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Two Charged With Iran Nuclear Conspiracy; Opposition: At Least 70 Killed In Syria; GOP VP Pick?; JPMorgan Bad Trades; Caregiver Abuse; Flooding in Japan; Penn State Scandal; Charity Scam

Aired July 13, 2012 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: And you're in the SITUATION ROOM. Happening now, international condemnation of what may be the worst massacre yet in Syria. And now, new fears about the regime's chemical and poisonous weapons.

Also, charges filed in a horrifying case of abuse. The victim, a disabled young woman.

Plus, the diary of a family murder. A man lays out his deadly plan in chilling detail.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in the SITUATION ROOM.



BLITZER: We begin this hour with new U.S. efforts to quash Iran's nuclear program. A federal grand jury has just charged two people with trying to send American parts to Iran to help enriched uranium. One of the accuse has already been arrested. The others are still in large. Our intelligence correspondent, Suzanne Kelly, is here in the SITUATION ROOM working the story for us. So, what are you finding out?

SUZANNE KELLY, CNN INTELLIGENCE CORRESPONDENT: Well, Wolf, prosecutors that Parviz Khaki is a citizen at Iran and Zongcheng Yi is resident of Chin,a both allegedly operating from the Philippines. Now, prosecutors say that over the course of nearly three years, the men conspired to obtain materials that are typically used for uranium enrichment without a license.

And then, as you said, send them onto Iran. Now, it's not your average shopping list. Take a look at what prosecutors say the men were after. Lathes and nickel wire, aluminum alloy rods, mass spectrometers, vacuum pumps, and Wolf, perhaps, the most disturbing radioactive source materials themselves.

Now, the indictment lays out fascinating detail about just how the suspects allegedly planned to do this. According to prosecutors, by setting up a front business in the Philippines, ordering the materials and then shipping them on ward to Iran. We got more detail on that from assistant attorney general for national security, Lisa Monaco, who warned that Iranian procurement networks continue to target U.S. and western companies for technology acquisition by using fraud and front companies and middlemen in nations around the globe.

Immigration and Customs Enforcement director, John Morton, called this a complex conspiracy to deliver nuclear materials to Iran and a significant threat to national security, Wolf.

BLITZER: Do we know, Susan, if any of this material actually made it to Iran?

KELLY: Well, we do know that a law enforcement source tells CNN that officials aren't in a position to say right now whether all of those materials made it to Iran. According to the indictment, the suspects were able to successfully ship the lathes and nickel alloy.

The indictment says that Khaki was trying to get an undercover federal agent to order the radioactive source materials. They can't say right now whether or not those materials, which were the most serious, actually made it into Iran, Wolf.

BLITZER: Suzanne Kelly with that information, chilling information. Thanks very much.

Let's dig a little bit deeper right now with our national security contributor, Fran Townsend. She's a former Bush homeland security adviser. She also serves on the external advisory boards of both the CIA and the Homeland Security Department.

So, Fran, what exactly does this mean as far as what's going on behind the scenes with Iran's nuclear program if these charges are accurate?

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Well, Wolf, what we know for certain right is that despite the heavy sanctions -- and remember, the most recent ones just went into effect on July 1st, despite this sort of complex and very heavy sanctions regime, Iran has found ways to work around that, to try and obtain the component parts necessary for their nuclear program.

You know, this has been a concern of U.S. government, and in particular, the Department of Defense for some time. I sat on a number of private boards for defense companies. And the defense department comes out and briefs companies who might be approached by one of these fronts and warns them about the kinds of signs to look for in a front company.

Suspicious activity, suspicious kinds of requests in materials that they may be looking for to overcome the sanctions and to get these parts into Iran.

BLITZER: All right. Standby for a moment because I want to pick your brain on another subject namely Syria. Opposition groups are reporting at least 80 people killed today one day after an alleged government massacre that killed more than 200 people in a village near Hama, apparently, the single deadliest assault in the regime's 16- month brutal crackdown.

And there are now growing signs about Syria's chemical weapons. Our Pentagon correspondent, Barbara Starr's working this part of the story for us. What's going on here, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, look, Wolf, it's well-known that Syria has this deadly arsenal of chemical weapons. The question now is what are they planning to do with it?


STARR (voice-over): A new worry about how far Bashar al-Assad will go to keep his grip on power. The U.S. now believes the Syrian regime has moved some of its chemical weapons in recent days. As the fighting continues, U.S. officials will only say the weapons are still under the control of Assad's forces.

But a former CIA director says make no mistake, the U.S. is urgently trying to gather all the intelligence it can.

MICHAEL HAYDEN, FORMER CIA DIRECTOR: I would see that ratcheting up, because you just want to know, look, at the end of the day, if something untoward's happening, you want to have as much time as possible to assess what it is and be able to develop a response.

