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Legal View with Ashleigh Banfield

Flint Water Scandal Latest; Federal Jobs Program Investigated for Fraud; El Chapo Again in Prison. Aired 12:30-1p ET

Aired January 21, 2016 - 12:30   ET

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

[12:30:04] SARA GANIM, CNN CORRESPONDENT: Because the state's water testing was from report which was leaked last summer. It said the high levels of lead in the water were alarming because the state's water testing was flawed. So the true lead levels were probably much higher.

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MARC EDWARDS, CIVIL ENVIRONMENTAL ENGINEERING PROFESSOR: We were just waiting for the appropriate authorities to help Flint residents to enforce federal law.

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GANIM: When Flint's former mayor asked the EPA for more information, he was shocked down, as you can see in this e-mail exchange obtained by CNN.

The EPA regional director writes, "The preliminary draft report should not have been released outside the agency and that only when the report is revised and fully vetted will it be shared with the city". But that wouldn't happen until months later.

Meanwhile, families were still drinking water poisoned with lead. The EPA blames the state, saying in a statement to CNN, "What happened in Flint should not have happened and that the EPA's ability to oversee was impacted by failures and resistance at the state and local levels.

The state was continuing with its own mistakes, according to Marc Edwards, "butchering a round of water testing". They not only tested the wrong homes but altered the reports, eliminating tests from two homes that would have shown toxic levels of lead. The state says the changes were legitimate.

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EDWARDS: They fabricated a report that made it appear like Flint was passing the lead and copper rule with flying colors.

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GANIM: In the fall, they admitted there was lead in the water and Flint was switched back to Detroit's water supply. But it wasn't until earlier this month that the State of Michigan started bringing in bottled water and declared a state of emergency.

Sara Ganim, CNN, Flint, Michigan.

ASLEIGH BANFIELD, CNN ANCHOR: It would be fascinating to know what those city officials were drinking all that time. So the damage is done. What can the people who have been damaged do about it? Dr. Sanjay Gupta's going to join us live from Flint, live with some crucial health information.

(COMMERCIAL BREAK)

[12:36:15] BANFIELD: We're staying with this big story in Flint, Michigan, right now. Because President Obama himself is saying that the water crisis there is a, "Reminder that you can't short change basic services that we provide to our people". While in Detroit, it was clear that the issue hits home for the president as the father of two daughters.

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BARACK OBAMA, (D) CURRENT PRESIDENT, UNITED STATES OF AMERICA: I know that if I was a parent up there, I would be beside myself that my kid's health could be at risk.

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BANFIELD: I think he's echoing what many of us feel. Sanjay Gupta, you're not only a doctor, you're a dad so maybe help me to understand what these people are going through right now physiologically speaking and what their children who have been exposed to this water are going through right now.

DR. SANJAY GUPTA, CNN MEDICAL CORRESPONDENT: Yeah, you know, Ashleigh, I just want to say psychologically, just to your point, you know, I think what's amazing to me many of the parents have heard what has happened here. They've heard that the water supply was changed and it led to this increase in lead in the water that was too high that poisoned their children.

But to your point, there's still so much blaming of themselves, parents still blaming themselves. Not their fault, but they still think it. I'm a parent and my young child was poisoned by this lead, I wish I could have done something about this. So the psychological part of this is not to be underestimated.

Physically, we know what lead does to the body. We don't think we'd have to deal with this in the United States. We thought that -- that was a yesterday issue. That we know once lead gets into the body at high enough concentrations there's no amount of lead that is safe but at certain levels it will penetrate into just every organ in the body. It will cross into the brain as well. It can have effects now which can be developmental delays, intellectual delays, cognitive delays but it can also have effects way into the future as well.

So, you know, it's an irreversible problem. Right now, there's a lot of knowing what's happening now but also wondering what the future holds for their children and for themselves. That is sort of state of things here in Flint, Ashleigh. BANFIELD: So Dr. Gupta, look, we have all been taught to get all lead

paint out of your house. Old cribs that might have lead paint, toys that might have lead paint, keep it away from children. If they're exposed and it is clear these kids have been exposed, is there nothing that can counter the effects of lead? Can we do anything for these children to mitigate what could happen to them later in their lives?

GUPTA: Well, I think there's a few doctors we've been talking to that best put it like this. This is going to sound basic. But let me explain the reasoning. When you give good nutrition, good produce, good vegetables and fruits and things like that, you're providing substances like iron and calcium, which can essentially go into the body and bind to the places that lead is trying to bind into. So, you're essentially filling up the body with good stuff so if the lead gets into the body it has nowhere to sort of stick.

That's why a good nutritious diet is actually really helpful for people who have been exposed to lead. It sort of doesn't allow lead to sort of take hold. You know it's going to have an impact potentially on intellectual development, so early childhood education. Early childhood stimulation, development, in terms of intellectual abilities, is really important as well.

It's tough. It's tough anywhere. It's particularly tough here in Flint. This is a city that's been hit hard. I mean 40 percent poverty rate here. Life expectancy is 10 to 20 years shorter than surrounding communities. There's hardly any place to buy good nutritious food.

