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U.S. Commander in Afghanistan Investigation; McAfee Founder Sought in Murder Probe; Coal Company Lays Off 160 Plus Workers; Another General Entangled in Scandal; UPS Ends Boy Scouts Funding; Celebrating 75 Years of March Madness

Aired November 13, 2012 - 09:00   ET

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

SOLEDAD O'BRIEN, CNN ANCHOR: "CNN NEWSROOM" with Carol Costello begins right now.

Good morning to you, Carol.

(LAUGHTER)

CAROL COSTELLO, CNN ANCHOR: Oh, my gosh. OK. I'll take it.

O'BRIEN: Don't ask. Move smoothly into your program, Carol.

ROLAND MARTIN, CNN CORRESPONDENT: An Alabama fan --

(CROSSTALK)

O'BRIEN: Carol, I'm telling you --

COSTELLO: I've got you. I'm moving on. Good morning, Soledad.

MARTIN: Time to move.

COSTELLO: Oh, Roland.

Stories we're watching right now in the NEWSROOM. Shocking twist. Yet another highly respected decorated general caught up in the Petraeus sex scandal. This time it's the man in charge of U.S. troops in Afghanistan.

And more than an affair? FBI agents searched the home of Petraeus' mistress Paula Broadwell. Seizing at computer and many, many other items.

And Victoria Secret's fashion faux pas. The lingerie company known for its racy runway shows but racism in the briefest of briefs? One group says yes.

And a new college basketball season tips off. We talk to Michigan State's head coach Tom Izzo live this hour.

NEWSROOM starts now.

And good morning from Washington. I'm Carol Costello. Thank you so much for joining us. This morning, a shocking new development in the sex scandal that toppled one of the most respected men in Washington. The David Petraeus affair has now snared another top general, John Allen. He's the commander of all international troops in Afghanistan. Today the feds are sifting through a mountain of e-mails and messages he traded with a woman named Jill Kelley. A mind boggling 20,000 to 30,000 pages, and agents are searching for anything inappropriate.

Now here is the common link. That woman, Kelley, Jill Kelley, she's the one who received harassing e-mails supposedly from Petraeus' jealous mistress, Paula Broadwell. Petraeus admits to the affair with Broadwell and he has said that this woman, Kelley, is merely a family friend.

We're going to take a much closer look at each of these players in a scandal that just seems to grow more bizarre by the day.

So first stop, the Pentagon and CNN's Chris Lawrence.

So, Chris, what specifically are investigators looking for in those messages? And morality aside, how serious of a concern is an extramarital affair?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: It's very serious in the military. You're talking about an active duty officer, Carol. And under the Uniform Code of Military Justice, you can be prosecuted for adultery.

John Allen is a married, four-star general who has been running the war in Afghanistan. He had already flown from Afghanistan here to Washington. That's how quickly all of this broke down. He was already here in Washington just 48 hours away from starting his Senate confirmation hearing to perhaps become the head of NATO.

Now that this has all broken, Secretary Panetta has gone to the president and asked that his nomination be put on hold. They're still keeping him as the head of NATO because they've got another confirmation hearing for Allen's successor. But right now this has really thrown the whole plan of succession into a state of flux right now.

COSTELLO: Chris Lawrence live at the Pentagon. Thanks so much.

Now to more on this woman, Jill Kelley, the Tampa mother of three, she's married to a cancer surgeon. Together they hosted parties attended by military leaders, including David Petraeus. This is Kelley leaving her bay front mansion yesterday. Even though the family lives in Florida, a government source says Kelley is known as a member of Washington's social circuit.

Reporter Jason Lanning is with CNN affiliate Bay News 9. He is standing outside the Kelley home.

Tell us what you can.

JASON LANNING, REPORTER, BAY NEWS 9: Well, the pressure is building here in Tampa, Carol, for Jill Kelley. At the moment, things are quiet outside of the Kelley home. The family has been keeping a fairly low profile. But if you can see in the back alley of this home, the media presence here building. So far, the Kelley family, Jill Kelley herself, has not come out with an official statement. Obviously, after the development about potentially thousands of documents that link Kelley to General Allen.

Thirty-seven-year-old Jill Kelley, known as a volunteer and social liaison for MacDill Air Force Base here in Tampa. The Pentagon says it's investigating the inappropriate e-mails between Kelley and General John Allen. There are reports there are as many as 20,000 to 30,000 documents linking the two.

