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Barack Obama Under Fire Over Iraq; Freed American Hostages Return Home; Big Sur Threatened by Fire; Hedge Fund Swindler Turns Himself In; Helmsley Estate Could Go to Help Dogs

Aired July 3, 2008 - 22:00   ET


ANDERSON COOPER, HOST: Tonight, Barack Obama under fire on Iraq. Has his call for withdrawal suddenly changed? The McCain campaign says yes. Obama says no, but had to give two press conferences today to clarify his position. It's a new line of attack by Republicans and a cause of concern amongst some liberals. Tonight, we will tell you the facts, so you can judge for yourself.
Also tonight, three Americans, home free, but at a terrible price. New details about what the three former hostages went through five years in the jungles of Colombia and new information how the drug-running guerrillas were tricked by Colombia's military.

Later, Big Sur burning, wildfires out of control in places that used to be straight out of a picture postcard. We will take you to the front lines with some very fast-moving flames tonight.

We begin, though, with Barack Obama scrambling to explain his position on Iraq. This morning, he seemed to open the door to changing his mind on a 16-month timetable for pulling troops out of Iraq. He said he might -- quote -- "refine" his plans after meeting with military commanders in Iraq later this summer.

The Republicans jumped on those comments saying essentially he's flip-flopping. And Obama had to hold another news conference to refine his comments about refining his plan.

So, was it a flip-flop or a smart move or something else?

CNN's Jessica Yellin has the facts and the "Raw Politics."


JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Barack Obama has made his name as a different kind of politician, a candidate who says what he means and doesn't change with the political winds, which is why he can't afford to be seen as shifting positions on big issues.

Today, he faced a firestorm about whether he's backing off the central pledge of his campaign, to withdraw combat troops from Iraq within 16 months of taking office. The concern became so intense, he found himself in an odd spot this afternoon, holding a do-over press conference.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We're going to try this again. Apparently, I wasn't clear enough this morning on my position with respect to the war in Iraq.

YELLIN: The problem? Obama triggered a deluge of questions with this statement earlier in the morning.

OBAMA: When I go to Iraq and I have a chance to talk to some of the commanders on the ground, I'm sure I will have more information and will continue to refine my policies.

YELLIN: Republicans accused him of flip-flopping. So, he faced reporters a second time to insist he's been clear all along.

OBAMA: ... that I would bring our troops home at a pace of one to two brigades per month, and, at that pace, we would have the combat troops out in 16 months. That position has not changed. I have not equivocated on that position.

YELLIN: When pressed, he refused to commit to that 16-month time frame, insisting any good commander in chief adjusts.

OBAMA: I would always reserve the right to do what's best in America's national interests.

And if it turned out, for example, that we had to, in certain months, slow the pace because of the safety of American troops, in terms of getting combat troops out, of course we would take that into account. I would be a poor commander in chief if I didn't take facts on the ground into account.

YELLIN: Though he insists he intends to end the war.

Still, the McCain campaign quickly fired off a statement insisting that Obama has 'reversed his position, proving once again his words do not matter, that they are just empty words."

Obama fired back, saying, they're playing politics.

OBAMA: I think what's happened is that the McCain campaign primed the pump with the press to suggest that we somehow we were changing our policy, when we hadn't.

YELLIN: And his Democratic allies agree.

PAUL BEGALA, CNN POLITICAL ANALYST: I think Senator Obama today did a good job of tamping down this one-day rumor that somehow he was shifting on Iraq. If I were to give him a little coaching advice, it would be, don't answer hypothetical questions. Presidents don't run a hypothetical country.

YELLIN (on camera): Clearly, the McCain campaign thinks it's found a strategy, accusing Obama of changing positions now on a number of issues, and will keep pressing its flip-flop claim.

Jessica Yellin, CNN, Washington.

(END VIDEOTAPE) COOPER: Now the impact. Will Barack Obama be seen as the next John Kerry, who famously said he voted for a piece of war legislation before he voted against it, or will he go down as someone who look a line from a famous British economist when someone accused him of inconsistency? "When facts change," he said, "I change my mind. What do you do, sir?"

Digging deeper, we're joined by Mark Halperin, who edits "The Page" at, radio talk show host and Obama supporter Ed Schultz, and Cliff May, president of the conservative Foundation for Defense of Democracies.

Cliff, McCain's campaign said today -- and I quote -- "Now that Barack Obama has changed course and proven his past positions to be just empty words, we would like to congratulate him for accepting John McCain's principled stand on this critical national security issue."

"If he had visited Iraq sooner or actually had a one-on-one meeting with General Petraeus," they go on to say, "he would have changed his position long ago."

Has Obama really changed course?

CLIFF MAY, PRESIDENT, FOUNDATION FOR THE DEFENSE OF DEMOCRACIES: I hope he has and I hope he will continue to change course.

And, look, it's the middle of a political campaign. These kinds of things are going to be fodder. But this also is a war. And a war is very important. And I think the quote that you gave earlier gives Obama a way to talk about this.

He can say: Look, over the past year, the situation in Iraq has changed dramatically. I have taken notice of that. I'm going to go there. I'm going to talk with General Petraeus. And the achievements that our troops have bought with blood and treasure, I am not going to waste by having some inflexible timeline. I'm going to see to it that we sustain whatever progress our troops have brought us.


