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Anderson Cooper 360 Degrees

NSA Defends Surveillance; IRS Scandal Widening?; Wildfire Investigation Leads to Arsonist; Hit Man Testifies Whitey Bulger Involved in Murders

Aired June 18, 2013 - 22:00   ET

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

JOHN KING, CNN ANCHOR: Good evening, everyone. It's 10:00 p.m. here on the East Coast.

Tonight, what top intelligence officials revealed for the first time about the surveillance of U.S. citizens. Plus, a former air marshal and whistle-blower was slapped with an IRS audit after appearing in this documentary critical of the TSA. He says that audit was payback. And his story may be part of a widening scandal, a 360 exclusive tonight.

And the Black Forest fire has sparked a criminal investigation, looking, authorities are, for evidence of arson. Now, Colorado has been down this path before. Tonight, we revisit a stunning piece of detective work, how they caught the culprit behind the Hayman fire.

We begin with the breaking news, though, of another disturbing case, allegations of forced captivity and abuse in Ohio, this time in Ashland. That's about 60 miles southwest of Cleveland. According to the FBI, the victims are a cognitively disabled woman and her young daughter who were held captive for more than two years as house slaves.

At a news conference, authorities described what they endured.

(BEGIN VIDEO CLIP)

ERIC SMITH, FBI SPECIAL AGENT: Suffice it to say these victims were repeatedly exposed to subhuman living conditions, such as frequently being denied meals, access to bathroom visits. They were physically punished for toiletry accidents. And they were threatened not only with weapons, but also with vicious animals, to include pit bulls and pythons.

(END VIDEO CLIP)

KING: Pit bulls, snakes.

And our Pamela Brown has just learned more disturbing details, that the victims were forced to eat dog food and were at times starved, all this while the alleged suspects were giving their pet iguana food.

Three people now have been arrested, Daniel Brown, Jordie Callahan and Jessica Hunt, charged with forced labor and again, according to our Pam Brown, authorities are looking to make a fourth arrest. The U.S. attorney is calling it a case of modern-day slavery.

Scott Taylor covering this story for our affiliate WOIO, he joins me now.

Scott, first, what are you learning about the case? What is the latest?

SCOTT TAYLOR, WOIO REPORTER: Well right now, they are looking for that fourth suspect.

As you mentioned, your own Pam Brown reporting that. I do want to explain that investigators believe, John, this is just flat-out slave labor. That's what they were doing with this mom back in 2011. Jordie Callahan and Jessica invited her into their home and then according to this court document, they initially put her down in the basement along with her daughter and kept her down there.

Mom would come up and clean, do the laundry, actually go shopping for them and they kept her down there in and then eventually moved her up to an upstairs room, where they actually locked the doors at night and eventually nailed the windows shut so mom and her daughter couldn't get out.

KING: Well, then, Scott, how did she get away?

TAYLOR: Well, back in October, she was at a Family Dollar store, John, and she stole a candy bar. Police arrested her.

Then she started talking to them over the period of time and basically said that people back at my house where I live, well, they are mean to me. Remember, she has a mental disability, so police took their time questioning her and eventually handed her over to FBI investigators. They started taking a look at it. They went back to the house, and that's when everything started to unravel.

KING: And had she ever been reported missing?

TAYLOR: No, as far as we know, she wasn't reported missing. I believe at least her mom lives in Ashland. Occasionally, she would go back to that house. Then according to witnesses in the FBI court document, Jessica and Jordie would send somebody back over to her mother's house and bring her back.

KING: That's bizarre. Scott, you also spoke to the lawyer for one of the defendants. What did he tell you?

TAYLOR: Yes, Jordie Callahan's lawyer, John, tells me that these acquisitions are ludicrous. He was ready to go to trial over these same type of charges and even more serious charges in county court. Well, those charges were dropped. Then the FBI indictment came down today.

He tells me that this young mother who is only 30 years old could come and go as she wanted to, that everything, all these facts just simply aren't true, but investigators believe her. KING: Scott Taylor of our affiliate WOIO. Scott, fabulous reporting. We will stay on top of this case, this bizarre case as it moves forward. Thank you, Scott.

Now to Capitol Hill, where the House Intelligence Committee held a rare public hearing on the secret surveillance programs, those programs recently revealed by the former NSA contractor Edward Snowden. For the first time, top intelligence officials shared details about the telephone and e-mail surveillance the government conducts.

General Keith Alexander, he's the chief to NSA, said the programs have helped thwart more than 50 terrorist plots around the globe since 9/11, including would-be attacks here on the New York Stock Exchange and that city's subway system. He called the surveillance limited and focused and also described what it does not do.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Does the NSA have the ability to listen to Americans' phone calls or read their e-mails under these two programs?

GEN. KEITH ALEXANDER, DIRECTOR, NATIONAL SECURITY AGENCY: No, we do not have that authority.

UNIDENTIFIED MALE: Does the technology exist at the NSA to flip a switch by some analyst to listen Americans' phone calls or read e- mails?

ALEXANDER: No.

