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ERIN BURNETT OUTFRONT

Stock Market Plunges; Job Growth; Mitt Romney's Finances; Schism in the Democratic Party; Secret Formula

Aired June 1, 2012 - 19:00   ET

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


ERIN BURNETT, HOST: OUTFRONT next the Dow plunges nearly 300 points. It was a horrible jobs report today. And why some of the nation's leading CEOs tell us they're hiring now and a developing story, in just the past hour Mitt Romney releasing his personal financial statements for the past year. What changed, and what didn't in the Romney's back account. And George Zimmerman has less than 48 hours to report to jail. This is bad news for his trial. That's OUTFRONT tonight.

I'm Erin Burnett. OUTFRONT tonight, stocks tanked. The Dow plunged 274 points today. Now that killed all the gains of this year. It's the biggest drop since November. It was a really bad day and the reason was a terrible jobs report. Usually using adjectives like this are sometimes a little bit much for the markets but it's the way it was today.

American employers added a meager 69,000 jobs, which is about half the number needed just to keep up with current population growth. It was the weakest month of hiring for the year and the unemployment rate went up to 8.2 percent. It was a grim day for the president.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: And today we're still fighting our way back from the worst economic crisis since the great depression. The economy's growing again, but it's not growing as fast as we want it to grow.

(END VIDEO CLIP)

BURNETT: Now, according to Bianco Research, no president has been re-elected in this country with an unemployment rate this high since the great depression. That was when FDR won and at that time unemployment in America was 13.7 percent. So what's happening? We went to find out. We asked our "Strike Team", 24 of America's business leaders including entrepreneurs like Marc Andreessen and CEOs like Alan Mulally of Ford, John Chambers of Cisco and Ellen Kullman of DuPont.

Eleven out of 18 said the job market is stalling. And they are less optimistic than they were just one month ago. Ellen Kullman, the CEO of DuPont, told me "I'm an optimist and was hoping to see some stronger growth by now. This is clearly going to be a slower recovery, so I'm a little more negative on near-term growth." Now this week to that point of the 20 economic indicators that came out, only one surprised to the upside that was a stunning statistic from (INAUDIBLE) research. And while the vast majority of our "Strike Team" is hiring themselves, when I read through the replies it didn't seem to me that it's the kind of hiring that drives a strong economy. Bill Miller of investment firm Legg Mason, said he's "only hiring replacements", and even Marc Andreessen, who is a board member of Facebook said that while his "companies are hiring across the board, it's only in certainly areas, like engineering and analytics."

So what can we do? This is the biggest fear as far as I'm concerned, because at this point there is no easy way out. Not only is another stimulus package a complete non-starter in Congress it might not even work. The "Strike Team" point of view on this is pretty overwhelming. Stimulus is not the answer according to them. Fourteen say, no.

There was one major dissent of no from David Stern of the NBA. (INAUDIBLE) means an ardent supporter of stimulus telling me, "yes, stimulus, Krugman style", referring to the liberal economists wish for $300 billion a year in spending. Now this is much bigger than politics. This ongoing crisis is hurting our 401(ks), defining our jobs, our career prospects, our earnings potential, our retirement or lack thereof and our nation's debt crisis.

Jim Bianco of Bianco Research and Dan Gross join me now. Great to have both of you with us and appreciate it, so let me start with you, Dan. We've been hoping things would start to improve, increase a little bit to the upside. We're just not seeing it yet, blip or part of something more sinister?

DANIEL GROSS, ECONOMICS EDITOR, YAHOO! FINANCE: We've been having an unemployment crisis for going on three or four years now. You remember back in '09 losing several hundred thousand jobs a month. People talk about a jobless recovery. Companies have been very good about doing more with less. They're amazingly productive. They're amazingly efficient and I also think in general they're waiting for that demand to materialize. And it's a chicken and egg thing. (INAUDIBLE) car sales are up 17 percent year over year, retail sales up six percent year over year. That's moving in the right direction, but it doesn't seem to be at the speed that says I've got to go hire somebody today.

BURNETT: Right and Jim Bianco, the other problem is it's not a speed at which has gotten us to where we were before this while problem began. So many industries are not back to where we were in 2007?

JIM BIANCO, PRESIDENT, BIANCO RESEARCH: That's correct. When Dan reports car sales being up 17 percent, retail sales up six, the overall levels are still below what we saw in 2007 and 2008. Now, the good news is the economy is not in recession. It's growing very slowly, but the bad news is, is that it is growing very slowly.

This is the 40th month in a row that we've had above eight percent unemployment and we have to go back to the great depression to find a period that we've had unemployment above eight percent for that long and that's what is casting a pal over everybody. They know that it's been high and it's been high for a long time and it even feels different from the '80s because in some respects it's a little bit worse by that statistic.

BURNETT: So Dan what do we do? Because that -- that's (INAUDIBLE) seem to me to be the most awful part about where we are. You know you can say we should have done a differ stimulus or a bigger stimulus.

UNIDENTIFIED MALE: Right.

BURNETT: But the reality is we're not getting another one before the election.

