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Anderson Cooper 360 Degrees

O'Donnell and the Truth; Paladino on the Record; Home Invasion Horror

Aired September 16, 2010 - 23:00   ET



ANDERSON COOPER, CNN ANCHOR: Thanks for watching.

Tonight: Tea Party Republican Christine O'Donnell raking in nearly $1 million in donations in just 24 hours and being advised by Sarah Palin to talk to only friendly news outlets.

Tonight, why shouldn't those who want to lead us be able to answer tough questions? And as Karl Rove pointed out, there are plenty of questions to ask O'Donnell about how she's been handling campaign money. Tonight, we're "Keeping Them Honest."

Also tonight, the other big upset winner on Tuesday: Carl Paladino. He is he willing to talk. He joins us live tonight, sending out letters to potential voters that literally stink of garbage. Who's behind the junk mail? We will talk to him about that. And what's up with those racially offensive and pornographic e-mails he used to forward to his friends.

We will talk to him. The Republican nominee for governor of New York joins us tonight.

And later, "Crime & Punishment": a truly shocking story of a home invasion that turned into multiple murder. Newly-released video, a woman telling a bank teller her family is being held hostage. And, a short time later, she's dead and so are her two daughters. We will take you into the courtroom in one of the most shocking crimes we have seen.

We begin, though, "Keeping Them Honest" with Tea Party sensation of the moment and so far the campaign, Delaware's GOP senatorial nominee, Christine O'Donnell. Tonight, she's sharing a candidates' forum with her Democratic opponent, Chris Coons in Wilmington. She's trailing him badly in a poll out today, but in the money race, she's now raking it in, claiming close to $1 million in contributions in the last 24 hours alone.

Karl Rove, who dissed her primary night, did something of a 180 today. And long-time supporter Sarah Palin gave her some free advice about only talking to friendly media. Watch.


SARAH PALIN (R), FORMER ALASKA GOVERNOR: She is going to have to dismiss that. Go with her gut. Get out there. Speak to the American people. Speak through FOX News, and let the independents who are tuning in to you, let them know what it is that she stands for, the principles behind her positions.


COOPER: Well, it used to be that new candidates were advised to brush up on the issues, so they could handle questions from anyone, even tough questions. The idea behind that was that it prepared you also for actually governing.

But now the advice to candidates is only to talk to sympathetic reporters, either on the left or the right, depending on your politics. Remember, Arizona's Governor Jan Brewer, after tough questioning from reporters, she simply walked away.


UNIDENTIFIED FEMALE: Governor, why wouldn't you recant the comment you made earlier talk about the beheadings in the desert?

UNIDENTIFIED MALE: Seriously. That's a serious question, Governor.

GOV. JAN BREWER (R), ARIZONA: Well, this was an interesting evening tonight, and, of course, you saw a complete display of the difference between myself and Terry Goddard.


UNIDENTIFIED MALE: Can you answer the question, Governor? Please answer the question --

UNIDENTIFIED MALE: About the headless bodies. Why won't you recant that? Do you still believe that?

Come on, Governor.

BREWER: OK. Thank you, all.

UNIDENTIFIED FEMALE: Governor, what do you make --





COOPER: She also vowed not to debate her opponent anymore.

Nevada's Sharron Angle also has a history of walking or even sometimes running away from unwanted questions, sometimes Christine O'Donnell -- something Christine O'Donnell hasn't done so well when confronted with facts. We came across an interview she did with Delaware's WGMD Radio shortly before the primary. She was talking with Dan Gaffney, a radio host who actually backed her earlier Senate bid. Listen.


DAN GAFFNEY, RADIO TALK SHOW HOST: When you were speaking at an out-of-state group recently and you told them that you won two out of three counties in Delaware, what did you mean?

CHRISTINE O'DONNELL (R), DELAWARE SENATORIAL CANDIDATE: I don't think I ever said I won two out of three counties. But I --


GAFFNEY: Well, let's listen to the audio. Hold on one second, because I have the audio right here.

O'DONNELL: I was the 2008 endorsed Candidate in 2008 against Joe Biden, and I won in two counties. I didn't have the support of our liberal Republicans then.

GAFFNEY: You said you won in two counties.

O'DONNELL: All right. You know what that probably was? You're on the campaign trail a lot. I meant tied.


GAFFNEY: Well, you didn't tie.

O'DONNELL: You know, they have got a tracker following you, waiting for you to trip up.

GAFFNEY: Yes, but you didn't -- Christine, Christine --

O'DONNELL: So, I -- you know --

GAFFNEY: -- I'm just saying why -- you didn't tie him either.

O'DONNELL: Look at the result. Look at the result.

GAFFNEY: I did. He beat you. It was close.

O'DONNELL: And what did they say, 49-49? I call that a tie.

GAFFNEY: No, Christine, he -- he won in votes. You know that.


COOPER: That was WGMD's Dan Gaffney. We will see if Miss. O'Donnell takes Sarah Palin's advice and only talks with the like- minded interviewers. Long ago, she appeared on MTV and with Bill Maher. She wasn't a candidate then. And she spoke from her heart.

It would be a sad statement if, now that she's running for office, she is no longer willing to do just that.

A moment ago, I mentioned Karl Rove's criticism of Christine O'Donnell on primary night.

