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U.S. Pulls Spies from China after Cyber Attack; Trump University a Fraud; Palestinian Flag to be Raised for First Time. Aired 10:30-11a ET

Aired September 30, 2015 - 10:30   ET

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


[10:29:48] CAROL COSTELLO, CNN ANCHOR: Let's bring in CNN justice reporter Evan Perez. He has more on this. Good morning -- Evan.

EVAN PEREZ, CNN JUSTICE REPORTER: Good morning -- Carol.

The concern here really is that the Chinese intelligence agencies can now compare the roster of U.S. embassy employees that they already know in Beijing against this massive database that they now have of U.S. government employees. And so those affected, I'm told, include employees of the CIA, the NSA, and the Defense Intelligence Agencies.

And of course, the Chinese are denying any of this and the Chinese foreign ministry had this to say. We could put it up on the screen here. "The Chinese government firmly opposes any forms of hacking. China and the United States are the biggest two Internet- using countries. We both face the same challenges and will gain mutual benefits from protecting cyber security."

Now, there's no doubt here in the U.S., U.S. investigators believe that the Chinese are behind this data breach which, as you pointed out, includes millions of personnel files including the fingerprints of 5.6 million government workers, many of them in sensitive jobs -- Carol.

COSTELLO: All right. Evan Perez reporting live for us from Washington -- thank you.

Checking some other top stories for you at 10:30 Eastern time, Joaquin is now a hurricane. The Category 1 storm is packing 75 mile- an-hour sustained winds. Joaquin is the third hurricane of the Atlantic season and is located about 250 miles east of the Bahamas. It is too early to determine if that storm will make landfall, but is expected to drop a whole lot of rain along the East Coast.

The state of Georgia has executed the first woman in more than 70 years. Kelly Gissendaner was put to death overnight despite a last- minute plea from her children, protesters and Pope Francis. Her death comes nearly 18 years after her conviction. In 1998, Gissendaner was sentenced to death for convincing her lover to kill her husband.

Still to come in the NEWSROOM, Donald Trump in hot water. Some students say he did not deliver on his promise to teach them how to win in business. A special CNN investigation ahead. (COMMERCIAL BREAK)

[10:36:11] COSTELLO: All right. We have late-breaking news from the floor of the Senate. The Senate has passed a bill that will temporarily fund the government through December 11th. That bill passed overwhelmingly 78-20. But that bill now goes to the House of Representatives where it could be quite the fight because as you know, some House Republicans want Planned Parenthood defunded in order to fund the government. But House Republicans say they may have enough votes.

So we'll keep our eye on that. And of course, the House also said they expect to take action on this temporary funding bill before midnight. We'll keep you posted.

In other political news, Donald Trump has won a lot in the business world over the years, and he says he will win so often as president, you'll get sick of hearing him talk about it. But some people say they didn't win with Donald Trump. In fact, they lost big, losing as much as $35,000 enrolling in his university. Trump University promised students success by simply enrolling but some students say it was a complete failure.

CNN correspondent Drew Griffin takes a closer look.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN CORRESPONDENT: This was the promise of Trump University when it launched, direct from the university chairman's own mouth.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: At Trump University, we teach success. That's what it's all about -- success. It's going to happen to you.

GRIFFIN: It operated from 2005 through 2010 and enrolled 10,000 students in real estate courses that ranged from free seminars up to $35,000 for advanced training and mentoring.

TRUMP: I think the biggest step towards success is going to be sign up at Trump University.

GRIFFIN: For a while, it was a business success. Trump University took in an estimated $40 million from people who believed they, too, could someday become successful.

UNIDENTIFIED MALE: Put proven Donald Trump secrets to work for you.

GRIFFIN: But it turns out not everything Donald Trump promises comes true. And not all of his businesses lead to success. Trump University is closed.

And it ended. Why did it end?

ALAN GARTEN, DONALD TRUMP ATTORNEY: Well, the economy crashed. The real estate market crashed. And demand fell off a little bit. So while the company continues to exist, it's not accepting -- currently not accepting any more students and hasn't since 2010.

