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THE LEAD WITH JAKE TAPPER

Mass Hacker Arrest; Rove on the Attack; Hollywood and the U.S. Military; "Truthers" to Protest 9/11 Museum; Deadly Virus Spreads to 3rd U.S. Patient; Deadly Long Waits

Aired May 19, 2014 - 16:00   ET

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


JAKE TAPPER, CNN ANCHOR: Just like your computer probably, the latest threat to U.S. security made in China.

I'm Jake Tapper. This is THE LEAD.

The world lead. Members of China's military accused of hacking into U.S. companies to steal secrets. So, what did they get? And will the Chinese government turn them over?

The national lead. It looks like almost like the official brochure for the soon-to-open 9/11 Museum. But it's actually a fake that so- called truthers plan to hand out. Can't these people give it a rest for one day out of respect to the families?

And the money lead. The giant cranky lizard may have his name on the posters, but the U.S. military gets a whole lot of screen time in Godzilla, after the Pentagon gave its blessing and its help to the studio. Just how cozy is Hollywood with the military?

Good afternoon, everyone. Welcome to THE LEAD. I'm Jake Tapper.

We will begin with the world lead. China has long been suspected of hacking targets here in the U.S., but the American government has never held anyone accountable for it, until today. The Justice Department calling this 21st century burglary. announced today, economic espionage charges against five members of a shadowy unit in China's gigantic military, their alleged crimes, hacking into these American businesses and groups to steal trade secrets, U.S. Steel, Westinghouse, Alcoa.

These are some of the biggest companies in the U.S. In announcing the charge, Attorney General Eric Holder seemed to be pointing the finger not only at these five suspects, but at China's government and its military as well.

(BEGIN VIDEO CLIP)

ERIC HOLDER, U.S. ATTORNEY GENERAL: We must say enough is enough. This administration will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market.

(END VIDEO CLIP)

TAPPER: Attorney General Holder says he expects the Chinese to cooperate in bringing these five to justice. That's what he said.

If he wasn't being naive about that, then perhaps he was being facetious, because the Chinese government, to whom the U.S. owes nearly $1.3 trillion, incidentally, well, they don't appear to be ready to cooperate with this indictment in any way, shape or form.

Let's bring in our justice correspondent, Pamela Brown.

Pam, how is the Chinese government reacting to these accusations?

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Well, they're really firing back at the U.S., Jake.

And just to put this into context, there's been a war of words between the U.S. and China on this particular issue for awhile. And now the U.S. is putting the gauntlet down with this criminal indictment. And no big surprise here, the Chinese government is lashing out at the U.S., with China's Foreign Ministry spokesman releasing a statement that called the allegations absurd and fictitious and that China is the real victim of cyber-theft.

He cited the Edward Snowden leaks, highlighting the NSA spied on foreign officials there. So, there's a lot of finger-pointing going on. However, the U.S. says five military officials from China's People's Liberation Army were spying on six U.S. companies for economic gain, draining the U.S. economy of at least billions of dollars and putting people out of jobs.

U.S. Attorney General Eric Holder is calling on China to cooperate and extradite the five men, so that they can be brought to justice here in the U.S.

(BEGIN VIDEO CLIP)

HOLDER: Well, it's our hope that the Chinese government will respect our criminal justice system and let the case proceed as it should, let justice take its course. We expect, we hope that the Chinese government will work with us in connection with this and bring these indicted men to justice. But we're also continuing to remain vigilant when it comes to cyber-threats that emanate from China or from other countries.

(END VIDEO CLIP)

BROWN: So, I have been speaking with a lot of people, Jake, on the idea that these men will actually be brought to justice here in the U.S.

And really the likelihood of China extraditing them seems slim to none. What it really seems like what U.S. officials are doing here is, is sending a message that they're not going to stand for this. It's really sort of a shot across the bow, if you will.

TAPPER: How long have they been working on these charges?

BROWN: Well, the U.S. has long suspected that the Chinese government was behind this. And they say they have been stockpiling evidence against these hackers for awhile now.

