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ANDERSON COOPER 360 DEGREES

Interview With Congressman Lee Terry; Crime Politics; Fiscal Cliff Fight

Aired November 30, 2012 - 22:00   ET

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


ASHLEIGH BANFIELD, CNN ANCHOR: It's 10:00 p.m. here on the East Coast.

And we begin tonight, as Anderson always does, "Keeping Them Honest," not taking sides, playing favorites, or giving you our opinion. There are certainly other places for that. But we're interested in the facts. They do exist and our goal is to get them to you.

So, tonight, a "Keeping Them Honest" investigation about a city that is among the nation's deadliest, Chicago, Illinois. This week alone, six people have been killed there, including a 15-year-old girl who was just standing in her backyard with her friends.

Those deaths bring the total number of murders there to 476 this year. That just happens to be a number that is greater than the coalition troops serving in Afghanistan during the very same period. So think of that. Chicago is, in a very real sense, a war zone.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Patients keep coming, and they come and they come, and it's like machine gun fire. You can expect this to happen every single night.

(END VIDEO CLIP)

BANFIELD: For the past several years, 360 has been covering the growing epidemic of gun violence on Chicago's South side.

(BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR: And good evening from the South Side of Chicago, a tough neighborhood with strong people reeling from a killing spree that cannot be ignored.

There are no easy answers, but the problems are too important to ignore.

We're in Chicago tonight, a city in crisis. Kids are dying, shot, beaten, murdered in these streets. The videotape beating of Derrion Albert, an student, brought Washington bigwigs here today, but is anyone really paying enough attention to what's happening to our kids? We should point out we have gone to Chicago a number of times over the last several years to report on this violence. If this violence was happening in other parts of the United States, many critics say it would be getting a lot more attention.

(END VIDEO CLIP)

BANFIELD: Part of our ongoing coverage of Chicago's gun violence has been to look at what's being done to stop it, which brings us to tonight's report.

With killings on the rise, Illinois's governor, Pat Quinn, launched an ambitious anti-violence program two years ago called the Neighborhood Recovery Initiative. On paper, it sounded like a great idea and it really did catch our eye.

And then we investigated and the CNN investigation found some pretty serious questions about whether this was crime prevention or good old-fashioned politics.

Here's investigative correspondent Drew Griffin.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: Hello? Hello? Anybody here?

involve This is one of the community organizing groups hired to help reduce violence in Chicago, part of a $54.5 million initiative, Governor Pat Quinn's Neighborhood Recovery Initiative, or NRI, rolled out just before his contentious 2010 election.

This group, called the Woodlawn Organization, got $1.2 million.

(on camera): So this is all that's left of the Woodlawn Organization. We walked through a front door that was wide open. You can see the equipment is here. This was defunded by the program because they couldn't figure out what they had done with the money.

(voice-over): It was one of about 160 community, church and civic groups that got the NRI money from the state. Now most of the money has run out. Homicides are up and questions are being raised about just what the NRI was really for, to cut crime or save an election?

What we do know is the money was spread out on Chicago's South and Southwest sides. The idea, get communities involved to stop the violence.

UNIDENTIFIED MALES: NRI! NRI!

GRIFFIN: How? On this chilly afternoon, teenagers across Chicago's South side are paid to hand out flyers.

UNIDENTIFIED FEMALE: You have a nice day, sir. GRIFFIN: And spread a message of nonviolence. The NRI is credited with creating about 3,500 temporary jobs, mentoring youth and parents, providing reentry services and counseling in schools.

But our four-month investigation found those jobs included handing out flyers, attending yoga class, taking museum field trips, even marching with the governor in a parade. The jobs are now gone.

(on camera): CNN has taken an extensive look at where the money went, what it did, and most importantly, the timing of how the program was rolled out.

The Neighborhood Recovery Initiative began sending money to tough neighborhoods in the city of Chicago right before Chicago voters went to the polls. According to these minutes from a state meeting, a member of the governor's staff promised -- quote -- "allocating some of the funds for this initiative immediately, the rest after the election."

GOV. PAT QUINN (D), ILLINOIS: I'm happy to say that I'm always honest.