COOPER: And, to you, it sounds like he's saying that?

MAY: I think he's started to say that.

Here's where he didn't say it. He said: I'm going to tell my generals, your mission is to end the war.

The problem is, the generals cannot end the war if they leave. If you leave, you have no influence over the war at all, and your adversaries will probably win it. If your generals want to win the war, that means they have to defeat al Qaeda on the battlefield, frustrate the ambitions of the Iranians, and then little by little turn over defense responsibilities to the Iraqis themselves.

COOPER: Ed, Obama is in a difficult spot. The situation on the ground has changed. He needs to keep flexibility, but a lot of his core support is from people who say, get out of Iraq, and get out now.

ED SCHULTZ, RADIO TALK SHOW HOST: Well, he's been very clear, Anderson. He's going to get us out of Iraq. It's going to be a reasonable drawdown.

He's going to do reasonably get us -- and changing policy in Iraq and move the fight to Afghanistan, where we have got to have the resources, because that's...


COOPER: But this morning, he said he would refine. He did use that word refine this morning.

SCHULTZ: Well, don't get caught up on wordsmithing by the conservatives, Anderson.

The fact is, Barack Obama made it very clear today in Fargo that Iran is a threat. He says we need to retool our military. He also said that we have got to keep our commitment to the veterans, and he's going to get us out of Iraq, and he's going to draw down responsibly.

Now, the McCain camp wants you to think that he's shifted. He has not shifted. He's been very consistent all along on what he's going to do with Iraq policy. I asked him directly today in a one-on- one interview today, will you send more troops to Afghanistan? And he said yes.

COOPER: Mark, what about this? Obama is saying, look, this is a McCain made-up story, pure and simple. But, again, Obama did use that word refine and held this second press conference.

MARK HALPERIN, SENIOR POLITICAL ANALYST, "TIME": It's not a made-up story. We're on the eve of this holiday and it's a time when the press and a lot of the political world is winding down. I think this is one of the biggest things that's happened so far in this general election.

COOPER: This goes to the core of his support.

HALPERIN: It goes to the core of his support, goes to the core of what he said was the big contrast between John McCain and Barack Obama, about if they got elected president.

I thought for a while that, no matter what Obama said during the campaign that in office, on Iraq, they wouldn't be all that different. And that's a little bit of a controversial thing to say, since they both say there is this big contrast. But the realities are the realities.

This will help him if he wins. I think he will be able to govern better because he's starting to shift his position. It's going to hurt him, potentially. I think the biggest thing about this is, this goes exactly to what the frame that the Republicans have been trying to say. This guy is a politician. He's not a leader of a movement. COOPER: Well, Cliff May, it's also not the Republicans. Back in March, Samantha Power, a former Obama adviser, said that Obama's Iraq plan is a -- quote -- "best-case scenario and will be revisited when he's president."

I remember Hillary Clinton's folks jumping all over that saying essentially what McCain is now saying.

MAY: Yes. And I think also on some of the more left-wing blogs, Obama is taking some hits.

But this does move him to the center. And, look, I want to put -- I'm not a big fan of his, but I'm going to put the best spin on it, which is that he understands the situation fairly well, certainly better than the Daily Kos does and some of those on the left who would like to see America defeated in Iraq as a demonstration exercise that U.S. power never, never can be used for good.

SCHULTZ: Whoa. Whoa.

That is absolutely outrageous. That is outrageous for you to say that people on the left want to lose in Iraq. I'm not going to sit here and listen to that. This is the Fourth of July. We are Americans. We don't believe in fighting in Iraq the way we are doing. We're depleting our resources. That's ridiculous.


MAY: Well, Ed, just tell me how you're going to win in Iraq if we have no troops there.

SCHULTZ: You don't even know what the definition of win is.


MAY: Tell me the definition of win is. If I don't know it, you tell me.


SCHULTZ: We don't have enough money doing this. We are absolutely hurting ourselves staying in Iraq. The Iraqi people need to step up. The real enemy here is in Afghanistan.


MAY: And they are.


SCHULTZ: For you to sit here and say that liberals don't want to defend this country is unconscionable.

MAY: I didn't say it of you.

(CROSSTALK) SCHULTZ: That is absolutely outrageous.

MAY: There are those on the left who would think that a U.S. defeat in Iraq would be like a U.S. defeat in Vietnam, an object lesson for Americans about the use of force.

SCHULTZ: Listen, Mr. May, I don't know where you get your information, but I spoke to Barack Obama face to face today.

MAY: Congratulations to you.


SCHULTZ: I asked him if he wanted to get out of Iraq. He said that he was going to get us out of Iraq.

I asked him, are we going to go into Afghanistan with more troops? Because that's what President Bush wants to do right now. He said he would support sending more troops into Afghanistan. Now, that is fighting the war on terror.


MAY: I'm glad that Obama and Bush agree on the need to also fight the battle in Afghanistan. These are both very important battles in one global conflict. We don't want to lose in either one.


SCHULTZ: It's something that Bush hasn't done very well, I might add.


SCHULTZ: It's something that Bush hasn't done very well at all.