Today, he kind of walked it back a bit, saying he was simply dishing up straight talk as a FOX News analyst, pointing out he actually did endorse her, that he's -- quote -- "for the Republican in each and every race."

But he also repeated the original criticism.


KARL ROVE, FORMER SENIOR ADVISER TO PRESIDENT BUSH: But then she needs to also be able to answer these questions about her personal background, explain how she got behind on her taxes and her mortgage. Why she didn't take care of that college bill, and do so in a way that's frank and honest.

Look, everybody in their life sometimes has difficulties. And -- and honesty and candor is going to be the best remedy here. She can't get away with simply saying, my answer is on my Web site, or it's puzzling to me why the IRS would file a lien for me when I didn't pay my taxes in 2005.

I mean, it's -- she's got to be more honest than that. And if she does, she has got a shot to win. But it's got to be passionate and factual and hard-hitting.


COOPER: Well, Gary Tuchman has been doing some digging for us on another facet of the money theme, crunching numbers on how the candidate spent some of the dollars from her last campaign.

Gary, what have you learned?

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Well, Christine O'Donnell, Anderson, speaking at a candidates forum here in Wilmington, Delaware tonight says America cannot spend its way to recovery, but, tonight, major questions about her spending. At the very least, the questions are troubling. At the very most, she might have violated election laws.

We have documents right here that show Christine O'Donnell spent a lot of money on what appears to be personal effects, and it was not during a campaign, and it was campaign money. The spending of this money occurred three months after she lost to Joe Biden in 2008, a year before she announced she was going to run as a candidate in 2010.

Now, the FEC, the Federal Election Commission, allows you to spend money after a campaign to retire debt, but not to add to the debt. And she has lots of debt from 2008, which troubles a lot of people. They think it's hypocritical, because -- because she wants America to spend what it has. But let us show you some of these checks. You can decide for yourself if she should have written these checks from her campaign money. For example, a check for 475 bucks, she labeled it as mileage reimbursement. Remember, this is three months after the campaign is over. This means she drove hundreds of miles and she submitted this with campaign funding.

Also, $157 on a phone bill from Verizon Wireless; by all indications, this is her personal phone. Also, $28 at a gas station -- the gas station in the town where she's originally from -- Moorestown, New Jersey. She still has family there. This is campaign money. There's no campaign going on.

Six hundred dollars for her utility bill paid to Delmarva Power. Also, there are little piddly expenses, but increasing her debt. And these are very telltale. You wouldn't need to spend this for any campaign, let alone a campaign that is not going on anymore.

$19 at a place called the Pike Lanes. The Pike Lanes is a bowling alley. That would pay for about eight games of bowling.

Also $26 for a meal at Ruby Tuesday's restaurant -- campaign money once again.

And then she even used campaign money for a $2.84 charge at Staples. In addition, she paid rent money with her campaign funding.

Now, the home that she lives in right now, the townhome, doubles as her campaign headquarters; she lives there some time. So do her campaign workers. But this money for her rent was paid during a time when she was no longer in a campaign.

Now, we can tell you that her detractors say she does this because she hasn't had a real job for years. She has no source of income. She needs to live on campaign money.

Of course we wanted to talk to her about it. I talked to one of her top aides face to face last night.

I said we have a lot to ask her about.

He said she's too tired to talk to you. Try to talk to her tomorrow. Send us a request.

We sent a request. We heard nothing. I saw her today at the campaign forum, asked if we could talk to her. Her aide said she again did not want to talk.

We have talked to some employees of hers who quit. They say they were not paid money they were owed, and they are very angry that she has spent so much money on charges like we just read to you -- Anderson.

COOPER: You know, her supporters would say, look, this is just Democrats trying to dig up dirt on her and that these amounts are kind of small amounts, a couple of hundred dollars here, a couple of hundred there.

What does the state Republican Party -- what does the state Republican Party have to say?

TUCHMAN: Right. The state Republican Party here in Wilmington, Delaware, the chairman of the party before the election was strongly in favor of Mike Castle.

What's being said now is that -- they came up with a statement -- they will support all Republican candidates, but conspicuous by its absence was no mention of this particular candidate, Christine O'Donnell. I called and asked, does that mean you are supporting her, you're not supporting her? They wouldn't comment.

We were talking about former employees, Anderson. This is important. Today, we talked to a former financial adviser who worked for the campaign for two months, and he said he had to quit as a financial adviser because he was aghast at what he saw.


UNIDENTIFIED MALE: She would withdraw money for mileage. She doesn't own a car, didn't own a car at the time. And you can only do one or the other, take the mileage expense or gas. She was doing both.

TUCHMAN: So, this is after -- she's not even running for anything anymore.

UNIDENTIFIED MALE: No. She should have been paying anything left over. And anything that came back in should have been paying off debt. None of that --


TUCHMAN: But she was using it to go bowling?


TUCHMAN: As a campaign expense?

UNIDENTIFIED MALE: Yes, and paying --

TUCHMAN: But there was no campaign.

UNIDENTIFIED MALE: And paying rent.

TUCHMAN: And paying her rent with it?



