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Anderson Cooper 360 Degrees

DOJ Launches Criminal Probe into Trump Accuser, E. Jean Carroll; Interview with Rep. Adam Smith (D-WA): U.S. Military Intercepts, Shoots Down Multiple Iranian Drones; Trump Says He Won't Be Rushed on Iran Because of the Midterms; Iran Says 23 Vessels Passed Through Strait of Hormuz Over Last 24 Hours; Five People Found Alive in Flooded Cave in Laos, Two Still Missing; NYT Reports Reflecting Pool Contract Has Inflated Profit Margin, Government Analysis Finds. Aired 8-9p ET

Aired May 27, 2026 - 20:00 ET

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

WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: ... unstable passages. There's contaminated air, that's also a risk factor and even the possibility of collapse.

ERIN BURNETT, CNN HOST: It's all just, it's just terrifying. And again, those images in that piece, unbelievable. All right, Will Ripley, thank you very much.

As we all hope, hope for a real miracle to find them and to have them imagine them not getting out, just too, too horrible to contemplate. Thanks so much to all of you for joining us. AC360 begins right now.

[20:00:30]

ANDERSON COOPER, CNN HOST, "ANDERSON COOPER: 360": Good evening from the Newsroom. We begin tonight with breaking news. Exclusive CNN reporting that the Justice Department is now investigating former magazine columnist E. Jean Carroll.

Now, just three years ago, Manhattan civil jury found that then citizen Donald Trump sexually abused her in a department store dressing room in the mid-1990s. They awarded Carroll $5 million for the sexual abuse and defamation, and later, $83 million in a separate, but related defamation case.

The President denies the allegations and has a long history of talking about Miss Carroll.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R) PRESIDENT OF THE UNITED STATES OF AMERICA: I met a woman in front of Bergdorf Goodman, took her up to a changing booth right outside where the cash register is. This is New York City, why didn't you scream? Uh, I was in trauma.

I don't even know who this woman is.

I have no idea who this woman is. I have no idea who she is, where she came from.

I know nothing about this nut job.

This is a person I have no idea until this happened, obviously. I have no idea who she was, and nor could I care less.

She said that I did something to her, that never took place.

It is a totally false accusation.

They said he didn't rape her and I didn't do anything else either. You know what? Because I have no idea who the hell, she is.

This is a woman who's also accused other men of things.

I said, well, it's politically incorrect. She's not my type and that's hundred percent true. She's not my type.

(END VIDEO CLIP)

COOPER: Now, some of those comments became evidence in the second defamation case, one of two she won against the President. And now CNN is learning that the Justice Department is investigating whether she committed perjury in connection with those lawsuits. CNN's Paula Reid shares the reporting on this and joins us now.

So, Paula, what is the basis for this investigation, as you understand it?

PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT: Well, Anderson, this is just the latest move in the Justice Department's efforts to target President Trump's long-standing adversaries.

I'm told that this investigation focuses specifically on a 2022 deposition where Carroll said she had not received any outside funding. But her lawyers later informed the judge overseeing this case that she had received funding from billionaire, Reid Hoffman for fees and expenses.

I want to note, when her trial began, the judge said he saw no credibility issues and blocked Trump lawyers from asking about funding. Now Caroll is 82 and she is currently embroiled in multiple ongoing legal battles with President Trump.

Juries have awarded her millions of dollars in damages, but President Trump is appealing those judgments. His appeal of a $5 million judgment in a sexual abuse case has been pending before the Supreme Court for quite some time. They have now 12 times, Anderson, deferred on deciding whether they're going to take that case up. Tonight. Carroll's legal team declined to comment for this story.

COOPER: And is the acting Attorney General Todd Blanche, involved in this investigation?

RIPLEY; So, we're told that Blanche has recused in this case because of his work on one of the appeals for Trump. Now, we are told that this case is being handled out of the U.S. Attorney's office in Chicago. Now, the next is to Chicago, we are told, is that Reid Hoffman's non-profit is located in that city. But I am told Blanche has not attended any meetings or been involved in discussions about this investigation.

But look, Anderson, where all this goes, it's unclear. We've seen them open other investigations into Trump's adversaries that have either gone nowhere or run into roadblocks when they reach grand juries or judges.

COOPER: And do you know anything more about the investigation? I mean, how big it is? What kind of resources are devoted to it?

REID: It's a great question, Anderson. At this point, we have not been able to confirm, for example, if subpoenas have been sent out or how many lawyers are working on this.

We know that this is currently being overseen by senior leaders in the Deputy Attorney Generals' Office. But as I said, it's been outsourced to the U.S. Attorney in Chicago. And at this point, it's not clear how many resources they have dedicated to this. It does appear to be in the somewhat early stages, as we cannot really identify any investigative action they have taken since receiving this referral.

COOPER: All right, Paula Reid, appreciate the reporting, thank you.

For more on the investigation, I want to bring in former federal prosecutor and CNN's senior legal analyst, Elie Honig.