COOPER: We are going to talk more about Obama's position and this switch, this move to the center, as some are calling it, also about John McCain's position on all this. We will have more from our panel in just a moment.

You can also join the conversation. As always, I'm blogging throughout the hour. Go to our new Web site, I'm about to log on myself.

Up next, is Barack Obama morphing into Bill Clinton, at least as far as policy goes? He's taking heat from liberals for moving to the center. We have got the facts, so you can make up your own mind.

Also, new details about what three Americans went through as hostages in Colombia, chained to other hostages by the neck at times, and new details on the amazing rescue mission that freed them.

Later, we're live on the fire lines with the men and women fighting to save California's scenic coastline. Big Sur is burning. We will tell you where the flames are heading next -- when 360 continues.



OBAMA: Apparently, I wasn't clear enough this morning on my position with respect to the war in Iraq.

I have said throughout this campaign that this war was ill- conceived, that it was a strategic blunder, and that it needs to come to an end. I have also said that I would be deliberate and careful in how we got out, that I would bring our troops home at a pace of one to two brigades per month, and, at that pace, we would have the combat troops out in 16 months.


COOPER: Barack Obama this evening in Fargo, North Dakota, clarifying his position, after Republicans jumped all over him, saying he had flip-flopped.

On a number of other issues, Obama has been seen as tacking right, moving to the center, whatever you want to call it. It used to be called triangulation when Bill Clinton did it.

Tonight, a new CNN/Opinion Research poll shows that voters already believe that both candidates do it, changing their minds on issues for political reasons -- 59 percent think Obama does -- 61 percent believe likewise about John McCain.

So, how real is this so-called move to the center by Barack Obama?

With that, up close, here's 360's Tom Foreman.


TOM FOREMAN, CNN CORRESPONDENT (voice-over): The senator from the middle of the country is moving fast to the political middle, too, many analysts believe. Obama, they say, wants to prove he's not what "The National Journal" called him, the most liberal senator in the nation.

KEN VOGEL, "THE POLITICO": Obama in many ways right now is for the first time in the campaign obviously putting pragmatism over idealism. And many people in his base are kind of questioning that.

FOREMAN: The last Democrat to win the White House grabbed the political center, and Bill Clinton's playbook appears to be well read by Obama.

For example, in the primary, Obama pleased liberals by opposing that broad intelligence surveillance bill called FISA. Now he says he's read through compromises in the measure, and he's for it.

OBAMA: That doesn't represent a huge shift in position. It represents an assessment of a compromise that was the best that could be done right now.

FOREMAN: Many liberal-leaning voters have worried that President Bush's faith-based initiatives make church and state too cozy. But just this week, in an apparent reach for moderate Republicans, Obama said he favors expanding such efforts.

And the list goes on. Since securing the nomination, Obama has issued nuanced words of support for private gun ownership, the death penalty, and even welfare reform.

(on camera): Obama has explanations for each of his decisions. And many of his supporters are satisfied. But there is risk. After all, he won the support of millions by promising no more politics as usual.

VOGEL: That was kind of his mantra in the primaries. Now, if he does lose a little of that in the general election, I think he could come under attack by Republicans for saying he's a flip-flopper or for saying it was just words.

FOREMAN (voice-over): But, in this election, all the numbers suggest the middle will be the battleground, and Obama is digging his trenches.

Tom Foreman, CNN, Washington.


COOPER: Digging deeper, joined once again by Mark Halperin, Ed Schultz, and Cliff May.

Ed, is Obama moving to the center?

SCHULTZ: Well...


COOPER: On Iraq, on a number of issues?


SCHULTZ: OK, he wrote in his book about the Supreme Court ruling that was just -- just came out about the rape of a child. OK? He's been very clear on the death penalty. He's been very clear on the Second Amendment. And he talked about that today with a local newspaper here.

Let me point out that John McCain did not support the G.I. Bill. John McCain did not support the farm bill, and Barack Obama did. John McCain will not get us out of Iraq.


SCHULTZ: John McCain will not get us out of Iraq. Barack Obama has a plan to get us out of Iraq. COOPER: As you know, Ed, this isn't just Republican talking points. There's a lot of liberals who say Barack Obama is shifting to the center. You're saying he's not doing that; there's not any post- primary kind of shift?

SCHULTZ: I think that's being overplayed.

What liberals are concerned about is his most recent position on FISA. They want some clarity on that. They're kind of miffed that he's going to give some immunity to the telecos, instead of pushing forward for justice on that.

But I asked him that today and he said, well, I'm willing to negotiate that, as long as we get the right bill and have oversight of the FISA court.

So, we're vetting our candidate to make sure that we're on the right track to the White House. The point is, is that the McCain camp is grabbing this like a pit bull and trying to make him look like he's a big shifter. And he's not.


COOPER: Cliff, let me ask you about that. Republicans are attacking Obama, McCain is attacking Obama, saying he will reverse himself on any issue for political gain. We keep hearing, it's just words that Obama uses.

But McCain has changed his position on tax cuts, offshore drilling, other things. Should he be throwing stones at Obama on these issues?

MAY: If I were advising, I would say not. I would say that McCain should be congratulating Obama for moving to the center on an issue as important as the war in Iraq.

