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Petraeus Sex Scandal; Why Romney and Ryan Lost

Aired November 13, 2012 - 20:00   ET


ANDERSON COOPER, CNN ANCHOR: Erin, thanks very much.

Good evening, everyone. We begin tonight, as we do every night, "Keeping Them Honest," looking for facts, not playing favorites, offering our opinions or pulling for Republicans or Democrats. You can get that on plenty of other cable channels. Just real reporting with one goal, to find the truth. We think that's -- there's value in that.

And we begin with breaking news and what the FBI was doing last night at Paula Broadwell's home. She is the woman who had the affair with General Petraeus. Details on that in a moment.

Also tonight, "Keeping Them Honest" on the new twist and turns in the Petraeus sex scandal. His affair with Broadwell led him to resigning as CIA director. You know that already. Now another four- star general, John Allen, is connected to the scandal.

We will also look at who's who in this growing scandal. We'll map out the key players and connect some of the dots. First, the big question tonight is who authorized the investigation which led to Petraeus' stepping down and why?

We know his extramarital affair was discovered when this woman, Jill Kelley, complained about anonymous and what might be considered mildly harassing e-mails. Well, new tonight, a source tells CNN that Kelley first mentioned the e-mails in a casual conversation with an FBI agent in May whom she knew. A casual conversation.

The source tells us the FBI agent said, let me check it out. The FBI has been on the case since then, and now Kelley finds herself in the middle of this drama.

New tonight, we hear her voice for the first time in a 911 call to Tampa police over the weekend. She called to complain about the people outside her house. Listen.


JILL KELLEY, FLORIDA SOCIAL LIAISON: You know, I don't know if by any chance -- because I'm an honorary council general so I have inviolability so I shouldn't -- they should not be able to cross my property. I don't know if you want to get diplomatic protection involved as well, but now, because that's against the law to cross my property because this is not, like, you know, it's inviolable. UNIDENTIFIED 911 DISPATCHER: All right. No problem. I will let the officers know.

KELLEY: Thank you.


COOPER: Honorary Diplomatic Council. Jill Kelley talking with Tampa police asking for diplomatic protection. That's not something she should expect. We'll dig into who Miss Kelley is in a moment. First, as I mentioned, there's a lot of twists and turns and a lot of people with ties to this scandal. Let's lay it all out for you right now.

Retired General David Petraeus resigned on Friday after admitting an affair. The other woman is, again, Paula Broadwell, who co-wrote his biography, the best-selling book, "All In: The Education of General Petraeus." This past spring, as we mentioned moments ago, Broadwell sent at the time anonymous harassing e-mails to Jill Kelley.

As I mentioned, Kelley talked to her FBI friend launching the investigation. Turns out the initial agent on the case, according to the "Wall Street Journal," was removed from the case when he reportedly became obsessed with the case and even sent shirtless photos of himself to Miss Kelley. It gets stranger. New today, we've learned Kelley also received some inappropriately flirtatious e-mails, self-described, from four-star Marine General John Allen. He denies an extramarital affair with Kelley and insists he did nothing wrong.

But the Pentagon is investigating thousands of documents and e- mails, some of them were apparently flirtatious. Turns out both Allen and Petraeus stepped in to help Kelley's twin sister, Natalie, in a custody battle with her ex-husband. Both generals wrote letters on the behalf of the sister.

Here's a photo of Petraeus with the twin sisters. Petraeus wrote to the court, quote, "We have on many occasions observed Natalie and her son, including when -- we hosted them in the Kelley family for Christmas dinner this past year. In each case we have seen a very loving relationship."

We removed the son's name, obviously, to protect his identity as a minor.

There you have it. Who's who in the scandal along with the latest twists and turns. There's a lot to discuss tonight.

Back to our breaking news, the FBI search last night. Agents spent about five hours at Paula Broadwell's North Carolina home, took away boxes full of documents and computers. We now have new details on why they were there.

Joining me now on the phone is CNN national security contributor, Fran Townsend, a member of the CIA's External Advisory Committee. Fran, as you know, recently visited Libya with her employer, MacAndrews and Forbes. Also with us, CNN intelligence correspondent Suzanne Kelly, George Washington University law professor Jonathan Turley, and CNN contributor and former CIA officer, Bob Baer.

So, Fran, I want to start with you. You're learning new information about what the FBI was doing at Broadwell's house last night.

FRAN TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Anderson, you'll remember yesterday as we watched over the course of this five hours in taking boxes out we wondered what in the world could that possibly be about. Well, a source tells me that Petraeus had designated, if you will, or sort of had Paula Broadwell be his archivist, the individual who collected and maintained all of his sort of historical documents that would be both backup for her book, but also, frankly, more broadly, her papers.

And that the FBI that -- had told Broadwell that they were interested in taking those documents, looking at that archive. We believe -- this source believed to see if there was any classified information in there, and so what we witnessed last night over the course of five hours and many boxes coming out was the removal from Paula Broadwell's home of David Petraeus' archive.

COOPER: Is that -- is any of that classified information?

TOWNSEND: We don't know, Anderson. And I think it's fair to say that's what the FBI is going to go through those documents to look for.