Elie, so no charges have been filed, clearly, early in this investigation. What would the Justice Department have to, first of all, what do you think of this?

[20:05:13]

ELIE HONIG, CNN'S SENIOR LEGAL ANALYST: Well, Anderson, it's not a surprise. The pattern so far is unmistakable, where virtually everybody who's ever crossed Donald Trump, politically or personally, has found themselves on the receiving end of a DOJ investigation or in some cases, indictments.

So, E. Jean Carroll certainly fits that description, as you showed in the opening montage. And so, it's shocking in some sense, because this is a person who has sued Donald Trump successfully for over $80 million but when you look at the broader pattern, it fits right in.

COOPER: So, what would the DOJ have to prove in order to prove perjury? If they're looking at this statement made in a deposition.

HONIG: Perjury cases are sometimes easier said than done. And the burden on prosecutors is high. You have to, of course, ultimately prove your case beyond a reasonable doubt. But prosecutors here will have to show that that testimony that Paula talked about back in 2022 was, in fact, false. That E. Jean Carroll knew it was false at the time and didn't, for example, learn later that it was false. And then finally, prosecutors have to show something called materiality, meaning was the false testimony relevant to some issue that actually mattered in the case, or was it just a sort of throwaway detail?

So, you need a specific, provable, intentional false statement.

COOPER: And do you think Carroll would have a vindictive prosecution defense if this ever ended up in federal court?

HONIG: Well, the definition legally of vindictive prosecution is when a person exercises their constitutional or legal rights and then is prosecuted as payback for that. And if we look at the history here, it's well known. E. Jean Carroll sued Donald Trump successfully, $88 million, and then a couple of years later finds herself on the receiving end of currently an investigation, who knows, might become a prosecution.

And if you look at this, just the other day, the indictment of Kilmar Abrego Garcia, who was wrongly deported, that was thrown out for vindictive prosecution because a judge in that case said, well, Mr. Abrego Garcia asserted his rights and then he was being prosecuted as payback.

And I think E. Jean Carroll would have a very similar argument. She would say, I asserted my rights. I brought a civil lawsuit, I won, and now she will argue, surely this is payback.

COOPER: In normal times, what would be the step from an investigation like this to actually charges coming?

HONIG: Well, so first of all, there's nothing that a person in E. Jean Carroll's position, a person being investigated by DOJ can do to stop DOJ. This is part of the awe-inspiring, fearsome power that federal prosecutors have. You can investigate essentially whoever you want and essentially whatever way you want, and there's nothing they can do unless and until they are actually charged.

Now, DOJ again, they have to prove their case. They're going to have to ultimately, if they want to indict it, they have to bring it to a grand jury. But prosecutorial ethics and DOJ's own rules say, you don't bring a case for an indictment to a grand jury until you're confident you can prove that case beyond a reasonable doubt, which is ultimately what prosecutors will have to show here if they bring this indictment, and if it winds up at a federal criminal trial.

COOPER: Elie Honig, thanks very much. Joining me now is Democratic Congressman Adam Smith. Congressman, I'm wondering what your reaction to this news is, the Trump Justice Department launching an investigation into E. Jean Carroll.

REP. ADAM SMITH (D-WA): Yes. Well, first of all, I agree with your previous guest's legal analysis. I guess I'd be more outraged by it. This is an unbelievable abuse of power and a continuation of an abuse of power by this President. He is using our government. Keep in mind, the Justice Department is not Donald Trump's. It belongs to the people of this country.

He is using the Justice Department to persecute people he doesn't like. It is unbelievable. I mean, even not even from a political standpoint, he's got something to gain from it. This is just pure vengeance being used by the Justice Department. And it undermines the credibility of the Justice Department. And it really undermines our representative democracy. I mean, if this was an isolated case, it would be horrific. But as you know, it's not an isolated case. I mean, there's dozen plus people who have suffered this way under Donald Trump. And I wish more people would speak out forcefully against it.

COOPER: The acting Attorney General, Todd Blanche, has clearly pushed to speed up, you know, doing the President's bidding. We mentioned that he's been recused from this investigation because he worked as one of the President's personal attorneys on the Carroll appeals. What overall message do you think they are trying to send the Justice Department to the President's political personal enemies? I mean, do you think this is about sending a message?

SMITH: Don't cross the President, basically, and don't cross the President in any way. I mean, you've got Letitia James, James Comey, a long list of people who have been subject to this. They are trying to send a message. Donald Trump runs this country, the Constitution, the laws don't matter. And he will use his power to come after you. Definitely trying to intimidate people. But also, I think it's just petty vengeance. I mean, he's just going to go after anyone who has ever crossed him.

[20:10:26]

COOPER: I mean, it is sort of remarkable if this is weaponization of the Department of Justice to do this at a time when the President is trying to set up, you know, what certainly Democrats have called a slush fund of, what, nearly $1.8 billion to reward people who they claim, were victims of weaponization by the Department of Justice.

