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Defense In Ghislaine Maxwell Trial Begins Making Its Case; European Officials Warn Omicron Could Be Dominant Variants In Weeks; Fed To Slow Stimulus, Hike Interest Rates; Nation Grapples With Shortage Of Childcare Workers. Aired 10:30-11a ET

Aired December 16, 2021 - 10:30   ET

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

[10:30:06]

ERICA HILL, CNN ANCHOR: All right. Kara, we know you continue to update us. Thank you.

JIM SCIUTTO, CNN ANCHOR: Yes. Let's speak now to federal and white collar criminal defense attorney Carolyn Felice. She's also a law lecturer at Columbia University. Carolyn, good to have you back.

So, you heard the description of the defense there, in effect questioning the motives, right, of these women, young women at the time who accused Epstein and Maxwell of sexual abuse, claiming it's all about money. How does that defense work in your view, both legally and with a jury?

CAROLYN FELICE, FEDERAL AND WHITE COLLAR CRIMINAL DEFENSE ATTORNEY: Yes. So the defense has been very candid from the start here, Jim. They set an opening statements, this case is about money, manipulation and memory. And that's exactly what they're doing.

As Kara noted, they are going to go point by point, trying to really debunk what these four women are saying now. They were minor victims, alleged victims at the time. Three of them have testified anonymously, only one, Annie Farmer, is using her actual name. She's been very vocal from the start about this.

And the idea, number one, is that the government is using Maxwell as a scapegoat, that Epstein obviously is not here to be tried and that she's left holding the bag. And I think it goes to a bigger question of criminal liability in general for enablers of abuse. So that's a huge deal here.

And then with respect to discrediting the victims, it doesn't play well in today's day and age. I think they're going to try to walk that fine line. They're introducing a memory expert to try to say, well, maybe these women aren't lying, per se, but perhaps they have a distorted memory of what occurred all these years ago. So we'll see how it plays out.

SCIUTTO: So Epstein, years ago, signed an agreement, really a plea agreement with federal prosecutors, which was quite broad and putatively provided protection against prosecution of any co- conspirators in effect going forward. I wonder if you believe that could be a vulnerability to whatever happens in this trial on appeal.

FELICE: Yes, I don't. And that, you know, it's dubbed a sweetheart deal with Epstein has been really widely criticized, even in the internal watchdog within the DOJ, has come out saying that (inaudible) use extremely poor judgment in executing that agreement. It's really sort of unprecedented, the type of non-prosecution agreement that he entered into with Epstein. He essentially granted perpetual immunity to any alleged co-conspirators from now until the end of time. That just sort of thing is not the type of thing that holds up in court.

And also prosecutors have really thought, critically, about what charges to bring and how they're charging Maxwell in this trial. And I think it'll hold up.

SCIUTTO: OK. Another story, another trial you've been following closely, that's the trial of Elizabeth Holmes regarding fraud around her company, Theranos. In that, the defense's case really focused on her, including her claiming that a lot of this results from a decade long abusive relationship with the former CEO, COO of the company, Ramesh Balwani. And really watching the jury here, right, and I wonder, based on your reading of this case so far, do you believe that defense might work?

FELICE: So here's the deal with that defense, Jim. I mean, they're really rolling the dice, not only putting Holmes on the stand but really that's the only testimony that they're relying on. There was a chance that they would put on an expert as well to testify about sort of interpersonal relationships and abuse and how that, you know, has an effect on the mindset of somebody.

Really, the defense is only using Holmes' testimony about this really abusive and manipulative, manipulative relationship. I think both things can be true at the same time. The jurors can both believe and accept that she was in, you know, a, by all accounts, a very dysfunctional relationship. But the question is, does that really go to negate her state of mind, does that really have anything to do with whether or not she on purpose relayed mischaracterizations and misrepresentations to Theranos investors. And so, I think that's the real issue here,

SCIUTTO: And therefore, the fraud of them, and there's been some criticism that some of her answers have been contradictory.

FELICE: Exactly. One of the bombshell pieces of evidence in this case has been that she actually doctored documents. She put on a Pfizer logo on some documents and gave them over to investors, the idea being that she had contracts with many pharmaceutical companies. And I think that the issue there is whether or not, you know, how -- just how bad that was.

And she did well on the stand, I do have to say. She's a magnetic personality. There's a reason she's sort of ascended to fame in the heyday of Theranos.

[08:35:00]

People like her. She's extremely compelling and I think she did a very good job defending herself.

SCIUTTO: Carolyn Felice, always good to have your expertise.

FELICE: Thanks for having me.

HILL: Still ahead, the Omicron variant spreading at a remarkable rate, forcing some countries to re-impose lockdowns and restrictions. That's next.

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[08:40:00]

HILL: The rapid spread of the omicron variant raising serious concerns overseas.