(END VIDEO CLIP)

KING: Snowden's leaks about the scope of these surveillance programs set off an outcry over privacy concerns. Snowden himself said he leaked the information because he felt these tools could be abused.

We should point out there is no way for CNN or any reporters to verify the testimony given at that hearing today.

Our chief congressional correspondent, Dana Bash, joins me now.

Dana, officials wouldn't or couldn't go into detail on the over 50 plots they say these programs have helped thwart, but they did elaborate on four of them. What do we know?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, that's right, four of them. Two of them were now. We got new information about them today.

The first is a plot to blow up the New York Stock Exchange. They said that was helped -- they stopped that by a program that allows them to look at Internet users, what they are doing abroad. The second is phone record surveillance and that they said helped stop a plot to give money to a Somali terror organization. Those are the two new information -- pieces of information we know about the terror plots. The second and the third and the fourth, you know, those are things that we knew before, John. The Zazi plot of 2009 to blow up the New York subway and then lastly preventing David Headley, someone who was going to blow up a Danish newspaper that did the cartoon about -- the anti-Muslim cartoon.

KING: What was administration's goal and the goals of other supporters of these programs going into the hearing and did they achieve it?

BASH: Their goal was pretty transparent and actually kind of unprecedented, and that was to join forces, lawmakers on both sides of the aisle to join forces with the Obama administration to try to lift the veil a little bit, demystify these programs and explain exactly what they do.

In that sense, they were pretty successful. It's the first time we heard publicly the idea of what goes into the programs, what they can and can't do. On the other hand, lawmakers were pretty clear going in, John, that they simply thought the best, most tangible way to calm concerns of constituents was to talk about the specific terror plots that were stopped and they weren't able to do that as much as they could because so much of it still had to remain classified because of protecting sources and methods.

And even the ones that they did put forward, even those they couldn't put a lot of meat on the bone because they say that even that would have hurt intelligence methods.

KING: Of course, this never would have happened had it not been for the leaks from Edward Snowden. He is the reason this happened and he was a major topic today. Let's listen to the exchange.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), MINNESOTA: How damaging is this to the national security of the American people that this trust was violated?

ALEXANDER: I think it was irreversible and significant damage to this nation.

BACHMANN: Has this helped America's enemies?

ALEXANDER: I believe it has, and I believe it will hurt us and our allies.

(END VIDEO CLIP)

KING: A lot of talk about Edward Snowden, but anything more specific about just how he did this and where he might be?

BASH: Not really and especially to the where he might be. I mean, you heard a question. The question was, what is next for Snowden? The answer was justice, but they can't bring him to justice because they simply don't know where he is. Heard a lot of discussion about the fact that he's a liar, that he's a felon, that he talked about things that could be done with this program that you really can't do, like reading people's e-mails, listening to their phone calls.

But the fact of the matter is, he did unveil, unearth this program that the government has been running secretly for years for the first time. And that's why Mike Rogers, the Intelligence chairman, put it in a pretty descriptive way. He said this whole exercise is clean up in aisle nine.

KING: Clean up in aisle nine, that's a good way to -- a little supermarket talk in the Congress. Our chief congressional correspondent, Dana Bash, Dana, thanks.

President Obama has defended the surveillance programs as necessary in an era of terror. They were made legal, you will remember, in the Patriot Act which Congress enacted back when George W. Bush was president. Former Vice President Dick Cheney weighed in on the NSA controversy on FOX News recently, not exactly giving a shout-out to President Obama, but listen here. He does defend the government surveillance.

(BEGIN VIDEO CLIP)

DICK CHENEY, FORMER VICE PRESIDENT OF THE UNITED STATES: I'm obviously not a fan of the incumbent president. I don't know what he did to the program. The program, obviously, from what's now been released, is still in operation. I think it's good that it's in operation. I think it has, in fact, saved lives and it kept us free from other attacks.

(END VIDEO CLIP)

KING: Critics now of the Obama administration continuing this policy, most of them to the president's left, they say these were implemented by the Bush White House and why is this Democratic president keeping them?

Well, the president addressed those critics last night talking to Charlie Rose.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Some people say, well, you know, Obama was this raving liberal before. Now he's, you know, Dick Cheney. Dick Cheney sometimes says, yeah, you know? He took it all lock, stock, and barrel.

My concern has always been not that we shouldn't do intelligence gathering to prevent terrorism, but rather are we setting up a system of checks and balances?

So, on this telephone program, you've got a federal court with independent federal judges overseeing the entire program. And you've got Congress overseeing the program, not just the Intelligence Committee and not just the Judiciary Committee -- but all of Congress had available to it before the last reauthorization exactly how this program works.

(END VIDEO CLIP)

KING: Let's break this debate, including the raw politics, with CNN political contributors Paul Begala and Ari Fleischer.

Paul, to you first. This one is kind of delicious. It wasn't Charlie Rose who brought up the comparison to Dick Cheney. The president himself clearly has that going on when he thinks about this himself. Why go there?

PAUL BEGALA, CNN POLITICAL ANALYST: You know, because that's what is in his mind, obviously.

So, probably nothing could be more unkind to Barack Obama than bring up a failed, dishonest man like Dick Cheney and compare President Obama to Mr. Cheney. And there is an important difference.