SMITH: Well, see, that's where this whole thing starts. And I want people to understand this because I know what I would refer to as respectable Republicans and Conservatives who say, well, okay, but this is what the Biden administration and everybody else has done.

No, no, it is not. It is not even close to that. I mean, look, Donald Trump did things that we're clearly questionable, okay? We saw what happened on January 6th. He had classified documents spread all over his bathroom down in Mar-a-Lago, okay. Investigating somebody who legitimately there is evidence of them having committed a crime is entirely different than picking out the people you don't like, and then pouring through every deposition, everything they've ever said under oath and saying, oh, I could get them for lying.

I mean, this is specifically targeted. What was going after Trump was stuff that was out there. We didn't go looking for that. It happened. So, what Trump is doing here is unprecedented in the history of this country and unprecedented in its damage, to our constitutional republic. COOPER: Are you surprised that he has been able to find so many people to do his bidding? I mean, in the Department of Justice? I mean, he's brought them in, obviously, but are you surprised at that at all?

SMITH: What I am surprised at is the complete unwillingness of the Republican Party and Republicans in Congress to say enough. This is fundamentally wrong, that Trump, as President, is able to use his power to bring people in to do his bidding. That's not surprising, nor is it surprising that he's willing to do so.

I mean, he said it during the course of the campaign. Look, say what you want about Kamala Harris as a candidate. But when she said, elect me, I'll work on your problems. Elect Trump. He'll get up every morning, try to figure out how to take vengeance on the people he doesn't' like.

That's exactly what he said, he was going to do exactly what he's doing. The shocking thing is the number of what I, again, would consider to be respectable Conservatives, Republicans, you know, who are just willing to go, well, no, it's fine. It's fine because it's been done before. No, it hasn't been done before. I mean, apples and oranges doesn't even begin to describe it. I guess apples and watermelons, I don't know, I'm at a loss for the proper analogy here. But no, this has not been done before. And it is the Republicans in Congress who are letting him do it. That, I think is the most shocking and appalling aspect of it.

COOPER: Congressman Smith, I appreciate your time. Thank you very much.

SMITH: Thanks.

COOPER: Coming up next, we'll dig deeper into the weaponization question, both, as it pertains to the investigation, Miss Carroll, and to the fight as well over that anti weaponization fund we've just been talking about.

Later, five located, two still missing in the attempt to rescue a group of people trapped inside a flooded cave for more than a week. The question now in such treacherous conditions how to get them all out?

(BEGIN VIDEO CLIP)

(RESCUER speaking in foreign language.)

TRANSLATION: We have now successfully located the five Lao nationals. Everyone is safe. We will proceed with providing for their assistance.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

[20:18:09]

COOPER: The breaking news right now, exclusive new CNN reporting that the Department of Justice has launched a criminal investigation of E. Jean Carroll, the woman who sued the President twice and won both times.

The investigation is focused on whether Carroll committed perjury in testimony tied to her two civil lawsuits against the President, one alleging he sexually abused Carroll in a New York department store in the mid-1990s and later defamed her. And then a second lawsuit for defamation for defaming her. When in 2019, he repeatedly denied doing anything wrong, said she wasn't his type and claimed she made it up to boost sales of a book she wrote.

Joining us now, Norm Eisen, founder of Democracy Defenders Action, as we'll discuss momentarily. He's also pursuing legal action over the Presidents settlement with the IRS and the $1.8 billion weaponization fund that sprang from it. Also, with us, CNN senior political commentator David Urban.

So, Norm, first off, what's your reaction to the DOJ launching this criminal investigation into E. Jean Carroll?

NORM EISEN, SENIOR FELLOW IN GOVERNANCE STUDIES AT THE BROOKINGS INSTITUTION AND CO-FOUNDER OF STATES UNITED DEMOCRACY CENTER: Anderson, it's so outrageous. Every American should be appalled at this pattern of Donald Trump utilizing the most fearsome power of our President, the investigation and possible prosecution of individuals who he perceives to be his adversaries. First, it was Tish James, that case was thrown out; then Jim Comey, that case was thrown out. He's going after Comey again, that case is going to meet the same fate.

This is garbage, and it is alarming because it is a classic sign of authoritarians. Dictators would blush at Donald Trump's abuse of his criminal powers and it's un-American.

COOPER: David, do you think an investigation like this is what the DOJ should be focused on?

DAVID URBAN, CNN SENIOR POLITICAL COMMENTATOR: You know, Anderson, I think that they've have got a lot of things to focus on, but I would just ask Norm, I am not sure the statute of limitations is on perjury. But did she perjure herself or not, Norm, in this case? It seems to me she clearly perjured herself.

You can ask your colleague who solicited her. I think your colleague George Conway, who you are associated with now, solicited Miss Carroll to bring the suit and then help set her up with Reid Hoffman when she was being deposed.

She denied that she was -- that she knew that she was or -- she didn't deny -- she denied having any funding for it, and then later admitted she was getting third party funding for it.

