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ERIN BURNETT OUTFRONT

Report: FBI Whistleblower Identified; Broadwell Security Clearance Suspended; Congress Wants Answers From FBI; President Dodges Questions About Petraeus; Dow Falls On Fiscal Cliff Fears; China To Announce New President

Aired November 14, 2012 - 19:00   ET

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


ERIN BURNETT, CNN ANCHOR: Next, today the president took questions for the first time about the Petraeus scandal. President Obama says he's reserving judgment, but others called it a dodge. OUTFRONT next, Representative Adam Schiff, a Democrat has questions he demands the FBI answer.

President Obama turned the heat up today on Republicans making it clear he is not willing to extend tax cuts for individuals earning $250,000 or more, a family with 250. We asked our political panel what the president will have to compromise on to avoid the fiscal cliff.

And President Obama fiercely defends his U.N. ambassador today after Republicans threaten to block her possible nomination for secretary of state. Republican Senator Rand Paul joins us. Let's go OUTFRONT.

Good evening, everyone. I'm Erin Burnett. OUTFRONT tonight, we have late breaking developments in the Petraeus scandal. First, we are just learning the name of the FBI agent who helped start the investigation that eventually led to the resignation of the nation's top spy.

The "New York Times" reports the name of the agent is Frederick W. Humphries II. He's 47 years old. He is a veteran investigator. In fact, he was the investigator who first learned of a complaint from Jill Kelley that she received harassing e-mails.

Now we're also learning the government has taken away for now, the top security clearance of Paula Broadwell, the former mistress and biographer of CIA Director David Petraeus.

Now this is after investigators found substantial classified information on her computer and the glaring question tonight is did Broadwell's relationship with David Petraeus give her access to these classified documents?

OUTFRONT tonight, CNN national security contributor, Fran Townsend. She's also a member of the CIA External Advisory Committee and knows a lot about what it means to have top security clearance.

But Fran, let me start by asking you about the late breaking news that we have on the name of the FBI agent, Frederick Humphries, who was, by the way, involved in foiling a terrorist attack, a bomb at Los Angeles Airport in 1999, a very accomplished FBI agent. What do you know about the relationship between Agent Humphries and Jill Kelley?

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Well, it's interesting. Apparently, I understand from a senior law enforcement official that Humphries and Jill Kelley met when she attended the Citizens Academy.

This is a sort of familiarization program that the FBI runs across the country in communities to familiarize people and sort of get them to understand the work of the FBI in their community so it's part of the see something, say something.

You know, this is another means of the FBI reaching out in local communities. Jill Kelley apparently attended the Citizens Academy in Tampa and that's where she and Agent Humphries initially met.

Agent Humphries, I'm also told is a member of what's called the FBI calls it a FIG, the Field Intelligence Group. So it would make sense. Part of their responsibility from the Field Intelligence Group, is to go out, to gather information, you know, appropriate to their mission.

And the fact is, that because Jill Kelley was an honorary consul general for the South Koreans and had many international contacts, you could understand why she would be an important contact for Agent Humphries.

BURNETT: And amazing when you think about how this started and where it has gone now. When we talk about Paula Broadwell and the late breaking news today, Fran, about how she's lost her top security clearance.

And obviously, her computer was found with a lot of classified information. Do you think her relationship with David Petraeus gave her access to that information?

TOWNSEND: You know, it's not clear. Everybody we talked to and sort of hearing from law enforcement officials that there's no evidence that would suggest that the information has been found in her possession, that she got that from David Petraeus.

We know she made a number of trips to Afghanistan. She certainly had access to members at all levels of the U.S. military. And so, it's not clear where she got it from. Presumably, it's part of the continuing FBI investigation.

BURNETT: Right, obviously, such a crucial question and what about this, Fran? I know, you know, you're a member of the CIA External Advisory Committee. You have top security clearance on some things. She had top security clearance. What does that mean in practice though?

TOWNSEND: Well, what it means is, you know, that Paula Broadwell was also a reservist in the U.S. Army and so, when she was doing her mission as in reservist, she had access to classified material for that purpose. But you know, when you have a clearance, it doesn't mean you have access to all information.

She has to have a need to know. Certainly as a journalist, she did not have access and her clearance did not apply, so the question is how did she come into possession of this material and even though you may be exposed to classified information, it's a whole different thing to have retained it because you have to have the authority to retain classified information.

You have to follow very strict proceed procedures for carrying it, for securing it and for maintaining it. The burden really would be on her to prove that she did have that authority and did follow those rules and procedures for securing it.

BURNETT: All right, thank you very much to Fran Townsend. So many questions, the more reporting, the deeper we go, the more we know. There are still some serious questions at the root of this.