GROSS: Right and we're not getting a whole lot of help from the fed.

BURNETT: Yes.

GROSS: I think they've run out of what they can do. The strange thing is the Bureau of Labor Statistics who reports the unemployment rate every month comes out and says how many job openings there are, how many people have quit and moved around. It is called the jolt survey (ph).

BURNETT: Yes.

GROSS: At the end of March, 3.7 million jobs opened in this country. that's the highest level that's been at since late '08. Conference Board has numbers on online want ads, 4-point something million. I think 4.3, also higher than it's been four years, so it's a dichotomy. They seem to be saying we have all these job openings --

BURNETT: Right.

GROSS: -- but we're not filling them and is that because people don't lack the skills, because people are in the wrong geographic place? I mean North Dakota has tens of thousands of jobs but nobody lives there.

BURNETT: Right. That's right. Maybe Jim Bianco, still the problem is a lot of people from Detroit can't sell their homes and move to North Dakota -- it comes back to housing. But I mean what do we -- what can we do at this point, Jim? I mean I guess I'm really curious. I know you're not -- you're very worried about the fiscal cliff that we're coming at, but what is a bigger cliff right now, the fiscal cliff or the economic cliff?

BIANCO: Well, I think it's the economic cliff, but you're right. Labor mobility is very tough. It's hard for people to move around because of this stagnation in home prices. You can't sell your home and move to where the jobs are and that's what is holding everybody back. To that end I think what we have to do is try and make it cheaper for employers to hire people. Lower the cost and whether that means tax cuts or incentives or something to lower -- make it easier or cheaper to hire people across the board that would probably be the only thing we can do in the short term. In the long term, we're going to have to wait for the storm clouds in Europe to subside and we're going to have to wait --

BURNETT: Right.

BIANCO: -- and see whether some of the storm clouds in the housing market, some of the other things that are holding us back subside here.

BURNETT: How much worst, Dan, would it get if Europe does indeed fall apart, if Greece goes and then that means whether --

(CROSSTALK)

BURNETT: -- Spain goes, others --

GROSS: Yes, we're not exporting a lot of stuff to Greece right now.

BURNETT: No.

GROSS: And if you were counting on Italy for growth in your end market, you've been disappointed for a decade now. The real problem is in the -- this comes back to our financial system.

BURNETT: Yes.

GROSS: Their banks go down, it affects our banks and then we see all those knock-on effects like we what we saw in '08 and '09. Just to echo one thing Jim was saying. It's almost as if companies have to be bribed to hire somebody. They frequently say well people don't have the skills.

BURNETT: Yes.

GROSS: They should be doing the training and so maybe the government can do a little more help with training of employees. Companies seem to be reluctant --

BURNETT: Right.

GROSS: -- to actually do the training, which they used to do a lot of.

BURNETT: Pretty interesting, well it's another issue we'll talk about in a moment. Jeb Bush was talking -- we got so many job training programs out there, are they working? Final word to you, Jim Bianco, what does this mean for the election?

BIANCO: I think that it hurts Obama over the short term. It helps Romney. It puts the election into that toss-up category and we're going to have to wait and see what the next set of data brings for us, so it's not settled at all. There's probably no clear front- runner right now.

BURNETT: OK, thanks to both, appreciate it.

And still OUTFRONT Mitt Romney, he just released his financial statement the night after Bill Clinton praised him. Did Clinton just throw his guy President Obama under the bus or does he have a secret strategy?

And days after a zombie-like attack there's a new case where police say the attacker ate the brain of a victim. The story continues to be bizarre and it's now in different parts of the country.

And two major developments in the George Zimmerman/Trayvon Martin case this afternoon.

(COMMERCIAL BREAK)

BURNETT: All right. Our second story OUTFRONT, politics and we have some breaking news on that. We've got some financial disclosures from Mitt Romney today. I'm here with John Avlon and I want to just talk about those. Look, I keep this on my desk. This is blind trusts everything Ann Romney, Mitt Romney, we've got it. And in that was, John, from last summer all the stocks Mitt Romney owns in his blind trust.

JOHN AVLON, CNN CONTRIBUTOR: That's right.

BURNETT: Today John saw the new ones came out, compared them, and what did you find in here?

AVLON: This is an update since last August, as you said. Just glancing at it very quickly what we know, he's a very wealthy man. He has over 50 different assets holdings valued at over $1 million at least. So this is an extraordinary at least successful guy. There's some speaking fees that have trickled in.

He's got more money from Marriott (ph) as a former director than previously but it is largely status quo. He's trying to keep his financial activity to a minimum because hey he's running for office, for Pete's sake.

BURNETT: That's right. I mean when you was looking some of these original ones, I mean he did own at one point individual stocks, Lemon Ford (ph), but it appears that some of those are gone --

AVLON: Many of them were sold.

BURNETT: Now it's much more -- yes sold -- much more money markets, very conservative.

AVLON: That's right and to give a sense of the range --

BURNETT: Bonds.