STARR: The Pentagon won't comment on the story first reported by "the Wall Street Journal," but said any use of chemical weapons by Syria would be a red line for the international community. Secretary of state, Hillary Clinton, has already warned Damascus.

HILLARY CLINTON, SECRETARY OF STATE: Given their behavior and the chemical weapons they possess, it is imperative that they understand their international responsibilities.

STARR: The U.S. military estimates there are nearly 50 chemical weapon sites throughout the country, deadly mustard gas and sarin among the holdings. With violence even spreading to Damascus, officials suggest Assad could have taken the risk of moving the weapons to put them in a safer place.

But another theory, Assad knows U.S. satellites watch those sites and his communications are intercepted. Is he just taunting the west to show he can freely move his deadly weapons around?

HAYDEN: I'm far more concerned about loss of control over the weapons and what happens when the chaos that seems to be infecting larger society might touch upon some of these weapon stockpiles.

STARR: But would the Syrian leader really use the weapons? In 1988 in Iraq, Saddam Hussein did. Thousands of Kurds died in a chemical weapons attack, but that led to years of doubts about whether Iraq maintained a stockpile. This time, it's different.

ANDREW TABLER, WASHINGTON INSTITUTE FOR NEAR EAST POLICY: I mean, they're there. It's not like Iraq where you have to guess at it. We know where they are. (END VIDEOTAPE)

STARR (on-camera): Now, if Assad were to use the chemical weapons, the U.S. believes that would be a red line for Russia and China. They would withdraw their support for the Syrian regime and that could open the door to a military intervention -- Wolf.

BLITZER: More chilling news out of Syria. Thanks very much, Barbara, for that.

Once again, we'll dig a little bit deeper with our national security contributor, Fran Townsend, also, Professor Fouad Ajami is joining us. He's a senior fellow at the Hoover Institution. Fouad, let me start with you. What do you think about these reports that Bashar al- Assad's regime, they are now moving around these chemical weapons. What does that signal to you?

FOUAD AJAMI, SENIOR FELLOW, HOOVER INSTITUTION: Well, you know, Wolf, I think this is a reckoning time for Bashar al-Assad in many ways. There's one dissident who put it well to say a word or to at least at the domestic setting of Syria. He said massacres have become like breakfast to us. Obviously, there is something horrendous is going on in Syria.

And there are all kinds of scenarios. There's even a scenario that many of the weapons, standard weapons of the regime are being moved from other parts of Syria to the (INAUDIBLE) homeland to the basic homeland of Bashar al-Assad and his own community. So, I think we have to watch what this regime is doing.

My feeling is when Bashar hears the word red line, I think he mocks this red line. He downed Turkish fighter plane and nothing happened to him. He's been defying all kinds of red lines and mocking all kinds of red lines.

BLITZER: Fran, based on what you know and without obviously violating any classified information, how good is U.S. intelligence when it comes to monitoring Syria's stockpiles of poisonous gas or chemical warfare, if you will?

TOWNSEND: Well, Wolf, monitoring, you know, the whole counter proliferation effort, that is tracking and monitoring stockpiles of these sorts of weapons is of the highest priority within the U.S. intelligence community. And obviously, since the sort of massacre of Assad of his own people began, collection of intelligence inside Syria about the opposition, about the Assad regime's capabilities and their weapons has been a real collection priority.

So, I think you've got to assume, you know, Barbara reported the fact the defense department acknowledges there's nearly 50 chemical weapon sites. That's because they know where they are. These are not that -- these things, once you know they exist, are not that difficult to track.

And so, you have to assume that it has been part of the defense department's contingency planning should there be a military operation to identify and assess what the resources would take to secure them.

BLITZER: Fouad, we've seen some more high level defections, civilian defections, military defections, including the Syrian ambassador to Iraq has now affected. All of this happening, and I read this quote in "The Washington Post," the story, there was an explosion in Central Damascus, the capital.

"The Washington Post" describing the city as now feels pregnant with rage and ready to explode. The defections coupled with the explosions in the capital, what does that say to you?

AJAMI: Well, Wolf, I think the war is coming closer to the den of this awful monster. It's coming close to Damascus. I mean, Damascus was always, if you will, the last citadel of this regime. What's really interesting to me, Wolf, about the recent violence is it's very premeditated, it's very precise. And the aim of Bashar al-Assad has become very obvious.

I believe Bashar has now realized he can't win the war for all of Syria. What he's done now is he's began to do these massacres on the full plan between the Alawi (ph) highlanders and the Sunnis in the plains.

I mean, these massacres, the massacre in Houla, the massacre in (INAUDIBLE), the massacre now in Turaymisah, these forlorn hamlets, but they happen to be on the fault line between these Sunni communities and the Alawis (ph) and they've begun ethnic cleansing.