[12:40:03] So, I don't want to paint too bleak a picture here, Ashleigh, but they know what the problem is. They're being told what they could potentially do to reduce the impact but even that's hard to get done in a place like this.

BANFIELD: It just -- it brings one word to mind, criminal. But we have yet to see if that's actually going to be part of this zeitgeist (ph) in this particular story. Dr. Gupta thank you very much for your reporting, Dr. Gupta, live in Flint, Michigan, clearly, where his water is also, you know, in question.

Coming up next, a huge federal investigation looking into where more than $2 billion of your money has been spent. One very serious accusation. The government agencies are handing out fat contracts to their friends and their political connections. This is a very deep CNN investigation. One federal insider says this is like dealing with the Mafia. Details are next.

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[12:45:12] A CNN/AC 360 investigative report, uncovering what could be one of the most massive federal fraud cases in decades. It's now officially being investigated by the U.S. Department of Justice. A federal grand jury is looking into allegations that the $2.3 billion federal program to help find work for the severely disabled is, instead, mired in bid rigging and fraud and operating illegally. They are allegations that were first raised in a CNN/AC 360 Keeping Them Honest report last year. And now CNN investigative correspondent Drew Griffin talks to the

potential linchpin of the federal case. Someone who says this huge federal program is being run by the Mafia.

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: For Rubin, 15 years in the cleaning business has led to big government contracts, cleaning federal buildings across the country. But what happened to Lopez's contract cleaning the federal courthouse in Las Vegas could now be the centerpiece of one of the biggest federal corruption and fraud cases in recent memory.

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RUBEN LOPEZ, CEO, BONA FIDE CONGLOMERATE: I was dumfounded, to be honest with you.

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GRIFFIN: Lopez hires the disabled to clean buildings. That's what the government demands as part of a tax-payer funded program to help the disabled find work. Contracts go to companies that do the work with a staff that's at least 75 percent severely disabled.

The federal program is called AbilityOne. But it outsources its management to a group called SourceAmerica. And together they award about $2.3 billion in federal contracts every single year. Including deciding which companies get those contracts and which companies don't.

Rubin Lopez thought his contract to clean the Las Vegas courthouse was secure. He'd been cleaning the building since it opened, had glowing reviews. But it turns out another company may have had better connections.

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GRIFFIN: So you were called, basically put on notice that this contract that you had for about ten years was going to be taken away from you and given to a competitor?

RUBEN LOPEZ, CEO, BONA FIDE CONGLOMERATE: A competitor who sits on the board -- as chairman of the board of directors for SourceAmerica.

GRIFFIN: It's bid rigging?

LOPEZ: Absolutely.

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GRIFFIN: Several government sources tell CNN the awarding of federal contracts to put the disabled to work mired in corruption, as CNN first reported several months ago. CNN has now learned a federal grand jury has been seated to look into allegations against SourceAmerica and AbilityOne. Investigators specifically looking at bid rigging, favoritism and cronyism at the program's management company SourceAmerica. Most troubling are allegations that the big losers in all of this are

the disabled. CNN has been told many major contractors are skirting the law, defrauding the government, by not hiring enough severely disabled. This former hiring manager says that her ex-employer sometimes fewer than 10 percent of employees had any disability at all.

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UNIDENTIFIED MALE: The majority of the individuals that were being hired were not severely disabled.

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GRIFFIN: Eventually, Rubin Lopez settled the Las Vegas contract dispute with SourceAmerica and as part of that settlement, SourceAmerica agreed to treat Lopez's company more fairly in the future even appointing their top lawyer to work with him. That lawyer was Jean Robinson.

But Lopez says his company instead was blackballed, receiving no more contracts. He became so disgusted with how corrupt the process was. He began working with federal investigators and secretly recording conversations between himself and SourceAmerica's attorney Jean Robinson.

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UNIDENTIFIED FEMALE: More money than you ever made the entire ...

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GRIFFIN: these are the transcripts of these recordings which CNN has obtained independently. The tapes now part of a federal investigation. Listen to how this former SourceAmerica attorney describes her own company's program as being like the Mafia.

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VOICE OF JEAN ROBINSON, FORMER LAWYER FOR SOUCE AMERICA: They're like the Mafia. They pride themselves. They don't care.

LOPEZ: She confirmed by telling me openly this people are like Mafia, this people are corrupt.

GRIFFIN: And let's be clear on whose telling that, that their attorney is telling you this?

LOPEZ: Their own attorney.

VOICE OF JEAN ROBINSON: You know, we are dealing with the Mafia here, the old SourceAmerica Mafia.

(END VIDEO CLIP)

GRIFFIN: Attorney Jean Robinson was eventually fired by SourceAmerica. She has declined to talk with CNN but may not be able to avoid speaking with federal prosecutors. Those prosecutors are also interested in what happened to Rubin Lopez after he complained and threatened to go public. SourceAmerica, he says, tried to buy him off.