COOPER: So you say he is moving to the center on issues?


MAY: Yes. Yes.

And also, on the FISA, just so people understand, this is a vitally important bill. It restores to our intelligence authority -- agencies the authority they used to have to monitor terrorists overseas, foreign terrorists on foreign soil.

COOPER: With oversight.

MAY: Now, Obama was against this -- with oversight -- Obama was against this bill, and Nancy Pelosi wouldn't let the House vote on it, where it had a bipartisan majority. We were losing vital intelligence. It's now passed the House.

Only those on the very far left are opposed to the Senate passing it. The Senate probably will pass it next week, and the president will sign it. And Obama is now for it. This is an issue I have been very involved in. And I say I am glad to see he's come around on this very vital piece of legislation that helps protect Americans. I'm not going to criticize him for changing his mind. If he will study the issue and move to the center, I think that's something that should be praised.

COOPER: It's interesting.


SCHULTZ: Cliff, he's been there all along.


MAY: Not on FISA, he hasn't, Ed.

SCHULTZ: Yes, he has.

COOPER: Well, let me ask Mark Halperin a question.

Mark, if you do look at these polls, our latest poll shows basically most Americans think both these guys flip-flop on issues, that there's not much light between them. I think we overuse that term flip-flop. It's a political attack term. People evolve in their positions, or at least good leaders should. But is there much difference between these two guys in terms of changing? And is Obama moving to the center?

HALPERIN: Well, he is moving to the center on some things.

On most of these positions -- FISA is an exception -- on most of these things, it's more a matter of emphasis. It's not new positions. It's what he's emphasizing, emphasizing being for welfare reform, emphasizing being for the death penalty. That is a shift. And it's politically smart.

The poll shows I think what people think about politicians generally. They guys both have a well-deserved reputation for being a little bit more true to their principles than some other people who have run for president. But both of them have made some changes.

COOPER: Ed, liberal blogger Arianna Huffington warned Obama that a move to the center could prove fatal.

She said -- and I quote -- "I can unequivocally say, the Obama campaign is making a very serious mistake. Tacking to the center is a losing strategy. Fixating on and pandering to this fickle crowd is all about messaging tailored to avoid offending, rather than to inspire and galvanize."

She said, look, didn't work for Kerry, didn't work for Dukakis, didn't work for Hillary Clinton.


SCHULTZ: Well, I think that, right now, you're seeing Barack Obama do very well with independent voters in this country. And he's doing that with a very consistent message about tax policy, about energy policy, about what he wants to do with education and health care.

Just keep in mind, conservatives, you're going to get George Bush III when you get John McCain, if that comes to pass, when it comes to taxing and when it comes -- the tax cuts -- and when it comes to the Supreme Court. And when push comes to shove, liberals are not going to run from Barack Obama. They don't want the court to lean to the far right.

COOPER: We're going to have to leave it there.

Cliff May, it's good to have you on.

Ed Schultz, thank you very much for being on, on the eve of this holiday weekend, Mark Halperin as well, although why did you say "Hah!" Mark?

HALPERIN: Partly to do my Chris Matthews' imitation and partly because I'm going to take away your Internet privileges. You're reading too many blogs.


COOPER: All right. Thanks very much.

Have a great Fourth of July, guys. Thank you.

MAY: You, too.


COOPER: Up next; new details about the daring hostage rescue in Colombia and what the captives, including three Americans, went through during more than five years in the jungle, including how hostages were punished if they tried to escape.

Also ahead, Big Sur burning, a fast-moving wildfire forcing people in California to flee their homes. We have got a live report from the front lines coming up.

Plus, he stole millions from investors and faked his own suicide. Now he's turned himself in, Samuel Israel, and he's talking to the judge -- his wild tale when 360 continues.


COOPER: That is a moment, Keith Stansell, Marc Gonsalves, and Thomas Howes will truly never forget, the world watching as three American military contractors set foot on American soil last night for the first time in more than five years. We brought it to you live.

Hours earlier, the Americans and 12 other hostages had been freed in a dramatic rescue mission by the Colombian military. Now, these men spent today reuniting with their families at Brooke Army Medical Center in Texas, where they're getting care.

And we have the first reports on their condition. Take a listen.


MAJ. GEN. KEITH M. HUBER, COMMANDING GENERAL, U.S. ARMY SOUTH: They greeted me with a strong handshake and clear eyes and an incredible smile. At this point in time, it's only appropriate to say that the conditions that they lived under were very cruel.


COOPER: We will have more on those conditions in a moment. Doctors treating the men said they appear to be in good health. They will spend the next couple days in what the military calls a reintegration process to help them transition back to their lives.

Since yesterday, we have learned a lot more about the elaborate rescue operation that freed them and what they went through during more than five years in the jungles.

Karl Penhaul joins us now from Bogota with new information.

Karl, you have interviewed another hostage who while in custody actually tried to escape with Ingrid Betancourt and was then chained by the neck to one of the American contractors. How tough was it for these hostages?


That hostage -- his name was Luis Eladio Perez -- he was freed earlier this year unilaterally by the FARC. And he described some horrific conditions. He said that, when he once tried to escape with Ingrid Betancourt, after four days, they give themselves up. And as punishment, they were chained by the neck 24 hours a day.