COOPER: Jonathan, this seems to have started out with Paula Broadwell reportedly jealous and e-mails another woman, Jill Kelley, who Broadwell seems to have thought was somehow a rival. Does it seem appropriate to you that the FBI would get involved at all in the first place? I mean aren't there civil liberties concerns here? Is it even just a local police matter?

JONATHAN TURLEY, LAW PROFESSOR, GEORGE WASHINGTON UNIVERSITY: Anderson, there are serious civil liberties concerns on how this started with an acquaintance who happened to be an FBI agent who appears to have launched a criminal investigation for someone that he knew. The concern for civil liberties is that the cybersearches occurred very, very quickly. They often use either national security letters or warrants that are obtained very easily, and they can -- they can expand very quickly.

Now my assumption is that this agent suggested that this might be what's called a Section 875 case, which involves an actual threat that's conveyed to the victim, or a -- a 223 case, which is more harassment often by an anonymous person so the agent would have had to have made some statements as to the basis of a federal crime, but the description that we're receiving sounds a lot like the type of chatter that you hear on Facebook.

I mean this is part of the concern with how generally written these laws are, particularly 223, where you would have a federal investigation and communications that are deemed annoying or harassing. And that's probably the most likely thing that the agent cited. COOPER: Yes, I mean, this is basically what Twitter is. I mean it's annoying and harassing things from people you don't know.

TURLEY: Right.

COOPER: Not everybody gets to launch an FBI investigation about it.

Bob, at some point we don't know when Paula Broadwell revealed details of private schedules of the generals of Central Command which have included General Petraeus. I guess that would raise immediate red flags, right?

ROBERT BAER, CNN CONTRIBUTOR: Look, there's undoubtedly something that could be, you know, interpreted as classified will come up in these e-mails, whether they actually crossed the line and violated the law, it's difficult to tell without seeing the e-mails. But what I can tell you is to push this investigation as fast as it was, the cybercrime bureau is very, very hard. You have to look at a lot of IP addresses. She was moving around.

This was not just done by one agent filing this. Somebody pushed it through and there's some other motivation here that we don't know what it is. And I can only speculate.

COOPER: So you're saying that a regular harassing e-mail, whatever, would not have generated this kind of investigation by the FBI.

BAER: I have been talking to people. It's a mill when they do these things and it can take years to actually run the IP addresses, go after the Google farm, retrieve the messages, find out where they were sent, the ISPs and the rest of it. So this was done very quickly and one brick agent, this FBI agent, we don't know his name, could not do it by himself. He might be able to file it but he couldn't -- he couldn't expedite it like this.

COOPER: Suzanne, where does the investigation stand now? I mean what do we still not know that investigators want to know?

SUZANNE KELLY, CNN INTELLIGENCE CORRESPONDENT: So much. They want to know what the FBI knew and when they knew it. Members of Congress are really clamoring to get some answers and they might get some tomorrow because the deputy director of the FBI, Sean Joyce, is going in for some closed meetings, individual meetings with a couple of members up on the hill.

And they're going to want to know exactly whether or not the FBI felt like this was a national security risk early on, and if they did, why didn't they brief the members of Congress as they should have done, and if they didn't, why was it that the FBI decided to go to the director of National Intelligence, Jim Clapper, on election night and tell him what was going on then. So there are going to be a lot of unanswered questions.

One point, though, Anderson, that I want to make, we were watching those boxes come out. You know, I spent some time with Paula Broadwell in Aspen over the summer at a national security forum, and she was telling me that she was writing a second book on General Petraeus and the two of them had been working on it and this was really meant to be the book that was his legacy so it's extremely possible, given that little nugget, that a lot of the information that she had was something that she had planned to use for the second book as well.

COOPER: Fran, do you -- do you think or do you have any knowledge of the stuff that was at Paula Broadwell's house, that that contributed to the ending of their relationship or --

TOWNSEND: No. The way it -- the way it was described to me, and it would not be surprising, Anderson, a prominent person of historical significance like David Petraeus would have all sorts of documents going back from his time, you know, when he was commanding in Iraq, commanding in Afghanistan, you know, and now at the CIA, and so it would not be surprising that he would have kept documents, that at some point when he left government he could go back and write a book of his own.

So I suspect some of it is supporting and historical documents from the time she wrote the first book, planning, as Suzanne suggested, background for the second book, and frankly, just historical documents that he wanted maintained and kept for the time when he left government.

COOPER: Jonathan, at this point, I mean, I keep trying to take a step back from this and try to think, is this just some salacious story or, I mean, is there real significance here, and I'm not sure I know the answer to this.


COOPER: At this point, what do you feel like you still want to know?

TURLEY: Well, right now, this is sort of a great tragedy without a redeeming character. I mean there's nobody that's looking particularly good but that doesn't mean that they look like felons. The way it looks to me, as a criminal defense attorney, is that there's no clear evidence of a crime. I'm surprised that this case went so far so fast, although I should note that the federal government follows a one-party consent rule so as long as you're someone like Kelley who is willing to turn over her e-mails, all of those e-mails can obviously be reviewed by the FBI.