It's a painstaking process to build a case like this, figuring out who is behind the keyboard hacking into these U.S. companies' computer networks. So, first, you have to figure out who the hacker is, where it's -- where they're originating from. And then officials had to work out -- work to figure out if the hackers are going rogue or if they're connected to the government, which takes some time.

And also there's a lot of factors at play here, policy, politics, process, strategy. This was calculated decision by U.S. officials to bring these charges against these five military officials in China.

TAPPER: All right, Pamela Brown, thank you so much.

The five suspects are officers in a top-secret unit of the People's Liberation Army, which is allegedly China's hacker central. The country has openly recruited computer experts for the unit for at least over a decade. Last year, a U.S. Internet security firm claimed it traced numerous cyber-attacks to the neighborhood where this unit operates in Shanghai.

I want to bring in Shawn Henry. He's a former executive assistant director for the FBI. Currently, he's the president of CrowdStrike, which presides security technologies worldwide. We're also joined by chief national security correspondent Jim Sciutto.

Shawn, let me start with you.

These suspects are officers in what is called Unit 61398. Who are these people? what is this unit?

SHAWN HENRY, FORMER EXECUTIVE ASSISTANT FBI DIRECTOR: It's a group of hackers that are working on behalf of the Chinese government, specifically to pilfer information from U.S. companies, to make Chinese companies much more competitive, to give them an advantage against U.S. companies and other western companies.

TAPPER: Give me an example of the kind of information they want.

HENRY: They're looking for research and development, intellectual property, corporate strategies. We see in the indictment -- and this is well-known -- that when U.S. companies are involved in partnerships, the Chinese are very interested in gaining information related to that partnership, trying to determine what type of negotiating strategies this U.S. company might be performing in its negotiations with the Chinese company.

It really is about getting a leg up, getting a strategic advantage, and putting themselves in a much stronger competitive position.

TAPPER: How are they doing this? How are they breaking through the security? I'm sure these companies have security and the U.S. government has security.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Listen, you throw the PLA at it, the People's Liberation Army at it, and years and years of research, and millions and millions of dollars, you're going to break through security.

This is a national priority for the Chinese government. It's not bad behavior by a particular wing of the People's Liberation Army or one statehood enterprise. It's national policy. China looks at this as acceptable. They look at is as righting a competitive imbalance with the U.S. and U.S. companies. And this is the way they compete.

And the fact is, it's been going on for years, more than a decade. The U.S. has known about it. Frankly, the Chinese know about it. U.S. companies know about it. It's only recently that the U.S. has gone public with naming and shaming the entities and the people responsible.

TAPPER: And saying that it's costing Americans jobs here in the U.S.

But let's talk about what the Chinese responded with today. China's Foreign Ministry, the spokesman said: "U.S. agencies have been consistently tapping into China's government agencies, corporations, universities, and private networks for surveillance purposes. We are strongly urging the U.S. to make clear explanations regarding this and stop such acts immediately."

We know from the Snowden leaks that some of the reasons for NSA surveillance are economic in nature. Is the U.S. being hypocritical here?

HENRY: The U.S. is not stealing intellectual property from foreign companies and providing them to U.S. companies. That's just not happening.

Some of the U.S. efforts may relate specifically to national security. And, quite honestly, we all know governments have been involved in espionage against other governments for hundreds, thousands of years. It's been going on. But as it relates specifically to some corporate competitive advantage, the U.S. isn't doing that. Other nations, not so much.

TAPPER: Well, Jim, I want you to weigh in on this, because Edward Snowden said something about this on German TV, using the German engineering firm Siemens as an example.

Let's play that clip. Oh, OK. It's -- I'm supposed to read it. "If there is information at Siemens that is beneficial to U.S. national interests, even if it doesn't have anything to do with national security, then they will take that information nevertheless."

Isn't Snowden alleging -- and I understand that people in the U.S. government say he's not a credible person, but isn't he alleging that there possible are trade secrets that the U.S. is snooping on?

SCIUTTO: He is alleging that. The Chinese like to make the connection.

The fact is, you talk to U.S. officials, they have been consistent on it that they don't do this for economic gain. They do it for national security. But there's another fact, that the NSA surveillance and Snowden's revelations have had a broader effect.