This began to look like the Balkans. And the man does it, and he has the feeling that the international community will not come to the rescue and will not do anything to stop him.

BLITZER: Yes. I'll bring Fran back in a moment, but Fouad, another strong statement from Hillary Clinton, the secretary of state, today in the aftermath of this massacre, similar statements coming from the White House. Let me read to you a line saying that the United Nations Security Council has to act. "History will judge this council," she says.

"Its members must ask themselves whether continuing to allow the Assad regime to commit unspeakable violence against its own people is the legacy they want to leave." So, here's the question, Fouad, will the United Nations Security Council do the right thing?

AJAMI: The United Nations Security Council, Wolf, cannot do the right things. They will not do the right things. I don't think either the Russians or the Chinese care about these statements. You know, Senator McCain has a wonderful expression. He says, look, the international community and the United States have run out of adjectives to describe the behavior of the Assad regime on all kinds of terms.

We've gone back to the United Nations Security Council again and again. And we meet the same Russian veto and we meet the same Chinese stalling and we meet the same indifference. But Bashar al-Assad's attitude is how many military divisions does this U.N. Security Council have?

And if the U.N. Security Council has no military division and if there's no intervention from the outside, I think Bashar will go on with the killing and with the strategy that we've talked about, the partitioning of the country, the setting up of Alawi homeland and the statement to the Syrian people is, "I will burn this country before I lose this war."

BLITZER: You know, Fran, as we take a look at what's going on right now, it's obvious to me that the situation is a mess. But what's fascinating is that even Syrian opposition, the rebel forces, they are now saying to the U.N. special envoy, Kofi Annan, go away, it's over.

We don't want you involved anymore. They're so frustrated. They're so angry at his inability, so far, to accomplish anything.

TOWNSEND: Well, and I think the Syrian opposition is absolutely right to say that. Look, every time Kofi Annan has met with Bashar al-Assad or the senior leadership of the Syrian regime, he says one thing. Kofi Annan leaves or walks out of a meeting, and the situation actually gets worse.

I mean, and so what they -- Kofi Annan's engagement gives this Arab legitimacy or continuing legitimacy to the extent Assad has any left. So, it undermines the Syrian opposition. I think they're absolutely right. If the U.N. Security Council and the envoy can't make affirmative progress that can hold and protect the Syrian people, then the Syrian people are better off without them.

BLITZER: One final question, Fouad to you, Bashar al-Assad knowing what happened to Mubarak in Egypt, knowing what happened to Gadhafi in Libya, do you think he will remain on the ground in Syria until the bitter end, even if it means his life, or at some point, will he flee, whether to Russia or Iran or some place else to save his life, to save his family, and the billions he's probably hidden away some place?

AJAMI: You know, Wolf, there's no way of knowing what these dictators will do. There's no way of knowing whether they will stay on the ground and fight the last fight or whether they will flee and unite with their bank accounts. It's very hard to know. I think what's very clear about Bashar and his family, his mother, his younger brother, his sister, his brother-in-law, these people are dug in.

And what they've done is they've made sure now that the entire Alawi community is implicated in the crimes because they want to make sure their own communities stand by them. So, we don't really know, but the fight is on. And I think this man has shown enormous barbarism.

BLITZER: Fouad Ajami, thanks so much for coming in. Fran Townsend, as usual, thanks to you as well.

A chilling video diary, a man vows to live in a bunker in the woods and calmly plots to kill his wife and 18-year-old daughter.

Plus, there's a lot of new buzz out there about Condoleezza Rice as the Republican vice presidential candidate. How likely is that? Is it likely at all?


BLITZER: I want to remind our viewers at the top of the hour, CNN's Jim Acosta will have his interview with Republican presidential candidate, Mitt Romney. They're speaking. The entire interview will air in our special 6:00 p.m. eastern hour of the SITUATION ROOM. That's coming up at the top of the hour. Lots of good questions for the Republican presidential candidate.

Meanwhile, there's other news we're following. It was a chronicle of deadly plans that no one was supposed to see, but police did find the video inside one man's Washington State home. And what they heard and what they saw was frightening. Lisa Sylvester's back once again in the SITUATION ROOM. Lisa, this was discovered after his wife and teenage daughter were killed.

LISA SYLVESTER, CNN CORRESPONDENT: Yes. This is a story that has now, at least, this video has now gone viral. The King County sheriff said it was breathtaking and evil. The extent, Peter Keller went through to plan the murders of his wife and daughter.


SYLVESTER (voice-over): The chilling video diary shows Peter Keller calmly plotting to kill his wife, Lynette, and 18-year-old daughter, Kayleen (ph), and to live in a bunker in the woods in Washington State.