General Allen served as the deputy commander and for a short time temporary commander at U.S. Central Command here in Tampa from 2010 to 2012. And we know Jill Kelley had a social relationship and friendship with General Petraeus. We don't know what kind of relationship, or friendship or social connection that General Allen may have had with Kelley during his time here.

That, of course, is subject of the investigation. Right now, though, no word on what those thousands of documents may contain. This may be an indication, though -- Jill Kelley has hired Abe Lowell as an attorney. Lowell used to represent President Bill Clinton, John Edwards and Jack Abramoff. Judy Smith has also been hired by Jill Kelley. She's a crisis manager. And you may remember Smith from her crisis management representation of Monica Lewinsky.

Of course, heavy hitters here to represent the family as this family is expecting a barrage of media questions here over the next days to weeks as this scandal unfolds -- Carol.

COSTELLO: Wow, I'm still getting over that house. That's something else.

Jason Lanning, with Bay News 9. CNN affiliate. Thanks so much.

In the midst of all of this, Paula Broadwell's biography of General David Petraeus is one hot seller now. Not kidding. Even as FBI agents trumped through Broadwell's home her book "All In" climbed out of the cellar to a solid 111th spot on the bestseller list. Nothing like a sex scandal to promote a book, something Broadwell certainly did not mention in an interview with Arthur Cade on her book tour.

(BEGIN VIDEO CLIP)

PAULA BROADWELL, AUTHOR, "ALL IN: THE EDUCATION OF GEN. DAVID PETRAEUS": When I realized the opportunity I had to tell this message to present this portrait of strategic leadership, you know, it's not a hagiography. I'm not in love with David Petraeus, but I think he does present a terrific role model for young people, for executives, for men and women, no matter what. There's a great role model there whose values oriented, who speaks the truth to power.

(END VIDEO CLIP)

COSTELLO: If you think this is the weirdest twist, you would be wrong. Yes, there is word this morning of a shirtless FBI agent. But before we get into that, let's talk about the serious implications of the sordid scandal.

Federal investigators search Broadwell's home last night and carried out boxes and boxes of stuff, including a computer.

Tom Fuentes is a CNN contributor and former FBI assistant director.

Morning, Tom.

TOM FUENTES, FORMER FBI ASSISTANT DIRECTOR: Morning, Carol.

COSTELLO: So as you watch all of this unfold, I just want to get your thoughts on it.

FUENTES: Well, it appears that the FBI has received new information that there may be classified material or something either in documents or on her computers at the residence. She gave permission, so it was a consensual search. And they went ahead and conducted that search last night and removed some material, which will be examined at the office in more detail.

(CROSSTALK)

COSTELLO: We know that the --

FUENTES: If I could add, if it had been really serious usually the FBI, if they were trying to be extra cautious, would go ahead and get a warrant even if permission is given for a consensual search. So it's really -- you know the fact that it was consensual, we don't know exactly what information they received to prompt the additional new search but that's what happened last night. They took out more documents and material.

COSTELLO: We know she has some classified documents in her possession. And supposedly they did not come from David Petraeus. But does that mean the general is in the clear? Are they also investigating him?

FUENTES: Well, that's what they don't know at this point, if she's had contact with other people. I mean, at the time that General Petraeus was in the military and commander in Afghanistan and the time that she was working on the book, he is not the only person that she's in contact with on a daily basis. She was residing in and working out of NATO headquarters in Afghanistan, and would be around his aides and other people all the time.

So -- and the general himself would have an entourage of people continuously with him night and day. So they wouldn't have been restricted to having just alone time with each other.

COSTELLO: OK.

FUENTES: So we don't know who would have provided the additional material. There's no -- there's been no indication to date that general or director -- excuse me, or Director Petraeus ever gave her classified material.

COSTELLO: OK --

FUENTES: The FBI -- the original FBI investigation was winding down, saying that it appeared that he had not.

COSTELLO: OK. I have to ask you about this shirtless FBI agent. Because it's very complicated. But I'm going to try.

FUENTES: OK.

