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Colorado Springs Wildfire is Out; Eurozone Deal Boost Markets Today; Samsung Galaxy; Iran Nukes

Aired June 29, 2012 - 19:00   ET


ERIN BURNETT, CNN HOST: OUTFRONT next, the Samsung galaxy, one of the best selling phones on earth. So, what does it have to do with Iran's nuclear program?

And Mitt Romney makes a day one promise, you know, on day one of my presidency. We're going to show you why that usually doesn't add up.

And George Zimmerman, in jail tonight waiting for a judge to determine if he'll be set free on bond. His lawyer is OUTFRONT.

Good evening everyone. I'm Erin Burnett.

And OUTFRONT we have breaking news. And this was a very, very big day. Stocks surged. The best day of the year and the best June in 13 years. Lucky 13 I guess. Why?

Well, we were touched by an angel. And considering how important Europe is to American jobs and to this presidential election, the president was touched by an angel too.

Yes. Yes, she is, the angel in this case is literal. Angela Merkel putting another band aid on the Europe crisis that buoyed stocks around the planet. I mean, literally this started in Asia and fell all the way through. This was pretty incredible news. She caved sort of. Looks like they're about to kiss, doesn't it?

European leaders today said they'll allow troubled banks to use emergency money from the European Union. Basically that means mostly German rescue funds. That's the truth of it. The bottom line, it means the money will get to the banks more quickly. Helping countries like Spain, whose crisis is threatening to break up the entire European experiment.

Now, the market celebrated, that's for sure. But this is not the final solution. As Peter Boockvar told me today, "for now, party on and turn that hour glass over as more time has been bought but only the symptoms are being taught as the underlying disease of excessive debt and lack of growth still remains."

Some symptoms of that disease, economic confidence at a 2 1/2 year low in Europe and at least eight countries in the euro are in recession.

OUTFRONT tonight, Stephen Moore of "the Wall Street Journal" editorial board and Jim Kessler, senior vice president for policy and co-founder of the third way. Great to see you both.

Stephen Moore, obviously, the market celebrated. The problem is when bad things happen in Europe, they plunge. But people are saying this is not the final solution. But this was a little bit more significant.

STEPHEN MOORE, WALL STREET JOURNAL EDITORIAL BOARD: Well, it's significant. I mean, the market loved it. Germany basically stepped up. I mean, Germany is the one country that can save Europe right now. It's the one economy that's growing.

What they passed, what they agreed to, Erin, was essentially like I guess the best way to describe it would be like a mini T.A.R.P., a mini bank bailout like we had in the U.S. back in September of 2008. And the markets loved it. But I don't think this say long-term solution. I think Europe still has really systemic problems. One other point, it was a great day for the market today. But the market just recaptured most of the losses from earlier this week so let's not be too --

BURNETT: That's right. There have some really bad days.

Jim, when you put it together though, when the president had his health care victory which was important to him in so many ways. But what's happening in European is out of his control. But really might be what really does control re-election.

How big was this move in your view in Europe? Something that's really going to stabilize it and allow economic stability here that will result in job creation and a re-election for him?

JIM KESSLER, CO-FOUNDER, THIRD WAY: Good couple of days for the president no doubt about it. If you remember, a few weeks back, the president did a press conference in the White House. He was talking about Europe. I think a lot people were wondering why he was doing that. Was he talking about, you know, making some rationalization for slow growth in the U.S. But I think one of the things he was saying was it was a message to Europe which was the time has come that you got to pull together and do some sort of solution. I agree with Steve. This is not a long-term fix to Europe's problems.


KESSLER: But you can't solve the long-term problem without solving the short-term problem. And I think this solves a problem for the president. There are two head winds to the economy. One is housing. We're seeing some rays of sunlight there. The other is Europe. And this should take Europe off the table I think as a negative thing for the economy, for at least the rest of the year.

MOORE: I'd like to think that's true, that Europe has passed, that the worst is behind them. I don't believe that.

Look, Erin, the problems with Europe are not so much monetary. Even in the banks, as bad as the problems are in the banks. The problem is they have a regulatory structure, a tax structure that just isn't competitive in global markets. Nobody wants to start a business, open a factory. We had a piece in "the Wall Street Journal" this week about how in some European countries they now have a policy if you get sick on your vacation, you get another week of vacation. I mean, there are not enough people working in Europe.


MOORE: Right. Great policy, right?

BURNETT: But you know, a lot of Americans are saying where do I move to get that?

MOORE: Systematic of a kind of culture in Europe that cannot give up these entitlements that are driving the country down.

BURNETT: Well, you know, it's interesting, before we get too excited, Jim. You know, this is the same angel, Angela Merkel who earlier this week said Europe will not have shared liability for debt which is a crucial thing, right, then you get all kinds of other countries defaulting and you are Germany. But she said they will not have shared liability for that debt as long as she lives.