So I am not quite sure what is so outrageous about, you know, someone who perjures himself in a very serious proceeding now being looked at by DOJ for criminal prosecution.

EISEN: Come on! URBAN: What do you mean, come on, Norm, explain it to me.

COOPER: Norm?

URBAN: Why is that -- why is it wrong?

EISEN: David, this pattern -- this pattern of Donald Trump going after his adversaries where you already have --

URBAN: Norm, you're not answering the question.

EISEN: -- proven, David --

URBAN: Norm, you're not answering the question. You're not answering the question, Norm.

EISEN: He tried it.

URBAN: You're not answering the question.

EISEN: Let me -- let me answer it. Let me answer it.

URBAN: Okay.

EISEN: This pattern, he tried it with Jim Comey, thrown out. He tried it with Tish James, thrown out, not once, but repeatedly. The same thing will happen here.

If you pick over people's testimony, you can always find some issue. We don't even know what -- we don't even know what this is. It is so --

URBAN: Some issue? Norm --

COOPER: Let him finish. Let him finish answering. Let him finish answering.

EISEN: Let me finish, please. You asked me a question.

URBAN: Okay. It is a yes or no question.

EISEN: I have been practicing criminal law. I have been -- well, you don't set that prerogative, my friend. I have been --

COOPER: Let's not talk over because with the feedback, it is very difficult. So let's just let him answer.

EISEN: I have been practicing criminal law --

COOPER: Go ahead, Norm.

EISEN: -- for 35 years. I have been practicing criminal law for 35 years. We have never seen a president engage in this kind of pattern. These allegations are nonsense, Anderson. And I am sad to say this for our country, but every American should be alarmed.

It reminds me of Stalin's secret police hit for Lavrentiy Beria's hit by Stalin.

COOPER: Okay, but Norm, the question is --

EISEN: Show me the man, I will show you the crime.

COOPER: I mean, David -- okay, Norm, the question is if she -- if somebody did lie in a deposition, does that justify the Department of Justice launching an investigation in a -- you know, in this kind of a lawsuit? I am not saying whether she did or didn't.

URBAN: And Norm, in your 35 years, norm of criminal --

EISEN: Anderson, if we seized upon --

COOPER: Norm, just answer the question.

EISEN: If we seized upon -- yes, Anderson, if we seized upon every inaccuracy or every disputed fact in every deposition, there would be nothing but criminal prosecutions of everybody who gives a deposition.

This kind of effort to go out and get an adversary and to cherry pick issues, we all know what is going on here. It is outrageous. No, these allegations would not be the basis for a prosecution in any presidential administration that I have ever seen, even if it is true that there is a single question --

COOPER: I get it. David, David -- do you -- no, David, let me ask you a question. David, do you not find it weird that the Department of Justice is zeroing in? I mean, they must have gone through all of E. Jean Carroll's depositions in all the multiple, you know -- I assume, there is a number of depositions to find something. Do you not find it --

Is that not odd that the Department of Justice would devote resources to something like that? Just out of the blue, to, like --

URBAN: Yes, so I am happy to answer, unlike Norm, I am not going to filibuster you here. I don't think it is weird.

I think norm loses all credibility when he just can't admit if somebody perjures himself -- this wasn't a small thing about like it was a Tuesday versus a Wednesday. This was material.

You heard Elie before say, did she know it was false? Yes. She knew it was false. Was it material? Yes, she knew it was material.

All of these things are going to be proven out.

Listen, who was funding your lawsuit? Who funded this? That's not something that just -- she forgot conveniently. So I don't think --

And Anderson, this has been out there for quite some time.

COOPER: I mean, we don't know the question -- we don't know the questions that were asked and answered. We don't know what she actually said. So it is a little hard to tell. We don't have the deposition in front of us, but --

URBAN: You're a hundred percent correct, a hundred percent.

So I will say this, if those things are true, I am not quite sure why they weren't prosecuted before, they should have been prosecuted. If you lie under oath in a deposition, the Department of Justice will prosecute. Ask Mike Flynn. Right? Ask Mike Flynn about that.

Ask -- you know, ask numerous people who have gone to jail for perjury. It happens.

Norm is being disingenuous if he doesn't admit in his 35 years of being a criminal prosecutor, he hasn't seen it happen. So do I think it is the best use of DOJ?

COOPER: Norm, let me -- okay.

URBAN: Do I think it is the best use? Perhaps not.

COOPER: Norm, let me ask you.

[20:25:09]

Right. Norm, let me ask you, this was a civil case, if I remember correctly, was it not?

EISEN: So Anderson, we don't know all the facts, but yes, it was a civil case. It was a deposition is the apparent allegation.

COOPER: So would it be unusual for the Department of Justice to look at a civil case, or is it because --

EISEN: It never happens, Anderson, that you go through a deposition.