COSTELLO: So Miss Kelley, right, she's getting supposedly these harassing e e-mails, So she talks to a buddy of hers on the FBI. He goes to the agency and he says, we should really investigate this. But then the FBI finds out that he sent shirtless pictures of himself to Miss Kelley and now he's under investigation. This is just -- this just looks bad all the way around.

FUENTES: Well, we're not sure if that's just exactly the only reason why he's under investigation. And we don't know exactly, you know, the nature of this shirtless picture. They are in Florida. It could have been that the families were at the beach and he sent a picture, you know, of himself and others in swimsuits.

We just don't know that at this point, if it was that type of picture or if it really was a lewd picture.

A lot has been said about him being on the case and removed from the case. He was never the case agent. She went to him because she knew him, because they were friends, and said that she had received these threatening e-mails. He reports that in the Tampa office and it's immediately assigned to the people who are expert. The cyber squad.

So an agent on that cybersquad would have been designated case agent. He was never the case agent. I think part of the reason he is under investigation now is at a later date when he was not in the loop of what was going on with the investigation, he felt like it wasn't proceeding fast enough or maybe there was something going on in Washington that was forwarding the continued investigation.

And he took it upon himself, apparently -- or reportedly to report it, eventually to Congressman Eric Cantor. And that's how Cantor found out about this. So his behavior in this, yes, you have the shirtless picture that's being looked at but you also have what he did in terms of continuing to follow the case, and maybe report to get outside of the FBI which is completely inappropriate, in any investigation, much less this.

COSTELLO: Yes, and there are rumors out there he's become obsessed about this case. We're going to talk much more about this part of the investigation in our 10:00 Eastern hour in the NEWSROOM.

Tom Fuentes, thank you so much for sharing your insight. Always appreciated.

FUENTES: Thank you, Carol. COSTELLO: About an hour ago, the White House released its first public comments on the General Allen investigation.

Our White House correspondent Brianna Keilar is at the White House with that.

Good morning.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Good morning to you, Carol.

This coming from a spokesperson for the National Security Council. It says really pretty much we knew from Leon Panetta's statement overnight, it says, that, "At the request of the Secretary of Defense, the president has put on hold his nomination of General Allen as Supreme Allied commander, Europe, pending the investigation of General Allen's conduct by the Department of Defense inspector general."

We know President Obama has gone ahead and put on hold the nominating process, the confirmation process for General Allen. That was set to go forward on Thursday on Capitol Hill, as you know, Carol. Congress is back in town, Starting today for its lame duck session with a whole lot on its plate, including these confirmation hearings.

The thing is, General Joseph Dunford, who is actually in line to succeed General Allen in charge of U.S. and NATO troops in Afghanistan. His confirmation hearing is still set for Thursday, still set to move ahead and the statement goes on to say that the president is urging Congress to act quickly on that.

As you know, there are 68,000 U.S. troops still in Afghanistan, General Allen has been overseeing what has been a critical time as President Obama decides exactly the timetable for how to bring those troops home by the end of 2014, as is planned.

So obviously he wants to make sure that the military leadership is in place in Afghanistan for that to move forward -- Carol.

Brianna Keilar, reporting live from the White House.

O'BRIEN: He pioneered the anti-virus software, McAfee, but today he is on the run, wanted in a murder case.

(COMMERCIAL BREAK)

COSTELLO: Sixteen minutes past the hour. Welcome back.

Now to the Central American nation of Belize where a manhunt is under way for McAfee software founder John McAfee. Police want to ask the Internet security pioneer and gazillionaire about the murder of his neighbor who was discovered shot over the weekend.

Zain Verjee is following these developments. McAfee tells Wired.com he's innocent.

ZAIN VERJEE, CNN INTERNATIONAL ANCHOR/CORRESPONDENT: He says he's innocent, Carol. And he is also in hiding. This a little bit weird, this story.

He gave an exclusive interview to "Wired" magazine and just listen to what he said. He said that he saw the police coming and then he ran and then he went not sand and dug himself into the sand and then he put a cardboard box over his face so he could breathe. He said it was very uncomfortable he had to do that because, quote, he said, "They will kill me if they find me."

He went on to tell "Wired" that he doesn't know anything about the murder, he didn't hear anything. He didn't see anything.

There's also a sense, from this -- from the interview he gave "Wired", is that he thinks that the guy who was killed actually was the wrong guy. And he thinks that whoever was out to do it was out for him.