KESSLER: Well then, I guess you only live twice because they now have shared liability on debt. Look, I don't dispute --

BURNETT: For banks, that is very different. She's talking about you have countries that failed. That is different.

KESSLER: Right, a lot of the sovereign debt in European is owned by the banks, so this is -- they're tied together.

BURNETT: That's a fair point.

KESSLER: Kook. Stephen is right. This doesn't solve Europe's problems by a long shot, but think the impending crisis of the economic implosion in Europe this year, that probably will not happen now.

BURNETT: You think --

MOORE: We'll see. I mean, hope you're right. I do think that these -- Europe just hasn't been serious about getting control of its spending and its debt. I mean, its debt is a share of GDP is a lot higher than it is even in the United States. And the real question of whether they can kind of grow up in Europe and say, look we got to get back to work. We got to become competitive. I'm not so sure they have the will power to do it.

Germany, as I said earlier, is the one country that's really doing well. They have very low interest rates. And the question is whether the German people -- because Angela Merkel has to be accountable to the citizens. Do they want to bail -- they don't want to bailout France and Spain and Italy --

BURNETT: Well, they see it as they're sitting there working hard. And look, they have a lot of the same issues with hiring and firing as other European countries. But, they say, will France wants to cut their retirement age to 60. This whole thing about I'm sick on vacation so I get another week of vacation.

MOORE: That's a big problem.


MOORE: Who do they compete with? They compete with Asia. The Asians work 70 hours a week.

BURNETT: Don't they already get six weeks a year? Don't they get six weeks or something in the month of August?

MOORE: Exactly, everybody takes July and August off.

BURNETT: I got to tell you. Jim, n a sense, I think we're all a little jealous. Although, we have been - I know the whole system may fail, but this time of year.

Thanks to both of you. We appreciate it. We'll take that gain where we can get it. Best June in 13 years for stocks.

Well, Republican presidential candidate Mitt Romney says he's going to repeal Obama care on day one. Why it doesn't add up.

And the iphone 5. Looks like it was a killer, in more ways than one.

And George Zimmerman had a bond hearing today. His attorney explains why Zimmerman and his wife transferred so much money between their bank accounts before that bond hearing. He's OUTFRONT.


BURNETT: All right, our second story. OUTFRONT, Mitt Romney's day one promise.


MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: What the court did not do on its last day in session, I will do on my first day if elected president of the United States. And that is, I will act to repeal Obama care.


BURNETT: That is not the only day one promise Mitt Romney has made.


UNIDENTIFIED MALE: Day one. President Romney immediately approves the Keystone Pipeline, creating thousands of jobs Obama blocked. Day one, President Romney announces deficit reductions, ending the Obama era of big government, helping to secure our kid's futures. President Romney stands up to China on trade and demands it play by the rules.


BURNETT: Some of those things are kind of vague and hard to do on day one. But, you know, these promises are politically often easy to make and rather hard to keep. In fact, President Obama tried to fulfill his campaign promise on day one.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We're going to close Guantanamo and restore habeas corpus.


BURNETT: Now, on day two of his presidency, he did sign an executive order to close Gitmo. Then he realized it's not that simple. And 3 1/2 years later of course Gitmo is still open.

So, does Mitt Romney's day one promise amount to more than campaign talk or not?

McKay Coppins joins me, political reporter from "Buzzfeed." Michelle Goldberg, senior contributing writer for "Newsweek" and "Daily Beast" and Allison Stewart, former spokeswoman for Rick Santorum, Mike Hukkabee and Michele Bachmann.

So, Alice, let me start with you. Is this a promise he can keep?

ALICE STEWART, FORMER SPOKESPERSON, SANTORUM 2012 CAMPAIGN: Absolutely. And the first thing he is going to do is issue waivers to all 50 states in order for them to make their own decision on this. And then, the plan to repeal and replace Obama care, which governor - the president did not do, Governor Romney will bring both sides of the house and Senate together, Republicans and Democrats. And he will work together in order to find the best solution to health care which includes free market reforms.

What we have yesterday, we had re-affirmation of another broken promise on the part of the president. This thing is nothing more than huge taxes. It includes an array of taxes, more than 21. And 12 of them affect the many people he says will not be affected, those making less than $250,000 a year. Another broken promise and something that Americans can't afford.

BURNETT: Obviously Michelle does not agree with you. But, let me quickly follow you on this waiver point, because my understanding is only certain provisions could be waived and only if states have specific and immediately implementable alternative ideas, right? So, it is not the entire thing as waiver idea you had. It wouldn't get the rid the whole bill.

STEWART: This is the first step in a series of steps to repeal and replace Obamacare. Putting the power in the hands of state is the most important thing we can do. This is a state rights issue. Let them put the power in the people of what we need to do. While the Supreme Court made an important decision yesterday, the final verdict will be in the hands of the people come November.