The president -- President Obama was going hit President Xi Jinping hard. You remember the Sunnylands summit last year.

TAPPER: Yes.

SCIUTTO: This was the time. They said, you know what? We have had enough of this. We're going hit the Chinese hard on this point.

Lo and behold, Edward Snowden releases documents that very day.

TAPPER: That day, yes.

SCIUTTO: And even if you can separate the two, and say one is for national security, the other is for economic interests, the other one -- one bleeds into the other one. And it undermines -- frankly, you have got to say it undermines U.S. credibility as they're trying to make this point publicly.

TAPPER: Shawn, how much is the U.S. government responsible for the cyber-security of these companies and how much is it these companies' responsibility?

HENRY: Honestly, the United States is not in position to actually protect the networks, by virtue of the fact they don't have filters in the gateways. They're not monitoring Internet transmissions.

So, in a physical world, if there was a foreign army that was massed on our borders, the army would respond. If they took airplanes and they buzzed our airspace, we would respond with fighter jets. But there's nobody that is blocking the ones and the zeros.

What the U.S. government can do is exactly what they're doing in a case like this, is trying to hold a foreign government accountable. But at the end of the day, the day-to-day security of networks is a company's responsibility. The government has intelligence they can share that can help bring some value and allow them to be more effective, but the companies are going to be responsible and have that obligation.

SCIUTTO: And that is one other thing in terms of response to this cyber -- cyber-attacks.

The U.S. government had been sharing more information about specific ways that China is hacking into the systems and where it's coming from to help them defend themselves. But that's really the most that they could do. It's, in effect, up to the companies.

TAPPER: Jim Sciutto, Shawn Henry, thank you so much. We appreciate it.

More alleged hackers targeted in our national lead. And this is less about what hackers want to steal from U.S. businesses and more about what they want to steal from you personally.

In a story first reported on CNN, the FBI and police in 17 other countries carried out a worldwide raid today arresting more than 100 people in connection with a so-called creepware, referred to as Blackshades. Miss Teen USA Cassidy Wolf is perhaps the best known victim in the U.S. Her former classmate was sentenced to 18 months in prison after he installed Blackshades on her laptop and used it to capture nude photos of her in an attempt to blackmail her.

Wolf was just one of more than half-a-million people victimized worldwide.

Our justice reporter, Evan Perez, joins us now. He has been following this for us.

Evan, how did this raid go down?

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, Jake, the FBI was working with police in France, and Germany, and the Netherlands, and Canada over the last couple of weeks, as they were trying to do some searches and some rounding up of some of these suspects.

Now, these are people who not only bought this software called Blackshades, but they also were marketing it. They were using it to hijack people's computers. And there's also a couple of co-creators of the software that have also been charged in this case.

Now, we were in the room in the FBI command center last week as they were watching some of these people, notice, as there were knocks on the door. And you could see as -- the hacker forums just lit up as people were starting to complain about the FBI being at their door or police being at their door.

And so it was a fascinating look as the FBI was trying get the upper hand on some people, obviously, who have being targeting people all over the world for years -- Jake.

TAPPER: All right, Evan Perez, thank you so much.

Coming up, it's a sacred memorial to the thousands who died, yet some are using the opening of the September 11 Memorial Museum as an opportunity to spread their lies about the attacks by handing out fake pamphlets made to look like the real thing.

Plus, outrage from Democrats has not slowed down Karl Rove, as he takes aim at Hillary Clinton's health again. Now one Republican is saying his line of attack is a smart move. Stay with us.

(COMMERCIAL BREAK)

TAPPER: Welcome back to THE LEAD.

The national lead now. The September 11th Memorial Museum opens to the public this week in Lower Manhattan. And some conspiracy theorists who are apparently no strangers to PhotoShop plan on attending. According to "Village Voice" newspaper, which broke the story, the conspiracy group Architects and Engineers for 9/11 Truth plan on standing outside the entrance on opening day to hand out fake museum brochures designed to look exactly like the real ones. Take a look -- on the left side of your screen, the real deal. Welcome to the 9/11 Memorial Preview. Visitors guide for adults.