I have been a critic of this program. I still don't like it. But there is a huge difference, as the president pointed out. When Dick Cheney and President Bush started doing this, it was not authorized by the Congress or supervised by the courts. It was on its own.

And, in fact, the attorney general himself, Bush's attorney general, John Ashcroft, was in a hospital and he and his deputy attorney general had to stop the program because they thought it was illegal, one of the most dramatic moments that we have learned about from the Bush administration.

That's the difference. President Obama has the authorization of Congress, the support of the Congress, and he's got the courts overseeing this and then within the executive branch there are checks and balances. I still don't like it, OK, but it's not illegal and it looks like it was under Mr. Bush and Mr. Cheney.

KING: Ari, jump in. I suspect you are going to get back at Paul's description of the former vice president.

But you have also said in the past this current administration on these issues is basically a continuation, a third Bush term, particularly on national security. After hearing President Obama last night, you tweeted this. "President Obama denies he's Dick Cheney. I love it. He's fighting with one of his straw men. Pretty funny, actually."

Tell us exactly what you meant by that.

ARI FLEISCHER, CNN CONTRIBUTOR: Yes, this is one of those weird issues, John. Dick Cheney is right. Barack Obama is right and Paul Begala is wrong. And that doesn't happen too often.

Here is what is going on. Barack Obama, to his credit, is continuing the very architecture he inherited from President Bush when it comes to drone strikes, when it comes to indefinite detention, when it comes to the NSA program, when it comes to secret renditions, when it comes to military commissions.

He is continuing the basic architecture he inherited from President Bush. To President Obama's credit, he has added some extra layers of due diligence to them, some extra audits to them. And the more time and space from 9/11, that's good and healthy. I'm glad he's doing that.

But make not mistake. The basic bones of how to fight terror, President Obama campaigned against and then he continued. The Bush- Cheney policies remain in place. Now, I understand why he doesn't politically want the comparison to Dick Cheney, but he's stuck with it. He is continuing the Bush-Cheney policies.

KING: Well, it's an important point you make about the add-ons.

Let's listen hear to a former -- this is President Bush's former NSA director, Michael Hayden. He's also a former CIA director. He was involved in helping to set them up and here is his take on how the new administration, the current administration has changed them.

(BEGIN VIDEO CLIP)

GEN. MICHAEL HAYDEN (RET.), FORMER CIA DIRECTOR: Frankly, the Obama administration was more transparent about this effort than we were in the Bush administration.

I mean, they made this metadata collection activity available to all the members of Congress, not just all the members of the Intelligence Committee.

(END VIDEO CLIP)

KING: Ari, all the members of Congress, not just all the members of the Intelligence Committee, but now that these leaks have happened, now that this debate is happening in the public, does the president have to communicate more with the American people?

And the NSA declassified a little bit of information. Does it have to do more or is that too risky?

FLEISCHER: Well, I think the president does need to communicate more. This is very controversial.

People are divided on it. When he has people in the own base of his party like Paul who are against it, the president needs to bring the Paul Begalas of the world over. What is most important is that this country have a bipartisan template for how to fight terror.

I want to see that bipartisanship as broad and as deep as is possible. So, it is the president's job to make the case for his policies, even if his political base doesn't like it. It's called leadership and it's required in this age of fighting terror. The president can do it. It just doesn't seem to be where he wants to put his political capital.

KING: And, Paul, what more does the president have to do to answer? Maybe he won't make you a convert to the program, but to answer your questions about it -- it is striking in this environment. This is a serious policy debate, but in the political forum that we saw today, Mike Rogers, the chairman of the House Intelligence Committee, a Republican, Michele Bachmann essentially going after Mr. Snowden and in doing so essentially taking the president's side.

BEGALA: Well, yes.

If you looked at that hearing today, I saw the coverage of it and Dana's coverage. The president is winning. If you look at the polls, the president is winning. He keeps pushing a couple points that I think are very important. Nobody is listening to your phone calls and nobody is reading your e-mails, and I think that's important, and then the checks and balances.

And that is critical. We're a nation of laws again. Under Bush and Cheney, President Bush and Vice President Cheney, we were a nation of men, not a nation of laws. We were doing things that were not authorized by the Congress or supervised by the courts. And that's a big difference.

It's like this. You can say Justin Bieber is just like Dale Earnhardt Jr. because they both drive 100 miles an hour, but Justin Bieber is doing it through a neighbor where it's illegal and Dale Earnhardt is doing it on a track at NASCAR, where it's legal and proper and entertaining. That's a huge difference.

KING: Let me jump in the poll thing a little bit, because our new poll, our new CNN poll does show the American people support this program. They support the idea that the government might have to do these things to fight terrorism, but we also have a clear majority, around 60 percent saying they think this president might be taking it too far.

So how does he balance that, saying to explain and to improve his numbers by talking to people and trying to dispute that notion?

BEGALA: Well, here is the question I would ask. What was the option that went too far? In other words, this seems to me, if you're listening in on every single phone call in America, my lord, that seems pretty broad.