He said also in this interview, "He's dead. They killed him" and that it really spooked him out. So, he's on the run.

COSTELLO: OK. So why is he so fearful for his life?

VERJEE: Well, according to "Wired" magazine again, that got this interview -- and CNN can't independently confirm any of these facts -- basically it seems as though, according to this interview, that there's some kind of vendetta with the government authorities in Belize. There are two issues here. Number one, he talks about his dogs having been poisoned, there was some kind of fight around his dogs, there was like half a dozen of them, and those dogs died on Friday.

Then he also talks about the Belizean authorities having raided his property, and saying essentially, accusing him of manufacturing meth, as well as having unlicensed weapons. Now, those charges were later dropped.

So, there's a lot of tensions between the Belize authorities there and it's obviously something bigger is going on. He doesn't trust them. Someone is out to get him.

And, of course, there's a murder of a man that people have a lot of questions for. He is also an American expat. His name is Gregory Falls. He was found in his house in the hallway with just one gunshot wound to the back of his head and lying in a pool of blood.

COSTELLO: What a strange story. We'll continue to follow it.

Zain Verjee, reporting live for us this morning.

How about being fired or laid off and it's all because your employer says it was also because President Obama was re-elected? We'll tell you about that.

(COMMERCIAL BREAK)

COSTELLO: There were a lot of business leaders who spoke out against re-electing President Obama, perhaps none more vocal than Robert Murray, who was CEO of Murray Energy Company, a major coal company. This morning, we have words that Murray plans to lay off 160 workers, presumably because Mr. Obama was elected to a second term.

I interviewed Murray back in 2007 after a deadly collapse at one of his coal mines. Let's just say he is no fan of Democrats, who disagree with his beliefs about the coal industry.

(BEGIN VIDEO CLIP)

ROBERT MURRAY, CEO, MURRAY ENERGY: I would describe Al Gore as the shaman of global goofiness and gloom and doom.

(END VIDEO CLIP)

COSTELLO: Of course, he was talking about climate change there. As you know, Alison, most scientists believe there is such a thing as climate change and we have to deal with it.

Alison Kosik is at the New York Stock Exchange.

Tell us more about Murray. I mean, did he really lay off these workers because Obamas was elected to a second term?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, he is he blaming President Obama for that. So let me just give you the quick back story about the coal industry. It's been struggling for a while. So, it's an industry under a lot of pressure. Now, you got this CEO blaming President Obama because of increased regulation, which he says is the cause for sort of the troubles that the coal industry is going through.

Now, what the CEO does say is that he has decided that these layoffs are necessary to prepare for a potential slowdown in production over the next four years. And Wall Street, it had the same idea last week because we saw coal stocks sell off right after Election Day.

Now coal production hit a historical high in 2008. It tumbled a year later but it stabilized.

But, you know, the reality is that it's kind of hard to blame Obama for everything. You know, utility companies, they have been ditching coal for natural gas, which is cheaper and cleaner and new rules go into effect in 2015 that are going to make coal production and coal- fired power plants even more expensive to run. Those rules, by the way, Carol, they stem from the Clean Air Act which was signed into law by Richard Nixon -- Carol.

COSTELLO: OK. So you don't have all bad news for us this morning. Tell us about the employees of Westgate Resorts.

KOSIK: This one is a real interesting one. So, their CEO, his name is David Siegel, he'd also threatened drastic action if President Obama was re-elected. Instead he is turning around and giving employees a 5 percent raise. Siegel says his employees are going to need the raise to deal with all the increased cost that he expects everyone is going to have to face as Obama takes on his second term. He also says with Obama re-elected, he's hoping he's able to maintain profits with his company and growth, but he also admits hiring -- it's not necessarily going to be in the grand scheme of things at this point.

Now, Siegel did send an e-mail to employees back in October and it said this. It said, "The economy doesn't currently pose a threat to your job. What does threaten your job, however, is another four years of the same presidential administration."

Well, guess what, now he says he never said he was firing anybody if Obama got elected and that the media twisted what he meant -- Carol.

COSTELLO: So strange.

KOSIK: Blame it on the media. Aren't we -- aren't we easy targets?

COSTELLO: Yes, but we can take it. We're big girls. Alison Kosik, thank you.