COOPER: Gary, there's also been a lot of questions raised about her -- her college record. What have you learned about that? TUCHMAN: She has very -- she has very much stressed throughout her life that it's never proper to lie, that you should always tell the truth, but many people who know her, many people who used to work with her say they have always assumed she was a college graduate, because she told them she was a college graduate.

She went to Fairleigh Dickinson University in Bergen County, New Jersey in the 1980s. Well, it turns out she wasn't a college graduate. Just this summer, she graduated college. She had to take an additional course. There were apparently some financial issues, but she had been saying, according to many people, she was a college graduate. And it turns out that she wasn't.

Also, another issue that comes to the credibility factor, her last job that we know was in 2004. It was for a conservative think tank here in Wilmington, a publisher. And she ended up getting fired from that job. And she wasn't happy she was fired. She ended up suing them, claiming gender discrimination, and suing them for $6.9 million.

Now, the reason why that's relevant, the case was eventually dropped. She dropped the lawsuit. Don't know why. She dropped the lawsuit. She did say she couldn't afford it, but we don't know if there's more to it.

The reason it's significant, though, is there are so many people, particularly conservative Republicans, particularly people in the Tea Party, who are aghast at our legal system and that people sue for so much money. And she sued for $6.9 million.

As far as the people at that conservative institute, they say they can't talk on camera because they don't want to stir up a legal hornets' nest, but they do imply she's lying, not telling the truth. Their quote to us -- they gave us one quote -- they said, "The good reputation of the institute stands for itself."

Now, it is important to tell you that at this forum tonight and all over the state of Delaware, there are many supporters of this woman. Obviously, she got lots of votes. She won the primary. But, still, they know there are these accusations. They feel it's an absolute witch-hunt.

We talked to a couple who are very active in the Tea Party, and they say they're standing by their candidates.


UNIDENTIFIED FEMALE: It makes me feel, once again, just like she's just like me and just like a lot of the other Delawareans that have had problems paying their mortgage, have, you know, taken years to pay off their school loans. I just feel like she's one of us.


COOPER: And who, during all this time, was the treasurer of her campaign? TUCHMAN: This is really interesting.

Under FEC laws, you must have a treasurer when you're spending campaign money. And according to the FEC document that we have investigated, for 13 months between July 2009 and between August 2010 while she was spending money, there was no treasurer.

The treasurer was Christine O'Donnell. That appears to have violated FEC laws, but the FEC has to determine that. Now, why haven't they determined that yet? Here's what has to happen.

There has to be an investigation. And we have just been informed that a nonpartisan watchdog group called the Citizens for Responsibility and Ethics in Washington is filing a complaint this Monday with the FEC about all the information and more that we just told you about -- Anderson.

COOPER: Interesting.

Gary, appreciate the reporting. Thanks.

Let's bring in the political panel: senior political analyst David Gergen, political analyst Roland Martin, and Ari Fleischer, former White House spokesman for President George W. Bush.

Roland, what do you make about this? Is this much ado about nothing? The amounts that we're talking about that Gary was uncovering, those checks written with campaign funds, were pretty small amounts.

ROLAND MARTIN, CNN CONTRIBUTOR: Three words: integrity, credibility and honesty.

When you have people in the Tea Party who are protesting, who are saying the President of the United States and this Congress is lying, when they are saying they cannot trust the word that's coming out of elected officials, these are some critical matters.

And I think Sarah Palin is disingenuous and she is ridiculous to assert that you should only talk to Fox News and you should only talk to friendly people. If she -- if O'Donnell wants to have the integrity and be a member of the United States Senate, she should have the guts to stand in front of the media and answer these questions.

If she has a plausible answer, fine. Give it. But stop trying to run from it. Deal with it head on, and not ignore it.

COOPER: Ari, what about it? Is this just sort of nitpicking by Democrats?

ARI FLEISCHER, FORMER GEORGE W. BUSH WHITE HOUSE PRESS SECRETARY: Well, no, I think these are issues that she's going to have to deal with. That's what campaigns are about.

But I think what's also going on here is two things. One, in a year in which people are really fed up with the excess spending, the huge amounts of government waste, and the big debt our country has, these personal foibles that somebody has become side issues, because people are really focused on the bigger policy issues. And I think that's what's driving in Delaware.

But there's another factor, Anderson, that riles up the conservative base of the Republican Party. And that's the mainstream media. I think there's a real sense here that this is overkill.

Where is the coverage of Charlie Rangel's win in Harlem, where you have one of the most corrupt members of Congress who got reaffirmed by the people of his district to come back to Washington? What does that say and mean about the Democratic Party?

And when it comes to all the gaffes that she was making in her statements, if gaffes disqualify you from office, Joe Biden never would have made it to the vice presidency. But he gets a pass from most of the National Press Corps.

MARTIN: Oh, Ari, come on.

FLEISCHER: So, I think there's also a sense -- I think there's also a strong sense at the conservative base of the party that when these things happen to conservatives, particularly women candidates, Sarah Palin and now Christine O'Donnell, there is a piling-on factor that doesn't similarly happen when there are candidates on the other side of the aisle.

COOPER: David, do you think that's true?


COOPER: Yes, do you?

GERGEN: No, not really. I -- my friend Ari and I disagree on some of this.