Now, when I say they were chained by the neck for 24 hours a day, it wasn't for just a few days. It was for two and three years, Anderson.

And, in the case of Luis Eladio Perez, he was -- I seem to remember him saying that he had been chained to the neck with one of the three Americans. I believe it was Thomas Howes. And essentially what it meant was, when one went to the bathroom, the other had to go to the bathroom. When one rolled over at night, the other had to roll over at night. It was such close quarters.

The food, he said, absolutely terrible. It was rice. It was -- it was a lot of carbohydrates, not much protein, only from time to time. Sleeping conditions were in the open air most of the time, and in these jungles, torrential rain much of the time, living in the mud. That gives way to foot infections, foot rot, but also a lot of these tropical parasite deceases, leishmaniasis. That's a tropical flesh- eating disease. Malaria was an ever-present threat.

But, fortunately, as we have seen, for 15 of these hostages, those days are gone. They're now in freedom. And today in fact we learned even more details about that daring rescue operation.


PENHAUL (voice-over): Their long march to freedom began in early June. FARC rebels led the 15 hostages on a 100-mile slog through this dense jungle.

What the rebels did not know was that they were being tricked. Orders to move the hostages had come not from guerrilla commanders, but from Colombian military intelligence, who had spent months infiltrating the rebel's command-and-control structure.

"This was called operation checkmate, and it will go down in history for its audacity and effectiveness," the defense minister said.

Making the journey were the FARC's most valuable hostages, former presidential candidate Ingrid Betancourt, and three U.S. defense contractors, Keith Stansell, Marc Gonsalves, and Thomas Howes.

The rebels wanted to use them as political leverage to win the release of hundreds of their comrades held in Colombian and U.S. prisons. With the hostages regrouped in the eastern jungles, the final phase of the rescue plan unfolded.

(on camera): U.S. national security officials say they were briefed and did give specific support, but they offered no further details.

INGRID BETANCOURT, FORMER COLOMBIAN PRESIDENTIAL CANDIDATE (through translator): This morning, when I woke up, the last thing that I imagined was that I was going to be here with you tonight.

PENHAUL: At 7:00 a.m., guerrilla commanders told her and her fellow hostages they would get a visit from an international aid organization or be transferred to another rebel camp. That was a cover story military infiltrators had sold to the guerrillas.

BETANCOURT (through translator): I had the opportunity to talk to the third person in charge. What he said to me is that they were all going to put us on a helicopter, and they were going to take us to speak with some -- one of their commanders, and they didn't know what was going to happen afterward.

PENHAUL: At 1:13 p.m., a white helicopter set down in a jungle clearing piloted by military intelligence officers disguised in Che Guevara T-shirts.

At 1:30, 65 heavily armed rebels watched the hostages loaded on to the aircraft. The hostage pickup was planned to last seven minutes. It dragged out to 22.

GEN. MARIO MONTOYA, COLOMBIAN ARMY: It is 22 minutes on land, the longest minutes that I could have lived in my life.

PENHAUL: Not a single shot was fired. At 1:35, the helicopter lifts off. Six minutes later, six soldiers cast off their disguises and overpower two guerrilla commanders who had boarded with their captives.

BETANCOURT (through translator): The chief of operations said, "We are the national army and you are all free."

PENHAUL: The hostages are home free after years in rebel prison camps. But Colombian army chiefs say some of their secret agents are still roaming the jungle.

GE. FREDDY PADILLA, HEAD OF COLOMBIAN ARMED FORCES: The risk now is that our people that is inside of the FARC will be discovered.

PENHAUL: But until they are discovered, their orders are to push ahead, infiltrating guerrilla ranks and defeating the rebels from within.


COOPER: So, there's still Colombian agents inside the FARC organization. Where does the Colombian government go from here in terms of trying to strike against FARC?

PENHAUL: Well, in fact, I just finished talking to the Colombian defense minister and asked the same thing to him.

And he says what the role of both of the military and also of those undercover agents will be will be to kind of exploit these loopholes that have been left by the fact that the FARC's communication networks is in absolute tatters. He says that that gives the military ability to strike against the FARC before the FARC realizes what's going on, before one unit can talk to the other.

But he says that the FARC are still dangerous. He estimates the FARC may still have 8,000 men and women in arms. He says they're still dangerous. They still have a capacity to strike with terrorist actions, in his words.

But he said they have now lost their capacity to respond in any meaningful way on the battlefield against the kind of strike we've seen over the last few days, Anderson.

COOPER: All right, Karl Penhaul, appreciate the update. Thanks, Karl, from Bogota tonight.

Just ahead, Samuel Israel, first he cheated investors out of millions. Then he tried to fake his own death to escape prison. Well, tonight, the hedge-fund scammer is behind bars, in more trouble than ever. The latest, including what the judge said to him today.

Also, Big Sur burning. A raging wildfire bearing down on the popular tourist spot. CNN's Dan Simon is on the scene with the latest.

And make way for big Bertha, the second tropical storm of the Atlanta -- Atlantic hurricane season. How much bigger will she get? Next on 360.


COOPER: Dangerous night in California. Hundreds of wildfires burning, including a fierce and fast-moving blaze bearing down on Big Sur. The latest details just ahead.