And the other developing part o the story tonight is the president dodging questions about the Petraeus investigation, including whether he should have been notified of the case sooner. Recall, it took almost six months for him to find out about it. He put it all on the FBI.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: The FBI has its own protocols in terms of how they proceed and I'm going to let Director Mueller and others examine these protocols and make some statements to the public generally.

(END VIDEO CLIP)

BURNETT: Now, the FBI is facing intense criticism over its handling of the investigation. I mean, perhaps, that's why FBI Director Robert Mueller made an unexpected visit to Capitol Hill today to answer questions.

At issue is the timeline of events and why it took as long as it did for the president of the United States to find out that the nation's chief intelligence person was under investigation. Let's just go through this timeline again. It's important.

It started in May. The FBI at that time first started looking into anonymous harassing e-mails sent to Jill Kelley. That's where Agent Humphries comes in. It was late in the summer when high level officials at the FBI and Justice Department were told that their investigation into the e-mails also had uncovered an affair between David Petraeus and his biographer, Paula Broadwell.

Now it's not clear when FBI Director Mueller and Attorney General Eric Holder were notified, but in mid-October, the FBI interviewed Paula Broadwell and David Petraeus.

October 27th, House Majority Leader Eric Cantor was told of the affair by an FBI whistleblower. The "New York Times" reports that that was Agent Humphries who felt that the investigation was not moving forward.

On October 31st, Cantor's chief of staff notified FBI Director Mueller of his conversation with the whistleblower. So, when it all came down to it, it wasn't until Election Day, November 6th, that the Director of National Intelligence James Clapper is told of an FBI probe.

And it wasn't until two days after that, November 8th, that President Barack Obama was informed, the same day that Petraeus submitted his resignation to the president. Obviously on Friday, the president accepted Petraeus' resignation.

And by that afternoon, the story was public. We all knew about it and that's when House and Senate Intelligence Committee members found out, many of them from watching television.

Again, we asked why did it take as long as it took for the president to find out that America's top spy was under investigation and should Congress have been notified earlier?

OUTFRONT tonight is Democratic Congressman Adam Schiff of the House Intelligence Committee. Good to see you, sir. We really appreciate you taking the time. Congressman, when we go through this timeline, did the FBI make a mistake?

REPRESENTATIVE ADAM SCHIFF (D), CALIFORNIA: Well, there are a lot of questions. How did this investigation get initiated? Was it properly started in the first place? Was it properly leaked? Why was it leaked to a member of Congress? Was that whistle blowing or was that personal or was that political?

Most significantly as you alluded earlier, was classified information compromised in this relationship with General Petraeus and finally, what about the notification to Congress under the National Security Act of 1947?

There is an obligation to notify Congress of significant intelligence activities and there's an intelligence community policy that if there's significant misconduct that could compromise intelligence that has to be notified to Congress.

I don't want the prejudge it too much because there are lots of unanswered questions at this point and clearly, I think the FBI was in a very tough position. If this was just an affair that had no implication then there's no reporting requirement.

BURNETT: Right.

SCHIFF: What is emerging publicly at this point and you know, it's I think there's a lot more work to be done is, the claim is there wasn't a compromise of national security information and if that's correct, maybe it did not trigger a notification requirement, but that's one of the very important questions that we have. BURNETT: And to that question, I understand the nuance that you're referring to, Congressman Schiff, but you know, in May, it starts, that leads them when they're looking at the harassing e-mails sent to Jill Kelley. It turns out they are from Paula Broadwell. That led them to David Petraeus.

At some point, they become worried was the CIA director compromised. They end up realizing it was an affair, but to your point, the director of the CIA has access to the names of every person in the intelligence community, every operative around the world except the Pentagon.

More access to intelligence than the secretary of defense with the national security agency and has independent access to the president. He can bypass the director of National Intelligence.

I mean, it would seem of all people in the world if you're worried about the security of the CIA director, that's something you would share if not just with Congress, but with the president, right?

SCHIFF: Well, you know, at one level, that's certainly makes sense from common sense point of view. At the same time, we have to look at the history of the FBI.

When the FBI was probing into the private affairs of public officials and under the Hoover administration, used them to blackmail extort pressure people to do the bidding of the FBI.

We don't want to return to those days, so I think we have to be very careful and clearly, the FBI was trying to find the right line here and not use what may have been an affair that had nothing to do with national security in a way that would --

BURNETT: Right.

SCHIFF: Harking back to the bad days of the FBI.

BURNETT: But as you say we just don't know whether they should have or shouldn't have at this point because we don't have enough information. What about Eric Cantor?

He was told on October 27th from a person he hadn't met before and he didn't know. And he didn't say anything about it. Some people have criticized him for it, but here's his defense today.