PETER KELLER, KILLED WIFE AND DAUGHTER: It's actually more comfortable for me to think about living out here, robbing banks, pharmacies, just taking what I want for as long as I can. At least it will be exciting. It won't be boring. And I don't have to worry about Lynette or Kayleen. And everything will be taken care of. Just be me.

SYLVESTER: Police say after murdering his family, Keller set his home on fire and left it booby trapped. But a pipe bomb failed to go off and the fire was quickly put out. Among the items investigators found at the home, this video.

KELLER: I used to sit here and think, you know, this whole thing is just crazy. At times. And then I'd think about it, and it would make sense and it was like, OK, this is what I got to do.

SYLVESTER: The King County sheriff says Keller made the video during a series of day trips to the woods. Authorities say he planned the killings for a long time and built a bunker in the woods stocked with foods, ammunition, and supplies. Question now, why? He leaves behind only this hint.

KELLER: Getting to the point where just trying to live and pay bills and live as a civilian and go to work, it just freaks me out.

SYLVESTER: Keller had a backup plan if he was ever tracked down. KELLER: I'm ready to get caught right away. Basically, if I get caught, I'm just going to shoot myself. I mean, I could basically be dead in two weeks or three weeks. I don't know. It's all up to chance at this point. I have my escape and that's death. I can always shoot myself. And I'm OK with that.

SYLVESTER: Photographs and construction drawings of the bunker site helped authorities find Keller's hideout. He killed himself as sheriff deputies were closing in.


SYLVESTER (on-camera): A co-worker said he had no idea that Peter Keller was capable of any of this. Meanwhile, family members of Lynette and Kayleen Keller (ph) have set up a scholarship in computer technologies and this was a passion of 18-year-old Kayleen. So really sad story, Wolf, all the way around.

BLITZER: Thanks so much for bringing it to us. Very sad, Lisa.

You might not realize this, but here in the United States, we're in the midst of what's being called the worst drought in a quarter century. The percent of the country affected is pretty amazing. We'll share details.

And a reminder why you should never ever run a red light. Wow! Look at that. Traffic camera catches a terrifying crash.


BLITZER: The secretary of state, Hillary Clinton, is headed to Egypt for talks with that country's new leadership. She'll also be in Israel this weekend. Lisa Sylvester's monitoring that, some of the other top stories in the SITUATION ROOM right now. What's going on, Lisa?

SYLVESTER: Wolf, Secretary of State Clinton's visit to Cairo will be highlighted by a meeting with Egypt's new Islamist president. Mohamed Morsi was elected and took over the presidency last month. Aides to Clinton say the visit is designed to demonstrate that the Obama administration wants to support Democracy in Egypt and help the country improve its fragile economy.

Federal authorities are classifying more than 1,000 counties as natural disaster areas as what some are calling the worst drought in a quarter of a century spreads across the United States. Drought conditions extend from Oregon to South Carolina and are now being reported in more than 60 percent of the land that makes up the lower 48 states.

And check out this video from a traffic camera in New Jersey. As you can see, oh, a car runs a red light, collides with another vehicle and then careens into oncoming traffic. Police released the clip as part of a campaign to crack down on red light violations. According to reports, no one surprisingly was seriously injured in that crash. And Arnold Schwarzenegger confirming plans are in the works for a sequel to the 1988 hit movie "Twins." Schwarzenegger made the announcement during a panel to promote his new movie, "Expendables 2." Danny DeVito co-starred with Schwarzenegger in the original -- Wolf.

BLITZER: I love the original. I can only imagine a remake how that is done, but it was a great -- you saw it, right?

SYLVESTER: Yes. And I'm looking -- there's -- look how young Arnold Schwarzenegger looks. I mean, that's the amazing thing. Wow! That was, what, back in 1988. So, the young man that he was back then.

BLITZER: Good for him. All right. Good movie. Let's hope the next one is as good. Thank you.

One-on-one with Mitt Romney. The presumptive republican presidential nominee talks to our own national political correspondent, Jim Acosta. That's coming up in our next hour. In fact, right at the top of our next hour.

And straight ahead, why Condoleezza Rice won't be Romney's running mate? That's what a lot of folks think. Some folks say maybe she will. We've asked our own Candy Crowley to do a little reality check to all of the rumors.

Plus, a bank loss first put at $2 billion has now almost tripled. So, what's going on at the nation's largest bank, JPMorgan Chase?


BLITZER: New rumors are swirling about the former secretary of state, Condoleezza Rice, possibly, possibly as the vice presidential running mate for Mitt Romney. Let's talk about that and more with our chief political correspondent, the host of "State of the Union," Candy Crowley.

You think that's realistic, Condoleezza Rice? She's qualified to be vice rpesident or president, for that matter, but do you think Romney might pick her?

