drive. I will get to everyone.

BURNETT (voice-over): Each day, the line outside the thrift way in Far Rockaway forms early.

GARCON: There are elderly who cannot leave their homes. If you can get one to them, I would appreciate it.

BURNETT: People here wait for hours. Not for gas, but for food, water and clothing -- a wait that can sometimes be in vain.

LINDORE ADAMSON, STORM VICTIM: We've been out here for going on three hours now waiting for this truck that's supposed to have been coming here today at 11:00.

BURNETT: For 120,000 people, the Rockaway Peninsula is struggling as thousands are still without power, including stores, restaurants and banks. For those who live in a high-rise like this one, they have to walk up 20 flights of stairs. More than half the population lives below the poverty line here and most are just trying to get by.

Seventeen-year-old William Sampson waited more than three hours with his grandmother to get food for seven people.

(on camera): What are things you wish were different right now? The house, what's happening in the Rockaway?

WILLIAM SAMPSON, STORM VICTIM: I wish for everybody to come together, help each other out, bring supplies you're not needing to give to other people that's in need, help the disabled, help the elderly, just help anybody. Just come out and help.

BURNETT (voice-over): With no power, it isn't safe to go out after dark. But William says even the gangs have called a truce.

SAMPSON: Yes, they all called a truce. They are all actually helping out other people because there's nothing bad you can do in a storm right now. It's already bad as it is, so might as well just call a truce, come together, help out.

BURNETT: Verlin Ailene comes here five days a week to get supplies for her three grandchildren. They're all in wheelchairs with muscular dystrophy.

VERLIN AILENE, STORM VICTIM: My grandkids haven't been home yet because they're all in wheelchairs and they can't come home because we have no lights since the storm. We have no one to help us.

BURNETT: The task is daunting. Many small groups are cobbling together help, like this medical truck from Kansas. People like Nia Garcon who was here to help distribute up to 10,000 meals a day donated by a local food company and the Red Cross. Her energy seems bottomless and she has a reason.

GARCON: You never know. It could always be you. You know?

You just give back. It could be anybody.

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BURNETT: The people in the Rockaway Peninsula are a close-knit community. Local churches are really central to the communities there. Many churches were destroyed like St. John's Baptist Church and it's hard because of the separation of church and state. FEMA isn't allowed to help the churches and they're the bedrock of where people are turning for help.

Congressman Gregory Meeks was baptized at that church and I asked him and Pastor J.D. Williams how long it's going to take the community to recover.

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UNIDENTIFIED MALE: It's going to be a long time. This is a symbol of what it is. We are here at St. John's Baptist Church, and it's going to take this church, which is an institution in the community, a long time to get itself back on its feet. It was devastated by this storm. You just look inside and you'll see complete destruction. It's going to take months upon months upon months to get it back together again.

BURNETT: And Pastor, this is the largest church here on the peninsula.

PASTOR J.D. WILLIAMS, ST. JOHN BAPTISH CHURCH: On the peninsula. And we have 15 employees, we did. We have a day care, (INAUDIBLE) hand ministry. The church is open seven days a week, doing the weekdays from Monday to Friday from 6:00 until 6:00. And now these employees of our church are without a job. The bottom has been completely destroyed. Six feet of water destroyed --

BURNETT: This bus, right, this is your bus. Went all the way up into the actual bus?

WILLIAMS: The van, the air condition system is gone. The boiler system is gone.

Everything that's in the church on the lower level was under six feet of water.

BURNETT: So how are you going to get that back? How do you get that back? You don't have a wealthy congregation.

WILLIAMS: Well, we don't. I'm appealing to the ministers in our state convention and in our association. We are asking our congregation to go out and ask people for donations to restore our day care so that we can at some time in the future have the day care back in session again.

BURNETT: What will you do then?

WILLIAMS: A couple days, a mother came by the church. She wanted food. We had food here and supplies, and she said, "Pastor, can I just lay on the floor. I have a roof over my head." I said, "Well, it's cold here." She said, "But I don't have a home".

And that really touched me, and this is not just an isolated case. These are people like that that are desperate.

BURNETT: If you had to say what you need the most to have it not feel abandoned, not feel overlooked. What do you need?

WILLIAMS: Right now, we don't need any more food or water, per se. That's an abundant flow. We need now people to come in the community disaster relief, people to give directions. We need someone to find our parishioners. We need finances for the people, not only for the churches but for the people.

If there's jobs available for cleanup, we need to know where that is so we can direct some of the people in the neighborhood to these areas where they may possibly get some temporary employment. We need help.

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BURNETT: OUTFRONT next, a young man I met in the Rockaways with a plan.

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BURNETT: Today in the hard-hit area of the Rockaways, we met William Sampson. We introduced you to him a moment ago. He's 17 and was helping his grandmother get supplies, his grandmother. During our conversation, he talked a lot about the gangs that have taken ahold of his school and community and I asked him if he joined one.

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SAMPSON: I'm in no gang. I'm a good boy.

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BURNETT: And he has a good plan and we discussed that plan today.

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SAMPSON: I'm planning to go in the Marines first for computer analysis and (INAUDIBLE) in the military. But yes, after the military, after about 20 years, I'm going straight into like ITT tech for more computer -- advanced computer technology.

BURNETT: You're planning for the military and what's after the military.

SAMPSON: Yes.

BURNETT: What made you decide to go into the military?

SAMPSON: I see a lot of heroes out there doing amazing stuff for the country, so I want to be one of those heroes and do something good for the country. I want to be known out there as a hero. I want to be big out there.

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BURNETT: Amidst the loss and hardship that's so much greater in the Far Rockaways than wealthier areas affected by the storm, there's that boy, soon to be a man. William isn't bitter. He's a patriot with ambition and generosity and a dream that humbled us. And to celebrate Veterans Day, we honor William's dream.

Anderson starts now.