(BEGIN VIDEO CLIP)

REPRESENTATIVE ERIC CANTOR (R), HOUSE MAJORITY LEADER: The information that was sent to me sounded as if there was a potential for a national security vulnerability. I had no way of corroborating the story that I was told. And felt that the best thing to do at the time was not to politicize it, but to put national security first.

(END VIDEO CLIP)

BURNETT: Now, Congressman Schiff, that makes sense. He then also continued to say he assumed that the FBI had told Congress. Did Cantor do the right thing?

SCHIFF: You know, I think he probably did. He's not in a position to really evaluate the merits of what he's being told and indeed, in terms of the facts that have come to public light, there are questions about this particular agent and his relationship and what motivated him.

So you know, I think he probably did the right thing and I have frankly more questions not for Eric Cantor, but for this FBI agent about why he chose Eric Cantor, someone in a very prominent position in one of the political parties.

Was this out of a political motivation or was this out of a genuine concern that the investigation itself was politicized? A lot of the questions we'll start to get to the bottom of tomorrow when we have a hearing with the FBI on this.

But again, you know, I've worked with the FBI ever since I was assistant U.S. attorney. They are an extraordinary agency, a lot of dedicated people and I don't want to prejudge them until I hear their side of the story.

BURNETT: All right, well, we are all looking forward to hearing that tomorrow and getting some answers to all the questions that you have. Thanks so much, sir.

SCHIFF: Thank you.

BURNETT: We know more about Jill Kelley, the Tampa socialite at the center of the Petraeus scandal. On the day her all access pass military bases was revoked, sources close to Kelley are speaking to us for the first time. That's coming up OUTFRONT.

And President Obama made it clear to Republicans he's just not going to do it, people. He is not going to extend tax cuts for the wealthy and the markets took notice.

And we are moments away from a very big turning point in China. This could impact the future of the world.

(COMMERCIAL BREAK)

BURNETT: Our second story, OUTFRONT, the president digs in and the Dow tumbles. This was a painful day for the market, 185 points to the downside on fears no deal maybe reach before we fall over the fiscal cliff.

That of course is the combination of spending cuts and rising taxes. The Dow was down only 83 points before President Obama made it clear in a news conference today that some things aren't up for negotiation.

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: I think that there are loopholes that can be closed and we should look at how we can make the process of deductions, the filing process easier, simpler, but when it comes to the top 2 percent, what I'm not going to do is to extend further a tax cut for folks who don't need it, which would cost close to a trillion dollars.

(END VIDEO CLIP)

BURNETT: So, what does that mean? I mean, that means well, you saw it in the market. The market gets really worried. Forget whether you think they want tax increases or not.

The reason the market plunges, everybody, is because they feel that the president saying I'm not going to do this. And on the other side, the Republicans are saying I'm not going to do that and that just means no deal. That's the worst outcome possible.

Hogan Gidley is a Republican strategist. Maria Cardona is a Democratic strategist. Good to see both of you. We appreciate it. So, Maria, let me start with that question because the reason the markets go down so sharply on this isn't because of their personal view, right?

It's because they're worried going off this fiscal cliff could mean a pretty deep and sudden recession in this country and that is really bad for everybody and for corporate earnings.

So is the president hurting chances for a deal by before they have even started discussing it, I'm not going to do this?

MARIA CARDONA, CNN CONTRIBUTOR: No, I don't think so, Erin, though I agree with you. The reason that the Dow plunges is because of this uncertainty. But I think what the president is doing is laying out the marker that frankly should not surprise anybody.

I mean, let's remember this is the one thing that he ran on. We can, you know, discuss during the campaign whether he had a lack of clarity on what he would do beyond this for the next four years.

But this was one of the things that was crystal clear that he wanted to do and he got elected by the majority of the American people and then in a statistic that just real blew me away, Erin, is the exit polls show that he won eight of the ten wealthiest counties across this country.

So apparently, wealthy people also agree that they should be paying more. So I think he's the one that has a little bit of leverage going in.

BURNETT: Right, and that's a fair point. But Maria, what I'm curious about is there's a lot of ways to get money from those wealthy people. One way is to raise the tax -- the marginal tax rate to go back to where it was under Bill Clinton, right?

That's what the president's saying he won't budge on. Another way though is to close loopholes or to cap deductions. You know, the think tank third way said, look, you could get about $1.3 million just capping deductions. That, of course, affects the wealthy. There are many ways to get revenue, why is he only saying, well, I'm only going to go for this way?

CARDONA: Well, let's remember that he was very conciliatory in his speech on election night. And he even reiterated today, Erin, that if Republicans have other ideas on how to get to where we need to go.

If even Democrats have other ideas, which would mean to deal with this in a balanced way that does not hurt middle class families, workers, seniors, the most vulnerable, I think he's willing to listen to that.