And I have been in the government. Ari has been. Usually, it's like Goldilocks and three bears. Right? One policy is too big, one is too small, you settle on the one in the middle. What was the proposal that was bigger than this? Maybe we need to have it. Maybe the president is right and Dick Cheney is right.

I still am not convinced at all that there was not a less intrusive way of doing this.

KING: Is part of the problem, Ari, that the director of national intelligence, Mr. Clapper, did tell Congress -- he answered no and then said, well, not wittingly when he was asked if they even had this information. Is there, I heard Senator Rand Paul today say, a credibility gap? FLEISCHER: Yes, that was a problem.

You cannot go before Congress and give an answer that like that. And that's created part of the problem. And it's a shame that he took that step. But it doesn't change the bigger fact here, and the bigger fact here is these steps are necessary to keep us safe.

And let me rebut what Paul said, because we all know the drone strikes program that President Bush had were legal and authorized, military commissions legal and authorized. The so-called warrantless wiretaps is a misnomer. They were not warrantless. They were provided by an order from the FISA court, just as President Obama has said.

What President Obama has done, because he's had the time and space since September 11, he wasn't in rush to defend America, as we were, he has been able to get more consultation with Congress, which is good. He's been able to create some independent audits of these programs to make sure that they're working properly. That's all well and good and I salute the president for that.

But Paul talked about Dale Earnhardt. Dale Earnhardt drives in circles. Paul is talking in circles. The Bush programs were fully lawful.

BEGALA: That's not true.

FLEISCHER: People who didn't like them alleged they were unlawful.

But it is true, Paul.

(CROSSTALK)

BEGALA: The president's own attorney general...

(CROSSTALK)

FLEISCHER: ... were authorized by the FISA court.

Paul, that was for an extension of an existing program and had to be signed and extended. That was what that was about.

(CROSSTALK)

KING: You used the racetrack analogy. I am going to wave the caution flag on this for now. We will continue the conversation another night.

Paul Begala, Ari Fleischer, thanks so much, gentlemen.

Just ahead here, a 360 exclusive. This former U.S. air marshal who appeared in a documentary critical of the TSA says the IRS slapped him with an audit as retaliation. His claims may now be part of a widening scandal. We're "Keeping Them Honest."

Also ahead, a very close call at the Denver Airport, where a tornado touched down. We will have the latest on that. (COMMERCIAL BREAK)

KING: "Keeping Them Honest" tonight with reporting you will see only here on 360.

We have confirmation tonight the scandal involving the IRS could be widening beyond the targeting of conservative political groups, those groups, of course, seeking tax-exempt status.

CNN has learned at least one former air marshal who publicly criticized and then sued the U.S. government has been interviewed by the IRS inspector general's office. Why? Because he was suddenly audited by the IRS after speaking out against the management and the politics of a federal agency.

"Keeping Them Honest," it could mean the investigation into the IRS is extending to how the agency treated not just Tea Party groups, but other individuals who have spoken out against the government.

Here is investigative correspondent Drew Griffin with the 360 exclusive.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): Jeff Black is a former federal air marshal who spoke out and eventually became a well-known government whistle-blower against a Federal Air Marshal Service and the Department of Homeland Security. He even testified closed doors before Congress, but it is what happened after he retired in June of 2010 that he came to believe someone in the Federal Air Marshal Service, the Department of Homeland Security, or the Obama administration was using the IRS to retaliate against him.

P. JEFFREY BLACK, FORMER U.S. AIR MARSHAL: We boarded the aircraft before the passengers. That was one of the flaws in the boarding procedures.

GRIFFIN: Jeff Black appeared in this documentary movie entitled "Please Remove Your Shoes," a scathing spoof of the TSA's security procedures. Its debut in Washington, D.C., came on June 30, 2010. That same day, Jeff Black found out he was under investigation by the IRS.

BLACK: Almost to the hour that the movie started, there was an IRS agent knocking at my door at home.

GRIFFIN (on camera): You don't think in any way that's a coincidence?

BLACK: I think the IRS is going to claim it's a coincidence.

GRIFFIN (voice-over): He was being audited. A $24,000 lien quietly was placed on his home and a yearlong intensive investigation into his taxes was under way, but in the end the IRS found out the federal government actually owed him $8,300 and that Black owed the IRS a mere $480. Black had to pay that $480, but because the IRS decided the statute of limitations had run, the government didn't owe Black a dime. And now the Treasury Department's inspector general is launching its own investigation, trying to find out if anyone in the federal government used the IRS to punish Jeff Black.

BLACK: They wanted to know the history of my whistle-blowing, me testifying before Congress. They wanted to get a whole history of my employment with the Federal Air Marshal Service. They also wanted to find out the origin of the audits. They were very concerned with finding out who actually pushed the button to start the audit.

GRIFFIN: Meanwhile, in a sign that that the scrutiny of the IRS is growing, a spokesperson for the House Ways and Means Committee told CNN it's using the committee Web site to solicit reports from individuals who believe they were targeted for political beliefs.

While it's too early in this investigation to determine what all of the facts are, the spokesperson told CNN, some reports received by the committee support claims the IRS was targeting taxpayers for their beliefs.