People give thousands of depositions every day in this country, in millions of cases that you would go through line by line, you find one incorrect answer. We don't even know if E. Jean Carroll had the information, and you pounce on that for criminal investigation?

It is so apparent from the pattern what is happening here. It is shocking. It is outrageous. I do not know of cases, no, where you have a straight answer to a question like this and you prosecute it.

It is crazy, it is wrong, and it is alarming to have a president who abuses the criminal justice system in this way. That is a crisis for our rule of law.

Fortunately, the courts are pushing back powerfully. They are throwing out these cases. But think of what it puts the people through, Anderson. It is appalling.

COOPER: Okay, all right, Norm Eisen, David Urban, guys, thank you very much. I do appreciate it. We are going to get to the anti- weaponization so-called fund another time.

Next, more breaking news. New U.S. strikes tonight on Iran and a new threat from the President to blow up, his words, an ally in the fight, Oman.

Later the hopeful news, five out of seven people who have been stuck in a flooded cave for more than a week are located. The challenge now is to find the other two who have not been located and getting them all out.

(COMMERCIAL BREAK)

[20:31:15]

ANDERSON COOPER, CNN HOST OF "ANDERSON COOPER 360": More Breaking News tonight. New American military strikes on Iran, that's according to a U.S. official who tells us that Iran has set out to -- that U.S. carriers set out has -- have struck some new sites at the Iranian -- nearby Iran. The official adding that the military also intercepted drones being launched from Iran.

Caps a day that saw the president hold a televised cabinet meeting, during which Iran came up repeatedly. He suggested a deal is closed, but also that there's no hurry to reach one, saying pressure from the midterm elections was not a concern for him. He threatened as well to "blow up Oman," which is an ally of the United States in the Gulf.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Iran wants control of the Strait of Hormuz. Would you accept a short-term deal that allows Iran and Oman to control the Strait? And will they have to open it immediately? Or would you be open to that happening over a period of time?

DONALD TRUMP, (R) PRESIDENT OF THE UNITED STATES OF AMERICA: No. The Strait is going to be open to everybody so --

UNIDENTIFIED FEMALE: And who would control it?

TRUMP: It is international waters, nobody is going to control it. We're going to watch over it. We'll watch over it, but nobody is going to control it. Oman will behave just like everybody else or we'll have to blow them up. They understand that, they'll be fine.

(END VIDEO CLIP)

COOPER: Again Oman is an ally, gives access to air bases and a port to American forces. And if you think the president's statement about blowing up Oman was a slip of the tongue, the State Department posted that clip with the president making the threat on social media not long after he said it.

As for Iran, it says 23 vessels passed through the Strait of Hormuz over the last 24 hours. That's under what it calls its security protection according to Iranian state-sponsored media with "hostile vessels still not allowed."

Joining us now CNN Global Affairs Analyst, Brett McGurk, who served in senior national security positions under the last four presidents, including president Trump's first term, and retired Army Lieutenant General Karen Gibson who previously served as Director of Intelligence for U.S. Central Command.

So General Gibson, as you heard, the U.S. continues to strike Iranian targets, attacks like these in the past don't seem to have broken the overall ceasefire. Do you think the U.S. is going to continue to try to coerce Iran toward a deal? Do all the strikes continue to help -- will that help in the coercion?

LT. GEN. KAREN GIBSON (RET.), U.S. ARMY: So I don't think these strikes are about coercing Iran to make a deal. I think certainly the ones that happened earlier in the week that CENTCOM says were defensive in nature, it is important to remember that even under a ceasefire, you do not give up your inherent right to self-defense.

So whether it was nefarious activity, potentially dangerous activity that was spotted by combat air patrol, fighter aircraft above our flotillas, whether it was some of the blockading vessels' own reconnaissance or national-level reconnaissance, you know perhaps from space or somewhere else, and an analyst somewhere who identified what was potentially dangerous activity cued it to a commander with the authority to launch those strikes.

Perhaps that's what has happened again today. I don't think that's part of a coercive mechanism per se. Again, you don't give up the inherent right to self-defense just because you're under a ceasefire. It does make it fragile, but I don't think it necessarily means that the ceasefire is failing.

COOPER: Brett, where do you see where the U.S. is right now in this -- in this war?

BRETT MCGURK, CNN GLOBAL AFFAIRS ANALYST: Anderson, I think it is good the president said he's in no hurry to get a deal because we're nowhere close to a deal. I mean, that's just my assessment. I can see what they're trying to do is do a Phase I deal in which you basically go back to status quo in the Strait of Hormuz and you leave the nuclear issues to a later stage.

I just don't see Iran doing that deal unless we accede to their effective control of the Strait, which is what they want. So we're stuck and the issue is the fundamental nature of the Iranian system, Anderson, the decision makers are, again, it's the same regime ideology.

[20:35:00]

And I think I was telling that two nights ago, as we were negotiating to try to reopen the Strait, Iran was laying mines in the Strait, trying to continue to build up some leverage. So I just -- I don't see a diplomatic breakthrough here.