So I think that is where the compromise can lie, if Republicans really understand that they're the ones that are going to need to give more.

BURNETT: do you agree with that? Republicans are going to have to give a little bit more? I mean, the president did win electoral popular vote. The margin in the popular vote was only 2 percent, but he did win it.

HOGAN GIDLEY, REPUBLICAN STRATEGIST: Sure. Well, I mean, look, elections have consequences, right? And this is the consequence of the election. He's the president of the United States. He ran on this. He said he was going to do it. Although he didn't come through on any of the promises from 2008, this is one it appears he's hell bent on making sure happens this time.

But look, I think the bottom line here is we've got to compromise, but what's scary in this press conference, there was no talk of any spending cuts. I mean, the president has been in office for four years. He's passed no budget.

And the one he actually proposed didn't get a single vote, it had no entitlement reform in it, no spending cuts and everyone admits we're heading for some serious trouble in those areas that debt continues to grow and he didn't address it at all.

He dug his heels in and focused on a sliver of a percentage of how much money could be raised about taxing the rich more, fine, you want to tax the rich, fine. You're the president. You push it. You go after it.

The problem is, that doesn't stop or solve, stop the bleeding or solve the problem of where we are now. We need more solutions. We need a broader set of ideas. Republicans will have to come to the table and deal with this president and offer some sensible solutions as well.

But my advice is the president needs to use one of his record setting number of golf outings to take some Republicans out and try to get this thing hammered out.

BURNETT: John Boehner probably like that. All right, thanks to both of you. We appreciate it. We have breaking news because China is just moments away from unveiling its new leadership. I mean, this happens so rarely. We're going to go live to China to find out who it is. That person is going to control our debt.

And Mitt Romney lost the election perhaps due in part to those comments about the 47 percent. What he said to supporters after the election that has heads scratching.

(COMMERCIAL BREAK)

BURNETT: Our third story, OUTFRONT, breaking news in China. The Chinese Communist Party is about to announce a new leader for the first time in 10 years.

It is widely expected Vice President Xi Jinping who visited the United States in February will take over as the new president, but much of this highly anticipated announcement has been shrouded in secrecy.

OUTFRONT tonight, Stan Grant in Beijing. And Stan, I know literally this announcement is coming in the next hour or two. What do you know about Xi and his views towards the U.S. since, you know, as we like to say, he sort of controls how much we pay for our mortgages.

STAN GRANT, CNN INTERNATIONAL CORRESPONDENT: You know, he's a bit of a mystery man. You talk about the party being shrouded in secrecy. This is a man who disappeared for almost two weeks just a couple of months ago and no one knows where he went or why.

There are rumors he might have had a heart attack. He's risen through the party by keeping his views very much to himself. He's the son of a revolutionary figure in China. What he has had to say in the past is that foreigners in his words, with four stomachs, should not be lecturing China about what they need to do.

That may ring some alarm bells for the U.S. that he's going to control the purse strings with China being the biggest foreign holder of U.S. debt. He has met President Obama over the past year.

But he's taking over a party riddled with corruption, facing huge challenges with the economy and the social structure here. And of course, that emerging rivalry with the U.S. -- Erin.

BURNETT: All right, it's certainly emerging rivalry. Now, will he really have the power or will the president, Hu Jintao now still sort of the puppeteer in the background?

GRANT: China is a long way from the days of Mao Zedong or -- the supreme leader figures. He'll basically be a chairman of the board. There are nine -- seven members of the standing committee. They control the country. He'll be the first among equals.

Hu Jintao may stick around a little bit longer. He's due to hand over the presidency next year and Xi Jinping will become head of the party today, but he may stick around as the head of the military and he who controls the military in China really does call the shots. So he will still have an influence on Xi Jinping.

BURNETT: That certainly will. Thanks so much to Stan Grant reporting live and we do expect that announcement imminently. By the way, another interesting thing about Xi Jinping, sort of make some cool and sexy here. You know what? His wife is a pop star.

Well, next, what we now know about the Florida socialite at the center of the Petraeus scandal. We have new details about her cozy relationship with military officials and why her all access military base pass was finally revoked today.

A Hamas military leader was killed today in an Israeli air strike. Israel is bracing for retaliation after Hamas says the gates of hell have opened.

(COMMERCIAL BREAK)

BURNETT: We start the second half of our show with stories we care about, where we focus on our own reporting from the front lines.

In a call with donors, Mitt Romney reportedly blamed his loss last week on gifts Obama gave to minorities and young voters. First reported by "The L.A. Times," Romney says Obama won over with two things: his plan for partial forgiveness of student loan interest and allowing those 26 and younger to remain on their parent's health insurance. He also said Obama's health care plan helped him with blacks and Hispanics. Romney also apologized for not winning, saying the race was very close, but close doesn't count in this business.