AVLON: -- we're talking -- bonds, money market funds, you know very, very diversified. To give a sense of the range, we know for example he got between 700,000 and 6.2 million from Bain in the last calendar year. But that's the kind of ranges these documents follow the money, a good principle in politics, but this is a document that establishes ranges not specific valuations.

BURNETT: Although of course for those of you out there, obviously he no longer works at Bain, so that I believe is the stream still coming from old Bain funds.

AVLON: Yes.

BURNETT: That money, of course, still all taxed at the 15 percent.

AVLON: Absolutely.

BURNETT: Not long-term capital gains rate. OK, all right, we're going to keep looking through these, but you know this is why we sit (ph) them and they get yellow and people say why do you kill trees? Because you know why, I don't want to kill trees every time it comes out. I save it. Right there on my desk.

OK, the schism in the Democratic Party, at least what some are calling a schism appears to be well may be getting a little wider. Former President Bill Clinton the latest to take on the issue with the tax of Bain Capital, calling Mitt Romney's record there, quote/unquote, "sterling" and today Mitt Romney weighed in.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Eighty percent of the businesses Bain Capital invested in grew during the period of Bain Capital's ownership. That's pretty good record, five percent went bankrupt. I understand the president and his team will focus all their energy on the five percent. I'd like to focus my energy on the 80 percent and I think Bain Capital has a good, solid record. I was happy to see President Clinton made a similar statement today.

(END VIDEO CLIP)

BURNETT: All right, John Avlon here, Hogan Gidley, former communications director for Rick Santorum also here. So, John, let me just ask you this question because this is -- you know you have Cory Booker first defending -- I'm not going to personally indict private equity. You had Deval Patrick also talk about it is a good company. Now you have Bill Clinton. The cynics say oh that's because they get donations from these guys. But you know Newark (ph) has a lot of businesses that have been created by private equity, so it may not just be cynical.

AVLON: No and it may also expose a deeper schism within the Democratic Party that Bill Clinton dealt with when he ran for president. Remember he was running -- the head of the DLC wing of the party, the Democratic Leadership Council that was attacked by some folks on the far left as being to close with business, but there's always been this tension within the Democratic Party. There's the liberal base and then folks who have a much more expansive inter connected attitude about business. And one of the things we may be seeing is a bit of a blowback on these Bain attacks that's showing the divisions beneath the surface of the Democratic Party surfacing yet again.

BURNETT: Hogan it's interesting when you think about Bill Clinton weighing in on this. I mean I think it's very clear from everything Bill Clinton said he's voting for Barack Obama. He wants Barack Obama to win but he's a guy who did what he did with business onboard.

UNIDENTIFIED MALE: That's right.

HOGAN GIDLEY, FMR. COMMUNICATIONS DIR. FOR RICK SANTORUM: Right and Bill Clinton's not -- he's a very smart man. He knew exactly what he was saying and what he was doing in that interview. I mean who knows? There might be some residue left over from that campaign he and Hillary faced off with Barack on many years ago. But look, I remember in Nashville and New Hampshire in the primary when Mike Allen from Politico came up to Rick Santorum and said look can you believe Romney said this about firing people?

And to Rick Santorum's credit he was the only who said look, that's capitalism. Some jobs you grow and make businesses grow, some people lose their jobs. That's just the way the system works. And what's interesting about this is, every other Republican jumped on and attacked Mitt Romney for Bain. But it was a losing strategy. Newt Gingrich has gone all over the country explaining this that it was a losing strategy for the -- a lot of those conservative folks to be talking about Bain Capital and now the president came out and did it for two weeks and it just shows they have no message to attack him on as it relates to Bain Capital and now people like Booker and like Clinton are coming out and saying, guys, he's successful. Get over it. Move on to another topic.

AVLON: Right and the key point with Hogan is that obviously we've moved to the general. That attack was always very risky for a conservative primary electorate. But what's fascinating here is that it actually playing to some extent into Romney's narrative. Romney tried to drive a wedge in a speech he gave between Clinton and that centrist leadership in the Democratic Party and Barack Obama and this all of a sudden this schism is starting to give credence to that argument, saying that look there is a difference. This is not the pro business Democratic Party that Bill Clinton ran. This is a party that he would argue Barack Obama's playing to the base and running against business. So it actually -- this schism the Democratic Party starts playing into a narrative that Romney wants to have a debate about.

BURNETT: Right. What's interesting, LZ Granderson is with us now, CNN contributor and L.Z., I just want to ask you this. You know I was with Bill Clinton recently and he was talking about the Bush tax cuts and he was basically saying look you know what, once we get growing again we need those to go up for everyone, not just the wealthy, for everyone, which doesn't seem to be the message at all of Barack Obama. LZ GRANDERSON, CNN CONTRIBUTOR: Well, no. And he has the luxury of not having to follow through with the party's, you know party talking line, right? He's not running for office necessarily. He's actually running to make the country better and I think the things that Bill Clinton is saying may not necessarily be the things the president wants to hear but are the things that the country may need and those are two different things. There's a motive for campaigning. There's a motive for turning the country around. They may not necessarily be on the same line.