GRIFFIN (on camera): Is there any doubt in your mind that what the IRS did to you is anything other than retaliation for speaking out against the administration?

BLACK: Extensive retaliation in the past for my whistle-blower -- I'm not surprised about this. It is basically the only way they can still come after me and retaliate against me after I retire.

GRIFFIN (voice-over): Jeff Black realizes many people will see this and think he's paranoid, but last month at a congressional hearing focussing on the IRS targeting of Tea Party-type groups, Congressman Kevin Brady wondered if in fact the IRS scandal is only beginning.

REP. KEVIN BRADY (R), TEXAS: Is this still America? Is this government so drunk on power that it would turn its full force, its full might to harass and intimidate and threaten an average American who only wants her voice and their voices heard?

GRIFFIN (on camera): Do you think there is others like you?

BLACK: I do.

(END VIDEOTAPE)

KING: Drew Griffin joins us now.

Drew, first, any idea when the I.G. will be done with its review of the specific case and does that congressional committee looking at this believe there are more citizens like Jeff Black who may have been targeted because of their politics?

GRIFFIN: On point one, we don't know when the I.G.'s office is going to come through. Point two, the committee, they are searching for other people. They want to be cautious here, John. Lots of people complain about IRS audits and a lot of people are legitimately audited by the IRS despite their political beliefs or no matter what their political beliefs are.

But we do know now that the committee is interested and the Treasury Department's inspector general is investigating whether individual citizens, not just Tea Party groups, but individual citizens may have been targeted because of their beliefs.

KING: And what about the IRS itself? Any response?

GRIFFIN: Not to Black's case, citing federal law which prohibits the agency from speaking out about individual taxpayer's cases.

However, we did get a spokesperson from the IRS who told us that audits in general, and I'm going to read here: "The IRS stresses that audits are based on the information contained on the tax return and the underlying tax law, nothing else."

John, I believe that is somewhat of a defense from the IRS about this story, but, again, it's the inspector general from the Treasury Department that is conducting this investigation.

KING: We are sure that you will stay on top of it and we will follow this one as it goes forward. Drew Griffin, thanks.

GRIFFIN: Thanks, John.

KING: Up next, at Denver's airport this afternoon, planes weren't the only thing touching down. Take a look. Yes, that's a tornado -- the latest ahead.

And investigators believe the Colorado wildfire could be arson. Tonight, we will look at how investigators sift through the ashes to hunt down a culprit. We will take you inside an investigation years ago that led to an arrest and conviction.

(COMMERCIAL BREAK)

KING: Well, a tornado touched down at Denver's International Airport this afternoon. Take a look at this incredible video from just east of the airport's concourses. The National Weather Service says the twister touched the ground briefly. Winds clocked in 84 miles an hour. The airport was not damaged and no injuries reported but at least nine flights had to be diverted to other airports nearby.

Tonight, firefighters are battling a wildfire on the western fringe of Yosemite National Park in California. It's burned 1,600 acres, hundreds of homes now threatened. And in Colorado the large Black Forest fire is now 85 percent contained. That wildfire is being treated as a crime scene to preserve evidence just in case arson is the cause.

Colorado fire officials know all too well how important protecting that crime scene is. The investigation into the giant Hayman wildfire in Denver in 2002 initially thought to be caused by careless campers and became a hunt for an arsonist. How investigators came to that conclusion is a fascinating piece of detective work. Here's Thelma Gutierrez.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: There's flames leaping 30, 40 feet into the air.

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): This was a fast- moving giant of a fire.

UNIDENTIFIED FEMALE: They have never seen a fire burn this hot, this fast.

GUTIERREZ: How to slow it, let alone stop it was a massive challenge.

UNIDENTIFIED MALE: Stand by. Stand by for evacuations.

GUTIERREZ: Before it was over, 5,000 people fled for their lives, above them ominously dark and choked skies.

UNIDENTIFIED FEMALE: It was a mushroom cloud, what I would imagine for like a bomb.

GUTIERREZ: The heat was so fierce, the walls of flames so massive, exhausted firefighters could not surround this monster.

UNIDENTIFIED MALE: There was just no way to fight it. There was just -- it wasn't doing anything, the water, the fire retardant was evaporating before it even hit the ground.

GUTIERREZ: The catastrophic inferno raged untamed for three weeks. One hundred thirty-three homes burned in an area nearly 10 times the size of Manhattan. A staggering 137,000 acres transformed into a vast and charred dead zone.

Eventually, suspicions could tease their way out of the ashes. As it turned out, what really happened here at the Hayman fire was a mystery. And like any good mystery, it had clues, false leads, lies and tantalizing pieces of a forensic puzzle. And then, of course, it had an unlikely hero.

KIM JONES, SPECIAL AGENT: I'm so new and at the same point in time this was the biggest fire in Colorado's history.

GUTIERREZ: Special Agent Kim Jones.

JONES: I didn't even think it was a crime. I mean, when I was going there that first day, I was told that it was an escaped campfire.