Well, the owner of the New England Compounding Center, the company whose steroid injections have been linked to a fungal meningitis outbreak that killed 32 people, faced questions from a congressional subcommittee today and what we heard was a lot of this.

(BEGIN VIDEO CLIP)

BARRY CADDEN, OWNER AND DIRECTOR OF NECC: On advice of counsel, I respectfully decline to answer on the basis of my institutional rights and privileges.

(END VIDEO CLIP)

BURNETT: That was what he heard. Lawmakers questioned Barry Cadden for fewer than ten minutes before they gave up and asked whether he'd answer any questions. Cadden declined, invoking his Fifth Amendment right to remain silent.

The FDA commissioner was also in the line of fire today over the agency's failure to follow up on reports, some a decade old, that say there were sterility problems at the facility.

Well, an investigation from a House subcommittee has found that Jon Corzine is to blame for the collapse of MF Global. That is the biggest bankruptcy in this century since Lehman Brothers. Lawmakers say his attempt to turn the brokerage firm into a full investment bank led to the firm's bankruptcy over a year ago and they blame him for the $1.6 billion shortfall -- you may recall -- at the end of it when there wasn't enough money to give customers back that they put into the actual company. They blamed it on an authoritarian culture where no one could challenge his decisions. It will ultimately be up to prosecutors and regulators to determine if Corzine or other employees violated laws.

We spoke to lawyer Mark Fernich who tells us he doesn't think Corzine will be prosecuted and this will be settled in civil court. Of course, you may recall, no one yet has gone to jail due to the financial crisis.

It has been 468 days since the U.S. lost its top credit rating. What are we doing to get it back?

Well, today, the president met with several of America's business leaders, to discuss the fiscal cliff. One of them was David Cote. He's an outspoken man, says what he thinks -- the chairman and CEO of Honeywell.

I spoke with him earlier and I asked him what kind of deal he thinks we need.

(BEGIN VIDEO CLIP)

DAVID COTE, CHAIRMAN AND CEO, HONEYWELL: Here's what I would love to see. This would be my perfect world is that they have a $4 trillion deal that comprises a simplified tax system that collects more, entitlements reform, discretionary cuts and infrastructure investment, math and science education, and that they say something like by July 4th, we are going to have this done.

(END VIDEO CLIP)

BURNETT: Well, pretty good plan. Now, you can see the whole interview with David Cote on our blog. We hope you'll check it out because he really lays it out amazingly well.

Now, our fourth story OUTFRONT: the socialite under scrutiny. Tonight, we're learning so much more about Jill Kelley and her connection to two of America's top generals, including General John Allen. Now, it was her report of harassing e-mails from Paula Broadwell, who wrote messages under the pseudonym "Kelley Patrol", that ultimately led to the resignation of CIA Director David Petraeus.

Our Ed Lavandera is OUTFRONT investigating the e-mail exchanges between Kelley and General Allen.

And, Ed, I know that is really the Holy Grail right now. What have you learned about those e-mails?

ED LAVANDERA, CNN CORRESPONDENT: Well, first of all, no one has seen the specific contents of these e-mails. They had been described by the Defense Department official as troubling, something they needed to look into it. Obviously, something that has spurned Leon Panetta to initiate a full investigation with the inspector general of the Defense Department.

But we spoke with a length today, with a lengthy conversation with a source close to Kelley who went on to say that they adamantly deny that there wasn't any kind of a sexual relationship between these two, but did not say that these e-mails were completely innocent, either. And they say they wouldn't try to dissuade anyone that there might have been some flirtatious nature to these e-mails and depending on your point of view, where you're coming from, you might find them inappropriate or not. So, that's kind of where that stands at this point.

But as I mentioned, Erin, no one has seen the specific contents of these e-mails just yet.

BURNETT: All right. Obviously, so much as you say may depend. I mean, I know you've talked to people who are familiar with their relationship, but so much will depend on the wording and what was in there.

I'm also curious about -- you know, we hear descriptions of Jill Kelley, you know, rich socialite, socialite, lavish lifestyle. But I know you've taken a look at that and the financial records for the Kelleys and it doesn't exactly add up, does it?

LAVANDERA: Well, you know, Jill Kelley, on the surface and people who had seen her at various parties and events, all the different fund raising things she had done, not only for the military community or for other causes here in Tampa say they never really knew this, but there is -- as we dug deeper and you look into the Kelley situation, there are a number of lawsuits that the Kelley family has been involved in. More than $300,000 worth of unpaid credit card bills, as well as several properties that are in the process of being foreclosed upon.

So a lot of them emerging now that she's become such a central figure in this case. But as the source also that we spoke with today, very close to Jill Kelley, told us today they'd find all of this particular angle and this investigation of all of this troubling and extremely unfair to her.