BURNETT: I just want to play an ad that the Obama campaign is running because I'm curious if all of you think that he's going to keep doing this. I mean if it's getting traction where he needs it do, he doesn't care what we're all sitting here saying or what some "I's" (ph) leaning right are thinking. Here's the kind of ad he's been running on Bain.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE, POLITICAL AD: We view Mitt Romney as a job destroyer.

UNIDENTIFIED MALE, POLITICAL AD: To get up on national TV and brag about making jobs, when he has destroyed thousands of people's careers, lifetimes, just destroying people.

UNIDENTIFIED MALE, POLITICAL AD: He's running for president, and if he's going to run the country the way he ran our business I wouldn't want him there.

(END VIDEO CLIP)

BURNETT: Keep running that kind of ad, John?

AVLON: There's not a lot of evidence that it's working. Their hope clearly is it's going to resonate with blue-collar workers in swing states like Ohio and Pennsylvania, that Rust Belt worker, but here's the problem. Bill Clinton recentered the Democratic Party and was able to reconnect with centrists and independents, that's how he was the first Democrat reelected since FDR. So if Romney can drive a wedge and say this is a return to the Democratic Party before it recognized that businesses create jobs, he can have a real argument with those centrists and independents who will ultimately decide who wins the election.

BURNETT: We shall see. Thanks very much to all three of you and a good weekend.

And still OUTFRONT the man who left the Romney campaign suddenly. But he says that being openly gay and being incredibly criticized for being openly gay from the far right of the Republican Party didn't influence him. Does it add up? We'll ask him.

And we go OUTFRONT to Israel.

(BEGIN VIDEO CLIP) BURNETT: Up next what might be the world's second most valuable secret formula.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BURNETT: Our third story OUTFRONT before I went to Israel to interview Prime Minister Netanyahu, we kicked around a few stories to shoot there like vertical farming or Israeli tech companies but then my eye caught this on my desk. It's called Moroccanoil and it's the hottest hair product in the world right now and it's made in Israel. The company was started six years ago by Chilean native Carmen Tal and her ex-husband. And as we found out the i-d-e-a, idea of Moroccanoil didn't come from years of research, but from something else.

(BEGIN VIDEOTAPE)

CARMEN TAL, CO-FOUNDER, MOROCCANOIL: Because of an accident that somebody damaged my hair I happened to land in a beautiful salon in Tel Aviv, and these persons just did miracles with my hair. And it wasn't just the person. It was the product.

BURNETT (voice-over): The product Carmen Tal stumbled on is called argon oil (ph). It's a natural oil that comes from an argon (ph) tree and has been produced in Morocco for centuries.

C. TAL: And that's why we decided to call it Moroccanoil and we never thought it would be so successful obviously, right?

BURNETT: Sold exclusively in salons in more than 35 countries, it's used by A-list celebrities like Madonna, Katy Perry, Jennifer Lopez and Scarlet Johansson.

(on camera): When you walk by a salon and say that's my stuff --

C. TAL: Yes, actually --

BURNETT: -- sort of still get with a feeling in your stomach?

C. TAL: It's funny it still does.

BURNETT (voice-over): Its been featured in "Vogue" and become the product of choice for fashion shows including Bagilla Mischa (ph) and Herlina Harrah (ph).

C. TAL: It evolved so fast that I don't think we had time to think, would it be that big? You know the part that it was a successful business came as a bonus --

BURNETT: That came as a bonus?

C. TAL: Yes it is.

BURNETT: The business is based in Israel where 80 percent of Moroccanoil is manufactured in a non-descript warehouse about two hours north of Jerusalem. Eitan Arbel (ph) is the plant director and one of only four people who know the secret formula to this blockbuster hair product.

(on camera): What makes it so secret?

UNIDENTIFIED MALE: The blend and mix of all the top-notch ingredients that we have inside makes it so good.

BURNETT: It really makes it so good or just (INAUDIBLE)?

(voice-over): They wouldn't tell me the top secret formula but I did see them make it. Twenty-five different ingredients go into Moroccanoil products and they're mixed in these special two-ton vats. The vats are named after the celebrities that use them like Angelina Jolie.

EITAN ARBEL, PLANT DIRECTOR, MOROCANOIL: (INAUDIBLE) this is the manufacturer room but inside the factory we call it (INAUDIBLE) --

BURNETT: (INAUDIBLE)

ARBEL: (INAUDIBLE)

BURNETT: Moroccanoil is a signature product and the factory here in Israel has 180 employees working 24/7 filling, labeling and packaging up to 150,000 bottles a day. It's big money, especially since that one product retails for $42 a bottle and it's not stopping there. Carmen Tal is now betting on body products.

(on camera): I'm not an expert in the world of beauty but I can imagine that it's incredibly cut throat and the world of body is a whole new world, really --

(CROSSTALK)

BURNETT: -- right?

C. TAL: Absolutely, absolutely.

BURNETT: So what made you feel you're ready to take that jump?