GRIFFIN (voice-over): In October 2010, then Lieutenant Governor Pat Quinn was struggling to be elected to the job he assumed after the former Governor Rod Blagojevich was removed from office for misconduct.

Quinn, a Democrat, needed a huge turnout in Chicago's heavily Democratic districts on the South Side. That's where critics say the NRI money ended up. The governor won that election by less than 1 percentage point, but the results on reducing crime? So far, there's been 476 murders this year, up nearly 20 percent from 2011.

MATT MURPHY (R), ILLINOIS STATE SENATOR: On its face, it appears to be a waste.

GRIFFIN: Illinois Republican State Senator Matt Murphy.

MURPHY: About a month before the election, at a time when reports everywhere were showing a diminished interest in the election in the governor's base, and lo and behold, here he comes with a new state program and millions of dollars to get people interested.

QUINN: It's a lot of baloney. They know that. Matter of fact, people who make those charges were running against me. It's all politics.

GRIFFIN: In an early November interview, Governor Quinn insisted to CNN the murder rate was so high in the summer of 2010, he had to do something.

QUINN: The city of Chicago is the third largest city in America. I live in Chicago. I live on the West Side. I live in a violent neighborhood. And I know firsthand that you better in government do something about the violence because that's what the people want. GRIFFIN (on camera): But the murder rate is up 25 percent. Are you saying that the murder rate would be up 30 percent, 35 percent without this program?

QUINN: You take it one year at a time and you try and evaluate the programs and find out what is working, what isn't working so well, and you focus on the things that work well. You don't just say we're not going to do anything.

GRIFFIN (voice-over): Even a member of Quinn's own party, though, Democratic state Representative Thaddeus Jones, has questions, asking where are the audits, administration costs and oversight of the many organizations.

We can show you what the Neighborhood Recovery Initiative did that is proof, say organizers. The money was well spent, teaching teens to change behaviors. And for $8.75 an hour, this is how the teens worked to reduce Chicago's murder rate.

UNIDENTIFIED MALE: This week we're talking about seeking inner peace.

UNIDENTIFIED FEMALE: How do you deal with stress?

UNIDENTIFIED FEMALE: My topic of this month is about being healthy.

UNIDENTIFIED FEMALE: Governor Quinn does not miss this parade.

GRIFFIN: And, yes, the state confirmed, part of promoting positive messages included paying teens to march with the governor in the annual Bud Billiken Parade.

(on camera): Is this the type of thing that you think leads to long-term employment or long-term reduction in violence?

MURPHY: It's another way of providing welfare.

GRIFFIN (voice-over): The director of one of the agencies that received more than $2 million concedes NRI was rushed out without much of a plan.

MICHAEL SHAVER, COO, CHILDREN'S HOME AND AID: Actually, there was a fast and furious nature to it. There was certainly from the time that the governor, who was running for reelection, announced it to the time frames to actually put the money in the community.

GRIFFIN: Mike Shaver says the program, modeled in part after a now defunct Philadelphia initiative, did hand out a lot of money, but spent little time determining if it was effective.

SHAVER: I have not seen anything that's been produced by the Illinois Violence Prevention Authority that would make a compelling case that this array of programs based upon the model in Philadelphia worked.

GRIFFIN: As we began asking questions of agencies who got the money, we have been getting more and more no comments.

(on camera): You can't talk?

(voice-over): Remember the Woodlawn Organization which received $1.2 million?

(on camera): Anybody here? Hello?

(voice-over): The leader of that group isn't talking, either. An audit by the state agency that ran the program could explain the silence. The state found questionable expenses, a lack of clear accounting, a $10,700 check written to a part-time staff member supposedly to pay a utility bill that they didn't prove was paid.

The state shut down all funding for the organization. The group's attorney tells CNN all documents will be provided to show it did nothing wrong.

(on camera): I just want to get back to the point of did this program work, Governor? As well-intentioned as it was, did it work?

QUINN: Yes, it did. It did work. If it saves one life, it worked.

GRIFFIN (voice-over): Chicago remains on track to approach 500 murders this year.

(END VIDEOTAPE)

BANFIELD: And Drew Griffin joins me now.