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LOPEZ: (Inaudible) have been calling me and said, I have authority to give you this contract. It was a sizable contract. It was like five or six building system (ph). Like a small city.

GRIFFIN: Buying you off?

LOPEZ: Absolutely.

GRIFFIN: Silence?

LOPEZ: Absolutely.

(END VIDEO CLIP)

GRIFFIN: On the recordings, SourceAmerica attorney Jean Robinson confides she is nervous about being set up herself by a board of directors she claims has been fraudulently awarding contracts for decades.

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VOICE OF JEAN ROBINSON: These people have been doing this for so many years. And they're not going to stop. I mean, that they're just -- it's was like an addiction, they're just -- so much time has passed. They've been getting away with it for, you know, what, 25 years, and they don't know how to do it different.

(END AUDIO CLIP)

GRIFFIN: Officials at SourceAmerica, at the federal program AbilityOne, have repeatedly declined interviews with CNN. Issuing statements instead denying any allegations of fraud, corruption, cronyism, bid rigging or illegal activity. All now part of a federal investigation.

BANFIELD: And Drew Griffin is with us from El Paso, Texas. Drew, that said comment about the severely disabled not being hired to actually do the work in this program, it would seem that's very easy to ferret that out.

GRIFFIN: And this is what's the most troubling thing, we have a presidential commission AbilityOne that's supposed to oversee and make sure these contracts being filled by SourceAmerica are filled with the severely disabled.

What we're hearing from our sources is these contracts are being filled by people with made up disabilities. In some cases the disability listed may be they're Spanish speakers only or non English speakers only. Certainly not living up to the letter of the law which says severely disabled physically, emotionally, whatever, people who cannot be hired in other jobs.

But AbilityOne is either ignoring its own inspectors or looking the other way while, as it's being alleged, SourceAmerica is dealing with this crony business where they're just handing out these contracts all across the country.

BANFIELD: Unbelievable. Drew Griffin, great work, thank you, and your team, for that very deep investigation.

Coming up next, Mexico says there is simply no way that El Chapo can escape from prison a third time, and if you don't believe it, we're going to take you actually inside and show you exactly what they're doing to make sure the notorious drug lord stays put. The image is next.

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[12:55:58] BANFIELD: Mexican prison officials say there's simply no way El Chapo is going to escape again. He's already busted out of jail twice. But it does appear this time Mexico is serious about keeping that number one drug kingpin locked up this time. And we know this because now we can see it.

This is the picture we've been waiting for folks, the actual image. The first image of Juan El Chapo Guzman locked up inside those prison walls where he was returned two weeks ago. We are also starting to see the evidence of the multiple layers of security. All of those ways they're trying to keep him put the cameras, the dogs, and the sensors. Very remarkable picture that we could see it all. Those dogs by the way in the picture we told earlier this week, specially trained just on El Chapo's scent. So if he gets anywhere, presumably they'll be hot on his tail.

Our senior Latin affairs editor Rafael Romo is in Atlanta. You actually talked to the journalist who is able to get pictures we just put up. Walk with you a little bit more this is such a fascinating story. I didn't think we'd see inside the prison. So now starting to get uneasy someone was actually able to snap a picture.

RAFAEL ROMO, CNN SENIOR LATIN AMERICAN AFFAIRS EDITOR: Yeah, that's right, and he says the prison has greatly improved the security measures since he last visited last summer shortly after El Chapo escaped.

First of all, there are four layers of security, around El Chapo including the Mexican federal police, the military, a national security agency and the prison guards. But the journalist says that what caught his attention the most is the fact that he's being guarded by the dogs you mentioned. Let's take a listen.

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CARLOS LORET DE MOLA, MEXICAN JOURNALIST: El Chapo tracker dogs. There have been some training with some specialized dog that are as they told me, they're very, very well trained in terms of smelling El Chapo and in case of an escape, of another escape, they will be released and try to track El Chapo all over the place.

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ROMO: And Ashleigh, there's another scandal brewing around the El Chapo. Mexican police yesterday detained Lucero Sanchez, she's a state legislature in El Chapo's home state of Sinaloa. And she's being investigated to, listen to this, for allegedly visiting El Chapo on new year's eve 2014 using a fake I.D. Sanchez has already been transferred to Mexico city where she's being questioned today about her alleged involvement with El Chapo. She said multiple times that accusations are false and the allegations endanger the lives of her two children, Ashleigh. Quite a scandal.

BANFIELD: Unbelievable, and obviously a reason for the number of microphones. This is a fascinating story no matter what side of the border you live. All right, Rafael, thank you for that, I appreciate it.

And thank you, everyone, for watching. It's been nice to have you with us this hour. Do stay tuned because my colleague Wolf Blitzer is going to take over the helm right now.

[13:0016] WOLF BLITZER, CNN ANCHOR: Hello, I'm Wolf Blitzer. It's 12 p.m. noon in Indianola Ohio, while it's 1 p.m. in here in Washington, it's 9 p.m. in Moscow, where ever you're watching from around the world --