C. TAL: There were so many people that said you have to -- you have to (INAUDIBLE) people begging you. You know? So we said, you know, maybe we're ready.

(END VIDEOTAPE)

BURNETT: Pretty interesting idea.

And ahead our Paul Callan talking about the decision to revoke George Zimmerman's bail, is it a really bad sign for the trial? And just days after that brutal zombie-like attack there is a new case and we'll tell you exactly the horrific thing that happened.

(COMMERCIAL BREAK)

BURNETT: Welcome back to the second half of OUTFRONT on a Friday.

We start with the stories we care about, where we focus on our reporting from the front lines.

And today, stocks sank after disappointing jobs report. It was a 274-point plunge for the Dow. The reason, the country only added 69,000 jobs in May, weakest this year. One of the stocks that took a hit. Facebook, it was down 6 percent today, and closed at $27.72 a share. Its two-week anniversary as publicly traded company and since its open, it has lost one-third of its value.

I asked our economic strike team whether they'd buy Facebook now. By the way, check them out on bios and blogs. Three said yes, 11 said no, four had no comment. One of them happened to be on the board said no comment.

If you want to learn more about our economic strike team, you can visit CNN.com/OutFront.

Well, breaking news. Severe storms in Washington, D.C., downed trees and caused flash floods throughout the area. In the town of Bel Air, Maryland, two buildings collapsed. A home and car dealership. We're told firefighters rescued several people trapped inside the dealership. A person was injured and a funnel cloud was spotted in the area.

Meantime, the military has dropped one of the murder charges against staff sergeant Robert Bales but added others, including illicit use of alcohol and steroids. Staff Sergeant Bales is accused of attacking two Afghan villages and facing 16 counts of premeditated murder for killing men, women and children. In a statement to CNN, Bales lawyer, John Henry Browne, says, "I'm so relieved that they, the prosecutors, finally came out publicly about the steroid use. Steroid use is going to be an issue in this case especially where Sergeant Bales got steroids and how."

John Henry Browne has told me from the very beginning that he thinks steroid use could be a key part of his defense.

Well, a Maryland college student who confessed to police that he killed and then ate a portion of his roommate's heart and brain was released from jail just days before the brutal crime. Court records we obtained show that Alexander Kinyua was charged with assault and reckless endangerment and had been released from jail just days before his roommate's murder.

The suspect's father called police after two metal tins deigning a human head and hands were discovered in the basement. Kinyua said they belonged to an animal, it was subsequently shown they were human.

A new report giving us details of the Stuxnet worm. That was the one that successfully caused explosions in the nuclear program, also explosions in some industrial facilities there. It happened to kill some Iranians as well. According to the "New York Times'" David Sanger, Stuxnet as developed as part of a program called Olympic Games. Started in this country, not Israel, by the Bush administration.

President Obama kept the program going and authorized the continued use of Stuxnet even after portions of the program became public. We're going to learn more about this when David Sanger comes OUTFRONT on Monday. Obviously, very significant, confirmed from the U.S.

It's been 302 days since the U.S. lost its top credit rating. What are we doing to get it back?

Well, it might help if we got economic growth. And given all the concern about that with the jobs numbers, the silver lining was oil prices. They are down 18 percent over the past four weeks. Gasoline futures fell 6 percent today, that could bring relief at the pumps over the next two to three weeks.

And now, our fourth story OUTFRONT, a bombshell in the case of George Zimmerman, the man accused of shooting and killing Trayvon Martin. Zimmerman claims Martin attacked him and that he was acting in self-defense. He is facing second-degree murder charges.

Today, huge news: the judge revoked his bond, ordering him to surrender in the next 48 hours. And what this means is that Zimmerman will have to spend months before bars before the trial against him even starts.

The judge's decision today coming after it was revealed by prosecutors that Zimmerman had not surrendered a second passport and had lied about how much money he had when his bond was originally set back in April.

You may remember this. The PayPal account that he started up to raise money had about $200,000 in it. When he went for that original -- and he spoke, he said he no money. Zimmerman's lawyer explained it was a misunderstanding.

(BEGIN VIDEO CLIP)

MARK O'MARA, ATTORNEY FOR GEORGE ZIMMERMAN: I don't they believed they had free access to that money and I think it was evident by the way they used it and didn't use it. I think it was compelling evidence, quite honestly, that they didn't go out and use it to get him out that very day. On the other hand I think Judge Lester wants a very tight courtroom, as well he should, and he was frustrated because he doesn't think he was being as straightforward and honest as he thought they should.

(END VIDEO CLIP)

BURNETT: OUTFRONT tonight, Natalie Jackson, one of the lawyers representing the family of Trayvon Martin, and CNN contributor Paul Callan.

Good to have both of you with us.

Does this surprise you, Paul? I mean, I know we heard about this account. It already raised as possibly something that could cause him to revoke bail, that he would lie about the money. But a second passport, both damning.

PAUL CALLAN, CNN LEGAL CONTRIBUTOR: Both things are damning and it's devastating blow to the defense. I was really stunned it happened. And the reason I said it's a devastating blow is because the judge, Judge Lester, who says he deceived the court. He and his wife, those are the words of the judge, he deceived the court. He lied to the court.