First, Erica Hill joins us with the "360 Bulletin."

ERICA HILL, CNN ANCHOR: Anderson, Bertha, remember that name. It is the second tropical storm of the 2008 Atlantic hurricane season. Right now, Bertha is swirling off the coast of Africa near the southern Cape Verde Islands. It is expected to head west and gain strength.

The good news, though, the National Hurricane Center says Bertha poses no immediate threat to land. We'll continue to follow it.

President Bush will attend the opening ceremony of the Beijing Olympic Games next month. Some world leaders are boycotting the ceremony to protest human rights abuses in China. Opponents of the boycott have argued skipping the games would only hurt innocent Chinese citizens.

Anderson, sad news to report tonight. Larry Harmon, who appeared as Bozo the Clown for decades and actually likened that name to other Bozos around the world, died today. He was 83.

COOPER: That is sad.

Erica, time now for the "Beat 360" photo. Senator John McCain waving to the press after a news conference in Bogota, Colombia, yesterday. Here's the caption from our staff winner, Daniel: "Strike a pose; there's nothing to it."

(SOUND EFFECT: foghorn)

HILL: I think instead of the foghorn, we should have played the "Vogue."

COOPER: A little -- yes, a little Madonna sound effect.

HILL: Maybe for the end of the show.

COOPER: Maybe so. Think you can do better? Go to our new Web site, AC -- uh-oh -- Click on the "Beat 360" link and send us your entry. We'll announce the winner at the end of the program. And Erica will do more voguing.

Up next, on the front lines, hundreds of wildfires burning in California right now, including this one in Big Sur. The popular tourist destination deserted this holiday weekend after the flames forced mandatory evacuations. We'll have a live report, though, coming up.

And the hedge-fund cheat who skipped out on his prison sentence, tried to fake his own death. Today he told a judge he really did try to commit suicide. The judge wasn't having any of it. We'll tell you if he got more time. The courtroom drama, when 360 continues.


COOPER: In California tonight, Big Sur is in big trouble. A raging wildfire bearing down on it. The blaze has already burned 100 square miles of the Los Padres National Forest. It's destroyed at least 17 homes, or nearly 400 fires burning right now in California.

CNN's Dan Simon is there.

Dan, what's the latest?

DAN SIMON, CNN CORRESPONDENT: Anderson, we're pretty much in the heart of Big Sur, and this town is very much in danger and you can see why. I'll step out of frame here, and you can see the fire in this canyon. Pretty much everywhere you look you can see flames.

There are 1,200 structures currently threatened, 200 homes said to be in immediate risk. All it takes is for those flames to come down this canyon here, hopscotch a highway just in front of me -- in front of us. There are about 200 homes.

We spoke to one guy who is still there. Keep in mind, this is a mandatory evacuation order. Some folks still at their house. One person we've talked to, he hosts a syndicated TV show out of his house. He's staying put. Take a look.


SIMON: Why are you staying?

DAVE EGBERT, BIG SIR RESIDENT: Because -- this house is all I got. I know. I'm sorry. I got to protect it. That's what I got to do. So if I don't have a house, I don't have a livelihood. So I got to keep the house going as long as I can.


SIMON: Dave Egbert, a Big Sur resident, also a volunteer firefighter, staying put at his house, putting some boards up on his windows, doing what he thinks, you know, will save his property from any sort of damage.

Anderson, this fire just 3 percent contained. It started on June 21, and they're saying that this fire won't be contained until the end of July. So obviously, they have their hands full.

You can see behind us how steep this terrain is. And you get an idea of how difficult it is to get bulldozers up there. Those bulldozers, obviously, used to make containment lines, but they can't put them up there because that terrain is so steep.

We should also remind you that, of course, tomorrow is the Fourth of July. Big Sur, obviously a huge tourist area, especially this time of the year in the summer. But this town obviously empty right now, Anderson.

COOPER: Yes. Good thing people got out. Dan Simon, appreciate it.

Still ahead, Samuel Israel, the hedge-fund fugitive who faked his own suicide, tried to skip out on his 20-year jail sentence. Well, he was back in court today, facing an angry judge.

The latest twist. He looks nothing like that guy there. He's now got a beard. Tried to disguise himself when he was on the run. The latest twist in Samuel Israel's spectacular fall.

Plus, his pregnancy drew international attention, landed him on Oprah. That's right, his pregnancy. The transgender man has given birth to a baby girl. We'll have the latest, coming up on 360.


COOPER: Tonight, the hedge-fund fraud who staged his own death is behind bars. He'll probably stay that way. A day after surrendering in a police station, Samuel Israel today stood before a judge in New York, describing his days as a fugitive and how he really tried to kill himself with an overdose of morphine and other painkillers.

Israel was sentenced to 20 years in prison, but that was before he went on the run. Now he's looking at a much harder time. 360's Randi Kaye has the latest in tonight's "Crime & Punishment" report.


RANDI KAYE, CNN CORRESPONDENT (voice-over): A federal fugitive for weeks, Samuel Israel looks more like he was on summer vacation. Dressed in shorts, a T-shirt and sporting a new beard, he told reporters he'd turned himself in because police went after his girlfriend.