Drew, that last stat, the police superintendent in that city says that just recently things are getting better, that it's actually going down, that the rate is dropping. Has something changed?

GRIFFIN: Well, something has changed, but it wasn't a change of handing out more flyers or going to more yoga classes.

According to the police superintendent, the murder rate, which actually was incredibly 66 percent higher earlier this year, has been steadily dropping because the Chicago Police Department has focused on the bad guys. They're arresting more gang members. They're tearing down abandoned buildings. They're putting more and more cops on the streets.

That has reduced the pace, but as we reported, Chicago is on pace for a 20 percent higher murder rate this year than last year.

BANFIELD: And what does that mean for this program, the Neighborhood Recovery program? Is it kaput?

GRIFFIN: It's still hanging on. It has a much smaller budget, $15 million. It's under a whole new state agency to monitor it.

There is a big state audit going on right now to figure out where all of this money went, and get this. According to this new scaled- down program, we are told that -- quote -- any new jobs would be more "traditional employment situations." So it survives a little bit, but not by much.

BANFIELD: And overall just a very distressing story. Drew, thank you. Appreciate that.

Want to let us know what you think? Follow us on Twitter @AC360.

And then tonight, a familiar Washington drama, the return of the towering fiscal cliff. Good news is, the Democrats have put forward a deal. Thank you. Bad news is Republicans hate it. Both sides seem to be digging in even deeper. So is either side going to budge any time? "Raw Politics" ahead.

(COMMERCIAL BREAK)

BANFIELD: In "Raw Politics," with the country one day closer to the fiscal cliff, President Obama took his case to the public today. He used an event in Pennsylvania to ratchet up the pressure on Republicans to freeze taxes for the middle class while allowing the tax rates on the wealthy to go up.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If Congress does nothing, every family in America will see their income taxes automatically go up on January 1. That's sort of like the lump of coal you get for Christmas. That's a Scrooge Christmas.

(END VIDEO CLIP)

BANFIELD: Hmm. In other words, the day after the White House puts its opening bid on the table, the president comes out swinging. That opening bid didn't have a whole lot of concessions in it to the Republicans, and the Republicans reacted as many would have predicted. They were mad, basically saying that that offer was an insult.

Today, House Speaker John Boehner doubled down.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: It was not a serious proposal. And so right now, we're almost nowhere.

(END VIDEO CLIP)

BANFIELD: That doesn't sound good.

Republican Congressman Lee Terry of Nebraska was just as succinct, but how shall I say this, a bit more colorful. He told "The Omaha World Herald": "We're screwed either way. We really have no leverage in these discussions."

Representative Terry has said he is open to a deal that includes some new tax revenues. He's also said that President Obama has an incentive to allow the country to just go on over the fiscal cliff and then blame the Republicans for it.

Just before we went on air tonight, Senator Max Baucus, who chairs the powerful Senate Finance Committee, a Democrat, indicated that that scenario isn't out of the realm of possibility. Listen to how he put it.

(BEGIN VIDEO CLIP)

SEN. MAX BAUCUS (D-MT), FINANCE COMMITTEE CHAIRMAN: If the other side is completely intransigent, that the president has probably no choice but to say, OK, we're going to go over the cliff. That would not be my first preference.

(END VIDEO CLIP)

BANFIELD: Yes. Senator Baucus pretty serious about that.

Bottom line, though, tonight both sides say that talks are stalled. The Democrats are turning up the pressure on Republicans. In a moment, our political panel will have some fun with this one, certainly about the president's opening offer, but, first, Congressman Lee Terry joins me live.

I know there's a bit of a delay, so I will ask the question, we can wait a moment and then I will get your answer. I love it when politicians talk from the hip, especially using colorful language like we're screwed either way, but I don't understand what you mean, because as I see it, there's still this extraordinarily powerful tool called the debt ceiling and you all have to be on board for that. So how do you not see that as a good tactic for negotiating?

REP. LEE TERRY (R), NEBRASKA: Well, that is probably the only level of leverage we have.