I actually think we're more likely, as we head into June, to see some return to a military operation. I don't think that would break the stalemate either. But we're in a great experiment now, Anderson. It's been about three months since the Strait of Hormuz has been closed. Economic pressure will compound inside Iran. I don't think that will affect their calculus, at least not in the near term. And the macroeconomic pressure will increase, as we've been discussing. So that's kind of where we are. I wish I saw the diplomatic off-ramp. I just don't see it.

COOPER: General Gibson, do you agree with that assessment?

GIBSON: I do. I think this is a very, even the nuclear negotiations themselves would be incredibly complicated. But now, before we can work through the finer points of what would happen with Iran's nuclear program, we've got to unstick this first.

This is, as we've talked about before, the most urgent and pressing issue, even if the nuclear weapons are more critical, the most urgent issue is to return to normal commerce and navigation in the Gulf. And it's very complicated. And there are many aspects to it. And now, you know, sequencing and reciprocity to be dealt with there. So it's going to take some time to deal with this issue itself, let alone the nuclear aspects.

COOPER: Brett, Iran's new supreme leader released a statement threatening U.S. bases in the region, saying, quote, "The hands of time do not turn backward, and the nations and lands of the region will no longer serve as shields for American bases." The regime targeted American bases before the ceasefire. Do you think that the statement is bluster or a real threat to attack bases again if the U.S. engages in new strikes?

And also, do you think, I mean, the fact that Iran has struck so many bases, U.S. bases in neighboring countries, has weakened the appetite of those countries to keep U.S. bases in their territory?

MCGURK: I would say, Anderson, in the Middle East writ large right now is a very fluid moment. Everybody is kind of recalibrating their position, including Iran. But what you just pointed to is very important because, and we've effectively been in a conflict with Iran since 1979. It is their ideology that was put in place after the revolution to get the United States out of the Middle East.

And Mojtaba Khamenei, the new Supreme Leader, put out a statement two days ago, even as these negotiations are going on, basically reaffirming the doctrine of the Islamic Republic. We want the United States of America out of the Middle East. They will remain under threat from our forces. And he also reiterated their view that they want to eliminate the state of Israel. And they're the hegemon in the region.

That is their driving philosophy. Ahmad Vahidi, who we've discussed before here, Anderson, is the new Head of the Revolutionary Guard. He was one of the founders, the earliest leaders of the Quds Force, the expeditionary arm which spreads the Islamic Revolution, as they say, around the region. So these are the guys that are making the decision.

And having been someone that sat across the table from them, I don't see the pieces lining up for a deal. If I can say one more example, Iranian state TV today put out what they said was the MOU. And I think they did that to maybe condition their population or their system, maybe we're moving towards a deal. And the White House said that was not actually what we're discussing and that's not what was agreed.

Just putting a finer point on it, Anderson, that I think we remain very far apart on the fundamental elements to any sort of a deal here.

COOPER: Yeah. Brett McGurk, Lieutenant General Gibson, appreciate it. Thank you.

Up next, new questions about the no-bid contract for the president's Reflecting Pool repair project. Most importantly, how much more profit the contractor is apparently making than others do for government work.

Plus, the incredible story of survival. Five people found alive in a flooded cave in Laos after more than a week trapped deep underground. Two people remain missing. The latest on the rescue ahead.

(COMMERCIAL BREAK)

[20:43:26]

COOPER: New reporting from the New York Times about the cost of President Trump's reflecting pool renovations. The Times, citing internal government records says the company given a no-bid contract to repair the pool is being paid an inflated and excessive profit margin far exceeding the norm. Their bid added at least $850,000 to what a more typical contract may have cost, and the administration eventually agreed to pay the company $13.1 million, seven times more than what the president initially estimated.

Meanwhile, this is how the president defended the spending during a cabinet meeting today.

(BEGIN VIDEO CLIP)

TRUMP: It always leaked and it was a problem, a lot of things, and hundreds of millions were spent. The Biden administration and the Obama administration spent hundreds of millions of dollars trying to get it to work, and they failed. And we'll be spending, you'll give me a number, but I think it's a very low number.

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COOPER: Earlier, I spoke with New York Times Investigative Reporter, David Fahrenthold, who broke the story.

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COOPER: So can you just walk us through what you found about the profit margins for this no-bid contract?

DAVID FAHRENTHOLD, INVESTIGATIVE REPORTER, THE NEW YORK TIMES: Well, what we found was that this contractor is charging the government 20 percent overhead and then another 20 percent for profit. And what we found was that the National Park Service itself, the people who are paying the bill, did their own analysis and found that both of those were inflated, both of those were excessive. The normal profit margin is like 6 to 12 percent usually. And so despite the fact --

COOPER: So 20 percent for overhead and 20 percent --

FAHRENTHOLD: More.

COOPER: Wow.

FAHRENTHOLD: -- for -- and both of those are above norms. The Park Service paid it anyway, though.