BURNETT: All right, Michelle this is -- to repeal it is very complicated, right? Because he can't just repeal it, that even Alice is saying he has to get these waivers --


BURNETT: You have to get congress, a filibuster proof majority which to get the 60 while they have to keep all the seats they have and get 13 out of 21 Democrat seats. Nobody's saying they're going to do that.

MICHELLE GOLDBERG, SENIOR CONTRIBUTING WRITER, NEWSWEEK, THE DAILY BEAST: Right. Yes. No. They're not going to do it legislatively. I mean, it's inconceivable even in a kind of dystopian worst case scenario in which Republicans take all three branches of government.

BURNETT: Dystopian obviously from your perspective. One person's utopia is another person's dystopia.

GOLDBERG: Yes. From my perspective or from the perspective of the 30 million people who are going to be covered under this bill who are otherwise a black-held insurance, as well as, you know, people like me, you know, the rest of us who could at any time be completely bankrupted should we run into unexpected medical trouble but that's a kind of side point.

Sometimes you'll hear them throwing around this idea that Republicans, if they only take a majority of the Senate but not a filibuster proof majority, that they could use the reconciliation process to try to undo Obama care that way.

Now, the reason they can't, I think this is important for people to understand, is because the congressional budget office has estimated that repealing Obama care will add $145 billion to the budget between 2012 and 2019. One thing that always gets lost in this debate, probably because Romney's been so dishonest by saying that Obama care adds to the budget -- adds to the budget deficit, is that this is a bill that not only kind of expands insurance to many, many millions of people, but it also attacks the budget deficit.

BURNETT: Right. Well, I mean, that is the CBO estimate. I know some people may disagree but McKay --

GOLDBERG: I know, but Republicans have their own numbers. This is the official numbers.

BURNETT: There are many studies out there. They do show different numbers. But I know your point. CBO, McKay, is the arbiter. And the whole point is, you can't go through the reconciliation process unless the bill at hand is shown to add to the budget deficit. And the arbiter of that by law is the CBO, correct?


BURNETT: So they say it doesn't, so that means reconciliation, what they've been talking about all day, won't work.

COPPINS: Exactly. I mean, it's almost a political mirage here to say as soon as president, you know, a president Romney gets into office he's going to be able to magically waive his wand and repeal it. This will be a long drawn-out fight in congress. And it remains to be seen whether he would want to use his political capital on day one to refight this battle of 2009. That really it's a political loser in a lot of ways because he's also said on day one he's going to attack the problem of joblessness, right? So if he wants to pass a jobs bill, he doesn't want to waste his time working on this.

BURNETT: Right. And Alice, this brings me to the point of when you look at what Americans are most worried about in this country, you know, its jobs, the deficit, a lot of immigration. All come before health care. I mean, should he be wasting his political capital now trying to get votes and if he were to win on this?

STEWART: Well, remember, Romney's been very smart, in that he has been focusing on jobs and the economy. That's why people trust him to fix the economy over the president. And one thing is important to note. While this is economy's the number one issue, you have to keep in mind in terms of the numbers; Obama care will cost $2.6 trillion over the next ten years. That's quite a bit of money. And in terms of whether or not the Republicans will take over the Senate, we'll certainly hold the house. And we have all expectations and are optimistic we'll take control of the Senate.

Keep in mind, we don't necessarily need a Republican majority. We're already seeing Democrats distance themselves from the president. Look at Senator McCaskill. They're also distancing themselves from the president. So they're going to break ranks with the Democrats if this is, you know, we get back to November because they're not going to want to -- they won't be able to face their constituents and support this largest tax increase and this huge tax burden on the American people.

BURNETT: Does it make sense for Mitt Romney? And Alice makes the argument from her side of the aisle it makes sense. Do you think it does?

COPPINS: Look, she's right that there are certain blue-dog Democrats who have switched sides on this. It seems highly unlikely that Mitt Romney would be able to bring enough Democrats on to his side to repeal this without significant gains and Republican gains in the Senate which I mean they might get a majority. They're not going to get a super majority. And with filibuster rules the way they are it seems unlikely --

BURNETT: Maybe he has a better chance with China, Michelle?

GOLDBERG: Look. If Mitt Romney is able to get Democrats on board to repeal the signature kind of progressive achievement of the last 50 years, I will name my first-born child Willard even if it's a girl. It is not going to happen. I mean this --

BURNETT: Willard? You couldn't even go with Mitt? I mean, honestly? He doesn't even use Willard. Hey, we'll take it. That's as close as you can get.

Thanks to all three of you. We appreciate you're taking the time.

Well, the iphone debuted five years ago today. And it might be to blame for the slow descent of what is still my beloved.

And hundreds of homes destroyed by those raging wildfires in Colorado. We have a stunning picture actually that came in today to give you a sense of just how dramatic this is before and then after the fire struck. And we are going to go to Colorado next.