This is the very judge who's going to decide at the ""Stand Your Ground"" hearing whether to give immunity on the grounds of self- defense. He's already called is Zimmerman a liar on the issue of bail. So, this is really, really hurt his case. Not to mention the fact he gets thrown back into jail.

BURNETT: Natalie, what's your reaction? You must be incredibly gratified?

NATALIE JACKSON, ATTORNEY FOR TRAYVON MARTIN FAMILY: Well, I think that -- it makes us cautiously optimistic that we're going to see justice and fair and equal justice for everyone. This judge showed everyone today that he's going to follow the law, and that he's not going to allow shenanigans in his courtroom.

BURNETT: Paul, does this, though, I mean, a lot of the information we've gotten, and I know both the defense and the prosecution are trying to keep it out of the media. I want to ask Natalie about has in a minute. What we've seen so far, at least according to your analysis and other lawyers, tended to go in George Zimmerman's favor, you know, that he was angry at the police department for what he had perceived as racist behavior on a totally unrelated issue.

How damaging is this now relative to all the information we have so far, which had seemed to go in his favor?

CALLAN: Well, you know, Erin, this is the first devastating blow we've seen delivered to the Zimmerman defense in quite a while. Yes, most of the evidence that we've seen so far has come in seemingly backing up the Zimmerman claim.

And in fairness, I think we have to say, O'Mara and this new defense attorney, West, have maintained that the just went overboard. And that, in fact, this was an innocent by George Zimmerman, not deliberate deception of the court. You know, that's the explanation they offer.

But whether it's true or not doesn't matter, because he's the judge, and he's deciding the immunity issue, the "Stand Your Ground" hearing. And that was the big opportunity to get the case dismissed before a jury trial.

BURNETT: Natalie, were you aware of the second passport until today? JACKSON: No. We weren't. I want to talk about "Stand Your Ground". We maintained all along "Stand Your Ground" does not apply to this case. I do not believe there will be a "Stand Your Ground" hearing in this case.

George Zimmerman's credibility is the main issue in this case. The main issue in the "Stand Your Ground" hearing, is the main issue in a trial. And with this case, we -- we heard all along people talk about "Stand Your Ground". We maintained that the "Stand Your Ground" law as applied to this case is just a red herring and we don't believe there will be a hearing in this case on that --

BURNETT: Mark O'Mara, when I've spoken to him, he said that he would, I mean, he's indicated he would just go with self-defense. He wasn't even pushing for "Stand Your Ground", he thought he could win on self-defense alone.

JACKSON: Right. Because he can't win or "Stand Your Ground" because it doesn't apply.

CALLAN: The issue in "Stand Your Ground" thing and it gets confusing. But in a lot of Florida cases they almost routinely grant -- I call it an immunity hearing, because s it's a hearing in which if the defendant says he acted in self-defense, the court make as determination whether he's proven by what we call a preponderance of the evidence. And if he has, then the case gets dismissed.

So, the question is, will the judge order such a hearing in this case? I don't think it's clear at this point. But it has been done in a lot of similar cases.

BURNETT: Natalie, what's the reason, the thing you and the defense agree on, this issue of not wanting to have more of the information, the discovery, come into the public eye? My understanding at this point is about half is out there. We've seen most of it, but you want the rest to be sealed. Why is that?

JACKSON: Well, I will say, actually, our team is asking for full transparency. The prosecution is agreeing with the defense to seem the discovery. We understand why. It's because what the -- everything that is left is what the prosecution is going to use as their smoking gun against Zimmerman. So, they don't want the media to analyze the way we've seen this piecemeal analyzation of evidence that's come in.

And the defense attorney agrees with that because it's damning to his case. That's why he wants it to be sealed. We're asking for transparency because of the things that have been leaked so far sort of demonize Trayvon in this case and he's the victim.

So, we're saying, if you're going to put that out there, really let the public see everything. Let them see what's going on in this case. There's enough evidence to convict George Zimmerman. This was not a case that -- you know, that Trayvon attacked George Zimmerman as we've maintained all along. The prosecutor, they did -- they brought this charge because they believe they could prove it. BURNETT: All right. Thanks very much to both of you.

And ahead OUTFRONT: does being gay disqualify you from being a power player are in the Republican Party? A man who used to work for Mitt Romney openly gay, for gay marriage, a Republican, comes OUTFRONT.

And next, a surprising twist in the hierarchy of international drug cartels.

(COMMERCIAL BREAK)

BURNETT: We're back with our outer circle and we reach out to sources around the world.

And we begin tonight in Canada where police today identified the victim of a gruesome murder in Montreal. The victim's name is Jun Lin seen in this picture here, according to CTV. We've got the picture for you coming up in a second. Police believe that Luka Magnotta, a self-described model and porn star, killed Lin, a 33-year-old university student from China, before stuffing his torso in a suitcase and mailing body parts to Canadian political leaders.