Israel, the co-founder of Bayou Hedge Fund, pleaded guilty to stealing more than $450 million from investors. His 20-year prison sentence was to start June 9.

(on camera) Israel was supposed to report to prison in Massachusetts by 2 p.m. That morning around 9 a.m., police say he left his home here in Armonk, New York, about an hour outside Manhattan, telling his live-in girlfriend, "I'm driving to prison."

(voice-over) Police say his girlfriend, Deborah Ryan, provided them with a fake suicide note, supposedly left by Israel. Israel's car was discovered on this bridge spanning New York's Hudson River. On the hood, written in dust, "Suicide is Painless," the name of the theme song from the "M*A*S*H" television show and the same song that played during a fake suicide in the original "M*A*S*H" movie.

Search teams trolled the river for Israel's body. A skeptical U.S. attorney released this wanted poster and a warrant for Israel's arrest. Then police charged his girlfriend as an accomplice. Investigators say she helped him load a scooter into this RV just days before he disappeared. It came in handy.

CHIEF MARK KRYNICKI, SOUTHWICK, MASSACHUSETTS, POLICE DEPARTMENT: He arrived here on a scooter, a small scooter that gets 100 miles to the gallon.

KAYE: Police say Israel, who was hundreds of millions in debt, had been sleeping at this Massachusetts campground the last few weeks.

JEAN GILBERT, MET ISRAEL AT CAMPGROUND: Quiet. Didn't say much about anything. He was just concerned about the dogs eating his power cord.

KAYE: Officers say Israel was on his cell phone with his mother when he turned himself in.

(on camera) Why fake a suicide and turn yourself in?

UNIDENTIFIED MALE: It seems like his mother convinced him to.

GILBERT (voice-over): Attorney Ross Intelisano says his clients lost $25 million in Israel's fraud scheme.

(on camera) Why do you think he didn't leave the country?

ROSS INTELISANO, CLIENTS LOST MILLIONS IN FRAUD SCHEME: I think it's not that easy in this post-September 11 world without a passport to get out of the country. So I think it would have been a little hard for him.

KAYE: After a brief court appearance in Massachusetts, Israel was driven to Manhattan, where he appeared in court this morning. Addicted to painkillers for years, Israel told the judge he tried to take his life this week by swallowing nearly 200 morphine tablets.

He said, "I thought it would be better to do myself in than turn myself in. I woke up and realized God didn't want me to do that, and I turned myself in."

The judge ordered him to prison. Israel wears a pacemaker and courts records show he's had at least nine back surgeries. Prison, he says, is a death sentence.

UNIDENTIFIED MALE: Anything else you want to say before you go?

SAM ISRAEL, HEDGE FUND SWINDLER: I'm sorry for everybody.

KAYE: Having swindled investors out of millions and triggered a nationwide manhunt, all paid for with your tax dollars, "sorry" may not be good enough.

Randi Kaye, CNN, New York.

(END VIDEOTAPE) COOPER: Well, coming up, is Barack Obama flip-flopping on Iraq? That's what the Republicans are saying. Well, we've got the "Raw Politics" and the facts at the top of the hour.

Up next, the Queen of Mean, Leona Helmsley. Remember her? Well, in her will, she ignored her kids, ignored her grandkids and gave $12 million to that dog named Trouble.

But now we learned that is chump change compared to the billions she's left for other dogs. Could maybe your dog get a cut? Details ahead.

And later, the pregnant man delivers. The latest on the birth, and the baby and the controversy when 360 continues.


COOPER: Here in New York, Leona Helmsley, billionaire real estate tycoon, who made headlines for brow-beating employees and stiffing the IRS, is making news again from the grave.

Leona Helmsley died a very rich woman. She had kids and grandkids, but she basically blew them off in her will. She left $12 million for her lap dog, a Maltese named Trouble. But now we learn she wanted dogs everywhere to share in the wealth.

Once again, here's 360's Erica Hill.


HILL (voice-over): She controlled the Empire State Building, hated paying taxes and had major problems with people. But boy, did Leona Helmsley love dogs.

So much so that the woman dubbed the Queen of Mean reportedly wanted her entire charitable trust to be used for the, quote, "care and welfare," a trust "New York Times" estimates is worth between $5 and $8 billion. Seriously, all that money for mutts?

JEFFREY TOOBIN, CNN LEGAL ANALYST: You can't leave a dog money because dogs can't spend money. But a judge will interpret Leona's will to be consistent with the general idea of helping dogs.

HILL: One dog who's been helped is her Maltese, Trouble. When Helsmley died last year, she left Trouble $12 million. But that was recently reduced to just $2 million.


HILL: Helmsley was a real estate tycoon New Yorkers loved to hate. She served time in prison for tax evasion.

In her will, she also left some of her grandkids nothing. Dogs, though, that's another story. The question is will her wishes come true? TOOBIN: You don't have unlimited power in a will. You can't leave money to commit a crime. You can't leave money that's only for the benefit of white people. And you can't leave money to a dog.

HILL: Since Helmsley's desire for the dogs was in a separate document, not part of her will or a trust, experts say judges can make some changes.

TOOBIN: The judge is probably going to establish broad guidelines that don't specifically help dogs but generally support the same idea.