BURNETT: So the iPhone is five. I didn't say the iPhone 5 is out. Said the iphone is five. As in five years old. Now, the original iPhone, let's just -- I mean, remember how fat it looks relative to the way they are now? It went on sale back on this day in 2007.

At the time, iPhones were about $200 more expensive than any smart phones. But it did end up being incredibly successful, we all know that, selling more than six million units. Three more versions of the phone were released to lines like this all around the world. This looks like it might have been Tokyo. All uphold, Apple has sold more than 250 iPhones which is about &150 billion worth of them.

But they had competition along the way. I mean, remember -- remember these guys? The Razor 2, the LG voyager, and the palm Centro, remember that? The Palm was released in 2007.

Also in 2007 was the blackberry curve. Back in 2007, the blackberry was all the rage. It was crack berry. People would feel phantom vibrations on their legs. Yes, not just talking about politics. One investor even compared the constant checking of your blackberry to Pavlov's dog which brings me to tonight's number, 19 percent.

That is the percentage that Research in Motion, the company that makes blackberry saw its shares plunge today. In the latest quarter, $518 million lost, a 33 percent plunge in revenues. Wow, that's a complicated chart but those are the headlines.

Yesterday, the company said it will cut as many as 5,000 jobs which is a third of its current workforce. And that is bad news obviously for me and my beloved. I love her. And I bet, for the world's most famous blackberry owner.

See him? That's a curve. I'm telling you, that's a curve. It's a silver curve like the one we showed you. That's the president of course. In April, it was reported despite the company's trouble, half a million federal employees, including the president of the United States, still use blackberries. Now, obviously, they're a lot more secure.

An iPhone is not something you want him to be tapping text messages on about I don't know Iran, Syria, Russia, or anything else. We'll wait and see how long Research in Motion can hold on to them. We're rooting for them.

And now, our third story, OUTFRONT, the worst wildfire in Colorado raging across the state right now unabated. The president declared it a major disaster. He toured the devastation today. With only 15 percent of the fire contained, 16,700 acres have been scorched, 346 homes destroyed, 20,000 still in harm's way tonight.

Two people are confirmed dead. And the body of the second victim was found this afternoon in the same destroyed home as the person found last night.

I want to show you a picture, just an unbelievable picture to give you a sense of this before and after. This is mountain shadows, a subdivision in Colorado Springs. We'll show you the before picture. And then you can see the after picture to get a sense of just how incredible this has been how this fire has completely razed entire neighborhoods, really destroyed so many lives.

Jim Spellman is OUTFRONT tonight in Colorado Springs and joins me.

And Jim, what is the latest that you can see tonight?

JIM SPELLMAN, CNN CORRESPONDENT: Well, we just got word from fire officials here the containment is now 25 percent. That's really good news here. They've taken advantage of a little bit of a break in the weather. It's still hot here but not as hot as it was a couple of days ago and the winds are much lower. But they are still going at this full force from the air, with helicopters and on the ground with ground crews up there in the middle of this fire trying to create fire lines and make sure no more homes were destroyed.

Last night, residents who lived in the area that was destroyed got word of that firsthand from the mayor here. As people were starting to find out, starting to really sink in. I caught up with a woman today named Susan. She's raising her four grand kids after her daughter died. And their home is now destroyed. Her four grandsons and Susan are now homeless trying to figure out what they're going to do next. Take a listen.


SUSAN, LOST HOME IN FIRE: We could see in our rearview mirrors the side of the hill just exploded. There had to be 40 fires, just bam. Can't just walk around feeling sorry for yourself. You got a lot of people to consider. And if you fall apart, what's going to happen?


SPELLMAN: Susan and her -- the grandkids are staying with a friend now like a lot of the people here. Other people in the community have taken them in when they've lost their home.

Tomorrow or Sunday, rather, they're going to get a bus tour in their neighborhood. They won't be able to get out of the bus. But they'll be able to see their home for the first time after this fire -- Erin.

BURNETT: Amazing. People's lives. Thank you very much. Appreciate it, Jim Spellman.

Well, the sanctions that the United States imposes on companies that do business in Iran are supposed to be pretty tough to companies around the world. So why is it, that Samsung can sell its latest gadget there without doing anything wrong?

And Tom-Kat is over. Katie Holmes has filed for divorce from Tom Cruise. A top divorce attorney tells us, what the settlements might reflect.


BURNETT: All right. Welcome back to the second half of OUTFRONT. We start with stories we care about, where we focus on our reporting from the front lines.

And we start with a story we first told you about on OUTFRONT: the Reverend Oliver White of the Grace Community United Church in St. Paul, Minnesota. He lost his battle to keep his church open.

Most of White's congregation left him after he came out in support of same-sex marriage in 2005. Since then, though, he'd been trying to keep his church financially afloat. He tonight tells us he couldn't raise the money. Tomorrow, he's going to start looking for a new church and build a new congregation.

