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Early Start with John Berman and Zoraida Sambolin

Dozens Drown as Philippines Ferry Sinks; New York Prison Break: Plot to Kill?; New Fallout for Donald Trump; 4th of July Terror Threats: Security Boosted; Markets Weigh Greek Crisis. Aired 4:30-5a ET

Aired July 02, 2015 - 04:30   ET

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

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[04:30:05] JOHN BERMAN, CNN ANCHOR: Big changes coming for a New York prison where two killers broke free. That as the now captured killer shares new details on the role that a prison seamstress had in the escape.

JOHN BERMAN, CNN ANCHOR: New fallout for Trump. Overnight, Trump firing back on CNN. You got to hear what he says.

BERMAN: All right. Security boosted in city's across the country over terror concerns on the Fourth of July. We have new information coming in on that as well.

Welcome back to EARLY START, everyone. I'm John Berman.

ROMANS: I'm Christine Romans. Nice to see you all this morning. It is 31 minutes past the hour.

BERMAN: We do have breaking news this morning. Dramatic rescue now underway in the Philippines where a ferry just capsized. Coast guard officials say the boat was carrying 173 people when it sank off the port of Ormoc City.

Red Cross officials say at least 36 people are dead, they drown, dozens more people rescued. Again, this rescue operation still underway.

Let's bring in CNN's Kathy Novak.

Kathy, give us the latest.

KATHY NOVAK, CNN CORRESPONDENT (via telephone): As you say, this is still happening right now, John. And these numbers are just coming in, but our sister network CNN Philippines says the Philippine coast guard says 118 people had survived, though, 36 people confirmed dead as you mentioned, 19 remain missing.

This vessel was only 200 meters from the shore when it went down. The people on the port could actually see it from where they were standing. The Red Cross told us there were stormy conditions and big waves and heavy winds.

This is a busy port city in the province of Leyte in the Philippines. Maritime disasters are common. The Red Cross folks and Richard Gordon said most of the vessels have seen better days. Most of the world's qualified people go abroad to work, so perhaps people who are handling this vessel may not have been very well-prepared. That is what the Red Cross is telling CNN, and we are still waiting on those people still missing -- John.

BERMAN: All right. Kathy Novak covering this for us again, a ferry capsized in the Philippines. Dozens dead. Dozens more rescued. The rescue operation still underway. We will keep you posted with the latest -- thanks, Kathy.

ROMANS: This morning, self proclaimed escape mastermind David Sweat revealing details about his time on the lam with the other escapee from Clinton correctional in upstate New York, Richard Matt. A law enforcement official saying Sweat's partnership with Matt went bad quickly. Sweat says the older inmate was out of shape, slowed him down and Matt started to get drunk after they broke into a cabin. Frustrated, Sweat said they split up. Officers shot Matt five days later and noting they could smell alcohol on him from feet away.

For the very latest on the investigation, CNN's Kyung Lah is in Albany for us.

(BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT: Good morning, John and Christine.

Investigators say they have completed their interview of David Sweat, at least for now. But he has been talking to them from his hospital bed and he has been saying a lot. First and foremost, certainly, leading investigators to understand that it was a lot easier to break out of this correctional facility than anyone could have imagined. Sweat detailing to investigators that he and his accomplice used hacksaws, manual hacksaws to get out of their jail cells, to cut into some of the piping, that they were able to slip in and out of their cells at whim.

They made it to an underground passage way and they found a sledgehammer, that was apparently left behind by a construction worker. They used that hammer to get further out. They were able to do a dry run, first getting into one manhole. Rejecting that manhole thinking it was too close to some houses. The next day, making their real run into a manhole -- popping out of a manhole that was less populated.

Also, Sweat detailed that he was the mastermind, it was Joyce Mitchell who had the idea of killing her husband.

[04:35:01] Mitchell's attorney saying that that simply is not true.

Mitchell certainly did not pick up the men so they tried to flee on foot to Canada, as we know. Sweat telling authorities that while he was on the run, he had a number of close calls, one where he was hiding in a tree as an officer walked right by him. He remains in the hospital this morning. He is under heavy guard from what the hospital tells us and he remains in fair condition -- John, Christine.