But we still have to look very closely at some of these issues that are potentially criminal. One of them is the possession of classified information, the removal of classified information, the disclosure of classified information to a possibly unauthorized individual, all of those are classic issues for investigation. There are accounts that there were some documents that were still marked as classified. This is a city that's awash with those types of documents. Documents that are still marked secret, although people pretty much understand they're not. Well, if they're still marked secret they fall under these laws. So we're still left with that question. As someone that's in the practice in the field, I'll tell you that this is a troubling field because it's inconsistently applied. You often see the government coming down very heavily against journalists, whistleblowers, but then when someone like Sandy Berger, the former national security advisor, actually hid documents in his socks and took them out of a secure location, he ended up with just a simple misdemeanor so it's a very inconsistent field in terms of its applications.

COOPER: Bob, one of the things I don't get is Jill Kelley, who this person is. I mean she -- on that 911 call, she's describing herself as an honorary general counsel. She has connections to all these generals who are e-mailing her thousands of pages of e-mails, and you know, she throws a party that General Petraeus goes to, and now she's got a high-powered lawyer and a high-powered PR person.

BAER: Anderson, first of all, she doesn't have diplomatic immunity.

COOPER: Right. It makes no sense.

BAER: Honorary counsel. She's a little bit -- there's something wrong there. Number two is where did she get all the money to entertain these officers and for how long? The FBI has every reason to look at this as a potential counterintelligence case. She's foreign born. What are her connections? She claims Middle Eastern connections but doesn't specify. And she's -- you know, she's broke. I mean they're on the verge of bankruptcy and according to -- you know, public records, and who is she? Who does she represent? As a former CIA officer, if I wanted to get into the U.S. military, I'd go after somebody like that, what we call an access agent.

I am not at all saying that she is.

COOPER: Right. None of us --


BAER: Just that now that this has become -- not at all. I mean -- I don't see this going anywhere. I agree with Jonathan. I think there's going to be -- it's going to be a salacious series of affairs at the end of the day.

COOPER: That's what you think it boils down to?

BAER: And I doubt --


BAER: I think so, yes. I don't -- I just don't see any great crime here or maybe any crime at all. And I think this woman is probably innocent. She's aspiring to get into the, you know, an American -- into the American military for whatever reason. But you know, you still have to look at it, as you know, counterintelligence, you're guilty until proven innocent. That's just the way we approach things.

COOPER: It's fascinating. Fran, Suzanne, Jonathan, Bob, I appreciate all your joining us tonight.

Let us know what you think. Follow me on Twitter right now, @AndersonCooper.

Do you think there's more to this story? I'll be tweeting tonight as well.

Paul Ryan is sharing his thoughts on why he and Mitt Romney lost the election. You might be interested to hear his thoughts on why they lost

Liberal critics are slamming what he's saying. He says higher turnout made the difference. Is it really as simple as he's suggesting? We're "Keeping Them Honest."


COOPER: Welcome back. Another "Keeping Them Honest" report tonight. Mitt Romney's running mate, Paul Ryan, is making the interviews rounds, giving his take on why he thinks his ticket lost the election. Here's what he told a local television station in his hometown in Janesville, Wisconsin, which Romney lost to Obama.


UNIDENTIFIED REPORTER: The reports that you and Governor Romney and your wives were shocked by the results that were coming in. True?

REP. PAUL RYAN (R), FORMER VICE PRESIDENTIAL CANDIDATE: It is true. Yes, we -- the polling we had, the numbers we were looking at looked like we stood a pretty good chance of winning, and so when the numbers came in, you know, going the other direction, when we saw the kind of turnout that was occurring in urban areas which were really fairly unprecedented, it did come as a bit of a shock. So those are the tough kind of losses to have, the ones that catch you by surprise.


COOPER: Well, some critics jumped on those remarks and said historically urban has often been used as a code word for African- American voters. We can't say for sure what Ryan meant there. But "Keeping Them Honest" the Election Day picture was a bit more complicated than that. Turnout among African-American voters was up this year and turnout was up in some swing state cities but it was down in others.

And the president's win was not solely dependent on black or urban voters. He also won more than 7 in 10 Asian, the Latino voters, 6 in 10 young voters and 55 percent of women voters nationwide. What's more, white voters played a big role in the president's re- election. Although Romney easily won the white voters nationwide the picture isn't quite so clear-cut when you look at swing states. In Iowa, Wisconsin, New Hampshire, Colorado and Minnesota, President Obama did better among white voters than either John Kerry or Al Gore did. President Obama won in some key swing states with predominantly white voters. Many of them live in the suburbs or rural areas. Take Iowa, where white voters made up 93 percent of the electorate. More than half of those voters, 51 percent, backed President Obama to 47 percent for Romney.

It was the same breakdown in New Hampshire where white voters were also 93 percent of the electorate and 51 percent voted for President Obama. There's also the fact that many New Hampshire voters live in rural areas, yet President Obama won those rural voters by 16 points, 57-41 percent.

As all the numbers suggest, it's not quite as simple as Congressman Ryan suggests. Urban voters can't take all the credit for the president's win.