You know, someone reached out to him and said, look, I'm going to give you the money if you take back what you said about gay marriage. He refused to do it. Reverend White tell us he does not regret standing up what he believes in.

And Congress acts at the 11th hour, just days before government-backed student loans were scheduled to return to their rate of 6.8 percent, Congress formally approved an extension of the current 3.4 percent rate, which was supposed to be a temporary taxpayer-backed rate.

The U.S. Department of Education tells OUTFRONT that as of last September, there were 37 million active federal student loan borrowers. They owed about $850 billion. About 5.4 million of them have loans in default which totaled $67 billion.

And there's a stalemate tonight between the U.S. and Russia, as the two countries try to bridge differences over how to handle Syria. On the eve of another multinational conference, one State Department official told reporters, quote, "We may get there tomorrow, we may not."

The United States says Syrian President Bashar al Assad has to go. Russia says outsiders shouldn't dictate -- interesting word choice -- the solution. Russia's also Syria's largest arms provider.

And we checked in with sources at the consul on foreign relations who say that Russia must first be assured that Assad's departure will outweigh any potential burden for Russia.

And now, we go to Mali. We've been following this situation closely. The African country is in the midst of chaos. Al Qaeda linked fighters want to battle in Timbuktu. The Islamist fighters, part of the al Qaeda Islamic Maghreb, say they've taken control of the northern half the country. They are going to be imposing restrictive Sharia law. Our source tells OUTFRONT that hotels have been closing in the Malian capital of Bamako and Government workers fear that they will not get paid.

It has been 330 days since the U.S. lost its top credit rating. What are we doing to get it back? Sure, it was a great day on Wall Street. But along with that surge came a surge in oil prices. Up 9.5 percent. It was the biggest jump in the year.

Part of the reason was new sanctions set to start this weekend with Europe not buying Iranian crude oil. When it comes to oil, it doesn't matter where it comes from. It's all just, you know, black stuff sloshing around. If you cut off a supply from one place, it means more pressure on other suppliers and that means prices will go up around the world.

Our fourth story OUTFRONT: the Samsung Galaxy and Iran's nukes. Now, everybody wants a smartphone -- I mean, everybody. In fact, Samsung sells more smartphones than Apple.

So what does this smartphone have to do with Iran's nuclear program? Plenty. This is supposed to be a breakthrough weekend. The toughest sanctions in history are set to take effect against Iran.

Europe will stop buying Iranian oil. And the goal is to cripple Iran's oil-based economy and force the government to end its nuclear program.

Now, oil accounts for about 80 percent of the Iranian government's export revenues. And losing that money is hurting. Officially right now, inflation in Iran is 22 percent.

But a source tells OUTFRONT, it may be more than 50 percent. The $39 monthly government subsidy that has been doled out to help Iranians buy food has been scaled back due to a shortage of cash. So, sanctions are working. There's no question about that, but perhaps not by nearly as much as they could, because the problem is, is that sanctions don't add up.

First, the United States gave an exemption to China, allowing it to buy Iranian oil. Yes, China is allowed to buy Iranian oil and still access the American financial system. Yes, China is the single biggest buyer of Iranian oil. Even though they've cut imports under U.S. pressure.

In fact this is amazing -- The United States has exempted all three of the top three buyers of Iranian oil from these sanctions: China, Japan and India. The State Department made this decision.

The second issue, that's where Samsung enters. When I was in Iran about 18 months ago, the Korean electronics giant had a store in a mall I visited. That's it right there. I mean, it was a beautiful brand-new store, just like you'd see in a fancy mall in New York, or Chicago, Boston.

We confirmed that store you're looking at there was a legitimate Samsung store. In fact, all the television, I saw in hotel rooms, in homes, in stores in Iran were Samsung.

Samsung operates openly in Iran. It confirmed to OUTFRONT it has stores there now and it sells the Galaxy -- the Galaxy 3 -- the new one, that's only just available in the U.S., along with printers, cameras and televisions.

Now, this isn't Samsung's fault. It is totally legal and above board, and I want to emphasize that, because the issue is with the United States government. While the U.S. was putting the harshest sanctions in history on Iran, it signed a free trade deal with Samsung's home country South Korea. That was the biggest single free trade deal for this country since NAFTA.

Korea got preferential access to U.S. markets. In exchange, the U.S. did not demand the companies choose between doing business in the United States or Iran. And so, Samsung, Hyundai, Kia, they keep selling in Iran.

Get ready for this -- Iranian imports from South Korea surged 49 percent in the first three months of this year, according to "Reuters", which also notes that 2,000 South Korean companies do business in Iran. That is unbelievable. In a time of sanctions and hardship, Iran's buying 49 percent more from South Korea than it did a year ago.