You know, he talks about flaws. These are not flaws. These are fundamental issues. This is a candidate who has had trouble with money, trouble with jobs, trouble with the truth. And those are pretty fundamental to any candidacy.

I think the interesting thing, Anderson, in all of this is, the Republicans brought up these issues during the campaign. You know, the Castle campaign ran against her based on a lot of this, had advertisements bringing this to public attention.

I think it's a measure of how angry the people in the Tea Party are, how frustrated they are, that they were willing to overlook all this and say, we still want to send a message.

FLEISCHER: But that's the point I'm making.


FLEISCHER: These are legitimate issues she has to deal with.

MARTIN: Anderson --

FLEISCHER: But when an election is driven so much by substance and policy, the spending problems in Washington. That's, I think, why people are willing, in an election cycle like this, to not weigh those measures as seriously as they normally would.

MARTIN: But, Anderson --


COOPER: Wait Roland, we have got to take a very quick break.


COOPER: But we're going to have our panel continue just on the other side of the break.

The live chat is up and running. Let us know, do you think this is important? Go to Weigh in from home or wherever you are.

Just ahead, also joining us, Carl Paladino, the bigger upset winner from primary night. He's now sent out garbage-scented letters to people he wants to elect him governor of New York to express his belief about corruption in Albany. We will talk to him about that and a lot of other things.

And, also, new video -- heart-wrenching moments in a home invasion murder trial. The defense is trying to shift blame onto the police. This is the woman. This is the last time we will see this woman alive, as she's telling a teller at a bank she needs money and that people are holding her family hostage.

We will be right back.


COOPER: We're talking about Christine O'Donnell. She's got enthusiasm on her side, a tidal wave of money, but also some questions dogging her.

We're back with our panel: David Gergen, Roland Martin, and Ari Fleischer.

Roland, you were about to say something?


I mean, look, Ari, I get this whole deal in terms of wanting to criticize the mainstream media. But, please, don't sit here and talk about piling on. Then you bring up Charlie Rangel.

Wait a minute. The Republicans brought up these very same charges against her. The voters in the primary elected her. The allegations were placed against Congressman Charlie Rangel. The voters there elected him. So, what's the difference there? You should, as a -- as person who stood and represented the president, you should be saying to her, answer the questions.

This isn't piling on. And to suggest that, well, we have overspending in Washington and people are tired of that, well, if you are sitting here spending campaign money for personal reasons, how are you then going to handle the people's money if you're put in the U.S. Senate? It's about trust.

FLEISCHER: Roland, rewind the tape. The very first thing I said is these are issues that she is going to have to answer to. That is part of a campaign. And I said that.

MARTIN: Yes, but sort of justifying it by blaming the media.

FLEISCHER: But here -- but here's the point.

Her opponent is getting no scrutiny. Now, he wrote a paper when he was in college -- I saw this today on the Internet, and it's true -- that he described himself as a Marxist with a beard.

Now, I would much rather have a lot of folks on, what does it mean to be a Marxist? What is his ideology? Where are the issues in this?

Yes, she deserves scrutiny and she has to give answers. But, right now, all the arrows and all the darts are pointed at her, and her opponent has been given a total free pass.

MARTIN: OK. Then we should then cover both people. Don't say --


COOPER: But, Ari, is -- is -- I mean, is something one wrote in college -- I mean, if we're all held to that standard, I can't even remember what I wrote in college, but I mean I certainly didn't describe myself as a Marxist or anything and certainly would have never done that, but, you know, I think I probably wrote some pretty stupid papers.

FLEISCHER: Anderson, and if I describe myself as being an extremist in college, I think people wanted to say, well, are you still, or when did that change, what was the path, what did you go through?

COOPER: Fair enough.

FLEISCHER: My point is, it's -- he's scrutiny-free right now, because the only person getting the scrutiny is Christine O'Donnell. She deserves scrutiny, but she's not the only one.


COOPER: David? FLEISCHER: And that's my point.


I think Ari has a legitimate point about what you write in college. The Republican candidate in Virginia for governor went through a scalding campaign because of what he had written as a student. And all of that was sort of revived during that. So, he has a fair point that this ought to be -- both candidates ought to be revived.

But, Ari, my point here is on Christine O'Donnell, I think the reason why she's now -- she's burst into the spotlight as the woman who's probably cost the Republicans their chance at winning the Senate. She is going to certainly contribute to a fear among Republicans about crossing lines and working with Democrats, as Mike Castle did.

You know, voting for cap and trade as he did, and have that bring him down sends a very big signal that it's going to be extremely hard to govern and form bipartisan majorities, no matter who wins in these elections.

And, finally, this election with her, you know, is probably going to drive or draw a lot of the Republican candidates for president -- you know this -- draw them to the right. We're going to have -- we're -- you know, Mitt Romney was described in "The Financial Times" today as a guy who really lost Tuesday night, because he's too moderate.

Mitt Romney -- give me a break -- is too moderate.


MARTIN: Anderson, Anderson, I have to --


MARTIN: I'm sorry.

FLEISCHER: There's no question Mike Castle would have won that seat. And, so, you can't argue that point.

Now, I don't know that Christine O'Donnell has a chance to win. But I also know that when Rand Paul defeated the establishment candidate in Kentucky, people said Rand Paul can't win. And, of course, Rand Paul is winning. So, you have to let this thing settle in Delaware and see where it goes.