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: I don't, actually. Look, I think the timing of this is suspicious. I'm not saying that someone didn't slip this to drudge because I'm sure they did. The fact of the matter is it was all Bain, Bain, Bain. And now, it's all Condi, Condi, Condi. So, that's good for the Romney campaign. She doesn't have an economic background. She's a foreign policy specialist. She hates politics.

She's just not a political animal at all. She's much more into policy. And so there's just nothing that sort of says, you know, Condi Rice is the right fit. And let's remember that one of the biggest arguments against Mitt Romney that the Obama campaign is making is, well, he's just Bush all over again. And if you want what you had before, let's go back to Bush. Well, there's no one -- there are a lot of people, Dick Cheney one of them that are perhaps closer to George Bush. But she was a confidant and I can't -- I just think that fits in too easily with the Obama argument.

BLITZER: Listen to what Romney said way back last September to Jim DeMint, down in South Carolina the forum that he was hosting. Listen to this quote.


ROBERT GEORGE, PRINCETON UNIV.: Governor, will the person you choose as your vice presidential running mate be someone who shares your pro- life and pro-marriage convictions?

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I would expect they'd all be pro-life and pro-traditional marriage.


BLITZER: The issue of pro-life. Condoleezza Rice has indicated in the past she supports a woman's right to have an abortion.

CROWLEY: She does indeed. And where is Mitt Romney having trouble other than the Obama campaign throwing Bain out there? And it is with conservatives. Do they believe him? Do they believe that he will stay steady to his message? Will they stay true to his message? Will he stay true to his message? So conservatives have always been skeptical. For him to go back now and say, well, yes, except for that she's really good. I just think there are way too many things that run against this --

BLITZER: So your instinct and I think like mine still holds out for a Rob Portman or a Tim Pawlenty or maybe a Bobby Jindal --


BLITZER: -- someone along those lines.

CROWLEY: Sure. I mean even though Rob Portman was also attached to the Bush administration it is not quite as closely.

BLITZER: He was budget director --


BLITZER: Special trade representative.

CROWLEY: Right. It is not quite as closely as Condi Rice at least in the public eye. And honestly Mitt Romney's strength and what they've been selling is he can handle the economy. You know what I see them doing is doubling down on that and getting someone who is also well- versed in the economy and just going for it.

BLITZER: And what Romney keeps saying and it's smart for him to say he wants somebody who is qualified --


BLITZER: -- to be president of the United States and to make sure -- CROWLEY: Always helpful in a --

BLITZER: -- that person if it were necessary could step in.



CROWLEY: Well fortunately I wrote it down.

BLITZER: OK, tell me.

CROWLEY: Massachusetts Governor Deval Patrick will be on with Virginia Governor Bob McDonnell. We're also go have Agricultural Secretary Vilsack on to talk about what you're going to talk about later in this show, which is that drought --


CROWLEY: -- which is going to drive food prices up --


CROWLEY: I mean it is scary for the farmers, but it's also going to have a huge impact inside the supermarket and also Ed Gillespie because we want to talk -- we'll be listening very closely to Jim Acosta's interview here with Romney to sort of follow up with Ed Gillespie senior adviser --

BLITZER: Ed Gillespie is senior adviser to the Romney campaign.


BLITZER: Good guy too.

CROWLEY: We'll be there. Yes.

BLITZER: Thanks very much. We'll be watching 9:00 a.m. Eastern, noon Eastern Sunday morning "STATE OF THE UNION" with Candy Crowley.

CROWLEY: Thanks, Wolf.

BLITZER: Thank you.

Today JPMorgan Chase revealed its disastrous investments cost a lot more than the $2 billion originally estimated. Let's get some more details from Erin Burnett, the anchor of CNN's Erin Burnett "OUTFRONT". I know you've been covering this story in depth on your show, Erin. I was pretty surprised. I originally heard two billion, then some people were floating three billion, maybe four billion, now more than $5 billion?

ERIN BURNETT, HOST, "OUTFRONT": Yes. I mean it's pretty amazing. I remember that first night when you know I was hearing from people at JPMorgan it could be three billion and everyone said why are you going with three and then all of a sudden days later, as you said, it kept climbing and climbing. And now they're coming out with 5.8, so that's nearly triple that initial estimate.

And you say well then why is it that JPMorgan shares when they made this announcement today along with their quarterly earnings said -- jumped six percent? I mean that's pretty stunning. Why did the stock go up so much? In fact we just had the best overall day for the market today, Wolf, this month a more than 200-point gain thanks to optimism about JPMorgan Chase.

Basically the reason is investors said well OK now you have got the trade under control, at least we know the number and knowing that it's 5.8 billion is better than wondering whether it's two or three or five or eight, so it could have been worse and at least we have certainty. But that sort of shows you where the market is right now. And of course JPMorgan Chase still ended up coming out and making money, which is pretty incredible. They were stronger in other areas. They were able to completely compensate for this loss.