GRIFFIN: Alan Garten is Donald Trump's attorney. He's defending the school from three separate lawsuits. Two class action lawsuits filed in California and one filed by New York attorney general Eric Schneiderman who took his case to CNN's "NEW DAY" just days after filing his lawsuit in 2013.

ERIC SCHNEIDERMAN, NEW YORK ATTORNEY GENERAL: We started looking at Trump University and discovered that it was a classic bait-and- switch scheme. It was a scam starting with the fact that it was not a university. They promised they were going to teach people with hand- picked experts by Donald Trump. The teachers were neither hand-picked nor experts.

GARTEN: He was very involved. From the early stages, he was meeting regularly every week, every two weeks with the people who were going to run the day-to-day operations of the course.

GRIFFIN: So the allegation that he had nothing to do with this, that he didn't pick a single expert as a New York attorney general has claimed, you say is completely false.

GARTEN: It's completely untrue. 100 percent untrue.

GRIFFIN: The New York attorney general declined to be interviewed for this report but provided CNN with six of the 150 affidavits he says he's collected from unsatisfied Trump University students who mostly complained their education at the school was worthless.

Like this student who writes "I have not been able to get in touch with anyone after I signed up for the Trump Gold Elite program. All the numbers have been disconnected."

One student who paid $25,000 to have special access to high-level mentors claims he hasn't been able to get in touch with his nonexistent power team. As for investing knowledge, the student says he wrote off Trump University as "a bad investment on my part".

[10:40:04] Most of the students never met or even laid eyes on Donald Trump. Trump University is now called Trump Entrepreneur Initiative. The school says it never promised anyone would meet the Donald.

GARTEN: There's at least 10,000 people who paid. So you can go and pick three or four affidavits from people or maybe 20 affidavits or maybe 30 affidavits. It's still a minuscule amount. I have in my bag and I'm happy to read to you all the people who loved the course.

GRIFFIN: And he did, providing CNN with 14 affidavits from satisfied students. Garten says Trump will continue to fight all three lawsuits until he eventually wins even if legal fees wipe out any profit he may have made. And in the end, win or lose, Trump University may have taught everyone a valuable lesson. Not every promise comes true, not everyone, even students of Donald Trump, will become a success.

And I bet the first person who would tell you that is Donald Trump.

GARTEN: Absolutely.

GRIFFIN: You've got to work hard. You've got to know what you're doing. You've got to outfox a lot of different people.

He must know in his heart a lot of these suckers in this room don't have what it takes to do what I did.

GARTEN: Well, I don't think the way he views -- let me just take a step back. First of all, I agree with you. All we can do is provide the tools for people to go out there and apply these things. If -- I can't control what happens out in the real world, if someone goes and takes our classes and decides to sit on their couch and not apply them, I can't help that.

GRIFFIN: In the real world, Trump has just won another court battle. A California judge has just made it harder for former students of Trump University to get any money back in damages, even if those students can eventually prove the school was just one big fraud. And so far, Trump is winning.

Drew Griffin, CNN, New York.

(END VIDEOTAPE)

COSTELLO: Trump's lawyer, Alan Garten, told CNN they have had discussions about what to do if there's a pending legal case and Trump wins the presidency in 2016. The legal team would seek an injunction and put the case on hold until after a Trump presidency ends.

Still to come in the NEWSROOM: controversy at the United Nations not just between Putin and Obama but over a flag.

(COMMERCIAL BREAK)

[10:46:40] COSTELLO: Soon at the United Nations, an historic and controversial moment will take place. The U.N. will raise the flag of the Palestinian Authority for the first time ever, a move that Israel has criticized and voted against along with the United States and six other nations.

In the meantime, Palestinians and Israelis in Jerusalem spoke about the significance of today's event.

UNIDENTIFIED MALE: That's what it means for us as the Palestinians, that maybe this is the beginning to get the freedom, Inch'Allah.

UNIDENTIFIED MALE: It's a first step forward. I hope it will be followed by much bigger steps.

UNIDENTIFIED MALE: We feel happy when we see the flag, but we don't want to see only flag.

UNIDENTIFIED FEMALE: I'm very happy for that, and I hope it means it's only the beginning for something more than official action.