Joining me now is CNN contributor David Frum who has a lot to say about this. His new e-book is "Why Romney Lost." He joins me now along with CNN contributors Paul Begala and Alex Castellanos.

So Paul, liberals have been critical of Congressman Ryan's comments about urban areas. What do you think of it?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Well, I don't want to ascribe any sort of dog whistle to it.


BEGALA: Let's just actually use the nomenclature he did, which is geographic. He's just wrong. You know, he's flat-out wrong. And this is the odd thing, everybody said, well, Paul Ryan is a numbers guy. Well, no, he's not, because first off, if he was shocked that the president, a Democrat, did well in urban areas, he hasn't been following politics

let's just actually use the language he did, which is geographic. He's just wrong. He's flat out wrong. This is the odd thing, everybody said well, Paul Ryan's a numbers guy. Well, no, he's not, because first off, if he was shocked that the president, a Democrat, did well in urban areas, he hasn't been following politics for the last hundred years. But he also -- I looked up a couple of interesting counties that I like to look at. Dubuque, Iowa, very rural. They filmed the movie "Field of Dreams" there. Barack Obama won.

He won Henrico County, a very classic suburban county in Virginia which is the home of Eric Cantor, the Republican House majority leader, and in Wisconsin, get this, Barack Obama overwhelmingly won Rock County, Wisconsin, which -- whose biggest town is Janesville which is Paul Ryan's hometown and home county.

And I don't know, I have been there, actually, but, you know, I've walked the gritty streets of Janesville, it's not actually all that, you know, urban. And how can he be this dumb is the only question I've got.

COOPER: Alex, does Congressman Ryan's comments on turnout in cities miss the point on why he and Mitt Romney lost, do you think?




CASTELLANOS: It's ridiculous. Look, this is one of the keys you look at and we were all looking at election night. Was Barack Obama going to be able to get out the black vote to 2008 levels with the same intensity as he did for the first black president of the United States four years ago? Was he going to get out the Hispanic vote? Well, he got both of those not only to 2008 levels, he got the Hispanic vote higher.

You're looking at keys. Is he going to achieve that, and when he did, that frankly was a surprise to everyone. Look, if it's all right for the Obama campaign to take credit for it, it's probably fine for Paul Ryan to notice and I'll also point out that Paul Ryan is the Republican in the Romney campaign who said look, let's go campaign among black voters, even though they're not voting for us, because if we're -- if we're the Republican Party of opportunity for everybody, that's where we ought to be among the part of the economy that needs help the most.

COOPER: David, I want to ask you about something else the congressman said today. ABC asked him whether or not the president had a mandate. Here's what he had to say.


JONATHAN KARL, ABC NEWS: The president wins 300 some electoral votes, every battleground state with the exception of North Carolina. Does Barack Obama now have a mandate?

RYAN: I don't think so because they also re-elected the House Republicans, so whether people intended or not, we've got divided government. And so --

KARL: You don't think there's a mandate here?

RYAN: So I don't, because then they would have put Nancy Pelosi in charge of the House of Representatives.


COOPER: David, do you buy that? I mean Democrats gained in both the House and the Senate. The president won the popular vote, well over 300 electoral votes, and by big majorities, they told the exit pollsters they agree with the president's position on tax policy.

DAVID FRUM, CONTRIBUTOR, DAILY BEAST AND NEWSWEEK: Well, whether the president has a mandate is a matter of opinion. Whether he has power is a matter of fact. And this president now has enormous power, because of the expiry of all these various tax measures and because of the advent of the sequester.

He's in a situation where he's in a doomsday contest with the Republicans, but the doomsday bites Republican constituencies harder than it bites Democratic constituencies, and of course the president doesn't have to face re-election, so even if doomsday arrives he has less to fear from it than the Republicans do.

So he's in a very powerful position. And Republicans are going to have to be very savvy about how they play this.

I mean, to go back to your original question, about why -- what was the cause of the defeat, we're going to hear three main theories about what happened. One is going to be very technical that it was about turnout, it was about voter models, and the great thing about that theory is it allows the politicians to blame their consultants, the people with real power can fire the people they hired and get new people, and then nobody in any position of permanent importance in the party needs to bear any share of the blame.

The second theory will be to point the finger at the candidates. Mitt Romney could have been a more perfect candidate and probably he could have been a more perfect candidate. And since he's out of the picture again, it's not embarrassing to anybody to criticize him.

But the third possibility is there's a problem with message, and a problem with what the party was actually offering the voters, and nobody wants to consider that until they have to, because that raises the most difficult questions, but in my opinion, the most important questions.

COOPER: And, David, in the last week, I mean, among, you know, the GOP insiders, among the GOP, you know, talking -- chattering class on television, is there a -- kind of a looking inward? Is there a reassessment of their message, the way they got across their message, the kind of echo chamber that some of their broadcasts might have had?

FRUM: Well, for sure that people are now ready to say, you know what, all that stuff we were telling ourselves about the electoral college, that obviously doesn't stand up. We're beginning to hear a conversation about immigration. That's the easiest conversation for the Republican Party to have, because immigration, a different approach to immigration really doesn't impinge very much on the economic interest of the wealthiest and most powerful people in the Republican party.