So that's where the positive news is, but still a lot of questions. And of course (INAUDIBLE) interest rate scandal is spreading through the industry as well. And now Jamie Dimon, the CEO of JPMorgan said in the call today he's not even sure how far it will go, so there's a lot of uncertainty still about there about the industry and JPMorgan.

BLITZER: Jamie Dimon, there's some pictures of him. He was testifying. Everybody thought he was the golden boy of Wall Street and I guess the biggest question I have and I don't think there's an answer yet to this, how on his watch could $5 billion been lost like this? I mean, it's hard for me to believe given the excellent reputation JPMorgan they did well during the 2008 crash when Lehman Brothers were going down and others. JPMorgan did just fine. What happened?

BURNETT: Well you know what's interesting, Wolf, is a lot of this really comes down to just mistakes made in management. I mean you look at JPMorgan itself, Wolf, during the financial crisis, literally the federal government said you need to go out and take over Bear Stearns. You need to take over some of these companies that are hurting and they went ahead and did that. So now if you look at the assets of JPMorgan, it is now almost 50 percent, just about 45 percent bigger than it was before the financial crisis.

So it was enormous then and now it is even more enormous. The top few banks in this country, Wells Fargo, JPMorgan, Bank of America and Citi Group, their assets are equivalent to about 50 percent of our entire economy. So the reason Jamie Dimon may not have known even though this was pretty close to him was that his bank is incredibly huge. And he may have the reputation of the top manager in the industry, which he did and he still does, I think it's very safe to say, but you can't know everything. Sometimes things just get too big. And that's the big question they have to deal with. And he certainly doesn't acknowledges that he agrees with that assessment but that may be the real answer here of why this could have happened.

BLITZER: Yes, I'm going to be watching your show tonight to make sure I get more information, Erin. Thanks so much.

BURNETT: All right. Thanks, Wolf.

BLITZER: It's video that's hard to watch, a disabled woman apparently being abused by her caregiver who has now been charged. We have an update on the story we brought you yesterday.

And he was an icon at Penn State University. Now there are calls to actually take down the statue of the legendary coach, Joe Paterno.


BLITZER: New developments in the disturbing story we brought you yesterday. The apparent abuse of a disabled woman by her caregiver all caught on videotape. Now, charges have been filed. CNN's Deborah Feyerick is joining us from New York. She's got the details. So what happened, Deb?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well Wolf we can tell you the woman, 34-year-old Angelica Rivera (ph), turned herself into police allegedly telling authorities that she's the employee in the video.


FEYERICK (voice-over): This group home for mentally disabled adults and those with learning disabilities was supposed to be a safe place. Yet watch how this woman dressed only in a short hospital-type gown is treated by a caregiver identified as Angelica Rivera (ph). The 34- year-old caregiver first kicks the disabled woman in the stomach, then hits and taunts her with some kind of belt or strap before dragging the distraught woman by the hair.

Options Unlimited is a private nonprofit agency that contracts with Connecticut's Department of Developmental Services to run about six such around-the-clock group homes. The company says it is "deeply saddened and appalled by the incident."

DR. TERRENCE MACY, COMMISSIONER, CONN. DEPT. OF DEVELOPMENTAL SVCS.: This is the most heinous crime I've seen in my 40 years. It just takes your breath away.

FEYERICK: Last year several Options Unlimited employees were fired from the group home and cameras installed to monitor activities. It's unclear who shot this video, which was cut together into a 30-second montage. Three copies were sent anonymously, one each to a local news station, the state agency in charge and Options Unlimited.

DEPUTY CHIEF BEAU THURNAUER, EAST HARTFORD POLICE: The success of this and the fast-moving investigation and the arrest and the search warrant were a result of great cooperative effort between the state police, Department of Developmental Services and the East Hartford Police Department.

FEYERICK: The caregiver, Angelica Rivera (ph), has been charged with several felonies including cruelty, unlawful restraint and bias intimidation. A man who answered her phone would not comment on the allegations or refer us to an attorney.


FEYERICK: And after Rivera (ph) turned herself into police, they did obtain a search warrant for a second employee who made video of additional abuse on a home computer. Rivera (ph) is out on $25,000 bond -- Wolf.

BLITZER: All right. Deb, thank you, a very, very disturbing story, yes. From hometown hero to a figure of disgrace, now there are calls to take down Coach Joe Paterno's statue at Penn State University, plus deadly and devastating floods, dramatic pictures of an unfolding disaster.


BLITZER: We're getting ready for -- we're getting some new information on a deadly train crash in South Africa. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now. What's the latest, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, at least 26 people are dead after a train collided with a truck carrying farm workers in South Africa. More than two dozen others are reported injured. Authorities have arrested the driver of the truck who they say tried to beat the train through the crossing.