OK. Here's another follow-up to a story we first brought you yesterday kind of about the same -- it is about the same thing. There's a New York franchise owner of several Applebee's restaurants, Zane Tankel, who says he may have to issue a hiring freeze to avoid the costs associated with Obamacare. Now, the president of Applebee's is responding to his comments.

Mike Archer says, quote, "Recent public comments by one of Applebee's franchise owners about the possible implications of the Obamacare on jobs within his individual company were not the views or opinions of either Applebee's or other franchisees, although we respect his right to speak freely as an American."

He also added that how franchises will implement the new health care law is uncertain. In other words, don't really know how Obamacare will affect things. We'll just have to wait and see.

One general resigns. Now, another general is the focus of questionable e-mails. Will he be the next to step down?

(COMMERCIAL BREAK)

COSTELLO: Good morning to you. I'm Carol Costello. It's 30 minutes past the hour.

Stories we're watching right now in THE NEWSROOM:

We're about 45 seconds away from the opening bell. Stocks under pressure as trading at the New York Stock Exchange is about to begin. Investors are closely watching lawmakers and whether a deal will be cut to avoid that so-called fiscal cliff.

Bringing the opening bell today, executives from Marriott Vacations Worldwide.

Work has started to exhume the body of Palestinian leader Yasser Arafat. French authorities have opened a murder investigation into the circumstances surrounding his 2004 death after radioactive levels were found on some of his belongings. Rumors of poisoning have long circulated around the former PLO leader's death.

Back here at home, New York's governor estimates Sandy's loss to the state to be around $30 billion. New York City officials announced a $500 million emergency spending plan for schools and hospitals while thousands still struggle without power.

Now to that shocking new development in the sex scandal that toppled one of the most respected men in Washington. The David Petraeus affair has now ensnared another top general, John Allen. He is the commander of all international troops in Afghanistan.

Today, the FBI is sifting through a mountain of e-mails and messages he traded with a woman named Jill Kelley -- a mindboggling 20,000 to 30,000 pages. And agents are searching for anything inappropriate.

And here is the common link: Kelley is the woman who received harassing e-mails supposedly from Petraeus' jealous mistress, Paula Broadwell. Petraeus admits to the affair with Broadwell and he has said that Kelley is merely a family friend.

Joining me now to talk about this deepening scandal is Jonathan Turley. He's a law professor at George Washington University.

Good morning, Jonathan.

JONATHAN TURLEY, GEORGE WASHINGTON UNIVERSITY: Hi, Carol.

COSTELLO: It's crazy, isn't it?

TURLEY: It is. We're the only two not named in this scandal at this point, in Washington at least.

COSTELLO: I'm just trying to figure out how over a two-year period you could write 30,000 e-mail pages to someone.

TURLEY: Yes, it takes an effort.

And, you know, the problem for General Allen is that he is active duty. So, he could face a very serious charge in terms of 134 of the military code, and this is the provision that's often used for adulterous relationships. When you add to an adulterous relationship the possibility of the disclosure of inappropriate information or even classified information, it becomes even more serious.

But these 134 cases were always serious when you have a general, because these are people that meet out punishment in their command. So, once these things go public, it's hard to make that catwalk backwards. You are sort of stuck unless you can show this is completely without foundation.

COSTELLO: And it doesn't matter the woman involved -- we don't know how she was involved just yet, I want to make that clear. But it doesn't matter whether she was in the military or a civilian because it's unclear to me. I mean, Kelley organized these social events for the military, but I believe she was a volunteer.

TURLEY: Well, the military has always taken adultery very seriously. They view it as a moral failure, which it is, obviously. And when it comes to general staff, that is even more important because they're a symbol of the military.

Now, part of the problem is as a defense attorney -- I've handled both military cases and nonmilitary cases. It's a nightmare when you have a client who is connected with tens of thousands of e-mails because all of us make mistakes. And you never know what's in that mountain of evidence. Your client usually doesn't even know.

And so, when you have people sifting through something like that, it's often very easy to find problems.

COSTELLO: OK. So on the other side of the coin, this Jill Kelley, she's lawyered up. She's got some very powerful lawyers now on her side.

TURLEY: She needs them.

COSTELLO: What do you suppose she's worried about?

TURLEY: Well, once again, you know, she did a voluntary surrender of her computers, which I think is a good idea. She's cooperating, which is a good idea.