In fact, it would be good for them. The costs would be borne by people much poorer than themselves.

The question is do we now have a more open conversation about why did the Republican Party not connect with the middle class. And you made that powerful point about how the Republicans did not do well with white middle class voters in swing states.

Well, if the Republican Party is not connecting with white middle class voters in swing states, it is out of business. Those are the people it must connect with, and what looks to have happened in places like Wisconsin and Ohio and Iowa was that people who voted Republican year after year, whose parents and grandparents had voted Republican, said what is this party offering me and didn't hear a good answer.

COOPER: Paul, when you hear Ryan saying that the president doesn't have a mandate -- I mean, I remember George Bush when he won re-election saying, you know, I've earned political capital and I can spend it now. Do you believe the president has a mandate?

BEGALA: Well, he's got a hell of a lot more of a mandate than Mitt Romney and Paul Ryan, doesn't he? I mean it just the worst person to say it. I mean, seriously, I don't -- Congressman Ryan's a family man and I know his mama raised him better than that.

The thing to do, I've gotten whipped and I've won. Winning is better.

When you get whipped, Congressman Ryan, you stand up and you take it like an adult. You say the other guys beat us, they were better, tougher, smarter. We'll come back next time and we'll reassess what we did wrong.

Instead, this oh, he doesn't have a mandate. George W. Bush in 2000 didn't even win the popular vote, most half Americans don't even believe he won the electoral vote. He only won a legal case that was decided by judges his father helped appoint. And yet he claimed a mandate and he did. He destroyed the surplus and waged two wars. And so if he can do that with getting fewer, with winning really only a Supreme Court case, then yes, I think Barack Obama has a mandate.

COOPER: We got to leave it there. Paul Begala, Alex Castellanos, David Frum, appreciate it.

Up next an update to a story we followed very closely here on 360. You might remember a guy named Andrew Shirvell. He lost his job as Michigan assistant attorney general due to his frankly bizarre campaign against a former student body president at the University of Michigan who was openly gay.

Now a judge has made a ruling in one part of the case. We wan to tell you about it ahead.


COOPER: Breaking news on the utility company under fire for its slow response to super storm Sandy. I'll have fallout when we continue.


COOPER: A "360" follow up tonight to a story we followed very closely here in 2010. It involves a man named Andrew Shirvell who was fired from his job as assistant attorney general in Michigan due to his actions against another young man, a man named Chris Armstrong. At that time, he was a student body president at the University of Michigan. Shirvell attacked Armstrong on a blog, posting photos of Armstrong with a Nazi swastika inside a gay flag.

Another that called him a racist elitist liar, all apparently because Armstrong was openly gay on campus. That's the only reason. I confronted Shirvell at the time.


COOPER: I got to ask you, I mean, you're a state official. This is a college student. What are you doing?

ANDREW SHIRVELL, FORMER MICHIGAN ASSISTANT ATTORNEY GENERAL: Well, Anderson, basically if you have been involved in political campaigns before, you know all sorts of stuff happens and this is just another tactic bringing awareness to what Chris really stands for.

COOPER: This is not some national figure. This is a guy who is running a student council.

SHIRVELL: Well, Anderson, as a private citizen and as a University of Michigan alum, I care because this is my university and I wasn't the only first person to criticize Chris.

In fact, long before I started the blog a couple of weeks before that, the Alliance Defense Fund, a well-known legal Christian foundation, put out an alert about Chris. So I'm not the only person that has criticized Chris and I'm not the first person to criticize Chris.

COOPER: But you are the only person running this blog, which is putting Nazi swastikas on this guy. You're a grown adult. Does that seem appropriate to you?

SHIRVELL: Like I said, this is a political campaign. This is nothing personal against Chris. I don't know Chris --

COOPER: What do you mean it's nothing personal? You're outside his house, videotaping his house, shouting him down at public events, calling him Satan's representative on the student council, attacking his parents, his friends' parents. You can't say it's not personal.

SHIRVELL: Well, Chris and any political campaign, you have to raise awareness and issues, and that's one way of doing it is by protesting.


COOPER: Political campaign. There was no political campaign going on. This guy just targeted this kid. Shirvell applied for unemployment after he was dismissed from his job at the end of 2010, but he was denied benefits by the State Unemployment Commission because he was fired for misconduct.

Shirvell sued and a Michigan judge recently ruled in his favor, writing in her opinion that Shirvell's, quote, "activities involving the blog as well as his political activities were all constitutionally protected freedom of speech. Accordingly, the commission's decision must be reversed."

Officials in Michigan want that decision changed. They claim Shirvell's activities disrupted the attorney general's office and therefore, was not protected speech. Text messages, calls made today to Andrew Shirvell were not returned.

We would always welcome him back. I'm joined by senior legal analyst, Jeffrey Toobin and by Deborah Gordon, attorney for Chris Armstrong.

Deborah, you're outraged that Shirvell was granted unemployment benefits. Basically, taxpayers are going to be paying his unemployment benefits. You say this judge looked at the case superficially. How so?

DEBORAH GORDON, ATTORNEY FOR CHRIS ARMSTRONG: Well, she made the statement in her opinion that the reason he's going to be getting the benefits is because his speech was protected by the first amendment. That's just absolutely false.