COOPER: And how did they get away with doing a no-bid contract? Just because of the length of time?

[20:45:00]

FAHRENTHOLD: You know, no-bid contracts are unusual. They're supposed to be unusual. Usually, if you want to find out who's going to do the best job for the least money, you go out and ask for multiple bids.

In this case, they not only gave the bid only to one company, that's unusual enough, but they went a step further and did something even more unusual, which is that they gave them the contract before they'd even agreed on how much the contract was going to cost.

They said, just start work now, and we'll haggle about it later, how much you're going to be paid. And of course, when they went back to haggle about it later, the government had lost all its leverage to try to drive a hard bargain, and the work was already underway.

COOPER: And the president has kind of -- initially, he took credit for choosing the contractor. He then later disavowed that. Has there been any clarification on how this company got the contract?

FAHRENTHOLD: No. You're right. The president said, initially, this is the company that fixed the swimming pools at my golf course in Northern Virginia. And you know, I knew them, and I called them in myself.

Later on, he said, OK, none of that was true. I don't know these people at all. But we don't really know how this company got chosen. They are not a pool company. They do not advertise any expertise with pools. And they have no history of doing government contracts. This is their first-ever government contract.

COOPER: You also talk about the actual work that's being done, what already they found out that they can't fix, that needs fixing. What did you find?

FAHRENTHOLD: So one of the most important problems with the pool -- and this problem has been around for decades -- is that there's concrete slabs that make up the pool's floor, and there's gaps between them that are usually filled in with some kind of sealant.

Lots of water leaks out between those gaps, and then the government has to spend a lot of money to replace it. So the main thing that they're supposed to do is plug those gaps. And what we saw was that the first two times they tried, their method failed.

COOPER: So the one thing that very much needs to be done, that's not going to be done?

FAHRENTHOLD: Right.

COOPER: So what is this company doing?

FAHRENTHOLD: The main thing they're doing, and the thing people have seen on TV, is that they're putting a blue waterproofing coating on the concrete slabs themselves, which people we've talked to have said, well, that's not going to hurt.

But the water doesn't leak out through the eight-inch-thick concrete slabs. It leaks out between them. So you're sort of solving a problem that doesn't really exist.

COOPER: So will this happen again? I mean, is this the new way things are going to be done? Because I heard the president now talking about the World War II Memorial might need a little zhuzhing.

FAHRENTHOLD: Well, that's a little bizarre, actually, because they already paid to fix the World War II Memorial. They paid in December $4 million to fix the World War II Memorial. I was there yesterday. It looks great. It doesn't need any fixing.

COOPER: The president said something, I think, about lightening a color.

FAHRENTHOLD: Oh, they're going to change the color? It's a very nice -- it's a, you know --

COOPER: Something about going with a lighter color. Would that be for the water -- for the pool?

FAHRENTHOLD: For the bottom of the pool.

COOPER: OK.

FAHRENTHOLD: The water there is clear. It's a very beautiful memorial. I guess they could change the paint color, but they just fixed it.

COOPER: David Fahrenthold, thanks so much. Appreciate it.

FAHRENTHOLD: Thank you.

COOPER: Now an incredible moment caught on video. Five of the seven villagers trapped in a flooded cave in Laos for more than a week have been found alive. Cave diving specialists found the five this morning. Two others remain missing, and the search continues for them.

The question now is, will they be able to get everyone out? That will be certainly a challenge. You can see the miserable and tight conditions in the cave. CNN's Randi Kaye has more.

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RANDI KAYE, CNN NATIONAL CORRESPONDENT (voice-over): Deep inside this cave in central Laos, lives are on the line. Not just the trapped villagers, but their rescuers, too. It all started about a week ago on May 19th, when seven villagers entered the cave in search of gold. Before they knew it, massive rains triggered flash flooding, which blocked their exit.

Authorities were alerted to the trapped villagers by a member of the group who managed to escape before the exit was blocked, AP reported. For days, specially trained cave divers tried to reach the group, diving deep into the 1,100-foot tunnel, winding their way through the cave's narrow passages, some just about 23 inches across. It is so narrow that you have to tilt sideways, duck low, and crawl flat on your stomach to get through, one diver said.

After hours in the dark navigating muddy waters, most days ended in disappointment, as rescuers, covered in mud, returned without finding the villagers. In this video, a diver reports he left the cave at nearly midnight, after rain started again and they pulled out for their own safety.

Helmets, breathing masks, and gas monitors are also being used to monitor levels of oxygen and toxic gases inside. As rescuers pushed deeper into the cave each day, they made noise, trying to signal to the trapped villagers that help was on the way. Divers yelled into the darkness, is anyone there? Near the cavern where they thought the villagers were, the water just ankle deep. Rescuers have been pumping water out of the cave.

Finally, on Wednesday, this was the moment divers found five of the villagers. They reported all five are safe. On this Finnish rescuer's Instagram post, he asks each villager his name and how they feel. They tell him they are not ill, just hungry. The search continues for the two other villagers, but finding these five men is only half the battle.