You'd think if the U.S. wanted to get the world on board with sanctions, it would use its powerful financial leverage. Sign a free trade deal with you, Korea, if you cut your ties to Iran.

Now, the decision to not do that was made by Congress, making life hard for the man who fights every single day for sanctions against Iran.

He's David Cohen, American sanction czar, treasury secretary for terrorism and financial intelligence, and he is OUTFRONT.

Sir, great to see you and I know you have worked tirelessly for sanctions -- financial sanctions, shutting off the U.S. banking system to companies and countries that do business with Iran.

Is it frustrating, though, that State Department gives exemptions to these countries?

DAVID COHEN, TREASURY UNDERSECRETARY FOR TERRORISM & INTERNATIONAL FINANCE: Let me address, first the issue of the exemptions given to China and to other countries that have been importing oil from Iran. The policy that we have been pursuing, and working with Congress on this, is to work with countries that are importers of oil from Iran, to significantly reduce the amount of oil that they're importing.

BURNETT: And do you feel confident those countries are really going to go to zero?

COHEN: Well, the way this legislation works and the policy that we're pursuing requires these countries to continue to significantly reduce their oil imports over time. BURNETT: What about this issue, though, with South Korea and Samsung? Sanctions are supposed to be taking a huge bite. And again, as we pointed out, with all know that they are. South Korea is selling 49 percent more to Iran this year than it was a year ago.

COHEN: Look, the way our sanctions are designed is principally to go after illicit actors in Iran. For countries like South Korea and others, they have been very, very good partners in isolating the financial institutions and others who have been identified as the illicit actors in Iran.

There is not a global trade embargo applied to Iran today.

BURNETT: Absolutely. I understand that. U.S. companies aren't allowed to operate there. I know you have the discretion to give some of them licenses. But usually that goes for health-related things, or, you know, things that are needed for humanitarian purposes.

You know, when I was there, all the U.S. brands I saw, Dodge Chargers, Levi's, all of that -- those American companies said they don't operate there, they don't allow anything to go there. That would be a violation of their perception of the whole point of sanctions. Anything that's getting there is illicit. It's not supposed to be there.

So, it is a different standard that's applied to U.S. companies versus, say, Samsung, on that face.

COHEN: Well, that's right. We have -- for our own part -- essentially forbid U.S. companies from dealing with Iran. With the exception, as you note, for food, for medical devices, for pharmaceuticals.

BURNETT: So, in a perfect world, if you had full control over everything, I mean, I know you're pulling all your financial levers, but what would you do to really make these sanctions work 100 percent? I just ask this because I know that it's not just Israel but other American allies in the region, Arab allies, say they don't know that negotiations and some cases, they passionately don't believe negotiations or sanctions will ever deter Iran from what they believe its ultimate goal is.

COHEN: For our part, we're going to continue to pursue the pressure track of the dual track strategy. And that means additional pressure to come. I'm not going to forecast precisely what we're going to do. But your viewers should know that there is more to come.

BURNETT: All right.

And now the story everyone's talking about tonight. Tom Cruise and Katie Holmes divorcing after nearly six years of marriage. The glamorous couple were a staple on the red carpet and tabloids. And who could forget?


HOLMES: Yes, yes, yes. Jumping on the couch with Oprah, professing his undying love for Katie. That was back in 2005. That was no ordinary show of affection. And this will not be an ordinary divorce.

OUTFRONT tonight divorce lawyer to the stars, Bernard Clair.

Good to see you, sir. Really appreciate your taking the time.

This is -- this is not ordinary. It's not even ordinary among megastars. I mean, Tom -- Katie Holmes is a star in her own right. But Tom Cruise, of course, biggest movie star in the world.


BURNETT: So, what do we know about the money here?

CLAIR: We know nothing about any of it right now. We assume some things.

There have been reports for a while, namely that there is a prenup. That the prenup has a sliding scale for what we call as divorce lawyers time served, which is $3 million a year for each year of marriage. That's what we have heard. But we don't know that.

BURNETT: OK. So $3 million. So you have $25 million I guess theoretically. But what's the -- what's the totally net worth? I've seen Tom Cruise worth $250 million. I was surprised. This guy's been the biggest star in the world for a very long time. I thought with the numbers he rakes in for movies it could be more.

CLAIR: Maybe it is. It may not matter one way or another because the prenup may take all of those issues out of the mix. The job for the judge will be merely to enforce what's in the contract.

BURNETT: So let me just ask you a question. They obviously live in California and New York. Katie Holmes filed her divorce papers in New York. What would be the reason for that?

CLAIR: I think there are two reasons. One is the child, Suri, lives here in New York. If there is custody controversial or even a battle, this is where it should occur because the child activities are here, pediatricians, et cetera, all here.

And secondarily, New York is a little more private than California with respect to our filings. In California, the filings go right up on e-tube right away.