(END VIDEOTAPE)

ROMANS: Kyung Lah, thanks for that.

More big changes underway at that prison. Clinton correctional has a new superintendent today, Michael Kirkpatrick. The superintendent and two deputies in charge during the escape were put on paid leave, nine security staffers also on leave. Other changes include much more frequent checks of cells and catwalks, and the elimination of the prison's honor block.

BERMAN: A business setback for Donald Trump. The presidential candidate running number two, by the way, in national polls and in Iowa. He's already been fired by NBC in a manner of speaking for painting Mexican immigrants as rapists in his campaign announcement.

Now, a major outlet for Trump's clothing and fragrances is following suit. Macy's is splitting up with Donald Trump.

But you know what? Donald Trump says he is splitting up iwht them. You can't dump me. I dump you.

CNN's Athena Jones has the latest.

(BEGIN VIDEOTAPE)

ATHENA JONES, CNN REPORTER: Good morning, John and Christine.

There is more bad news on the business front for Donald Trump. Macy's has announced it's ending its partnership with the billionaire businessman, after mounting pressure, including an online petition by MoveOn.org that urged the company to dump Trump. That petition got more than 700,000 signatures.

The company is taking his merchandise off the shelves, saying his disparaging remarks about Michigan immigrants are inconsistent with Macy's values. Trump says he's the one who ended the relationship because he has, quote, "never been happy about the fact that the ties and shirts are made in China."

This is just the latest company that cut ties with Trump after Univision and NBC Universal ended their business relationship with the real estate mogul following those inflammatory comments.

Here's what Trump had to say about this controversy on "CNN TONIGHT" last night.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: They fold under pressure. That's the problem with our country. Everybody folds under pressure.

Macy's was unable to handle pressure. They folded like dogs.

JONES: So, there you have it. Donald Trump is still not backing down.

And given the history, this is not the last we are hearing of the story yet -- John, Christine.

(END VIDEOTAPE)

BERMAN: Thanks to Athena for that.

So, Athena mentioned that Donald Trump did an interview last night with Don Lemon on "CNN TONIGHT." It was fascinating, and I use that word euphemistically.

Don really pressed Donald Trump on the issues and comments surrounding Mexico and immigration. Donald Trump cited media reports to back up his claims that Mexicans are rapists as he said. Don Lemon pushed back. Let's listen.

(BEGIN VIDEO CLIP)

TRUMP (via telephone): Don, all you have to do is go to fusion and pick up the stories on rape and it's unbelievable when you look at what's going on. All I'm doing is telling the truth.

LEMON: I read "The Washington Post" and "Fusion" and that is about women being raped. It is not criminals coming across the border.

TRUMP: Somebody is doing the raping, Don. You know, somebody is doing it. Just saying women being raped. Well, who's doing the raping?

(END VIDEO CLIP)

BERMAN: Donald Trump, someone is doing the raping.

Now, it's important to note, Don Lemon is 100 percent correct. The article in "Fusion" that Trump keeps citing talks about women coming to the United States, how 80 percent are very high number are raped on the way here.

ROMANS: How dangerous the journey.

BERMAN: But officials across the border on their way here, by the coyotes, by the other people. It is not the article or people coming to the country and performing sexual crimes. So, it is interesting to hear that.

So, there's new trouble for Donald Trump's Miss USA pageant. The rapper Flo Rida has announced he is bowing out. He was scheduled to be a performer on the bill.

Craig Wayne Boyd, Natalie La Rose, and J. Balvin, they all dropped out as well. Retired NFL running back Emmitt Smith quit as a judge. There is one of the final five judges left on the panel.

NBC and Univision have already pull the plug on the network telecast, but officials do say the pageant will go on as scheduled. It will be streamed online on July 12th.

ROMANS: All right. Now to the Fourth of July holiday. Fears of an attack on American soil. The FBI and Department of Homeland Security and National Counterterrorism Center all say the threat much higher this Independence Day than last because of ISIS, and the group's aggressive use of social media. Officials fear Islamic State supporters could be inspired by the terrorists' call for attacks during the Islamic holy month of Ramadan.