The question, are these classified documents? Now, supposedly, she has a clearance, but my assumption is that clearance is only covering things when she's on active military duty. It would not excuse her in having classified information.

I hold that type of clearance. I've held it for a long time. And it comes with a great deal of obligations. One of the things that we have to establish is the protection of material, not taking material home. It's treated very seriously.

For those of us in the field, there's often a complaint that the Justice Department seems to give a free pass to high-ranking individuals while using this as a cudgel for people they don't like, like journalists and whistleblowers. And the best example is Sandy Berger, who was accused of removing classified documents in his socks when he was helping President Clinton. He only got a minor misdemeanor for that intentional violation of classification laws.

COSTELLO: So this is long from over and hopefully you'll join us again as we try to make sense of all of this.

Jonathan Turley, law professor at George Washington University.

TURLEY: Thanks, Carol.

COSTELLO: Thank you.

General John Allen is the man who is currently overseeing U.S. troops in Afghanistan. He actually took over command from General Petraeus back in July 2011. And now, as you know, the FBI wants to know about the thousands and thousands of e-mails he is accused of sending to that Florida socialite.

CNN's Nick Paton Walsh is in Beirut, Lebanon.

Good morning, Nick. You spent a lot of time with General Allen in Afghanistan. What do you make of all of this?

NICK PATON WALSH, CNN INTERNATIONAL CORRESPONDENT: Certainly a lot of time observing the conduct of his work in Afghanistan, I met him on a number of occasions. But, certainly, he was a man respected by his troops, a career soldier, had been through Iraq, working also with David Petraeus then, then took over General Petraeus' job, the same with his job in Afghanistan. So, very much associated with the former CIA director, but a man certainly who was aware of the cute problems of the Afghan conflict, although many respects of his job was that of public relations, trying to sell the war as success despite declining popular support for it.

But also a man who inspired great loyalty I think in many of the people closest to him. A number one aide working for him in Afghanistan who said he'd really done so many tours in Iraq, he wasn't that keen to go back but would always take the call if General John Allen rang, which he eventually did. (INAUDIBLE) to describe how he felt towards the man. They were together in a dining facility in Iraq. A round landed close and a soldier leapt under the table for cover and General John Allen stayed very much in his seat, and said quietly, son, you're not going to win the war from down there.

So, very much a man who made those rounds and field of work harder and I'm sure they'll be baffled really by the extent of these allegations.

COSTELLO: And just one more question for you. Does this affect at all the projected withdrawal of U.S. troops from Afghanistan by 2014?

WALSH: I think in a word, no, to be honest. What it does do is make the project look bad and now a third general in a row who has had some scandal attached to him. Stanley McChrystal, sacked off, inappropriate comments to a general. David Petraeus, promoted to the CIA, but then resigning after his extramarital affair and now John Allen.

But the timetable for withdrawal is a political decision being made in Washington, very much a timetable which is not influenced it seems by many observers by events on the ground. So, I don't think we'll see this scandal affecting work in Afghanistan so much -- Carol.

COSTELLO: Nick Paton Walsh, reporting live from Beirut this morning.

Let's switch gears. Let's way switch gears -- Victoria Secret fashion faux pas has upset the Native American community. Why the lingerie company is saying, I'm sorry for that little number.

(COMMERCIAL BREAK)

COSTELLO: November is Native American Heritage Month and Victoria Secret is celebrating with a model, feather and headdress and an apology.

Showbiz correspondent Nischelle Turner is in Los Angeles.

This is -- I don't even know what to make of this, Michelle.

NISCHELLE TURNER, CNN SHOWBIZ CORRESPONDENT: Well, there's -- somebody is making something of it, because we're talking about it now, right, Carol?

COSTELLO: Yes.

TURNER: Now, here is the deal. Last week at its fashion show in New York, Victoria Secret model Karlie Kloss wore this headdress on the runway.

The outfit sparked backlash from many in the Native American community who found the use of this headdress in this setting offensive. Now, Victoria Secret has issued an apology on the company's official Facebook page.

They said, quote, "We're sorry that the Native American headdress and our fashion show has upset individuals. The outfit will be removed from the broadcast. Now, this show will air December 4th on CBS. And, Carol, the model, Karlie Kloss, she also apologized on her Twitter page. She says that she supports Victoria Secrets decision to remove this clip from the broadcast.