BURNETT: All right. Ed Lavandera, thank you very much.

And some in Tampa, you know, are telling CNN that Jill Kelley's close relationship with military leaders you know, what really caused that. So, Tampa's former mayor says, military generals from MacDill Air Force Base were popular party guests at these opulent gatherings around town.

(BEGIN VIDEO CLIP)

PAM IORIO, FORMER TAMPA, FLORIDA MAYOR: I don't think it's unusual for people from MacDill to attend social functions that people in the community have on their behalf. I mean, that's just one way that people in the community show their appreciation for MacDill. (END VIDEO CLIP)

BURNETT: I want to bring in someone who has known Jill Kelley for more than a decade.

Aaron Fodiman, he is a publisher of "Tampa Bay Magazine."

And, Aaron, I really appreciate your taking the time. A lot of things I wanted to ask you, but I wanted first to give you a chance to react to what our Ed Lavandera was reporting about Jill Kelley. The final troubles, credit card debt, foreclosed properties. Other creditors have sued them.

Is this -- is this the Jill Kelley that you know?

AARON FODIMAN, PUBLISHER OF TAMPA BAY MAGAZINE: No, but there again, it is the economic climate that we know. So many people in this area have been having financial difficulties. And it doesn't surprise me that somebody may have made a few real estate transactions that didn't work out well.

BURNETT: All right. So I know her husband, Scott, is a surgeon. We're looking at a picture of him there with Jill.

What -- how would you describe Jill's professional life? I mean, I don't know if you've been watching much TV, but it's been hard for us to figure out exactly what it is, right? She was an honorary ambassador. She was doing a lot of parties for the generals.

But what was -- what was her job? Do you know?

FODIMAN: Sure. Her job was to be a wonderful mother, a great wife and also to be a member of the community. I think she was no different than thousands of other women here whose husbands are relatively successful, love their families and want to help the community.

BURNETT: Now, what about some of the things you've heard about her though? I mean, there have been a lot of unflattering things and maybe this is unfair, this is people piling on. So I want to get your point of view.

Someone who is close to General Allen described her as a nice, bored, rich socialite. Someone else described her as a ferocious social climber.

Are these fair?

FODIMAN: They may be to those people. They aren't to me.

I'm sure there are some people that think that I am many things that I don't picture myself as and I think that all of these characterizations are honest feelings from people that feel that way, but I can tell you that I haven't seen anything that would make me say, oh, absolutely, that's what this woman is. I've seen the contrary. BURNETT: So, when you say --

FODIMAN: A loving wife.

BURNETT: Sorry, we got a little bit of a delay. But what is -- what is -- what are the words and adjectives you'd use to describe Jill Kelley?

FODIMAN: Vivacious, charming, gracious -- those are the words I'd use.

BURNETT: And now, what about -- she's supposed to be close friends with the Petraeus family. She obviously knows General Allen extremely well. She's hosted parties for a lot of generals. In fact, when the story was breaking, my understanding is she was hosting a party that night for senior officials at the base.

What fuels her interest in our top military leaders? What makes her want to be in that social scene? Do you know?

FODIMAN: I have no idea, but I would imagine most other people, if they had the opportunity, would want to be in that social maloo (ph). I mean, we're talking about some of the most wonderful men in the world. These are leaders. These are very accomplished people. Why wouldn't you want to be in their presence?

BURNETT: All right, Aaron. Thank you very much for coming out and telling your side of the story. The Jill Kelley that you knew. We appreciate it.

FODIMAN: My pleasure.

BURNETT: The president today came out swinging, on a lot of things. Not talking taxes now, we're talking about a defense of Susan Rice, his U.N. ambassador. Republican senators say they're going to block a Susan Rice, secretary of state nomination.

Republican Senator Rand Paul comes OUTFRONT.

And a Hamas military leader was killed by an Israeli air strike. Hamas says Israel has opened the gates of hell on themselves.

(COMMERCIAL BREAK)

BURNETT: Breaking news on the Petraeus investigation.

CNN has just learned from a senior House aide that David Petraeus will appear before the House Intelligence Committee on Friday to testify about the Benghazi consulate attack. There had been some questions about whether Petraeus would appear after he resigned as CIA director. But we can now confirm that he will also be appearing in front of the House.

Well, now, to tonight's "Outer Circle", where we're going to reach out to our sources around the world. And we go to Gaza tonight, where Hamas says Israel has opened the gates of hell on themselves after an Israeli air strike kill the leader of Hamas military wing. Egyptian state news reports Palestinian President Mahmoud Abbas is calling for an emergency session of the Council of the League of Arab States to discuss the circumstances.