Major cities like New York are deploying radiation detectors and other resources in waterways and in the air. Thousands of security cameras are already in place to help authorities patrol the streets.

(BEGIN VIDEO CLIP)

[04:40:04] JOHN MILLER, DEPUTY COMMISSIONER, NYPD: This may be potentially the most complex counterterrorism overlay for this event ever. I think you saw a couple of days ago, we had three coordinated attacks overseas in France and Kuwait and in Tunisia. So, given the world situation, we wanted to put those layers of protection behind the regular patrol piece.

(END VIDEO CLIP)

BERMAN: A dramatic serious attack in Egypt by ISIS. ISIS militants hit checkpoints. At least 17 soldiers were killed and dozens injured. The latest attack comes two days after militants assassinated the top prosecutor on the streets of Cairo. Now, concerns are growing over the terror group's expanding reach.

CNN's Jomana Karadsheh has the very latest -- Jomana.

JOMANAH KARADSHEH, CNN CORRESPONDENT: John, security officials in Egypt are describing this assault that we saw unfolding in the Sinai yesterday as unprecedented. At least 300 militants were involved that hit several checkpoints in the northern Sinai. They used car bombs and heavy weapons. It went on for hours.

ISIS affiliate in the region named the State of Sinai claimed responsibility for this attack, saying they attacked 15 checkpoints and used at least three suicide bombers. The assault was focused on a town called Sheikh Zuwaid 200 miles from Cairo, close to the Gaza border. There are civilians in that area and really a dramatic situation there, very describe a battlefield that was unfolding.

The Egyptian military was battling the militants in the area. Ambulances could not reach the town. Military reinforcements either because landmines were planted in the area. Air strikes overnight and Egypt says they are in full control of the area, 100 militants killed, 17 security forces. But a lot of concern about the new kind of tactic we are seeing and more sophisticated attacks by ISIS affiliate, John.

BERMAN: Huge concern it will continue.

All right. Jomana Karadsheh for us -- thanks so much, Jomana. ROMANS: All right. Are airlines working together to keep your ticket

prices high? A new investigation launched by the Justice Department. Details next.

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[04:46:12] ROMANS: All right. Developing this morning, several airlines promising to comply with federal subpoenas. The justice department looking into the possible coordination to limit capacity and keep a number of seats down so they can keep ticket prices high. The subpoenas, of course, rattling the stock market. Airlines stocks Shares of American airlines down 3 percent. Delta and United and Continental and Southwest and JetBlue down significantly.

For the latest on the federal probe, let's go to CNN's Rene Marsh in Washington.

(BEGIN VIDEOTAPE)

RENE MARSH, CNN AVIATION & GOVERNMENT REGULATION CORRESPONDENT: Well, we can confirm United, American and Southwest Airlines have all received demand letters from the Department of Justice. The feds are asking several major airlines for documents and communications that could prove they worked together to manipulate capacity of flights.

In other words, limit available seats and keeping planes full and ticket prices high for consumers. Now, consumer advocates have been suspect of the major airlines because they say multiple airline mergers means less competition and higher prices for consumers.

Right now, four major airlines control 80 percent of the market. But specifically, what sparked this federal investigation was a letter from Connecticut Senator Richard Blumenthal. He asked DOJ to investigate after learning about public comments airline executives made at an industry conference. In one instance, Blumenthal says Southwest Airlines CEO announced plans to expand capacity for flights which many in the industry believed air fare cuts were next.

Southwest CEO came under fire from others in the industry and had to quickly reassure investors the airline wasn't going rogue. The senator saying that was just one example that suggested industry collaboration.

Now, the airlines we have heard from all say they plan to cooperate with the investigation, but the allegation alone is a bitter pill for passengers. The four major carriers saved billions combined on fuel. They made millions and millions on baggage fees, and yet prices for consumers, it remains high.

Reporting in Washington, Rene Marsh, CNN.