But I do have to tell you, I'm not sure it will be missed. There'll be lots of eye candy on the Victoria Secret fashion show so everyone will be OK.

COSTELLO: I think you're probably right about that, Nischelle. Nischelle Turner, thanks so much.

An online petition is putting pressure on Macy's to tell Donald Trump, you're fired. Nischelle is back next hour to tell us why.

The Boy Scouts get thousands and thousands of dollars from corporations every year, but the agency's policies toward gays has one company saying, not anymore.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

SGT. FRANKIE VERNER (RET.), U.S. MARINE CORPS: I am currently in the firefighting training with the California Conservation Corps.

Hold this and then just pull.

UNIDENTIFIED FEMALE: Yes, hold it and --

VERNER: All right.

This is also I'm training. So it's good they're doing this especially for veterans because it can be hard sometimes to find good jobs. I play with the chainsaw, get associated, more familiar with it. And we would practice laying hose from an engine which we hadn't done with actual water.

UNIDENTIFIED MALE: That's what influences the wild land fires, right?

VERNER: Well, since it's mostly veterans, it's really easy for us, a lot of us to just click and work together so the teamwork thing fell into place really well.

I was in aviation, hydraulics and airplane mechanic for the Hueys and Cobras. I was stationed at Camp Pendleton and we deployed to Afghanistan in 2010. I know it was a bloody summer while we were there. We lost a couple of pilots. I saw a lot of bodies coming back.

PETTY OFFICER JAZMYNE SIMS (RET.), U.S. NAVY: I was in the Navy -- U.S. Navy for four years. My job title was quartermaster. We helped out with amphibious operations. We had a lot of Marines on our boats.

I was so focused on Navy at one point in time, I never imagined myself being a firefighter. I never imagined myself going through the training. It's been challenging for me but the challenge is more than welcomed.

I'm hoping that I get, you know, picked up with, you know, some kind of fire department or I'm also trying to get into some kind of police work, just experience and hopefully a job.

Being a veteran, it's a big thing to me. It means a lot. Because I have a lot of veterans in my family. When we have Veterans Day it's not more or less, you know, you know, I did my time and service. It's saying I paved the way for people that are going to come behind me to do their time and service.

To come home and to celebrate a Veterans Day or, you know, to have people acknowledge the fact that I did something like this, it touches my heart. It really does.

(COMMERCIAL BREAK)

COSTELLO: The Boy Scouts anti-gay stance over members and its organization is forcing another sponsor to pull its funding. The latest company, shipping giant UPS.

Alison Kosik is here with more.

Good morning, Alison.

KOSIK: Good morning, Carol. So technically what the company didn't do, it didn't put its funding, instead what it's doing is announcing new guidelines for any funding going forward. So those guidelines essentially disqualified the Boy Scouts from getting any money from UPS going forward.

Now these new guidelines say that UPS Foundation will only support organizations that are aligned with the company's nondiscrimination policy, which says that UPS and UPS Foundation do not discriminate against any person or organization with regard to categories protected by applicable law.

And what that essentially means is that all future funding is gone to the Boy Scouts until the organization welcomes in gay scouts and leaders. Now this change is coming about after 80,000 people signed a petition on change.org. UPS, by the way, Carol, is one of the boy scouts biggest corporate donors. He gave 1$150,000 to the boy scouts in 2010. Intel also had announced it was pulling its funding for the same reason. Carol?

COSTELLO: Alison Kosik, reporting live from the New York Stock.

New season, same goal. Reach the final four, then cut down the nets. Michigan's state coach, Tom Izzo, joins us live in the NEWSROOM.

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COSTELLO: March Madness may be the most exciting time on the sports calendar. But long before the nets are cut down next spring, college basketball fans can join the NCAA in marking a milestone. The celebration of 75 years of March Madness begins today.

You can go to ncaa.com/marchmadness and check out the tournament timeline. See Kareem Abdul-Jabbar and Christian Laettner on the March Madness float at the Macy's Thanksgiving Day Parade, and starting in January, you can vote for your favorite all-time teams, players, and moments at ncaa.com/marchmadness.

And one more thing, in April, for the first time ever, the men's division one, two, and three title games will be played at one site.