GUTIERREZ: Jones was a rookie Forest Service investigator but a former police detective, so moments after she arrived, Jones was certain this was no ordinary fire but a crime scene.

Forest Service worker Terry Barton was on fire lookout in Pike National Forest when she says she spotted a fire. These first moments of the fire proved so critical that investigators asked Barton to recreate them on tape.

Barton first tried to smother the flames, then realized she needed backup, fast. The fire erupted and raged out of control.

When investigators arrived, they photographed the campfire ring and searched for clues. Their initial conclusion, a no-brainer: careless campers started the fire. In fact, a witness did report seeing a van leaving the area.

JONES: I'm thinking why am I going to a campfire, you know?

GUTIERREZ: Jones remembers thinking it was a waste of time trekking six hours through the smoky haze to find and question a negligent camper?

(on camera): What is it like being back to the scene of the crime?

JONES: It's -- it's a little strange to be back, because it doesn't look anything like it did then.

GUTIERREZ (voice-over): When Jones first arrived here, the very place where the fire began, her instincts immediately took over. Remember, there was a drought and high temperatures.

JONES: It was a 90-degree day, and no one is going to build a fire.

GUTIERREZ: She talked to the first investigators.

JONES: As I'm looking at things, like, I don't see any evidence of camping. And they were like, "Well, maybe it was a hot dog that they cooked." Where's the trash?

GUTIERREZ: It was common sense sharpened by years of police work. In the '80s Jones was a cop in Missouri. Then she worked environmental crimes for the EPA. But Jones was new to the U.S. Forest Service, and she'd only worked a few fires. In fact, Jones had only taken her first forensic fire investigation training a year earlier.

JONES: The fire moved directly underneath this rock and went straight out.

GUTIERREZ: Jones traced the fire to a poorly-built campfire ring.

(on camera): What was it about the formation of rocks that made you think that something was very fishy here?

JONES: There's a large rock with -- that had been propped up by another rock. It looks to me like this fire is staged to look like a campfire but that it was an intentional fire.

GUTIERREZ (voice-over): Then Jones took a closer look at the ashes and made an important find.

JONES: It's a paper match, and I can see clearly the head of it and clearly the stem. I wanted to get closer to it, and then I noticed that there's a second match directly underneath it. GUTIERREZ: Then a third match.

JONES: And the three matches were stuck in the middle of this clump of grass.

GUTIERREZ (on camera): What if the person starts their fire and threw the match off to the side?

JONES: They just couldn't have been flung there, because I found three all within an inch and a half of each other.

GUTIERREZ (voice-over): At that moment Jones says she knew she wasn't looking for a careless camper. Instead, she was looking for evidence to lead her to an arsonist.

(on camera): Did you start to think that maybe you were being a little bit too overzealous?

JONES: I was. I did start to think that.

GUTIERREZ (voice-over): Given the magnitude of the devastation, Jones also felt she needed help, and she brought in her fire instructor, Paul Steensland, a senior special agent with the Forest Service.

JONES: We were going to need an expert witness, and he's expert. And with it being the biggest fire in Colorado, there is just -- my...

GUTIERREZ (on camera): Did you think you would get picked apart?

JONES: Absolutely.

PAUL STEENSLAND, SENIOR SPECIAL AGENT, FOREST SERVICE: Kim is a very seasoned investigator, but she was very inexperienced when it came to fire investigations.

GUTIERREZ (voice-over): Steensland has more than 35 years of experience and is known to be one of the best in the fire investigation business.

STEENSLAND: Questions for me, you guys?

GUTIERREZ: So good, he trains many of the nation's wildfire investigators.

STEENSLAND: Watch how it comes out low and goes out high.

GUTIERREZ: Just hours after Jones called to ask him for help, Steensland flew to Colorado.

At the same time the driver of that suspicious van spotted leaving the scene was found, but he had an alibi and was cleared. Investigators had no other leads so Steensland and Jones returned to the scene and began a painstaking forensic investigation. Steensland mapped the path of the flame with colored flags.

STEENSLAND: We were going to use the physical marks a fire leaves, which is basically the fire's footprints.

GUTIERREZ: Then he meticulously sifted through the ashes of the campfire ring. Jones had already removed the crucial evidence, the three matches, but photos showing their exact position when the fire ignited were vital.

STEENSLAND: Being able to enhance that photograph and bring that original position of those matches out was fairly critical to our theory.

And there's one. You can see the head and the stem. There's the second one, the head and the stem. And there's the third one, the head and the stem.

GUTIERREZ: They theorized an arsonist struck the matches, purposefully lighting the dry grass in the campfire. But who?

Remember the first forest worker to stop the fire, Terry Barton? Steensland thought she might remember key details and lead them to the arsonist.

STEENSLAND: We said bring her up here as a witness and have her reenact her actions on the day of the fire. Her story was that she gad smelled smoke.

JONES: She drove up on the fire and saw it and parked her vehicle.

STEENSLAND: And then found the campfire burning at about 20 x 20 feet.

GUTIERREZ: If you look there among the trees, you can see Steensland and Jones timing Barton's every step. And in their reconstruction, they stumbled across something they couldn't explain.