There is a huge disconnect between first amendment rights and intentionally defaming someone and I have a federal judge and I have a jury who have decided that this was not first amendment protected activity in any way, shape or form, that my client was defamed. I obtained a $4.5 million verdict a couple months ago against Mr. Shirvell.

COOPER: What's amazing about this, Deborah, it's not just this horrific blog he kept in which he said all this ridiculous things, which were completely false, he showed up at his house. He was videotaping late at night outside his house.

He was following this guy around and this isn't some huge public official. This is a guy who was on the student council of his college. Jeff, what do you make of this decision?

JEFFREY TOOBIN, CNN SENIOR ANALYST: Well, you know, this is actually not that complicated a legal issue. Under Michigan law, if you're fired for misconduct, from any job, you don't get unemployment compensation.

She, this judge, seems to have tortured the law in some way to get him unemployment compensation but remember he's raised the same argument every time. Don't fire me, freedom of speech. Don't award me damages because of my freedom of speech.

Give me unemployment compensation because I'm exercising my freedom of speech. Every time people have said it's not freedom of speech. This judge now seems to say it's freedom of speech, but I anticipate her decision will be overturned by a higher court.

COOPER: And I mean, how is the freedom of speech argument even made by the judge on this? TOOBIN: I mean, you can sort of see the broad outlines of it, which is that he's talking about controversial issues, you know, gay rights is a -- and you could say that that is the kind of thing we should encourage, debate about even if we disagree with it.

But that's not what happened here. This was much more targeted. This involved physical conduct, going to his office. It involved breaking rules at the office involving media appearances, including his appearance here on 360.

So this was not simply expressing opinions about gay rights as a political issue. It was targeted harassment for which he was fired, and that is misconduct and that means you don't get unemployment compensation.

COOPER: Deborah, has Shirvell ever apologized or expressed any sort of remorse for what he said about your client? I think I know the answer to this, but I got to ask.

GORDON: Absolutely not. We offered multiple times, multiple times, Anderson, before the trial began, even during the trial, to just drop everything if he would simply retract his ludicrous and ridiculous lies made against my client.

You know, every time he just dug in deeper and continued to go forward, and you know, as I said during the litigation, if you're not going to make it right, we'll just let the jury do that and they did, in a resounding fashion.

The jury was amazing. They listened to every bit of evidence, returned a resounding verdict larger than I asked for. It was a really diverse jury from all over Southeast Michigan. We talked to them afterward, Chris' family was there, I was there. They were in tears. The Armstrongs were in tears.

You know, the judge had already ruled this is not first amendment protected. So I agree with Jeffrey, I think quite clearly this judge is going to either reverse herself or she will be reversed.

You get the feeling reading her opinion she never laid eyes on the blog because once you lay eyes on the blog, it just screams out at you. It's 100 pages.

COOPER: It's beyond protected speech.

GORDON: absolutely. There's no possible way and that's the least of it.

COOPER: What's amazing to me, this was a public -- this was a guy working, you know, for the taxpayers and in his spare time, putting swastikas on students' faces and showing up at their homes videotaping them late at night.

TOOBIN: And the question you have to ask is why have so many public officials bent over backwards to try to accommodate Shirvell? Remember, the former attorney general tried to keep him employed and now you have this judge. It raises the question of whether they weren't as appalled as they should have been by what he was saying.

COOPER: We'll continue to follow it. Deborah Gordon, appreciate you being on. Jeff Toobin as well, thanks very much.

Up next, breaking news, shakeup at the New York utility company under fire for slow response after superstorm Sandy. We have been reporting on it a lot the last couple nights. Lot of customers are outraged as what they faced these past two weeks.


UNIDENTIFIED FEMALE: Most of this block got power yesterday. We still don't have it.



COOPER: Helping the four-legged victims of Sandy. We take you along as a rescue group feeds and cares for pets abandoned or lost on Staten Island during the storm when we continue.


COOPER: Welcome back. Breaking news now, late word that the chief operating officer of the Long Island Power Authority has resigned effective at the end of the year. His name is Mike Hervey. No details were given about why he's stepping down, but his resignation comes as you know amid growing backlash that LIPA is facing.

"Keeping Them Honest" tonight, we are still trying to get answers for thousands of LIPA's customers in New York who are still without power more than two weeks after the storm. Nearly 50,000 are waiting for their power to be restored and they understandably are furious.


UNIDENTIFIED FEMALE: Don't get me started. This was handled so poorly.

UNIDENTIFIED FEMALE: Most of this block got power yesterday. We still don't have it. You can't do anything when your hands are cold. It's just hard.

UNIDENTIFIED MALE: It's not just that they didn't get the power on for 15 days and it's not just that they wouldn't provide us any information. It's that they provided misinformation every step of the way.


COOPER: Mismanagement has been obvious. That man is part of a class action suit against LIPA. We asked LIPA repeatedly to come on the program, frankly, every day since the storm. They've said no every time. The invitation is still open. Today Deborah Feyerick went to LIPA's headquarters. She tried to talk to Mike Hervey, the man we just told you has resigned this morning. Here's what Deb found.