UNIDENTIFIED FEMALE: They've had many opportunities to bring peace to the land, to flourish. All our leaders have offered them amazing deals. And I feel that at this point in time to give them any credence in the world audience is just totally insulting to humanity.

(END VIDEO CLIP)

COSTELLO: CNN's Richard Roth is live at the United Nations. Richard, President Mahmoud Abbas of the Palestinian authority has shared his views on this ceremony. What's he saying?

RICHARD ROTH, CNN SENIOR UNITED NATIONS CORRESPONDENT: Abbas already has written about what he plans to observe in a couple of hours here at the rose garden at the U.N., this historic and controversial raising of the Palestinian flag for the first time. The Palestinians are not an official state here at the U.N. Though the resolution about the flag says it's a state in Palestine.

Abbas, in Huffington Post wrote -- here's a portion of it, "The international community demonstrated its solidarity with the Palestinian people by approving this flag raising. Now it must act with urgency to seize the momentum from this symbolic gesture and provide a clear plan to end the illegal Israeli occupation, uphold human rights and achieve justice."

Israel has denounced it, of course, in their view as a publicity stunt. The Secretary-General may be there. The Vatican flag was raised on Friday before the pope arrived. The Vatican and the Palestinians, Carol, have the same status here -- observer, nonmember states -- Carol.

COSTELLO: All right, Richard Roth reporting live from the United Nations this morning. Thank you.

I'm just reading about some breaking news coming into CNN. A senior U.S. official is telling CNN the Russian airstrike in Syria has no strategic purpose in battling ISIS. That information gotten by State Department correspondent Elise Labott. She's on her way to the set, but we have, of course, conflicting information from Russian authorities.

In fact, Russia's foreign minister, Sergey Lavrov said, and I'm quoting here, and he's talking about the airstrikes, quote, "We're referring here exclusively to the operation of the Russian air force to carry out strikes against ISIL or ISIS positions in Syria. We have informed the authorities in the United States and other members of the coalition created by the Americans of this and are ready to forge standing channels of communication to ensure maximally effective fight against the terrorist groups."

But as I just said, the U.S. said that the Russian airstrikes targeted a city in western Syria, and there are no ISIS targets there. [10:50:03] Elise Labott is here. You got all of this

information. So what's going on here?

ELISE LABOTT, CNN STATE DEPARTMENT CORRESPONDENT: Well, clearly, Carol, you know, the U.S. had said that they wanted to deconflict with the Russians on the ground, to avoid any possible confrontation. But what the Russians are trying to do is ground the U.S. They're not telling the U.S. where they're flying. They're not telling the U.S. what they're doing. They're just saying to the U.S., stop your flights.

I mean, if you look at what they did today, for instance, in Homs, U.S. Officials are telling me this is not of strategic importance to go after ISIS. And if you look at some of the weapons that the Russians have on the ground, some of this anti-aircraft equipment, this is not for ISIS because ISIS is not flying on the ground.

So what U.S. officials are saying is this is kind of proof positive that this mission is not to go after ISIS. They understand that the Russians want to shore up the Syrian military. It's very tired after going against ISIS on the opposition. They want to bolster the Syrian military.

But clearly, they are very concerned that they will go after this beleaguered opposition even further and be a proxy, in effect, for the Syrian military.

COSTELLO: So why don't the Russians just come out and say what they're doing? I mean they appear to be lying. I mean, I don't know because we're not on the ground in Syria, and we don't know for sure. I only know there are conflicting statements from the United States and Russia.

LABOTT: Well, they're not going after specifically opposition on the ground right now, but they are, you know, trying to assert the fact that we are here. We are going to be, you know, running the skies right now. And you'd better back off.

So they're not really making their intentions very clear right now. They're creating a lot of uncertainty. I understand Secretary Kerry is going to be meeting throughout the day, speaking throughout the day with Russian foreign minister Lavrov. I think officials are trying to tamp down the temperature, but look, you know, we know in conflicts like this, it just takes one miscalculation for something to blow out of control, and one misfired weapon, and someone could get really hurt.