STEENSLAND: The story just did not make sense within the fire behavior context.

GUTIERREZ: Remember, Barton says she was first drawn to the fire by its smell, but the experts on fire behavior said not possible.

JONES: We asked the fire behavior analyst for one, could a person have smelled smoke from a 20 x 20 fire? And then first, they were like, "No, there's just no way you could have."

GUTIERREZ: At that moment the mystery would shift once again.

STEENSLAND: And the more we talked to her, the clearer it became to us that she moved from a witness to a person of interest.

GUTIERREZ: It changed from whodunit to an even more perplexing question: Would a forest worker, a mother of two, set off what became the worst fire in Colorado history?

(END VIDEOTAPE)

KING: Up next, part two of Thelma's riveting story. Those investigators close in on the suspected arsonist, who offers an alibi that just doesn't add up to seasoned detectives. We'll see how they finally got to the truth.

(COMMERCIAL BREAK)

KING: More now on how investigators looked for clues of arson after a wildfire. As we mentioned, the massive Black Forest, Colorado, fire is being treated as a crime scene, although it's not yet known that a crime was committed. Once again, here's Thelma Gutierrez with a look at how investigators solved the 2002 Hayman fire.

(BEGIN VIDEOTAPE)

GUTIERREZ (voice-over): Fire investigator Kim Jones was on the biggest case of her career, tracking the arsonist who started Colorado's largest fire.

New revelations about the case forced her to re-examine the evidence: the matches and the ashes in the campfire ring. Soon, Agent Jones was zeroing in on a fellow forest worker, one of their own.

Terry Barton spent nearly two decades preventing fires in Colorado's national forests. The married mother of two raised her daughters here. This was Barton's backyard. She was the one praised for trying to put the fire out. Now Jones was closing in on her because her previous statements just didn't make sense so Jones confronted her.

JONES: "We don't know what happened, Terry, but there's no way, you know, anyone else started this fire. You started the fire."

"I'm not an arsonist." She's like "I'm not an arsonist; I'm a firefighter."

GUTIERREZ: Barton began to buckle under pressure. What she was about to reveal to Agent Jones during a taped reenactment...

STEENSLAND: Terry, you've given previous statements to the agents...

GUTIERREZ: ... would shock her small mountain community.

STEENSLAND: Were those statements correct statements as far as your account at what happened?

TERRY BARTON, FORMER FOREST WORKER: No, they weren't.

GUTIERREZ: Barton said it wasn't arson but an accident. She was in the middle of a divorce, and she says heartache drove her to light the fire.

BARTON: I was the one that started the fire, and it was a fear, and the fear kept getting bigger when the fire kept getting bigger.

STEENSLAND: She then admits that, in fact, she was responsible for the Hayman fire by taking a love letter from her about-to-be ex- husband, in a state of emotional trauma, carrying it out to the campfire ring and burning it. BARTON: The matches were in my hand with the letter. I put the letter down, and I lit it one match -- let the match down, and I watched it, and I sat here until it burned up.

JONES: This moment is key, because she's saying how she lit the letter and she lit it with one match. I say, "Are you sure it was with one match?"

She says, "No, I'm sure it was one match, and I would have just flung it." I found three matches and that to me was a key piece of evidence that disputes what she says is happening here.

BARTON: I just wanted to get rid of the letter. It was an emotional act, and it was a stupid act on my part and then I tried to cover it up because of fear.

JONES: We had an admission. She was admitting to being responsible for this fire, and that was the goal.

GUTIERREZ: But Jones said the evidence never pointed to any letter.

JONES: I never found any remnants of paper. Never.

GUTIERREZ (on camera): But, to an untrained eye it would seem plausible that the paper along with the matches would just simply burn in the campfire, and that's the end of that.

JONES: Well, I mean I still had the matches, and they didn't blow away.

STEENSLAND: You know, I was pretty confident that if there had been any paper there, you know, we would have found it.

JONES: Jones and her mentor, senior Special Agent Paul Steensland, sent this ash from the campfire to a federal lab to screen for trace evidence of paper.

STEENSLAND: And of course, they found not a shred of paper material. We don't believe that there was ever any love letter in this case, and that her motivation was to start a small fire, certainly not the biggest fire in Colorado history, but start a small fire, suppress it and then be recognized as a hero.

GUTIERREZ: And so whether a heartbroken Terry Barton ever burned a letter remains a mystery. The case never went to court. Barton pled guilty to charges of arson and lying to federal authorities.

(on camera): And in the end what does it say about the evidence you had against her?

JONES: That it was strong.

GUTIERREZ (voice-over): Agent Jones says that, in a strange way, she feels sorry for Terry Barton and her daughters.

JONES: People think that they burn something and it's gone, but there's evidence there. And it speaks very loudly, and it was key in this case.

GUTIERREZ: Also key, this rookie fire investigator's instincts that resurrected clues and solved a mystery out of ashes.

Thelma Gutierrez, CNN, Lake George, Colorado.

(END VIDEOTAPE)

KING: Fascinating story. Up next, "Crime & Punishment." We'll go inside the intense courtroom showdown between ex-mob boss Whitey Bulger and the hit man who confessed to killing at least 20 people.