DEBORAH FEYERICK, CNN CORRESPONDENT (voice-over): People on Long Island are tired of the cold, the dark and the run-around from the power company out here known as LIPA.

(on camera): Is it fair to say that LIPA wasn't giving anybody answers because they themselves didn't have the answers?

UNIDENTIFIED FEMALE: Well, quite possibly.

FEYERICK (voice-over): Kate Murray is the supervisor of the town of Hempstead on Long Island, New York. She says the Long Island Power Authority, LIPA, has changed their story virtually every day even refusing to set up an emergency hotline.

(on camera): Is it fair to say LIPA almost went into hiding in terms of dealing with its customers?

UNIDENTIFIED FEMALE: Well, yes, that's -- I think that's a fair and accurate portrayal, sadly enough.

FEYERICK (voice-over): We tried to get answer from LIPA's Chief Operating Officer, Michael Hervey, the man currently in charge.

(on camera): So this is the office is temporarily closed, all employees usually assigned are assisting with storm restoration efforts.

(voice-over): The business card I left did get a response.

(on camera): So the security guard called media, media called me, there will be no interviews with Michael Hervey. We are told that he's not available for the rest of the day.

(voice-over): A 2006 report criticized LIPA's outage management system and computer, calling it outdated and saying in a crisis, LIPA had no way to know when the power would return. New York's governor is now calling for an investigation.

GOVERNOR ANDREW CUOMO, NEW YORK: Many of these systems were failing to begin with.

FEYERICK: Walter Drabinski worked on the report. He says LIPA delayed upgrades in part because of the $7 billion debt that would have forced a rate increase.

WALTER DRABINSKI, VANTAGE CONSULTING, INC.: They knew that they needed a new outage management system. That they needed to inspect and replace a lot of poles that had deteriorated.

FEYERICK: LIPA says it began replacing its computer system. The entire process taking between 18 months to two years could be ready sometime next year.


COOPER: Infuriating. Deb Feyerick joins me now from -- on Long Island. So there was this class action lawsuit, it was filed today. What do we know about it?

FEYERICK: The class action lawsuit essentially alleges breach of contract, also gross negligence and fraud. And one of the things that the lawyers are saying is that basically LIPA knew exactly what it was supposed to do.

It had 50 different recommendations and simply didn't follow through on most of those recommendations, including better communication with hundreds of thousands of customers. That was critical and that was one of the top recommendations.

You know, we talk about the computer system that they're now replacing. Well, Anderson, when we called the Media Department actually instead of getting a cell phone number or being able to leave a message, we actually got a pager, and it was funny because one of our news assistants didn't even know what you're supposed to do with a pager once you heard the little beeps.

That's how antiquated the entire system really is. When we chased Michael Hervey down, now we understand why he wasn't available and media person very short, very clipped, saying he's simply not going to be scheduling any official appointments.

Keep in mind, this could ultimately squarely sit right back on the governor's shoulders because he is technically in charge of appointing a chief executive officer. Michael Hervey, he was chief operating officer and he was basically the one who was running the place, but there wasn't a CEO.

In fact, some of the people on the board, their terms are expired so the agency has not really been handled all that well and clearly it showed.

COOPER: Yes. I think most people understand look, it takes time to restore some of these things but it's the lack of communication, to reporters and most importantly, lack of communication to the customers who are desperate for answers and not getting any.

Deborah, appreciate you continuing to stay on it. So many people have been affected by the storm in all kinds of ways, large and small.

Something that doesn't get as much attention is how a lot of pets need rescuing, too. Luckily, there are groups that are helping to find and feed pets that were lost or abandoned in the storm. Randi Kaye brings us up to date on that.


RANDI KAYE, CNN CORRESPONDENT (voice-over): Robert Misseri is on the move. On this day, he and his team from "Guardians of Rescue" are in Staten Island trying to find, feed and save pets lost or abandoned during superstorm Sandy.

ROBERT MISSERI, PRESIDENT, "GUARDIANS OF RESCUE": We are going to leave you kitty litter. We will leave you dog food and cat food.

KAYE: Robert's team has rescued 100 cats so far. He says residents underestimated the amount of water the storm would bring so pets either drowned or ran far from home to escape the rushing water. Of those found --

MISSERI: Many of them are suffering from stress to start. Some of the cats had blood in their urine. Some had internal injuries. Some of them had exterior wounds. We found several cats with sea water in their lungs.

KAYE: It's a big job, which is why Robert called on his friend, Hush, a hip-hop artist from Detroit. Hush is a rapper, but he's also an animal lover, who has helped animal rescue efforts in his hometown.

Hush's contacts in Detroit donated nearly 8,000 pounds of dog and cat food. Then he drove 12 hours through the night to New York to help Robert's group.

(on camera): What worries you most about the pets that are probably out there?

UNIDENTIFIED MALE: Being displaced, you know, and just being out of their element, they're probably freaking out.

KAYE (voice-over): Hush and the volunteers went door to door, looking for pets that may have been left behind.

UNIDENTIFIED FEMALE: We got plenty of food.