COOPER: She also just made close to $1 million. She has now a lot of money in the coffers, and more is going to be pouring in.

To Ari's point, the more, you know, folks in the liberal media attack her or the mainstream media or, you know, ask questions, the more her supporters seem to rally around her and raise money for her.

MARTIN: And, actually, the more the liberal media attack her --

FLEISCHER: These ideological struggles within parties also can be healthy.

And I don't want it to go too far. And I do think Republicans have to be careful that we -- say to people in New England and the center Atlantic states you're not welcome, because there are areas we need moderates to win.

But it is important to let the ideological struggle play itself out and to see which part of the country -- party emerges, but then you also have to build coalitions. Parties have to do both. Republicans have to do both. Conservatives have to do both.

MARTIN: And obviously, Anderson, hopefully, the conservative media will also pay attention, cover these stories as well.

But I also -- I also need to speak to this issue that David brought up. And that is the election hasn't taken place yet. And I think it is wrong for us to somehow assume is that, look, this is written off, that she's going to lose.

Look, all the same people who said Mike Castle, this awesome politician, elected statewide so many times, will blow her away, he lost. And so, if you're a Democrat sitting out there and you somehow think this is going to be a cakewalk, she's going to be hitting the ground, hitting those doors.

And so I just don't make that assumption. I would say you better get your folks out.


MARTIN: Or, you know what? O'Donnell might very well be the U.S. senator.

COOPER: It seems to me every year, or every few years, we learn this lesson in TV land, that pundits -- and I mean no offense to you guys -- but don't get it right.

I mean I remember a pundit predicting John Kerry, on the eve of that election, that he was going to be the president.

MARTIN: Count the votes.

COOPER: Right. I mean, so it's up to the American people, and we're seeing that, you know, we're reminded of that every single time.

MARTIN: That's right.

COOPER: And thank goodness for that.

COOPER: Roland Martin, Ari Fleischer, David Gergen, thanks very much.



COOPER: Coming up: the man who wants to be governor of New York, Tea Party favorite Carl Paladino. He rocked the Republican establishment on primary night, and he is promising to shake things up if elected. He's also making a stink, literally, with new campaign mailings that smell like garbage.

We will talk to him about that and a lot of his other positions.

Also tonight: Her story shocked the nation. She claimed an attacker threw acid in her face. Tonight, police say that story is changing, and the bottom line could be even more shocking.


COOPER: Ahead on 360: a deadly storm ripped through New York City. Trees were toppled. Thousands were left without power. We are going to have the latest on that coming up.

But, first, Isha Sesay joins us with a "360 Bulletin" -- Isha.


We have learned tonight that an alleged acid attack in Washington State was self-inflicted. Bethany Storro claimed that an unknown assailant approached her in Vancouver, Washington, on August 30th and threw acid into her face. The Vancouver police now say she admitted she did it to herself. Storro could face criminal charges.

Baltimore police say Johns Hopkins Hospital was the scene of a murder-suicide today. A man who had just received an update on his mother's condition shot and wounded a doctor. Police say he then killed his mother, before taking his own life. The doctor is expected to survive.

Pope Benedict XVI opened a four-day state visit to Scotland and England today by meeting with Queen Elizabeth II at her Scottish residence near Edinburgh. He then celebrated mass with tens of thousands in Glasgow before flying on to London.

And just before the Pope's arrival, Anderson, Britain's Advertising Standards Authority censored an ad by an Italian ice cream maker. Take a look at this. The ad showed a pregnant nun eating ice cream with the tagline, "Immaculately conceived." The company said it was using humor to send a message that -- quote, "Ice cream is our religion."

Anderson, what do you think? Too much?

COOPER: Not a lot of people laughing there about that, Isha. Yes.

We will check in with you in about 20 more minutes for some more headlines.

A lot of people saying politics stinks especially the man we are going to talk to next, at least politics in New York. Carl Paladino won the Republican nomination for governor of New York on Tuesday, shocked a lot of, well, so-called experts. I will talk to him about the letters he's sending out now and some other things.

Also, bank surveillance video catches the final moments of a woman's life -- what happened to her and her daughters next and who is trying to now blame the police. It's our "Crime & Punishment" story -- ahead.


COOPER: One of the biggest surprises from Tuesday's primaries was in the Republican New York gubernatorial race. The Tea Party candidate, Carl Paladino, a wealthy conservative businessman, stunned the establishment by beating GOP favorite Rick Lazio.

In this open letter to New Yorkers, former Republican senator Alphonse D'Amato joined two Democrats, former New York Mayor Ed Koch and former state comptroller Carl McCall, in blasting Paladino for being what they said was unfit to serve as governor; calling him dangerous, divisive, and they said he's running a disingenuous campaign. I'll talk to him about that in a moment.

Meanwhile, Mr. Paladino is pressing on, recently sending out a campaign mailer that actually smells like garbage. The scent is meant to drive home Mr. Paladino's message that something stinks up in Albany, which is the state's capital.

Joining me now is New York gubernatorial candidate Carl Paladino.

How did you come up with this idea to send out mailers that actually smell like garbage?