(COMMERCIAL BREAK)

KING: "Crime & Punishment" tonight. More riveting testimony in the trial of James "Whitey" Bulger, the 83-year-old former mob boss accused of 19 murders and other charges.

Former hit man John "The Executioner" Martorano back on the stand today, describing in chilling detail some of the alleged killings, and he said Bulger was directly involved in some of them.

Martorano also told the jury that, in Bulger's gang, death was a way of life.

Shelley Murphy, a "Boston Globe" reporter and co-author of the book, "Whitey Bulger," joins us with more.

(BEGIN VIDEOTAPE)

KING: Shelley, help us understand this very significant day in court. This was the first time, right, that a trial witness, in this case a confessed killer, John Martorano, testified Whitey Bulger himself committed murder, right?

SHELLEY MURPHY, CO-AUTHOR, "WHITEY BULGER": That's right. He claims that Whitey actually was the triggerman in the shooting of a Dorchester bar owner back in the '70s. He claims he drove to the scene. Whitey and Steve Fleming got out, they walked down the hill. He heard a burst of fire. They came back to the car and said, "He's gone."

KING: Eddy Conyers, I believe. Isn't that right, Dorchester bar owner? That's the old hood.

MURPHY: That's right.

KING: Now John Martorano -- I want you to help me with this one. John Martorano has admitted to 20 murders, but he says he doesn't like the word "hit man," doesn't like to call himself or consider himself to be a mass murderer, not a serial killer. What does he call himself?

MURPHY: Well, I think John has a very different definition than most of us might have. He says by his definition a hit man is someone who is paid to kill someone. Now, after one of the slayings, after the murder of businessman Roger Wheeler, Martorano says his buddy who actually authorized the hit gave him $50,000, but John said it really wasn't for the murder. He just gave it to him because he was so grateful. And John said he would have done it for nothing, and so he didn't consider himself a hit man.

Now, there were other slayings, as you said 20 total, but Martorano said, "No, no, I'm not a serial killer," because by his definition a serial killer takes joy in killing. And John said not only did he never take joy, that he actually didn't really like it. He really just did what he had been brought up to do, and that is take care of his friends and his family and that most of the hits, except for a couple of mistaken identities or accidental, you know, innocent bystanders who got in the way, John says that, you know, really, it was him doing a favor for friends.

KING: So one of the big questions here is can the Whitey Bulger defense team chip away at Martorano's credibility, in part because he did kill 20 people and probably because he cut a pretty good deal with the federal government back in the '90s, serving only 12 years for 20 murders.

Cross-examination just began today. What's your sense of the defense strategy and its effectiveness so far?

MURPHY: Well, I think the defense was very effective today. I mean, Hank Vernon, you know, Whitey's lawyer, was very aggressive in going after John Martorano. And he got Martorano to admit that, yes, Whitey, you know, by Martorano's own account, actually was the triggerman in one slaying, that, you know, Martorano was the guy that was shooting people between the eyes and in the back of the head.

And the other thing is that I thought he sort of mixed him up a little bit that, when Martorano insisted that one of his victims, that he stabbed him four times. And when the defense lawyer noted that, you know, gee, the forensic evidence shows he was actually stabbed 20 times, John said, "I really didn't remember that, didn't seem like that many to me."

So he did trip him up on some of the details. And he also showed the fact that, you know, John Martorano has been out there claiming to be a vigilante, and he tried to make him a little foolish.

But the one thing that they didn't do is shake his story, the fact that he and Whitey were part of the same gang, that they were very close friends.

And one things I thought was interesting, they actually showed the jury a photo of Whitey Bulger smiling in a nice suit, holding John Martorano's son at his christening. Whitey was the godfather to the child. So the government is showing, "Look, you know, he might be a killer, but they were -- they were close buddies. Look how close they were, close buddies, they were all in this together.

KING: Shelley Murphy at "The Boston Globe." It's a fascinating trial. Thanks so much. MURPHY: Thanks, John.

KING: Let's get caught up on other stories we're following tonight. Isha Sesay joins us with a "360 News & Business Bulletin" -- Isha.

ISHA SESAY, HLN ANCHOR: John, a wildfire in Arizona's Prescott National Forest has grown to 5,000 acres, causing hundreds of homes to be evacuated. High winds and extremely dry conditions are fueling the blaze, which began on the northwest side of Granite Mountain.

Two point seven million Jeeps are being recalled after Chrysler gave in to a government request. The car manufacturer said today that in some cases it will provide an upgrade to the rear structure of vehicles for better protection in low-speed impacts.

The models in question include the 1993-2004 Jeep Grand Cherokees and 2002-2007 Jeep Liberties.

And journalist Michael Hastings was killed in a car accident in L.A. today. Hastings won the 2010 Polk Award for his "Rolling Stone" expose on General Stanley McChrystal, who resigned shortly after its publication. He was 33 years old.

We will be right back.

(COMMERCIAL BREAK)

KING: That does it for this edition of 360. Thanks for watching. "ERIN BURNETT OUTFRONT" starts now.