(END VIDEOTAPE)

ROMANS: Yes, the real winners are always been shareholders. Shareholders have done well for the airlines in the past couple of years, not necessarily flyers, but shareholders really got hit yesterday. No question.

BERMAN: You are talking about investors. You want to know what they want to know this morning?

ROMANS: What?

BERMAN: What the heck is going on with Greece? What is happening with the situation there? Europe on edge. That country in crisis. Markets going bonkers. We are live with the latest right after the break.

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[04:52:35] ROMANS: Greece's debt crisis rattling markets all week. European stocks cautiously higher right now, so are stock futures. Investors hoping Greece and creditors figure out the situation. But, wow, yesterday, stocks swung wildly and then doubts the two sides can figure it out.

New negotiations are now on hold until after a referendum vote on Sunday.

BERMAN: The confusion in the markets reflects confusion on the ground in Greece this morning. It seems the leader there has overplayed his hand or perhaps cut off his own hands. Just hours after the prime minister told officials he is ready to accept the terms, he urged Greeks to vote no on the bailout referendum to strengthen his hand. When the Sunday vote comes, no one knows what the Greeks will even be asked for what the consequences of the vote will be.

I want to bring in Isa Soares live from Athens.

Isa, what's the next possible moment of clarity here?

ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: Good morning, John.

I think it will be after the referendum. We are not expecting to hear from the Prime Minister Alexis Tsipras, in the coming days. He spoke yesterday.

We heard from the Europeans. Europeans said they will not talk to the Greeks until post referendum. So, I think, now, the ball in on the Greek court and how Greeks will vote come Sunday. Like you said, many unsure exactly what they will be voting for, John.

Let me give you a taste of the mood on the ground. I've got two newspapers. It is a bit windy, but I'll try to show you here. This one says here, "Terror Machine." And this side, you've got pretty much the leaders of the trade commission, the IMF Christine Lagarde. And this is how they are pushing to vote yes.

This newspaper here, has both sides. On one side, you have "Cueing for a Few Euro." And this side, pushing Greece over the cliff and deceiving the Greeks. So, you see, some people here angry, furious, at how Prime Minister Tsipras managed the situation. Others say he played a strong and fair hand with Europeans, John. BERMAN: Interesting to see what happens. Isa Soares, thanks so much.

ROMANS: All right. The White House says for-profit colleges have taken advantage of hopeful students and it stops now. They are putting the bad actors out of business, calling unconscionable actions in higher education.

[04:55:00] We're going to get some real relief for students. We got that right after the break.

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ROMANS: I'm Christine Romans. Let's get an early start on your money.

Stocks are cautiously higher. European stocks and U.S. stock futures up a bit right now. Markets still getting whipped around by the Greece debt crisis. Yesterday, the Dow climbed 138 points, in hopes Greece and its creditors can come together.

Now, the big market mover, the June's job report, that comes out at 8:30 Eastern. CNN Money predicts 235,000 jobs added. The unemployment rate ticking down to 5.4 percent. Yes, it's only Thursday, but the market, tomorrow is a holiday.

All right. Puerto Rico avoiding default for now. The island made all its debt payments due yesterday. But investors authorities are worried that's just a temporary fix and it will miss future payments very soon. Puerto Rico is on the hook for $73 billion. The governor says it simply doesn't have the money to pay it.

The Obama administration cracking down on for-profit colleges. New regulations, brand new regulations will hold the schools accountable for the value of their degrees. The Education Secretary Arne Duncan told me there are too many students graduated from for-profit colleges with debt and zero job prospects.

(BEGIN VIDEO CLIP)

ARNE DUNCAN, EDUCATION SECRETARY: Either you're getting real skills that lead to real job, that's fantastic. We want more of that to happen. But too many of these guys took advantage. Taxpayers have been on the hook. People taking out these big loans have been on the hook. You have a worse financial situation when you started. Nobody signs up for that.

(END VIDEO CLIP)

ROMANS: In some cases, these schools -- these programs have been preying on veterans. Programs that don't meet the requirements are forced to make changes fast or shutdown. he says there's room for the good actors. The bad actors are going to go out of business.

BERMAN: The message.

EARLY START continues right now.