Sara Sidner is in Jerusalem and I asked her how it's escalating.

(BEGIN VIDEO CLIP)

SARA SIDNER, CNN CORRESPONDENT: Erin, there's serious concern that this is going to turn into a full scale war. Now, what happened around 4:00 in the afternoon, Jerusalem time is that there was a targeted air strike on a Hamas leader. The leader of its military wing was killed, Ahmed al-Ja'abari. He's also one of the founders of Hamas.

So, a major reaction from Hamas. Hamas saying Israel has opened the gates of hell on itself and that they will see a reaction and retaliation from Hamas.

So far, we've seen dozens of rockets coming into southern Israel and Israel has also responded with dozens of air strikes, as well as strikes from its ships that are anchored off of Gaza in the Mediterranean.

We now know there are 85 people who have been injured in Gaza. Seven to eight people killed and there are also several people injured in Israel -- Erin.

(END VIDEO CLIP)

BURNETT: Thanks, Sara.

Well, now, let's check in with Anderson Cooper with a look at what's coming up on "A.C. 360".

Hi, Anderson.

ANDERSON COOPER, HOST: Hey, Erin.

Yes, we're keeping them honest tonight in the program. The unanswered questions about what took place in Benghazi, Libya, the night Ambassador Chris Stevens and three other Americans were murdered. Questions about the attack prompted a strong reaction, almost a challenge from President Obama to Senators John McCain and Lindsey Graham and they answered right back.

We'll play for those for you and you'll hear from Senator John McCain, who's a guest tonight on the program.

Also at the president's news conference today, questions about the investigations in the affair that forced the resignation of CIA head David Petraeus. New information is still coming out. We'll bring you that. And our investigation into the Dr. Kelley Cancer Foundation, a charity set up by Jill Kelley and her husbands that raised $157,000 in contributions and spent the exact same amount on expenses. No record of any cancer research or care for any patients. Drew Griffin has that angle.

Those stories tonight and the "Ridiculist" all at the top of the hour, Erin.

BURNETT: Our fifth story OUTFRONT: Susan Rice, the lightening rod. President Obama fiercely defended his U.N. ambassador today at this press conference after Republicans threatened to block her possible nomination for secretary of state. Senators including John McCain and Lindsey Graham say Rice misled Americans about the events surrounding the September 11th attacks in Benghazi.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If Senator McCain and Senator Graham and others want to go after somebody, they should go after me. And I'm happy to have that discussion with them. But for them to go after the U.N. ambassador, who had nothing to do with Benghazi and was simply making a presentation based on intelligence that she had received and to besmirch her reputation is outrageous.

(END VIDEO CLIP)

BURNETT: OUTFRONT tonight, Republican Senator Rand Paul of Kentucky. He serves on the Homeland Security Committee.

Senator Paul, Senator Lindsey Graham responded to the president in a statement. I wanted to quote it for you. I got in my inbox. It was strongly worded.

"Mr. President, don't think for one minute I don't hold you ultimately responsible for Benghazi. I think you failed as commander- in-chief before, during and after the attack. Given what I know now, I have no intention of promoting anyone who was up to their eyeballs in the Benghazi debacle."

Do you agree with him or did he overact?

SEN. RAND PAUL (R), KENTUCKY: Well, I think, you know, there's two questions. Everybody's been emphasizing whether or not it was right for her to go out and say this was caused by some crazy movie made by some low budget person in L.A., but I think really the more important question, is it really about whether it was caused by terrorism or that was caused by the movie. Obviously it was terrorism.

But I think the more important question is: why were there no Marines guarding our ambassador? Who made the decision, not an immediate, emergent decision, but a month-long desk decision to send an ambassador into a war-torn country without any uniformed marines? I think that was a bad decision. Who ever made that decision ought to be let go. BURNETT: All right. So you think that person out to be let go. And, obviously, that person is not Susan Rice. I mean, we're not -- we're all trying to figure out who that person is, right? But --

PAUL: Well, everybody -- the president knows who that is. They have known that for weeks. It's who ever is in charge of embassy security in the State Department. They made a really bad decision and it cost us some lives.

And when you're the head of an organization, you make bad decisions, you should be fired. I mean, the person who decided to have no marines guarding the ambassador should be fired. I mean, just plain and simple. But I don't know if that's Susan Rice. I think we get involved with Ambassador Rice when we're getting off subject.

Who made the decision to have no marines guarding the ambassador? That to me is the most of all the decisions.

BURNETT: I want to ask you about the Benghazi hearings that are starting and General Petraeus, or Director Petraeus of the CIA in just moment.

But, first, on Susan Rice -- you know, when she made that appearance on the weekend talk shows, it became something that we were all talking about a lot, because for a long period -- you know, it was sort of -- it was the statement that set the tone, right? The video, using the word "spontaneous".