BURNETT: Right. That's why you can always read the causes or -- we don't know the causes here.

CLAIR: That's right.

BURNETT: Usually hear irreconcilable differences.

CLAIR: And we now have that in New York as of two Octobers ago, we finally became a no fault state. All that has to be shown is six months of irreconcilable differences basically.

BURNETT: All right. Well, thank you very much. We appreciate it. People will be talking about that.

And still OUTFRONT, George Zimmerman's attorney is on the show. He said his client need to repair his credibility. We're going to ask him if he did that. The bond hearing was today.

And the reason why I'm watching the progress of a ship sailing for remote Pacific island of Nikumaroro.


BURNETT: And we're back with tonight's outer circle, where we reach out to sources around the world.

We go tonight to Cairo where President-elect Mohamed Morsi of the Muslim Brotherhood party was widely expected to appoint a woman and a Christian to his cabinet today. Instead, he told a crowd in Tahrir Square that the people were the source of his authority.

Dan Rivers was there and I asked him about reaction to that speech.


DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Erin, the crowd absolutely loved what he was saying here. It was a real rabble-rousing speech with soaring rhetoric. But he also did have some concessions to non-Muslim Brotherhood supporters, people who were concerned about his ascension to the presidency.

He talked about governing for everyone. He mentioned Christians. He mentioned women, and was saying that he will govern for the entire country. A hint perhaps of the direction he will take Egypt.

Everyone here hoping that he can lead Egypt out of the economic malaise that it's currently in -- Erin.


BURNETT: Thank you very much, Dan.

And, now, let's check in with Soledad. She's in for Anderson with a look at what's coming up on "A.C. 360" on this Friday.



Breaking news tonight ahead on "360." CNN has obtained details of e- mails that purportedly show that Jerry Sandusky could have been stopped from raping multiple boys. The e-mail exchanges among high- ranking Penn State officials show them discussing how to address the eyewitness account of Sandusky sexually assaulting a boy in the shower.

Now, shockingly, the officials never reported the incident to anybody outside the university. CNN's Susan Candiotti has some details of this breaking news. We're also going to speak to a lawyer for victim number five, who might not have been a victim at all if somebody at Penn State had acted sooner.

Also tonight, a first person account of a woman watching her world burn to the ground.


UNIDENTIFIED FEMALE: I'm leaving my house for probably the last time. Oh, my God. There's smoke in the air. It's so bad.


O'BRIEN: That's what it looks like in Colorado today. Nicole Frye (ph) was able to grab some pictures, documents, a few clothes, her dog, dog food and escape. She's going to join me ahead.

Those stories and the number one "Ridiculist" of the half year at the top of the hour.

Erin, we'll see you then.

BURNETT: Ooh, number one "Ridiculist" of the half year.

O'BRIEN: Finally made it to number one.

BURNETT: All right. Thank you, Soledad.

And now, our fifth story OUTFRONT: George Zimmerman remains behind bars tonight as a Florida judge decides whether to let him out on bond. Defense attorney Mark O'Mara called four witnesses at a hearing today, including an emergency responder who was there that night -- you're going to hear what he had to say in a moment -- a probation officer and George Zimmerman's father who testified it was his son and not Trayvon Martin calling for help in the background of this 911 call.


911: OK. Does he look hurt to you?

CALLER: I can't see him. I don't want to go out there. I don't know what's going on so -- they're sending --


911: So, do you think he's yelling help?


911: All right. What is your --


(END AUDIO CLIP) BURNETT: And you hear the shot.

The defense also called a financial expert to explain why so Zimmerman was transferring money between several family bank accounts before his first bond hearing. The bond hearing of course at which he did not disclose the money that he had.

I spoke to Mark O'Mara before the show. And I asked him if he was concerned about this exchange concerning Zimmerman's money.



UNIDENTIFIED MALE: Why would somebody -- if I gave you $1 million and you put it into an account, yours, but if you put it into three other people's in this courtroom's account, why would you do that?

ADAM MAGILL, FINANCIAL EXPERT: Well, either you'd be gifting or you'd be trying to keep under FDIC limits. There's multiple reasons.

UNIDENTIFIED MALE: Hide maybe the money?

MAGILL: Well, hiding is actually done by cash. You don't hide money by transferring money to banking.

UNIDENTIFIED MALE: In terms if somebody's trying to figure out how much money you have in your checking account?

MAGILL: If you only look at the person, that's correct.


BURNETT: Mark, what's your response to that? It does seem so strange, moving money from account to account, all in amounts under $10,000 and then not being honest about it in the court.

MARK O'MARA, ATTORNEY FOR GEORGE ZIMMERMAN: You know, and it always sounds like I'm trying to offer a strange explanation or excuse from my client. I don't want to do that. But if PayPal says you cannot move more than $10,000 out at a time and you have literally $200,000 coming in in an 11-day period, they were moving it out in $9,000 increments into one or the other of George's and Shellie's account.