So I think that everyone is trying today to find some rules of the road going forward. But clearly, the Russians are creating a new reality on the ground.

COSTELLO: OK. So Barbara Starr is at the Pentagon. What are you hearing about this, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Carol, military officials here at the Pentagon are just full of consternation about this. What one official said to me is, "This is not how you conduct military relations between superpowers or between any country." You don't go banging on the door of the embassy, as a Russian general did this morning in Baghdad, and tell the U.S. to get out of the skies. U.S. warplanes will continue to fly.

Fundamentally underlying all of this is the lack of trust that the U.S. has with Russia right now, and especially the U.S. military. They simply do not feel they can believe what the Russians say. That's the big worry right now. Because as another official said to me, look, our two presidents, Putin and Obama, just earlier this week said that both militaries would sit down and talk about how to operate safely in the skies over Syria.

Defense Secretary Ash Carter was beginning to set up that -- those talks from the U.S. military side, reach out to the Russians, and see how to best proceed with those so-called deconfliction talks. Now the Russians, you know, on one hour's notice to the U.S. embassy in Baghdad have just gone ahead and done it.

U.S. pilots have a lot of classified technology. They can identify Russian planes in the sky. They can do everything to stay out of their way. I don't think it's that they particularly expect a military confrontation with the Russians. They do worry about accidents, as Elise was just pointing out, but it's a fundamental question, number one, of trust between the two militaries.

And even bigger than that, perhaps, what is the Russian military really up to here? They do not appear to be fighting ISIS. They're trying to prop up the Assad regime.

I want to bring in our CNN military analyst, Lieutenant Colonel Rick Francona. Elise brought up kind of a scary point. What if an accident does happen? What if Russia accidentally harms our troops in some way? What happens then?

LT. COL. RICK FRANCONA, CNN MILITARY ANALYST: You know, that's a big problem. Then the question is what will we do about it? And I think it's important that we have some sort of a coordination cell. I think the Russians did kind of a ham-handed attempt at that by using the U.S. embassy in Baghdad, but there is a coordination center in Baghdad. We have one with the Iraqis. The Russians, and Iranians and Iraqis are setting up an additional one.

I think we have got to talk to the Russians. We've got to talk to anybody involved over there. Because as we said, any time you're operating this many aircraft from this many air forces in that confined airspace, there is a real possibility of a misjudgment, something to go wrong very quickly.

[10:55:05] I mean these aircraft are flying, you know, at the speed of sound. They're on a hair trigger. And a pilot could very easily mistake one aircraft -- a Russian aircraft for a Syrian aircraft, for a Turkish aircraft, and this is a recipe for disaster.

COSTELLO: Lt. Col. -- Colonel, I just want to interrupt because Elise Labott brings up a great point and a scary point. So Saudi Arabia is also conducting airstrikes over Syria, right? Go ahead, ask your question.

LABOTT: Colonel, they're part of the coalition, obviously, and you know that Saudi Arabia is one of the main opponents of Assad and wants Assad to get out. They've been very wary of Russian intervention all along. So is there a potential for the Saudis, for the UAE, for the Turks, more of this anti-Assad crowd to start getting more involved in the fray?

COSTELLO: Right, will they fire back on the Russians, right?

LABOTT: Are we looking at a major escalation in the region that people have predicted for years? I mean we don't want to be overly dramatic, but is there a potential for other players to get into this battle space and blow things really out of control here?

FRANCONA: Oh, absolutely. And I can give you the exact scenario as it might happen. You know, there are U.S.-trained and sponsored groups operating on the ground in Syria right now -- these moderate rebels that we've provided a lot of weapons to. You know, the Saudis, the Qataris, others have provided weapons and training to various groups there and are supporting them.

What happens when the Russians attack those anti-regime rebels? Are the Saudis going to come to their aid, or are they going to interfere? Or are we going to interfere with Russian aircraft conducting strikes on groups that we support?

COSTELLO: All right.

FRANCONA: This is setting up a real problem. And it's going to happen.

COSTELLO: All right. We've got to leave it there. Thank you all for joining me today.

I'm Carol Costello. "AT THIS HOUR" with Berman and Bolduan after a break.

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