Given what you know now, would you oppose her nomination as the next secretary of state? Or given what you just said, that you don't think she's a main character, would you be all right with her getting that job?

PAUL: You know, I'm not ready to make a decision on it.

I think there were political decisions based on Benghazi that really shouldn't have been political. I'm sort of annoyed and insulted that we spent U.S. taxpayer money advertising in Pakistan, apologizing for a video that had nothing to do with our government, and it really may have nothing to do with this.

So, I'm annoyed about a lot of the politics, but that doesn't always rise to whether or not I'll oppose somebody. I am very annoyed by and think the person who made the decision to have an ambassador with no adequate security. That person shouldn't be making the decision for any other ambassador, for any other country. That person needs to be relieved with their duties.

BURNETT: All right. And now, let's talk about the Benghazi hearings. Now that former CIA Director David Petraeus is going to be testifying. What do you want him to answer? Because, of course, as we've all learned, part of the problem is that it's turned out that you asked the Americans that were in Libya, most of them worked for the CIA.

State Department thought the CIA were responsible for their security. So, when you are saying someone should be fired, should it be someone at the CIA?

PAUL: You know, I don't know enough of the details that exactly tell you to comment.

My understanding though that embassy security isn't the CIA's responsibility. Embassy security is the State Department. Now, they have to ask the Marines, which is part of the armed services. But it's not the armed services problem that there were no Marines.

It's the State Department for not asking for Marines and for making -- I mean, what kind of decision is it to have an informal militia guarding your ambassador? Would we ever trust someone to guard our diplomats who's like a band of roving people with guns strapped to their jeeps roaming around Benghazi?

BURNETT: Right.

PAUL: It's a mess there and crazy not to have our own should soldiers guarding our diplomats. We should never put diplomats in that situation. If there had been two Marines with automatic weapons, the ambassador might have gotten out alive. And if there had been 10 Marines, I'd say that a really fighting chance to get out alive.

And I think someone made a bad decision. It doesn't make them a bad person it makes them someone who shouldn't be in charge of making that decision for any other ambassador.

BURNETT: One last question, we're talking about Susan Rice -- is there any candidate for secretary of state, you as a member of the Homeland Security Committee, would be comfortable with that, already, you would say, look, I like this person?

PAUL: No, I wouldn't want to prejudge it. I'd have to just wait and see who they appoint. It is one of the things, when you're in the presidency -- I'm a believer that President Obama does get to choose who'd he wish, and it has to rise to a certain level of problems because I'm going to say I'm not going to vote for him. For the most part, I have supported a lot of President Obama's nominees.

But I am concerned about the movie with Senator Graham and I'm concerned about other things. I think there have to be questions answered before any of us can make any decision on this.

BURNETT: Well, thank you very much, Senator Paul. It's always a pleasure, sir.

PAUL: Thanks, ma'am.

BURNETT: We'll be right back.

(COMMERCIAL BREAK)

BURNETT: More breaking news now on the Petraeus investigation. OUTFRONT has just received a statement from a lawyer he says he represents the FBI agent who sparked the investigation into Petraeus and ultimately lead to his resignation. This, of course, is the agent Jill Kelley first told about harassing e-mails from Paul Broadwell. We told you about him at the top of our program. His name is Frederick Humphries II.

Lawrence Berger says he's representing Humpries tells OUTFRONT. I want to quote him. He said, "I've looked at some of these stories and Mr. Humphries has been a stellar performer with the bureau for many, many years. He and his wife have been social friends with Ms. Kelley and her husband for many years -- well before this incident. There's absolutely nothing between them. There's no amorous relationship between them. Absolutely none. They've been social friends for many years."

Now, as you recall, this is the same FBI agent, Frederick Humphries, who sent Jill Kelley, the woman who complained of those harassing e-mails from Paula Broadwell, shirtless pictures of himself. Now, you have probably heard a lot of coverage about that, that he sent her shirtless pictures.

So, his lawyer Lawrence Berger goes onto say, "amongst those pictures was one of Mr. Humphries posed with two dummies side-by-side with him. He's in the center. That was years before. That picture was imbedded among other correspondence. There is nothing prurient in the picture. There is no sexual component to the picture.

When he was contacted by Ms. Kelley who felt threatened, he merely reported the matter to the proper component of the bureau and had nothing to do with the investigation. He followed FBI protocol. He did not have part of the case."

That again is from the attorney who said he is representing Frederick W. Humphries II, who "The New York Times" first identified tonight as the agent who started all of this, the agent who received the complaint from Jill Kelley about a harassing e-mail, that complaint within several months lead to the resignation of CIA Director David Petraeus.

Thanks so much for watching. "ANDERSON COOPER 360" starts right now.