Tom Izzo is hoping to bring his Michigan State Spartans back to Atlanta for the Division 1 championship game. The team is in Atlanta for tonight's champions classic game against Kansas.

Hi, Tom.

TOM IZZO, MICHIGAN STATE UNIVERSITY HEAD BASKETBALL COACH: How are you, Carol?

COSTELLO: I'm good. We're so excited that you're here with us this morning. Thank you for being here.

IZZO: Well, thank you for having me.

COSTELLO: You well know March Madness excitement. You've made 15 straight tournament appearances. So what's going to be special about this season?

IZZO: Well, I think with the 75-year celebration, it's incredible. And I've got to be a part of some of those. I've been in six final fours, and there's nothing like the NCAA tournament. March Madness to me, and I'm a big football fan, is still the greatest couple of weeks in the whole year.

COSTELLO: Don't you think college basketball is so much better than pro-basketball?

IZZO: Wow, I don't know about that. I think the pros do a better job than we give them credit for. I think sometimes, you know, it's favorite, but there's something about that David and Goliath type of activity that happens that first week of March Madness that I think brings everybody together and everybody had somebody to pull for.

COSTELLO: So awesome. You were a small, college, all-American, what will it feel like for these division two and three players to had their title games where the big schools are playing. You said some of that but I want more.

IZZO: Well, I give the NCAA credit. Bringing us all together means a lot. Being a division two guy myself, I have a great appreciation and just the thought of being around the things that happen in a final four weekend, I think, is going to be great for division two and division three. And everything's relevant, no matter what level you play at. A championship is a championship.

COSTELLO: You're right about that. I'd like to ask you a broader question about recruitment. I wonder, has Kentucky changed the model for college basketball? That is recruit athletes, not student athletes to play for one or two years, win a national championship before leaving school without graduating? Is that the way schools must now compete in division one basketball?

IZZO: I think John's done a great job at Kentucky, and it's unbelievable how he's handled things. I don't think it's the norm, and I don't think it's the way it's going to be. I still think even there, there's student athletes, that's the way college is set up. But the one and done thing is a phenomena. I don't know if it's going to last, if it's going to be that way all the time.

It's going to be something that we're all going to have to deal with. But I don't think it's the norm. He's done an exceptional job and, yet, I think at most places, you're going to see guys, they'll stay in two, three, and even four years.

COSTELLO: Well, I hope so. Because not only, you know, are the many fans, you know, they want them to stay on the court, but a lot of -- you know, not many college players make the pros and you have to wonder if colleges are recruiting kids just to play basketball in the end, isn't that harming young people?

IZZO: Well, I think that's the greatest problem we have right now. As we talk about the Kobes that make it, the LeBrons that make it, But we forget about 60, 70 guys that come out each year that don't make it. And that is one of the problems we have. But that's where parents and NBA got to do a good job. Coaches got to do a good job.

I think does a great job of kind of giving you an idea. Where you stand, we just have to make the right decision and sometimes that's hard with all the middle men involved.

COSTELLO: Yes. OK, Coach. You have six final fours in the past 12 years. The top among NCAA basketball coaches. Are there any other challenges in your future beyond Michigan state?

IZZO: Well, Michigan States is where I'm going to be and I just hope to accomplish some of the things, some of these other great coaches that have been in this tournament down here in Atlanta have accomplished.

You look at what Mike Krzyzewski has done, and Bill Self now has won a national championship. John has won one. We've won it at Michigan State. But I think we're always chasing, can we be part of a smaller fraternity? Can we win, too? Can we win three? I'm not sure anybody is going to win 10 like John Wood did.

(LAUGHTER)

COSTELLO: So you have no dream to, you know, to be the L.A. Lakers coach? Because you know that job was open a short time ago.

IZZO: Boy, watching that circus out there and what's happened, I think I'm going to leave that to the bus family and maybe magic can help out there a little bit.

COSTELLO: Maybe so. Coach Izzo, thank you so much for joining us this morning. We enjoyed it.

IZZO: Thanks, Carol.

COSTELLO: The next hour of CNN NEWSROOM starts after a short break.

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COSTELLO: Stories we're watching right now in the NEWSROOM. A scandal has already ended the career of CIA director David Petraeus. Now another top general is under investigation. Will he be the next one to step down?

Joking about Jesus. Why does it seem to be acceptable and OK when other religious figures are off limits.