On the right, the group's handiwork. Welcome to the other story about 9/11. That's of course, the false one. Inside, they claimed they have compiled, quote, "a vast amount of evidence", I'm using the term loosely, "proving," that's their word, not ours, "that all three World Trade Center skyscrapers were deliberately destroyed by explosives on 9/11."

Of course, they don't actually prove anything except for man's capacity for believing crazy things and man's insensitivity to, for instance, to the families of the approximately 3,000 people in New York, the Pentagon, and in a field in Pennsylvania by Islamic terrorists, with al Qaeda, as every credible investigation has actually proven.

Let's bring in Emily Bazelon, senior editor at "Slate", for more on this.

Emily, we are more than a decade after the tragedy of 9/11, why do these truthers have such staying power?

EMILY BAZELON, SLATE: It's such a good question, the persistence of this theory. You know, you imagine people are trying to make sense of the senseless. But with 9/11, we have a real conspiracy, called al Qaeda. One has to imagine that the anti-government motivation of the 9/11 truthers is really what's driving this, because if you could imagine that the government made up 9/11 as a hoax, then the government is completely monstrous. There's no reason to believe anything any federal official says and certainly no reason to pay your taxes.

TAPPER: And what happens when this kind of nonsense hits the echo chamber of the Internet?

BAZELON: Well, it tends to multiply online. And you see these dark corners of the internet where people pile on. And there is this very minute parsing of the technicalities of the supposed evidence. And more and more detail gets added and accumulated. And it kind of feeds on itself.

TAPPER: And the idea here, right, is not just that the three buildings were destroyed by explosives. That it's all part of this grand conspiracy where the U.S. government -- I mean, let me state if I haven't made it clear enough -- none of this is true. This is all just crazy talk, that the U.S. government faked it, killed all these people intentionally, it was just to start a war in Iraq and another one in Afghanistan. Is that the idea that they're going for?

BAZELON: That's the idea. And just to say that it's to show how horrifying it is, I suppose that given the American government did put forward some false ideas to motivate going into Iraq, in particular, the whole idea that there were weapons of mass destruction there, it's like the tiny, tiny kernel of truth that is in some way related to this completely crazy theory. TAPPER: And there's also of scapegoating involved in 9/11 truther stuff. There's anti-Semitism, anti-Israel, anti-corporations, right?

BAZELON: Exactly. And I think you see these virulent strains that are related to each other and familiar from fringe right wing talk and they all get kind of weirdly braided together in this particular theory.

TAPPER: And historically, we see that these conspiracies come after very upsetting events -- the Kennedy assassination, the assassination of Martin Luther King Jr. Is there a pattern in there?

BAZELON: I think that each time something really scary and disastrous happens, people search for meaning, and then sometimes, even when there is a clear explanation, because we have that for 9/11 in a way that we didn't for the Kennedy assassination certainly at first, when -- then you have the search for supposed other evidence out there. People just kind of pick it up and run with it, even when it seems completely unwarranted.

TAPPER: All right. Emily Bazelon with Slate.com -- thank you so much.

When we come back --

BAZELON: Thanks so much for having me.

TAPPER: When we come back, another case of the deadly MERS virus detected in the U.S. after a casual business meeting between two men. Now, how many more people are at risk?

Plus, a Supreme Court battle over a 34-year-old film. Why one woman says she deserves some of the profits from "Raging Bull." That story coming up.

(COMMERCIAL BREAK)

TAPPER: Welcome back to THE LEAD.

In national news, the Centers for Disease Control hoped it could contain the spread of a mysterious deadly virus in the U.S. to the two cases that it confirmed in Indiana and Florida. But those hopes are now dashed. The CDC has now confirmed a third case of Middle East Respiratory Syndrome, or MERS, in Illinois.

But this time, the patient didn't bring it back from Saudi Arabia, as happen with two cases. The CDC believes he was infected by the original Indiana patient, which would this the first case of person to person transmission within the United States.

Let's bring in senior medical correspondent Elizabeth Cohen.

Elizabeth, good to see you. What does it tell us that this virus was spread through casual contact like this?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: You know, Jake, I think it's worth going into a little bit of detail about how this spread occurred.