CARL PALADINO (R), NEW YORK GUBERNATORIAL CANDIDATE: Well, I've been feeling my way through the political scene, and somebody suggested that they have this type of thing available. So we -- we looked into it.

And it's just basically a folder, and then when you open it, the -- when the oxygen hits the card, the stink starts, and the longer you keep -- the longer you keep it open the --

COOPER: The worse it gets?

PALADINO: Oh, sorry. Yes. The longer you keep it open, the worse the stink gets. And that's --

COOPER: I'm not sure if -- you're definitely catching a lot of attention with it. I'm not sure if you're going to anger some people who open it and don't want the smell, but I guess that, we say, it's a political gamble you're taking. PALADINO: Actually, we have received absolutely no complaints. We've received no complaints, and we've -- we've actually had a lot of people commend us on it.

COOPER: All right.

I just want to go over a couple of your positions for our viewers who may not have followed your campaign up until now.

Abortion -- you oppose it. What about in the case of rape or incest?

PALADINO: No. They have adoption available for them.

COOPER: You have a plan for the unemployed and people on welfare and I was reading about it on your Web site today. You basically suggest renovating prisons and unused college campuses and say that those on welfare would live in these facilities voluntarily, I assume.

And you say, quote, "Instead of handing out the welfare checks, we'll teach people how to earn their check. We'll teach them personal hygiene, the personal things they don't get when they come from dysfunctional homes."

I mean, your critics are saying this sounds a little bit like you're saying people who receive unemployment or who are on welfare are dirty, that they need personal hygiene lessons.

PALADINO: No, that's not the case. We're talking about a dignity corps that would help people who are disadvantaged move into the mainstream of our society. It would give them a pathway to a fulfilling life.

Yes, it would be basically for able-bodied people who are not otherwise accepted, and the majority of welfare recipients are -- would be accepted. But for those that are able-bodied it would be mandatory. It's a work for the check.

COOPER: But is there a dignity in sending them to a prison?

PALADINO: No, it's not a prison. The facility that we're discussing was an old tuberculosis center in -- up in the Adirondack area of New York, and it was for sale by the state of New York. And I said rather than sell it we could use such a facility by just taking the barbed wire down. It's an old hospital facility. It was a dormitory style.

COOPER: But you've also talked about prisons and correctional facilities. I'm sorry. We have a bad delay, so that's why -- I don't want to seem like I'm jumping over you. So there's a slight satellite delay.

But you have said about, you know, reforming old prisons and, you know, retraining guards to become counselors. PALADINO: Yes. Because obviously, we have a problem in the state right now with our correction officers. We have less -- we have less prisoners in our prisons. They're shutting down facilities. And in order to keep those people working, to keep those correctional officers, many of them could be retrained to be guidance -- guidance counselors in such a program.

COOPER: Why are you saying, though, that people on welfare need hygiene lessons?

PALADINO: I trained troops part of the time I was in the reserves, and at that time I learned that a lot of people from dysfunctional environments, they didn't know how to take care of themselves. And I made that remark, that we could help them with personal things such as don't wear wet socks, wear two socks and brush your teeth twice a day and other hygiene and other matters that involve the individual.

COOPER: And you say this would be mandatory, people on welfare would be mandated to go live in these -- in these places?

PALADINO: Not people -- and they're not mandated to go into that program. They could go into the education program. They could go into an urban program and live at home. They could -- it's only applicable to those who would choose to go into the rural program and work, say for instance, in the Adirondack Mountains or in the -- in an environment that was not at home. Otherwise, they could stay home.

I mean, it's totally voluntary, where you go into the program. Most people we feel would take the education option and be able to get an education to lead them into a more fulfilling life. It's intended to help people with their self-esteem and to find a pathway into our society.

COOPER: I know a lot of people brought this to your attention this year during the campaign, but now that you're the Republican candidate, you're probably new to a lot of people. So I need to ask you about it again.

You forwarded a number of X-rated e-mails, one even showing bestiality, a woman and a horse, to an e-mail list of your friends and associates. How does that jibe with conservative values that you say you hold?

PALADINO: I apologize to those that were offended by me forwarding e-mails to a personal group of friends. I forwarded them, I did. I'm in the construction industry. We've got all kinds of nonsense like that on a daily basis.

The real obscenity, though, was Albany. The real obscenity is the high crimes and misdemeanors that we've allowed our political class to take, and feeding at the public trough.

COOPER: You're saying you've apologized to those who found it offensive. I mean, don't you -- do you not find an e-mail with a woman and a horse, you know, an X-rated video, isn't that offensive? PALADINO: To be frank with you, I don't particularly remember that one. I remember some of the other ones that --

COOPER: Well, you did send it, though. All right. You're not -- you are saying that it's offensive, isn't it?

PALADINO: I did, yes, I assume I did.

COOPER: It's offensive though, isn't it?

PALADINO: It definitely is offensive. Yes. Of course.

COOPER: You also forwarded a number of racially offensive e- mails. One of them used the "N" word. And I'm showing our viewers one that you said showed the rehearsal for President Obama's inauguration, which is basically images of, I think, some sort of tribal dance in -- and I'm assuming in Africa.

You've said in the past this is just humor, but I mean, I don't understand. Why would up find that funny?