(BEGIN VIDEO CLIP)

URSULA VON DER LEYEN, PRESIDENT, EUROPEAN COMMISSION (through translation): If you look at the time it takes for new cases to double the number, it seems to be doubling every two or three days and that's massive. We're told that by mid January, we should expect omicron to be the new dominant variant in Europe.

SCIUTTO: We're following all the latest developments around the world. Let's begin with CNN senior international correspondent Ben Wedeman. He's in Rome.

So, Ben, Italy, it's extending its COVID-19 state of emergency, what does that look like on the ground there?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: What that means, Jim and Erica, is that basically the Italian government, which oftentimes is bogged down in bureaucracy, can act quickly to impose new restrictions. For instance, now travelers from abroad or elsewhere in Europe who have not been vaccinated, will have to undergo a mandatory five-day quarantine.

Now, Italy has this green passing effect whereby you have to prove that you have been vaccinated to enter a lot of public places and now has a super green pass. That means that just testing negative isn't enough. You have to show you've been vaccinated. And starting today, Italy has begun vaccinating children between the ages of five and 11.

We're outside Rome's Museo dei bambini or Children's Museum where they are vaccinating these children. And this is all part of the effort to really increase the level of vaccination in the population to avoid the kind of outbreak of the Omicron variant, which here is still in the low double digits. They don't want to have a situation here like what the United Kingdom is going through. Jim, Erica.

HILL: Yes. And speaking of the United Kingdom reporting its highest number of daily cases since the start of the pandemic, CNN Salma Abdelaziz is in London, and that is prompting concern and some action there.

SALMA ABDELAZIZ, CNN CORRESPONDENT: Jim and Erica, it feels like everyone, and I mean everyone right now is reconsidering their Christmas plans. People are canceling social gatherings left, right and center. Even the Queen has canceled a pre-Christmas lunch with her family out of an abundance of caution. The streets are empty because there's work from home guidance.

Yes, we're not under lockdown but it feels like a self-imposed one. That's because yesterday, the UK, as you mentioned, recording the highest number of COVID cases in a single day since the very start of this pandemic, more than 78,000 new positive cases. And health officials here are warning that the R number for Omicron in this country is between three to five. That means for every one person infected, they can infect up to five other people. That's why we see that phenomenal case number rise.

And it really has the health system here concerned, worried. There's always a finite number of hospital beds and that's why health officials are saying out of an abundance of caution, reconsider Christmas. Be very careful, think twice. Jim and Erica.

SCIUTTO: It's happening so quickly. Salma Abdelaziz in London, Ben Wedeman in Rome, thanks very much.

Worker shortages, unimaginable wait lines, plaguing in particularly the childcare industry in this country. Next, how parents are coping with the crisis.

HILL: But first, here's a look at some of the other events we're watching today.

[08:43:21]

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HILL: New this morning, weekly job claims ticking up just slightly last week with roughly 206,000 filings for unemployment which means that's actually near they're staying near that 52 year low.

SCIUTTO: This comes as the Federal Reserve says it is planning to wrap up its stimulus program faster than originally announced, says that it will likely also raise interest rates, signaling as many as three interest rate hikes early next year. All to respond to inflation, CNN business reporter live from New York, Matt Egan.

So, Matt, tell us how quickly consumers see this. I mean, the bond buying is something they don't necessarily see right away but interest rates, they will, mortgages, credit cards, you name it.

MATT EGAN, CNN BUSINESS REPORTER: Jim and Erica, absolutely. It does take some time to filter through the economy, but this is a major policy shift by the Federal Reserve. We know that high inflation is really the biggest financial headache facing Americans right now. And the fed is finally showing that it's serious about trying to tame inflation. After months of insisting that these price spikes were just a temporary issue, the fed is finally acknowledging reality, which is that inflation is on fire and someone's got to put it out. So the fed is acting like the firefighter here. They're stepping in to cool things off by wrapping up that bond buying stimulus program a few months early, and penciling in three interest rate hikes next year and more hikes to come after that.

[08:50:00]

Now, the rate hikes that would be a big deal because that does raise the cost of borrowing on everything from mortgages and credit cards, to small business loans. Borrowing costs is still below but they would tick higher.

Now, here's how Jerome Powell explained during yesterday's press conference, exactly why the fed is making this policy shift.

(BEGIN VIDEO CLIP)

JEROME POWELL, FEDERAL RESERVE CHAIR: I believe that inflation may be more persistent, and that may be putting inflation expectations under pressure, and that the risk of higher inflation becoming entrenched has increased.

(END VIDEO CLIP)

EGAN: Now, the fed came to the rescue in March of 2020, to prevent this COVID recession from turning into a full blown depression, and it worked. Yet, the fed is still largely in emergency mode. Even though today unemployment is low and inflation is high. This would be like a doctor continuing to heavily medicated patient long after they fully recovered. There's going to be some side effects. And in this case, it's inflation.