So, the Indiana man was feeling sick, had a fever but didn't know he had MERS. He had this business meeting with this man in Illinois. It was a meeting that lasted 40 minutes. They shook hands. The next day they had an even shorter meeting.

So, the thought that you can get MERS through a business meeting in shaking hands. You know, they said there was no hugging, there was no kissing. It certainly makes you wonder about what health experts have been telling us, which is MERS is hard to get, it's mostly spread within people living in the same household. You know, this isn't living in the same household. This is during a business meeting. So, that certainly is giving some people concern.

TAPPER: You know, specifically, we had been told that the contact needs to be close. It needs to be a health care worker or a partner, not a business partner, a partner in your home.

Let's go to this man in Illinois. He hardly felt sick at all. Could he still have spread MERS?

COHEN: Experts tell me he could have because even though he didn't feel seek, at some point in time, the virus was likely in his nose and mouth. So, at that point, he could have spread it.

Now, when someone has a respiratory virus, really any respiratory virus, even if they don't feel sick, they can spread it. But they're not going to be good at spreading it. They probably don't have a lot of the virus in their respiratory system.

So, someone who is really sick spreads it more efficiently. But could this man have spread it? Experts tell me, yes, he could have spread it.

TAPPER: And now, we know also, hundreds of people have been on the airplanes with the Indiana patient, the Florida patient, some of them with this patient for many hours. Do we know if any of them, any of these individuals, on the planes have contracted MERS?

COHEN: You know, the CDC is still running tests to see if anyone was infected with MERS. As far as we know, no one was very, very sick on the flights. And that's good news.

But we're talking a lot of flights. I mean, one man was on a flight from London to Chicago. Another man was on a flight from London to Boston, then Boston to Atlanta, then Atlanta to Orlando. That's many, many hours of sitting sort of knee to knee, very close to someone. It will be very interesting to see what that testing shows.

TAPPER: Elizabeth Cohen, thank you so much.

COHEN: Thanks.

TAPPER: In other national news, President Obama's staffers say that he is supposedly, quote, "madder than hell" over the absurdly long wait times at the nation's veterans' hospitals, first reported on CNN. But according to the right-leaning newspaper, "The Washington Times", he's known about these delays for years. "The Washington Times" claims they got hold of briefing materials that show V.A. officials told team Obama during the transition in 2008 that V.A. hospitals were fudging the numbers on their wait times, right after the 2008 election, they said.

At the Phoenix V.A. hospital alone, we now know that at least 40 veterans, many of whom were on a secret list, died while their treatment was delayed. But when pressed by our own Jim Acosta, the White House press secretary today claimed the administration knew nothing about that until they saw CNN's reporting.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: You mean the specific allegations that I think were reported first by your network out of Phoenix. I believe we learned about them through the report. I'll double check if that's not the case. But that's when we learned about them and that's when, as I understand, Secretary Shinseki learned about them.

(END VIDEO CLIP)

TAPPER: Our senior White House correspondent Jim Acosta joins us from the White House.

Jim, are we going to hear from the president himself on any of this, do you think?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: We are, Jake. I heard from Press Secretary Jay Carney during the briefing today that the president will be talking about this soon. I doubled back to a White House official who said yes, you can expect likely in the near future, we'll hear the president on this. And that would be about three weeks since we heard the president talk about it.

He first he talked about it and the only time he talked about this was about three weeks ago when he was in Asia, hasn't really talked about it since. He sent out his chief of staff. Jake, you talked to him last week. He's made a couple of appearances. But that's as far as we've heard.

Now, what we did hear from Jay Carney here today is that the president has confidence in Eric Shinseki, the secretary of Veterans Affairs, but that other officials will be held accountable if it's found out that they are responsible for this secretive -- these fraudulent waiting lists that used to conceal wait times at various V.A. facilities.

TAPPER: Jim Acosta at the White House, thank you so much.

Coming up, more questions raised by Republicans about Hillary Clinton's health and her age. Will this barrage of questions make her think twice about running in 2016? And later, it crushed the competition at the box office with a little help of the Pentagon. Coming up, the U.S. military's role in the making of the latest Godzilla movie and why the Defense Department agreed to do it.

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