And it wasn't quite clear, but they were also moving some of it to the sister's account, because they could do $10,000, $10,000 and $10,000 -- $30,000 at a time, into those accounts. They then moved it from the sister's account into Shellie's or George's. Look, there's no question that they had $130,000 or $150,000. That when the issue was presented, Shellie Zimmerman didn't answer as truthfully as she should have. We're dealing with the fallout from that.

But the reason why I brought the expert in is was to say not a penny of that money is missing. I think that's at least as relevant as to why they were bouncing it back and forth $9,000 at a time. BURNETT: You had an EMT first responder today. I thought what they had to say was pretty powerful. The person who had attended George Zimmerman on the night of the killing.

Here's what he had to say about George.


ADAM O'ROURKE, EMT/FIRE FIGHTER, SANFORD FIRE DEPT.: I observed that he had blood on his face and the back of his head.

UNIDENTIFEID MALE: And did you consider that it was likely his nose was broken?

O'ROURKE: Absolutely.

UNIDENTIFIEDMALE: Was swelling and --

O'ROURKE: There was -- there was swelling and blood. And his nose was obviously deformed from what it usually is.


BURNETT: And obviously that was powerful in favor of George Zimmerman's case. He's trying to say he feared for his life.

But what we've been look at, the past few days, is the reenactment, when the day after George Zimmerman went back to say what happened. And here's what he said then.


GEORGE ZIMMERMAN: He was just focused on my head. The little -- bruising there. There's a cut here.

UNIDENTIFIED FEMALE: The swelling went down. I remember yesterday seeing swelling around right here. I don't see it now.

ZIMMERMAN: My wife is an RN student so she went to work.


BURNETT: Mark, obviously, you couldn't see that but I know you have seen it. You know, it's just like a little bandage on the back of his head. He said he only needed -- he didn't even need stitches. This is a guy who's trying to say his head was being slammed repeatedly against cement and he was in fear for his life. I mean, you know, you would think it would look worse.

O'MARA: That's going to be up for the judge or a fact finder. I could go back and forth on the real question that I think needs to be focused on. And that evidence that you just pointed out sort of helps us. But the real evidence that needs to be focused on is, what would the next strike have caused? Because, after all, what you have to look at is what was George thinking was going on? That's the whole issue. That is the essence of self-defense. So if in fact the next strike would have been another slamming of the head on the concrete -- I don't think there's anyone to deny that. Let's remember, we have an eyewitness who came in and said through his statement that's now in evidence that he was -- the man on top who he believed to be in the hoodie and had the orange-shirted person on the bottom, George Zimmerman, was raining MMA blows on him and used the term "ground and pound." I would invite you to go on YouTube and do a Google search for ground and pound and watch some of the videos. To maybe get a feel for what may have been happen.

We have to look at what could have continued to happen.

BURNETT: Ground and pound. Mixed martial arts. I'm quickly Googling it. Just to get a sense of what it is.

So, what is -- what is your feeling? Is your client prepared for this bail decision to go either way? What is his mental state right now? How stable is he?

O'MARA: He is most worried about his wife, Shellie. He truly is. He wants to get out. He understands he's in the position he's in because of what happened at the bond hearing. And nobody but Shellie and he had control over that.

He's willing to deal with the fallout from that if he has to.

BURNETT: And how much money have you raised now? I know that the fund- raising had continued obviously. But how much additional money has been raised since that first hearing?

O'MARA: I think there's been about $211,000 in the account now. There certainly has been money expended. And, quite honestly, in the last week or two, we spent quite a bit money getting ready for this and a lot of preparation it took for this. It's getting spent now too.

BURNETT: All right. Well, thank you very much, Mark. Always good to speak with you. Appreciate your time.

O'MARA: Sure thing, Erin.


BURNETT: Up next, one of the world's greatest mysteries. And the story of one of my greatest heroes may be solved. E-Block is next.


BURNETT: At this moment, a ship is preparing to leave Honolulu n a 26- day voyage. Its destination is a Pacific island of Nikumaroro. Its crew is hoping to prove Amelia Earhart's Lockheed Electra plane went down on that island. Now, Earhart disappeared 75 years ago on July 2nd, 1937.

As I said before, I grew up with her as my idol. She was so unafraid of exploring. And it probably sounds morbid but her plane disappeared on my birthday so I felt a personal affinity with her too. I felt like that day had to be the beginning of something for her. Like maybe a secret life the rest of us would never know about,.

Which is why I'm conflicted about the voyage -- sure, it's amazing. They have robotic equipment that weighs more than 25,000 pounds to go under 5,000 feet of water. But I'm conflicted because part of me wants to hold on to that belief that she lived. So, I'm hoping they'll prove she was there but never know for sure how long she lived there.

"AC 360" starts now.