HILL: As for a response from possible beneficiaries, we tried asking questions but all we got in return were barks and a few sniffs.


COOPER: Unbelievable. My dog wants some of that money.

HILL: Jake is all about getting a chunk of that. Do you know how many treats that can buy?

COOPER: Yes. I think there's going to be a lot of dogs lining up for.

HILL: Although it could help. You think about things like Katrina.

COOPER: Yes, I know. It would be great.

HILL: Wow, it would be amazing.

COOPER: There's a lot of stuff, sure.

HILL: It's still a lot of money for a dog.

COOPER: I got to say, I feel for her kids and grandkids. I mean, how would you like to have your mom to have billions and dollars and then get nothing.

HILL: Twelve million to Trouble. You, you really ticked me off when you're 5. You're out.

COOPER: How can the dog, Trouble, need $12 million? What possible -- you know...

HILL: I don't know.

COOPER: How much care can a dog get?

HILL: That's a lot of grooming. Apparently, though, it got death threats after that and had to hire a security detail. It's like 100 grand a year.

COOPER: Security detail. Trouble's got a security detail. There you go. I know you have some other surprising stories in the "360 News and Business Bulletin."

HILL: Indeed we do, Anderson. We start off with one that you'd probably rather not here. But I'm your bearer of bad news. Gas almost $4.10 a gallon as we head into the July Fourth holiday weekend.

That is 39 percent higher than last Independence Day, and it's almost certainly going to keep on going higher. Oil today crossing the $145-a-barrel mark for the very first time.

Airlines are also feeling the squeeze. American Airlines today announcing massive job cuts, seven thousand full-time employees. It will also cut its flight schedule by 11 percent. At Airtran Airways, plans to slash salaries by 10 percent.

And the pregnant transgender man has given birth to a baby girl. Thomas Beaty was born a woman. He legally switched genders but kept his female reproductive organs in tact. He 34-year-old gave birth naturally, and everyone, Anderson, is said to be doing fine.

COOPER: All right. Time now for our "Beat 360" winners. You know how it works, Erica. We post a photo on our blog. Erica does that. And then we ask viewers to come up with a caption that's better than one from our staff.

Tonight's picture, there you go, Senator John McCain today with a funky facial at a news conference in Bogota, Colombia, yesterday.

Our staff winner is Daniel. His caption: "Strike a pose. There's nothing to it." A salute to Madonna there.

Our viewer winner is Michelle from Spring Valley, California. Her caption: "Stop right there! This is perfect lighting to make shadow puppets on my face."

All right.

(SOUND EFFECT: drum beat)

COOPER: Ba-dum Dum. We'll be here all week.

HILL: I mean, is there anything you don't get on this show?

COOPER: I don't think there is. I think you got it all.

HILL: Like you're Trouble, and you just won $12 million.

COOPER: Exactly. Woof.

"The Shot is next. Overweight, overfed monkeys, just too darn fat. The solution, coming up.

And at the top of the hour, changing his mind on Iraq or not? Barack Obama's comments on the war ignite a firestorm today. The latest on his words and McCain's response and his response to the response when 360 continues.


COOPER: Time now for "The Shot." What better way to start off the holiday weekend festivities with chunky monkeys.

HILL: Not the ice cream, huh?

COOPER: No, definitely not. They certainly look overweight. That's what happens when people give them food.

HILL: Look at the belly on that guy.


HILL: Wow.

COOPER: The Japanese zoo is open 24 hours a day and for the fat primates it is non-stop eating. Zoo officials, concerned about their out-of-shape monkeys, said they're putting them on a diet apparently.

HILL: Nothing but celery for you.

COOPER: That's right. They need some exercise. They need to do more than just sit around and groom.

That's a good shot.

HILL: That's nice.

COOPER: Cutting their calorie intake more than half. You know what they need? They need Dr. Phil.

HILL: Dr. Phil. I thought the pear-shaped diet didn't really work so well for him. Wasn't there an issue with it?


You can see all the most recent -- what the -- I don't know what that shot is. I'm not sure I want to know. You can see all the most recent shots...

HILL: Good thing this is cable.

COOPER: All the more disturbing shots of monkeys...

HILL: Monkeys. Just monkeys. We'll leave it at that.

COOPER: Go to, and you can also see other segments from the program, read the blog, check out the "Beat 360" picture, whatever you want to do there. The new address again is

Up next, how Barack Obama is handling allegations he's flip- flopping on Iraq. One of our guests tonight calls it the most significant development of the general election campaign. Frankly, I think we're the only ones covering it this hour. Decide for yourself when 360 continues.


COOPER: Tonight, Barack Obama under fire on Iraq. Has his call for withdrawal suddenly changed? McCain campaign says yes. Obama says no but had to give two press conferences today to clarify his position. It's a new line of attack by Republicans and a cause for concern among some liberals. Tonight, we'll tell you the facts, and you can judge for yourself.

Also tonight, three Americans, home free but at a terrible price. New details about what the three former hostages went through five years in the jungles of Colombia, and new information about how the drug-running guerrillas were tricked by Colombia's military.

Later, Big Sur burning. Wildfires out of control in places that used to be straight out of a picture postcard. We'll take you to the front lines and some very fast-moving flames tonight.