And crews are combing through wreckage after torrential rains caused devastating flooding in Japan. The death toll now stands at 19 and eight people are missing. Here's CNN's Paula Hancocks with the details.


PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): Parts of southern Japan have never seen rain like this. Residents have been killed inside their homes as mudslides have engulfed entire buildings. Rescue teams have been working through the night searching for those still missing. But rescue operation is continuing Friday.

Helicopters have been brought in to save those cut off by the floods. Rivers burst their banks and deadly torrents of water swept away anything in their path. Tens of thousands of households were told to evacuate. Many of those orders have since been lifted. The sheer force of water pushed cars into the sides of buildings. Buses were stopped in their tracks.


HANCOCKS: This man says it took just 10 minutes for my car to be completely submerged. Then it was just washed away. Japan is no stranger to natural disasters, but the amount of rain has surprised many. Parts of the southern-most main island of Kyushu (ph) saw a month's worth of rain in just eight hours. The Meteorological Agency says the rainfall in southern Japan has never been experienced before.

Paula Hancocks, CNN, Seoul.


SYLVESTER: Authorities used helicopters to rescue some of the people from the roofs of their homes -- Wolf.

BLITZER: Lisa thanks very, very much.

Meanwhile, controversy at Penn State University over the legendary former football Coach Joe Paterno. He's singled out in an independent report as one of the school officials who enabled, enabled the assistant coach, Jerry Sandusky to molest boys for more than a decade. But some are still fiercely protective of Coach Paterno including a new Penn State trustee.


ANTHONY LUBRANO, PENN STATE TRUSTEE: Hello, my name is Anthony Lubrano and I am a very proud Penn State graduate class of '82. What have we learned? First, this was not a Penn State scandal. Second, this was not a Penn State football scandal. And, third, this was certainly not a Joe Paterno scandal.


BLITZER: That clip came before Louis Freeh's report, the head of the Penn State investigation; he's the former FBI director. But today, one day after Freeh's brutal report about how top Penn State officials put children at risk for a decade the trustees are having their first meeting. Our national correspondent Susan Candiotti is in Scranton, Pennsylvania. She's joining us right now. Susan, what's the latest because the fallout has been enormous?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Well, certainly some people are calling, going so far as to call for that statue, that famous statue of Joe Paterno, to come down from outside the football stadium. And some of the people calling for it to come down, believe it or not, a supporter of Joe Paterno, an admirer of his in his own words, former Florida State Coach Bobby Bowden.

And he's saying it should come down for the family's sake because in his opinion that statue is a painful reminder to anyone who comes outside that stadium of the linkage between Coach Paterno and Jerry Sandusky, the convicted child sexual predator. Now, I asked Anthony Lubrano about that. Lubrano ran on a platform just before he was elected recently to the Board of Trustees that the Paterno family is owed an apology from Penn State University and furthermore that the football stadium should be named after him. Well, I asked him about all this today.


CANDIOTTI: You know there are calls today from Bobby Bowden himself for example to pull down the statue of Joe Paterno.


CANDIOTTI: What do you think of that? LUBRANO: Well, as I think Karen Pete (ph) said last night or yesterday afternoon in the press conference, that's a Penn State community matter. And the Penn State community will, you know, address it in due time. But we all know my feeling for Coach Paterno and as far as I'm concerned, it's something that should stay.

CANDIOTTI: There are many calls to suspend the football program immediately --

UNIDENTIFIED MALE: I have no comment on that.



BLITZER: You know, let me bring back Susan Candiotti. So what did we learn, Susan, about what happened today at these meetings that are taking place where you are in Scranton?

CANDIOTTI: Now at a news conference that just wrapped up with the Board of Trustees a little while ago the new president of Penn State University, Rodney Erickson (ph), said that he thinks that this is a very sensitive issue, talk about removing Joe Paterno's statue. He feels that they need some time to think about it and certainly solicit opinions from the community at large in order to -- before they make any kind of decision on that -- Wolf.

BLITZER: Susan Candiotti in Scranton. Thank you.

An alleged charity scam that took in millions to help military dogs in Iraq, we confront the woman who may have duped even CNN.

And don't forget coming up right at the top of the hour in our 6:00 p.m. Eastern hour the new hour of THE SITUATION ROOM, Mitt Romney responds to the controversy over the old company he left behind. He has an interview with our own Jim Acosta.


BLITZER: Little bit more than six minutes away from the top of the hour, then we will air the interview with Mitt Romney. Our own Jim Acosta sat down with him, spoke about a whole bunch of sensitive subjects on the Republican presidential nominee's agenda right now, the interview with Mitt Romney here in THE SITUATION ROOM coming up in our new 6:00 p.m. Eastern hour of this program.