PALADINO: I look back on it and I say, yes, it probably was offensive to some people. I understand that.

COOPER: But was it offensive to you? Saying it's offensive to some people, that's not really saying it's offensive. Is that offensive?

PALADINO: Most -- most of the time in sharing these e-mails back and forth, we were paying very little attention during the heat of the day. It was careless. There's no question about it.

COOPER: But I mean, are those -- are those e-mails offensive?

PALADINO: Of course they're offensive. Yes. I understand how they could be offensive to people, and I've apologized for them.

COOPER: I appreciate your time. I'd like to go over a lot more issues. I hope to have you on the program again. I appreciate you coming on early in the program.

We talked about, you know, many politicians these days not wanting to come on programs where they feel they may be challenged. I appreciate you coming on and answering questions and we'd love to have you on again.

PALADINO: I don't have any problem with it. Thank you, Anderson.


COOPER: Mr. Paladino, appreciate your time.

Still ahead tonight, crime, punishment and a new look at a family's story. This case is unbelievable. It's happening right now in Connecticut. The court case is going on. Take a look at this surveillance video. This is a woman -- a wife, a mom -- desperately attempting to save her children's lives and her husband's life. They are being held hostage at home by some home invaders.

She's withdrawing $15,000 from the bank to pay off the men holding her family. What happens next is just unthinkable. We'll tell you, ahead.


COOPER: In "Crime & Punishment" tonight, a home invasion horror. Two ex-cons accused of slaughtering a Connecticut family, a mother and her two daughters tortured and then killed. The mom ordered to withdraw money from her bank. This is the surveillance photo from the bank, the last time we saw -- we would see her alive. She was trying to save her kids and save her husband, who were trapped at home being held hostage.

In the end, her two daughters and that woman died. The only survivor, the husband, the father, now facing the accused murders in court; describing to the jury the terror that went on inside that house.

Randi Kaye tonight reports in tonight's "Crime & Punishment."


RANDI KAYE, CNN CORRESPONDENT (voice-over): You're watching a wife and mother in a desperate attempt to save her family. This newly-released bank surveillance video shows Jennifer Hawke-Petit, 9:17 a.m., withdrawing $15,000 from her bank in the small town of Cheshire, Connecticut.

It was a Monday morning, July 23, 2007. About three miles away, something awful, something truly sinister was happening inside her home.

Her husband, William, was bound and gagged -- and along with her two daughters, Haley and Michaela -- was being held hostage. Their mom hoped the $15,000 would be enough to convince the two men who allegedly broke into her home the night before, to spare her family's lives.

At the bank she reaches out for help but has to be discrete, because one of the two alleged kidnappers was just outside. The bank manager quietly calls 911.

9:21 a.m., Cheshire police first learn of the home invasion and hostage situation.

UNIDENTIFIED FEMALE: We have a lady who is in our bank right now who says that her husband and children are being held at their house. The people are in a car outside the bank. She is getting $15,000; that if the police are told, they will kill the children and the husband. She is petrified. KAYE: Minutes later, she leaves the bank with the ransom money.

UNIDENTIFIED FEMALE: They told her they wouldn't hurt anybody if she got back there with the money. She believes them. I think she's walking out now. She's walking out now.

KAYE: 9:26 a.m., Hawke-Petit gets into her car along with suspect Steven Hayes. The bank manager describes the vehicle to police. Officers are dispatched to the house to set up a perimeter.

9:27 a.m., a police captain tells officers not to approach the house. Almost 30 minutes go by; still, not a single officer approaches the Petit home. No other authorities are alerted. Not the fire department, not state police.

In court, police testified that was protocol. In a hostage situation, they said, they don't storm the house. Adding they had no reason to believe anyone was in immediate danger.

At 9:54 a.m., a police dispatch. Dr. William Petit, who would turn out to be the only survivor of this horrific crime, was in the yard calling for help. He was bleeding badly from his head, his ankles still tied.

(on camera): By now, nearly 40 minutes had passed since the bank manager had warned Cheshire police about the nightmare scenario unfolding at the family's home. Forty minutes.

Police would soon learn that Jennifer Hawke-Petit had been strangled; she and one of her daughters, sexually assaulted.

In chilling testimony, Dr. Petit described how he had been beaten with a baseball bat then tied to a pole in the basement. He said the suspects yelled to him, quote, "Don't worry. It's all going to be over in a couple of minutes." And it was.

Dr. Petit managed to free himself through a basement door, but minutes later the house was on fire; his wife and two daughters dead.

Hayes has pleaded not guilty to sexual assault and murder. Around 10 a.m., the suspects race out of the driveway in the family's SUV. As smoke billows from the back of the home, the suspects slam into police cruisers. Only then do officers realize the situation was much more urgent than they had thought.

Randi Kaye, CNN, New York.


COOPER: It's just so sickening, the story, a family just tortured and slaughtered, allegedly by these two men.

Police say the suspects met at a halfway house and then plotted their home invasion crime that ended with those deaths of the mom and two daughters. We told you one of the men, Steven Hayes, is now on trial for his life. To try and save Hayes from the death penalty, defense attorneys are pointing the finger at the police, of all people, saying a delay in flawed response to the scene contributed to the tragedy. It's a risky argument to say the least, but is it true?