[20:50:00]

They still need to get them out of the cave. As this rescuer said on social media, extraction is still ahead and it ain't going to be easy.

The trapped villagers were given liquid and gel food, but some of the cave divers must head straight back the way they came to gather more supplies for the men, so they can build up enough strength for the journey out. The rescue operation started long before the cave diving. Crews had to hike about two-and-a-half miles through the jungle to even find the site.

Now, one diver told CNN, more than 100 people have joined the operation, including 15 experienced divers and experts who helped save 12 young soccer players and their coaches who were trapped in a cave in Thailand in 2018.

Randi Kaye, CNN.

(END VIDEOTAPE)

COOPER: Just terrifying.

Coming up next, see how Ukraine is hitting Russia with its deep strike drones. We'll take you to the war zone.

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[20:55:23]

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COOPER: A disturbing video from Kyiv. An aerial bombardment earlier this week, Russia using a hypersonic missile to target the capital. Just one of about 90 missiles and 600 drones used in the attack, according to Ukraine. Since military support from the Trump administration became in doubt, Ukraine has been forced to improvise.

Their ingenuity and desperation has led to a remarkable evolution in drone warfare by Ukraine against Russian forces.

CNN's Nick Paton Walsh went to eastern Ukraine to see their long-range drones in action.

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NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR (voice-over): President Trump once said Ukraine had no cards, but now, they've built themselves a new deck. We're now with perhaps Russia's most keenly sought target in the war. A deep strike Ukrainian drone unit launching this night, a wave of 200 attack drones into Russia.

PATON WALSH: The issue here is the scale. Potentially 20 drones being launched just from here and three or four other locations around here also involved in tonight's attack. The sheer number overwhelming, it seems, much of Russia's air defenses and causing persistent embarrassment to the Kremlin.

PATON WALSH (VOICE-OVER): Working fast in silence, knowing an error with the fuel or explosives or launch could kill them all.

PATON WALSH: They are a key target for the Russian Shahed drones flying overhead, constantly interrupting their work, which is going to go on all night.

PATON WALSH (VOICE-OVER): Close to here, Russian strikes have just hit Ukrainian civilians. And in Russian Stavropol, these Ukrainian drones hit. The mayor telling Russians there to stay indoors.

In another field, another technological leap is at work. Jet boosters used to get drones to their 120 mile an hour speed in just seconds. At their base, one screen is a glimpse of a world order turned on its head. Dozens of Ukrainian drones roaming inside Russia -- Code, coordinates, targets, A.I. powered, pulsing on the screen faster than your eyes can read. Russia, often seen as the third largest military power, preyed upon by a series of laptops.

VECTOR, DEEP STRIKE COMMANDER, DEFENSE INTELLIGENCE OF UKRAINE: It's our biggest advantage and why it is so hard for Russia to destroy this program, because we split up. We don't have any common centers and we use dozens of places. Also, the software gives us a chance to work with thousands of UAVs.

PATON WALSH (VOICE-OVER): The Liutyi drone can take a huge payload over 1,200 miles. There are decoys and a jet-powered drone, they say, seems to appear like a rocket on Russian radar.

VECTOR: Those are decoys. We sent hundreds of them. Some are empty, some with a payload. The payload is small, but it's enough to destroy air defense systems.

PATON WALSH (voice-over): It is dizzying, the speed of evolution, adaptation, ingenuity. Ukraine, two years ago, begging for old American missiles to hit just inside Russia's borders. But now, it builds itself and launches so many drones, often as deep as Russian Siberia, even Kremlin loyalists are questioning Putin's endgame.

Now, the West wants to learn from what Ukraine had to do to survive when it didn't get the help it needed. Each leap, advantage, lasts just months before the other side catches up. Ukraine is ahead for now, but only because it's learned it'll likely be on its own when it's not.

(END VIDEOTAPE)

COOPER: So how is this new capability by Ukraine changing the war?

PATON WALSH (on camera): It's really putting pressure on Vladimir Putin internally, because there is sort of this concept now that their ability to defend their own skies is limited. So these longer-range strikes hitting oil refineries and, you remember too, caused a bit of concern around the May 9th Victory Parade, which was significantly limited by the Kremlin, partially because of this threat.

But on the broader issue around the battlefield, some of these drones in the medium range are really disrupting Russia's supply lines. And so, parts of the near battlefield where Russian troops might feel safe, they could move around at freedom, are now being regularly pummeled. And that's a huge impact on Russia's ability to continue its offensive and invasion, and on morale too, bad as it already was.

And so this change is something which started out as being Ukraine's initial ambition and advantage, and the way they've produced it at mass scale has really changed the dynamic now.

[21:00:00]

COOPER: Nick Paton Nick Walsh, thank you. Well, that's it for us. Thanks for watching. The news continues. "The Source" starts now. I'll see you tomorrow.