Let's take a look at some of this hour's "Hotshots" in the meantime. In London, members of the military look at a helicopter that will be used for Olympic security. In Cambodia, police escorts await the arrival of the Secretary of State Hillary Clinton. In Brussels, protesters demonstrate outside the EU headquarters while the commission discusses the future of Europe's farms. And in India -- check it out -- farmers wave from a tractor as they head to work in the fields -- "Hotshots" pictures coming in from around the world.

A charitable appeal to help military dogs abandoned in Iraq brought in millions of dollars but now there are growing questions about where all that money really went. Drew Griffin of our special investigations unit confronted the woman who may have duped even CNN.


DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): It is televised appeal on CNN's HLN.

UNIDENTIFIED FEMALE: Our salute to the troops today is actually live in the studio --

GRIFFIN: That so many of you found outrageous.

UNIDENTIFIED FEMALE: Sitting right beside Nugget is Terry with the SPCA and Ivy is down at my feet.

GRIFFIN: March of 2011, Terry Crisp (ph) with SPCA International was telling our viewers Ivy and Nugget --

UNIDENTIFIED FEMALE: Just look at that face.

GRIFFIN: -- were two bomb sniffing dogs that had worked for a U.S. contractor in Iraq and had been essentially abandoned by the company. She rescued them and was trying to find them homes. Along for the visit was an unwitting retired military dog handler. HLN anchor Robin Meade understandably couldn't believe the story.

UNIDENTIFIED FEMALE: So how is it that they fall through the cracks and get stranded there, that's unthinkable to me.

UNIDENTIFIED FEMALE: It is unthinkable and that's why SPCA International is making sure that these dogs don't get forgotten and that they get brought home --

GRIFFIN: It turns out Ivy and Nugget were not abandoned. They were donated, taken from their adoptive homes in Iraq, a military contractor tells CNN, after Terry Crisp (ph) asked for them. The military contractor, Reed Security (ph), told CNN they had no idea Crisp (ph) would use Ivy and Nugget as fund-raising tools in the United States.

For weeks, CNN has been trying to track down Crisp (ph). First, we were told by her spokesperson she was unavailable. This week, we drove to Terry Crisp's (ph) rural home down this dirt road in the foothills of California's Sierra, Nevada, and found Crisp (ph) driving straight toward us.


GRIFFIN (on camera): Ms. Crisp (ph), it is Drew Griffin with CNN. We'd sure like to talk to you.

(voice-over): Terry Crisp (ph), dog in hand, got out of her car and walked right up to our camera and acted like she was about to answer our questions.

UNIDENTIFIED FEMALE: This is not the place to do an interview.

GRIFFIN (on camera): Well what is the place to do an interview because we've been trying to get an interview with you for a long, long time specifically to ask you about Operation Baghdad Pups (ph).

UNIDENTIFIED FEMALE: Yes. Stephanie Scott, our director of communications has communicated with you directly.

GRIFFIN: Yes, I understand that --


GRIFFIN: But can you tell us why you came on CNN and basically lied to our viewers about Ivy and Nugget?

UNIDENTIFIED FEMALE: You need to talk to Stephanie.


GRIFFIN: I think you need to talk to our viewers and explain to us what Operation Baghdad Pups (ph) is all about, because it appears to be just a fund-raising effort for your life-style and Quadriga Art (ph) quite frankly.

UNIDENTIFIED FEMALE: Well like I said again, you just need to contact Stephanie. All our interviews are coordinated through her. We've offered to do them with you.

GRIFFIN: You've been on our air, ma'am. You've told our viewers that Ivy and Nugget were abandoned military contract dogs, which we've confirmed they were not, basically lying to our viewers and I know you got an outpouring of support and most likely money after that appearance. I mean our viewers feel like they, and so do we, CNN feels like we were lied to. Do you have any explanation for how that happened?

UNIDENTIFIED FEMALE: This, like I said, is not the time and place. We're happy to talk to you. Everything has to be coordinated through our director of communications.

GRIFFIN (voice-over): Crisp (ph) is part of SPCA International, a group raising millions of dollars with its sympathetic fund-raising campaign called Baghdad Pups. According to these IRS tax filings, SPCA International has taken in more than $26 million in donations over the past three years, $23 million of that money has gone right into the coffers of the direct mail company Quadriga Art (ph), not towards rescuing military dogs.

What has it done with the rest of the remaining three million? SPCA International says it rescued about 447 soldier's pets from Iraq and Afghanistan. But Bob Ottenhoff (ph), the president of the charity watchdog group Guidestar (ph), says the numbers just don't seem to add up.

BOB OTTENHOFF, PRESIDENT, GUIDESTAR: I can't understand how to connect the dots between find out how much money is spent on fund- raising to how much money is spent on programming, and what the sources of those revenues are, and I also can't really measure the impact of this organization. What difference are they really making?

GRIFFIN: Drew Griffin, CNN, Placerville (ph), California.