Paula Newton is in London as the manhunt for Magnotta is now in Europe and I asked where police are looking for today.

(BEGIN VIDEO CLIP)

PAUL NEWTON, CNN CORRESPONDENT: Erin, the international manhunt is on. Police say they have reason to believe that suspect is near Europe but don't exactly know where. They're telling me that he had at least five days lead on the Interpol wanted list. That Interpol notice did go up, we can tell you. It's up in airports and train stations here.

Police pointing to the long and sordid trail of evidence that this suspect apparently left on the Internet saying that he even posted a video of the decapitation. Police now in Canada saying that's proof enough for them, and this will help them in their investigation. But right now, they're pointing to his connections to France, even here in London, perhaps the Netherlands and they hope to be able to catch up with his soon.

The problem is now, though, with that lead, the fact he was already here on the continent for five days, many people concede he can travel throughout Europe without being detected -- Erin.

(END VIDEO CLIP)

BURNETT: All right. Thanks to Paula.

And now, we go to Mexico, where a recent study found over 10 percent of organized crime group, led by women. And that number is growing.

I asked Rafael Romo while we're seeing more and more women leading some of the most dangerous drug cartels on earth?

(BEGIN VIDEO CLIP)

RAFAEL ROMO, CNN CORRESPONDENT: Erin, in many cases, women end up as cartel bosses because they're the only ones who are left in a drug war where you see cartels fighting each other and the government fighting all cartels many drug lords have fallen and their wives, lovers, girlfriends and even daughters have taken their place. According to a new book published in Mexico, 46 women allegedly involved in drug trafficking have been arrested in Mexico in the last five years.

For example, Sandra Avila Beltran known as the "Queen of the Pacific", was arrested in 2007 and convicted of trafficking cocaine from Colombia. There's also the case of Angie San Clemente, a former Colombian beauty queen who was arrested in Argentina and charged with trafficking cocaine from South America to Europe -- Erin.

(END VIDEO CLIP)

BURNETT: Wow. Involving beauty queens.

And to the U.K., as the British prepare to celebrate Queen Elizabeth II 60 years on the throne. A CNN poll shows her popularity at a 15-year high here in the U.S. Eighty-two percent of Americans say they have a favorable opinion of the queen. Has the president ever gotten there?

To kick off festivities, Prince Charles produced a personal tribute to his mother tonight. Max Foster is in London and I asked him what Prince Charles shared ahead of the jubilee.

(BEGIN VIDEO CLIP)

MAX FOSTER, CNN ROYAL CORRESPONDENT: Well, Erin, what Prince Charles has done is dusted down these old family videos, many of which he admits she hasn't seen for years. And one of them shows him playing on a beach with his sister Anne as children, and the queen is actually filming this footage.

Ad it dispels the myth, really, that the queen was a hands-off mother. This was a very functional, happy family from the look of these home videos. Also, some footage from behind the scenes of Buckingham Palace on the day that the queen was crowned and Prince Charles relays this story how he was in the bath. The queen came in with this priceless crown as she practiced wearing it.

So, a very ordinary family in many ways, at least that's what we've learned here, not just a queen, but a mother -- Erin.

(END VIDEO CLIP)

BURNETT: Nice to see those pictures.

And our fifth story OUTFRONT, the foreign policy adviser to Mitt Romney who became so controversially that he quit his job before he even started. He was lambasted from the right.

Ric Grenell was named foreign policy spokesman for Mitt Romney back in April, but he immediately faced a backlash because he was gay. The Romney campaign asked him to lay low, but he resigned days later.

And earlier tonight, he came OUTFRONT. I asked if he was surprised by the outcry of his sexuality.

(BEGIN VIDEOTAPE)

RICHARD GRENELL, CAPITOL MEDIA PARTNERS: I really wasn't. I'd been working in American politics for a very long time, so I really was not surprised. I think, though, it's fair to say that the intolerance was coming from the far right as well as the far left. And the far left intolerance doesn't get enough attention put on it, but I think both extremes were uncomfortable. The far right doesn't want a conservative to be gay and the part left doesn't want a gay to be conservative.

BURNETT: Between a rock and hard spot when you put it that way, but what made it so bad that you said, I can't do this anymore?

GRENELL: Well, you know, I'm a foreign policy guy. I'm somebody who has devoted my life to really thinking about policy, national security policy, and making sure that America is safe and strong. And I relished the opportunity to actually define for the Romney campaign and for Governor Romney a lot of these issues that I think President Obama and his administration are really not doing a very good job on.

And so I was hired because of that experience, and was looking forward it, but it just became increasingly clear that, you know, this is a campaign. It's not governing. I spent eight years in the Bush administration and was comfortably out and it was never an issue.

But campaigns are different.

BURNETT: You must feel pretty angry, right, that al of a sudden the fact that you're gay becomes how everybody is talking about you, that's what you're talking about, it's what determined if you kept the job. That has really got to make you mad?

GRENELL: You know, I'm very comfortably gay and I'm very comfortably conservative. So, it really doesn't -- I understand politics. I've got my big boy pants on.