Senior legal analyst Jeffrey Toobin and "In Session" law enforcement analyst, Mike Brooks joined me earlier.


COOPER: This case is just so stunning. I mean, from what you know, Mike, should the police have done anything differently when they arrived on the scene? I mean, it was some 33 minutes before they actually saw the people leaving the house that they got -- seemed to really get involved.

MIKE BROOKS, "IN SESSION" LAW ENFORCEMENT ANALYST: Well, you know, Anderson, right from the time of the 911 call from the bank teller, telling 911 that, "Hey, this woman is here. She's in our bank. She says that they've been very nice, that if they give them the money, that they'll go away."

From the time of that call to the time police were able to get a perimeter set up around that neighborhood, and -- but they actually also had someone outside with eyes on the house, trying to find out what's going on inside.

COOPER: And they said there was nothing unusual that they could see from the outside going on.

BROOKS: Exactly. From the information they had to work with, from Mrs. Petit, and their procedure that I think they were following, because you don't want to go rush right in. You know, they don't know what the situation's going on inside that house. It could have made things even worse.

COOPER: It's sort of damned if you do, damned if you don't.

BROOKS: Exactly.

COOPER: Had they rushed in and something bad happened, the police would be blamed. I hate to second guess police in something like this, but I mean, it just -- Jeffrey, I mean this is just -- it's every -- it's the worst -- it's sort of a nightmare scenario, someone invading your home. It just seems so horrific that it can actually happen, and it's a bizarre strategy by the defense. They're blaming the police.

I mean even if they had made a mistake, their client still allegedly committed the crime.

JEFFREY TOOBIN, CNN LEGAL ANALYST: You know, we've all covered a lot of crimes, and I remember vividly when this happened in Connecticut thinking, this is the worst. This is the single worst crime I have ever encountered, at least in the United States. And in terms of this defense strategy, the answer is, so what? If the police made a mistake, so what? How does that help the defense?

I think the approach here and look, the defense lawyers have to say something, is simply to throw things against the wall, try to blame someone else, try to complicate the story, try to deflect attention.

I don't think it's going to work. But I certainly don't blame them for trying it. It is certainly better than focusing on the behavior of their client.

COOPER: And they had tried to go for some sort of a deal that they would get life in prison, you know, if they pleaded guilty, but the husband who survived doesn't want that.

TOOBIN: Right, and Mr. Petit has become a political figure in Connecticut, and in fact, a state which technically has the death penalty on the books but has hardly executed anyone over the past several decades. Mr. Petit has become a leader of the forces bringing it back. And he brings, of course, a moral authority and political attention to the subject that it really hasn't had in many years there.

COOPER: You know, Mike, you look at this, especially the bank tape of her, you know, the last images we see of her before she ends up being strangled and raped and killed, if you're the teller, I mean, I guess the teller did all she could.


COOPER: I mean, she -- they got the money and alerted the police. I mean, it's one of those difficult situations where people say, "Look, don't call the police," but you have to call the police.

BROOKS: Oh, they did the absolutely right thing, Anderson, by calling the police while she was still there in the bank. And they were able -- even able to say, well, look, no, there's one person in the car, so that they knew that there might have been another person back at the house.

And again, it seemed as if Mrs. Petit thought, "Well, if I give them the $15,000 they'll go away and leave us alone, because they haven't done to us as of yet."

TOOBIN: You know, Anderson, in terms of legal strategy, what's going on here, the real defense strategy is to have one defendant blame the other because they're being tried separately. And that is really the heart of the defense attempt to avoid the death penalty is to simply say things got out of control because of the other guy.

COOPER: It reminds me of "In Cold Blood," the Truman Capote, you know, book based on the killings in Kansas back in --

TOOBIN: It is -- it is that scary and that bad. COOPER: Jeff Toobin, Mike Brooks, appreciate you being on. Thanks.

BROOKS: Thanks, Anderson.

COOPER: We're going to continue to follow that story, let you know what happens to the accused killers.

Up next, new video of the deadly storm that tore through New York City a short time ago. We've got the damage and the details of that.

Also a new book claiming that Michelle Obama, the first lady, told France's first lady that she can't stand being first lady and her life is hell. What the White House is saying about those comments, next.


COOPER: All right. Got an update on some of the other stories we're following. Isha Sesay is back with the "360 News & Business Bulletin" -- Isha.

SESAY: Hi there again, Anderson.

A powerful and deadly storm blew into New York City early this evening. This video shows how fast the storm moved into the region. The New York Fire Department reports one person died when a tree fell on top of a car. The storm packing strong winds and torrential rains also left more than 25,000 people without electricity.

The Senate today passed a $42 billion bill designed to help small businesses hire new employees. Two Republican senators broke with their party to support the measure. The House has already passed its version of the bill.

A spokeswoman for first lady Michelle Obama denies that Mrs. Obama told the wife of the French president that life inside the White House is, quote, "hell". A new book claims the remark was made back in March. The French embassy in Washington also says it never happened. Anderson, something of a brouhaha there.

COOPER: A brouhaha indeed.

Hey, that's it for 360. Thanks for watching. I'll see you tomorrow night.

"LARRY KING" starts now.