KAYE: And dropping off food and supplies.

UNIDENTIFIED MALE: Thank you very much. The dogs will be very happy, too.

KAYE: Along the way, they picked up whatever pets they could find.

MISSERI: We will put him in this carrier, OK? It's all right, baby. It's OK.

KAYE (on camera): This house is typical of this midland beach area of Staten Island. You can see the big red sticker here on the front door, it says unsafe area. So clearly, somebody came by to check the home.

They found it to be unsafe, but whoever that was probably wasn't looking for cats or dogs. They were looking for humans and to check on the condition of the home.

But when we pulled up, we did find a group of four cats eating from this cat food here so obviously, somebody left this behind for the cats. The question is, though, how long will they be able to survive on this food and will somebody be able to save them before this food runs out?

(voice-over): Robert marks the house so they know to come back for the cats. If they find them, they'll try to catch them. Otherwise, they will set humane traps to save them.

MISSERI: They can't talk, you know. They can't say, you know, my owner left me behind or, I'm stuck, I have nowhere to go, I need food.

KAYE: Like this cat, who was hungry and alone. We were finally able to coax her out of an abandoned house.

(on camera): She's starving. She's eating so fast.

(voice-over): Eventually, she was put in a cage. She'll be held in foster care until the owner can move home again or she'll be put up for adoption. After a terrible storm that took so much from so many, a reason to be thankful. Randi Kaye, CNN, Staten Island.


COOPER: So many victims, humans and animals.

Still ahead, new developments in a story we reported last night. The man who claimed he had an inappropriate sexual relationship with a man who has been the voice of Elmo for nearly three decades is changes his story, retracting his charges, what he now says really happened next.


COOPER: Welcome back. Let's check in with Isha in the "360 Bulletin," see what else we're following -- Isha.

ISHA SESAY, CNN CORRESPONDENT: Anderson, a bizarre story involving software company founder, John McAfee who is now in hiding. He is wanted for questioning in the shooting death of his neighbor in Belize.

One day after McAfee's dogs were poisoned. McAfee says he's innocent and tells a "Wired" magazine reporter he thinks the police in Belize will kill him if they find him.

The man who accused Elmo puppeteer, Kevin Clash, of having sex with him when he was a teenager has changed his story. The man now says it was an adult consensual relationship. In a statement, he says he is relieved the painful allegation has been put to rest.

The population of endangered mountain gorillas has increased slightly according to the World Wildlife Fund. It says there are now 880 mountain gorillas up from 781 back in 2010 and I know you're glad to hear that. We're looking at video from your report in the Congo in 2006.

COOPER: Yes, it's amazingly good news considering the war going on there, the fact they have been able to raise the number, fantastic. Isha, thanks.

Coming up, what a New Year's Eve celebration -- what is a New Year's Eve celebration without possums? The "Ridiculist" is next.


COOPER: Time now for the "Ridiculist." I'm sorry to be the one to break it to you, but if you have made plans to go to the annual New Year's Eve possum drop in North Carolina this year, and I'm sure many of you have already, you may be out of luck.

For 19 years, Brasstown, North Carolina, a.k.a. the possum capital of the world, has hosted the New Year's Eve possum drop. It's more of a gentle possum lowering, if you want to get technical about it. They didn't actually drop said possum.

It's like the Times Square ball drop only with a live possum and a clear case with tinsel on it. It looks like it's the end of an era because PETA sued to stop the event and a judge just ruled the North Carolina Wildlife Resources Commission does not have the authority to issue a permit for the quote, "unlawful public display of a native wild animal."

In an 18-page ruling, the judge wrote in part, quote, "Citizens are prohibited from capturing and using wild animals for pets or amusement. Hunters must afford wild animals the same right Patrick Henry yearned for, give me liberty or give me death."

Now I've said it before. I'll say it again. There is nothing like a well placed Patrick Henry quote to really give an 18-page ruling on a possum drop the gravitas it deserves.

So the Wildlife Resources Commission has 30 days to appeal, but at least for now, we'll just judge t have to rely on YouTube to commemorate videos of possum drops of years gone by.

Brings a tear to the eye. It doesn't really compare, but there are some other options for New Year's Eve. You always have Times Square, but there are hardly any possums in that part of Manhattan. You don't get a whole lot of bang for your possum buck in New York. That's always been a problem living in the city.

There's always Key West, Florida where they drop a drag queen in a giant shoe. Without a doubt, that's provided top-notch entertainment year after year on our New Year's Eve show.


COOPER: As you can see, it's not quite as well orchestrated perhaps as some of the other events. I'm not even sure the shoe dropped, frankly. But that apparently is a drag performer who looks like she's about to drop even if the shoe isn't.


COOPER: That is quality television. I can't shake the feeling, however, that New Year's Eve just will not be the same without a possum. Sure we'll still pop the cork on the champagne, blow the noise makers.

But come midnight, we'll all be thinking about the thing that truly symbolizes the start of a New Year rich with promise, marsupials, in general, possums in particular.

We'll see you again one hour from now. That's it for us. At 10 p.m. Eastern joins us again for another edition of 360. "PIERS MORGAN TONIGHT" starts now.