It's a rough and tumble game. Politics is a game. Campaigns are nasty. Presidential campaigns are nasty.

But I think Governor Romney can win this election by avoiding all of that talk. You know, the Obama campaign really wants to define Republicans as either homophobic, misogynistic or racist. I think that's just their playbook.

And Governor Romney has got to ignore all of that noise that really the Obama campaign is going to throw out there because frankly speaking, if Obama tries to run on his record of four years, he is going to be a one-termer. He is absolutely going to lose. They cannot run on their record.

BURNETT: So you've left the Romney campaign, but as you said, your whole career has been in foreign policy. Right now, latest poll ABC News/"Washington Post", 53 percent of the likely voters say the president will do better than Mitt Romney on the foreign policy issues. If there was one thing Mitt Romney needs to do to change that number, what would you tell them to do?

GRENELL: Well, first of all, he's got time to really have that discussion with the American people. I've never been called by a pollster. I don't know anyone who's ever been called by a pollster.

We just got out of a bruising Republican primary battle. This is just the beginning of June. We've got a long time to take that message to the American people.

And I think the American people will get into the voting booth and they will see what the past four years has not been good for America. We have struggled both internally and globally, and I think they will look at Mitt Romney and his record and say, let's have a businessman who really is passionate about making America exceptional again. Let's give that guy a shot.

BURNETT: So with all the things being said, obviously I'm aware you're going to vote for Mitt Romney. I mean, are you going to do so with passion and conviction given your personal decisions, your personal life? Or are you going to do so just because he's the Republican candidate?

GRENELL: No, no, I've been on the Romney campaign personally for a very long time. He was my pick in the beginning from the primary, and so I'm passionate. I think he will be a great president. I think that at the end of the day, we all will go into that voting booth and make the decision according to a variety of issues. We're multi- facetted people. I wish I was a one-issue voter. Life would be a lot more simple.

(END VIDEOTAPE)

BURNETT: Now the 911 calls made during that horrifying zombie like attack in Miami have literally just been released. We're going to play them for you right after this break.

(COMMERCIAL BREAK)

BURNETT: Nine-one-one calls made, the Miami Police Department has just released some 911 calls made during the gruesome face-eating attack in Miami. They literally have just come out.

Here's the first one we have. We want to play it for you.

(BEGIN AUDIO CLIP)

CALLER: Two bums were going at it with each other taking up the whole lane. I think they're fighting or something. Yes, just up the causeway, in like pedestrian area. DISPATCHER: You said there was three of them?

CALLER: I think there are two.

DISPATCHER: Two? Were they black or white?

CALLER: Black or Hispanic. Darker skin color. Or maybe just very tan.

DISPATCHER: What did you say they were doing?

CALLER: Fighting with each other. They almost knocked over an old lady.

DISPATCHER: You say they were in the street?

CALLER: In the bike path or pedestrian walkway, the pedestrian causeway.

(END AUDIO CLIP)

BURNETT: Now, you know the story. Police shot and killed Rudy Eugene after the 18 minute attack on a homeless man. Eugene was possibly on a drug known as bath salts. He chewed the face off of the other man, gouged out his eye ball. It is horrific. And it truly defied anybody's imagination who knows about this case.

Paul Callan, you've done a lot of cases. You've heard a lot of 911 calls. This is the first one. There could be others. To emphasize to everyone, this was in the middle of the afternoon. There were bikes going by, cars going by.

What do you hear here?

CALLER: Well, you know, this is amazing. I'm always surprised when you hear the 911 tapes at how inaccurate people are when they describe what they see. You know, you talk about eye witness testimony being inaccurate. What you're going to hear are descriptions of bizarre things that we know don't correlate to what was going on. He was eating somebody's face.

BURNETT: Right. You would think -- the guy said they were fighting.

CALLER: They were fighting.

BURNETT: What we heard was growling and literally ripping. That was not part of this call.

CALLAN: What we hear, was he black? Was he white? The guy says, well, he was a little tan. I mean, you know, it shows you about eye witness testimony how unreliable it is. We're going to see that in some other very prominent cases when witnesses get cross examined.

BURNETT: Right.

CALLAN: These 911 tapes, you always hear this.

BURNETT: One thing I'm curious about. This happened in broad daylight, on a causeway. The act that was going on was so horrific. It does defy imagination. A lot of people, you can see it in video, biked right on by.

Now, maybe they were scared and they called 911 further down. I don't know.

But is it common for people to just see something awful and just ignore it?

CALLAN: It's extraordinarily common, especially in the big cities. Anybody who lived in New York in the '70s remembers homeless people laid out in the street. People would just step right over them in the subway. They'd just ignore them because it had become so common place. And I think people had fear too.

I mean, the fear is if you pull over and stop, what if you're going to get hurt. What if you get attacked. So, I think a lot of people drive on maybe if they call 911 we're lucky, but they don't stop.

BURNETT: All right. Thank you very much to Paul.

Thanks so much as always to all of you for watching. Appreciate it and have an awesome weekend.

Anderson Cooper starts now.