Now, we also got new evidence today of just how strong the jobs market is. Unemployment claims did tick higher but they remain your 52 year lows. No bosses just simply aren't firing people right now because they can't afford to. They have so many job openings that they can't fill.

Jim and Erica, this is another reason why the fed is getting out of emergency mode here. The jobs market is moving rapidly towards full employment. And that is great news, especially considering where we were in the spring of 2020.

SCIUTTO: Wages going up too. Matt Egan, thanks so much.

One industry hit particularly hard by the pandemic is childcare, maybe you've experienced it yourself. Centers just can't find workers which means weightless for parents getting much longer.

HILL: CNN's Gabe Cohen takes a look at the ripple effects on the economy.

(BEGIN VIDEOTAPE) GABE COHEN, CNN CORRESPONDENT (voice-over): There's a crisis close in classrooms at Nurtury Early Education in Boston.

UNIDENTIFIED MALE: Oh, we need to get ready for the tea party.

COHEN (voice-over): The nonprofit staff has shrunk 30%.

Why can't you find employees?

UNIDENTIFIED FEMALE: Because they can earn a lot more money working anywhere other than in childcare.

COHEN (voice-over): Across the country, more than 10% of childcare workers have left the industry during the pandemic, driven out by closures and furloughs early on, and now wage competition. Nationwide, the average childcare worker makes just over $12 an hour, far less than K through 12 teachers. And in this competitive hiring market, other industries are raising wages to attract workers.

RHIAN EVANS ALLVIN, CEO, NATIONAL ASSOCIATION FOR THE EDUCATION OF YOUNG CHILDREN: This developmental time for children is the most critical developmental time in the human lifecycle. And yet, we're competing against other minimum wage, wage jobs.

COHEN (voice-over): The American Rescue Plan passed by Congress in March spent billions to keep the childcare industry afloat. It helped nursery raise wages $1 an hour, but Martin Ramos, a teacher here, still works a second job at Home Depot.

MARTIN RAMOS, TEACHER, NURTURY EARLY EDUCATION: I'm been living like pay cheque by cheque, and I was getting behind on my bills.

COHEN (voice-over): With the staff shortage worsening, Nurtury is now taking 15% fewer students.

How long could families sit on a waitlist?

UNIDENTIFIED FEMALE: They may sit on the waitlist for the better part of 2022.

COHEN (voice-over): Across the US, roughly 10% of childcare programs have closed, others are downsizing, and many parents are seeing prices rise and waitlist grow.

ALLVIN: And parents predominantly women can't go back to work.

COHEN (voice-over): A recent survey found 84% of parents feel overwhelmed by the cost of childcare, and nearly 20% have quit a job because of it. The average annual cost nationwide is more than $10,000 per child. For the average couple, that's 10% of their income. For single parents, it's 35%.

UNIDENTIFIED FEMALE: This is my boo-boo.

COHEN (voice-over): Reshonna Reynolds became a stay at home mom when her son was born last year. She was making less than $40,000 in Seattle.

RESHONNA REYNOLDS, MOM: The childcare costs was more than what we were paying for rent. That's how much the childcare costs work. I decided, hey, I have to quit my job.

COHEN (voice-over): She and her husband are now trying to find daycare so she can get back to work, but the waitlist or up to two years long.

REYNOLDS: We can't find any childcare.

COHEN (voice-over): Nearly 3 million women, including hundreds of thousands of mothers, are still out of work from the pandemic.

NELA RICHARDSON CHIEF ECONOMIST, ADP: And it's really important in terms of the jobs for coverage going forward.

COHEN (voice-over): Nela Richardson is ADP's chief economist.

RICHARDSON: The US is losing trillions of dollars when women are not fully participate in the labor market.

COHEN (voice-over): President Biden's Build Back Better Plan would invest close to $400 billion in childcare, boosting wages, offering universal free preschool for three and four year olds, and guaranteeing middle class families pay no more than 7% of their income on child care.

ALLVIN: Parents can't pay more, early childhood educators can't earn any less. And so, it's going to continue to take significant public funding in order to fix this problem.

COHEN (voice-over): Just look at Reshonna Reynolds and the career she left.

What was the job you quit when your son was born?

[08:55:00]

REYNOLDS: I was a preschool teacher and I had that job for 15 years. I loved it, it was great, but I could not afford the cost of childcare.

COHEN (voice-over): A teacher stuck at home needed now more than ever.

REYNOLDS: If you want us to pour into your children, you got to give us what we need.

(END VIDEO CLIP)

SCIUTTO: Thanks so much to Gabe Cohen for that report. We're hearing so many similar stories around the country. Thanks so much to all of you for joining us today. Another busy news day, I'm Jim Sciutto.

And I'm Erica Hill. Stay tuned "At This Hour with Kate Bolduan" starts after this quick break.