But what many of us fear, we come back from the election, we want to get the fiscal cliff resolved, but yet we aren't seeing anything from the White House. We see some disingenuous moves like the one that was done today. Last week, it was, oh, you guys go first, we're not going to put anything on the table until you vote for a tax increase.

So many of us fear that the president's real plan here was to let us go over the cliff and blame the Republicans, and that's what we look like we're being set up to do. And then if you go over the cliff, then two months later, a month later, the president can come back with a bill and say, hey, we're going to now, since the Republicans let everyone's taxes go up, I'm going to ride in here now, be the knight in shining armor and lower the taxes on the lower two brackets.

And, of course, the Republicans who one of our main values is lower taxes, would support something like that.

BANFIELD: But, Congressman Terry, that doesn't make any sense to me because while that sounds like logic, there's that other side of the fiscal cliff, all those horrible cuts that could plunge us into a depression and all the rest that no Democrats want either.

So are you serious? Are you really saying what I think you're saying, and that is that it might be a strategy that the president really wants? He wants us all to go over the cliff and then just blame you?

TERRY: Yes, that I think that's to his political advantage to do that, because then he gets to blame us, set up the 2014 elections by us being the bad guys.

But look at this. A lot of my colleagues on the other side of the aisle like the $600 billion hit to the Defense Department and they will absorb the 2 percent of cuts to the other programs out there. And, remember, none of the cuts that are in the sequestration have to do with the big three on the entitlement programs. Most of us would love to see an Erskine Bowles type of solution put on the table here.

BANFIELD: So what if there were...

(CROSSTALK)

TERRY: The Simpson-Bowles, sorry.

BANFIELD: Simpson-Bowles. I understood what you mean. But there is an Erskine Bowles as well. So it is a bit complex.

What about congressman Tom Cole, your Republican colleague, and his overture that he would be ready right now to just get moving and actually make this overture and say, I'm fine, I'm fine with this $250,000 a year family not getting a tax cut and letting that expire, that tax cut for those wealthier 2 percent to expire?

There are a couple people who have come out with that. Mary Bono Mack has come out and said that doesn't sound too bad. There's also Robert Dold who said that as well. What about you?

TERRY: Yes.

No, I don't support that. And Tom is a great political strategist and what he was saying is, hey, look, we know there will be a revenue increase, if we can get that big deal. And so let's just go ahead and take it off the table. You know, let's take that leverage away from the president there, but the reality is as a Republican who my very core principles are lower taxes, limited government, to just take a solo tax or a vote on a tax increase with not having everything else there to kind of, you know, give us the sugar to make the medicine go down, that's just not going to fly.

Most of us aren't going to support that. But I could certainly understand Tom's political strategy of trying to take it off the table, and then the president may get serious about dealing with all of the other financial problems we have.

BANFIELD: I hope you all can come to some consensus because you're costing me money as I sit here and everybody else watching us. And I think a lot of people are pretty frustrated with the people we're electing to do something big and bold. Come on. Negotiate.

(CROSSTALK)

TERRY: Well, and the president -- yes, well, I want -- but when the president goes from, you know, hey, I want to increase taxes on those over $250,000 and then Geithner comes and puts on $1.6 trillion of taxes, we're going in the wrong direction.

(CROSSTALK)

BANFIELD: Come back with another proposal, and then come back on the show and I will interview you about your proposal, but I'm out of time.

Congressman Terry, thanks for being with us. Appreciate it.

Joining me now, CNN political contributors Mary Matalin and Paul Begala.

Paul, let me begin with you. This feels by most reporting to be a bit of an unfair offer, given the wholesale rejection, and even Mitch McConnell's purview, the comedy of it. Is this a wise decision to come at the Republicans with something that is so unacceptable right off the bat?

PAUL BEGALA, CNN POLITICAL ANALYST: It's certainly acceptable to the majority of the American people.

We just had an election, the president ran on this and keep in mind, this is his opening bid. For once, finally, the Democrats are not negotiating against themselves. The president has this crazy notion that he ran around the country, he got 51 percent of the vote and carried the majority of states and the vast majority of electoral votes on this agenda.

(CROSSTALK)

BANFIELD: Partially, partially. But this is not just one small piece. This is a lot of pieces that seem very partisan. And Americans also like independence and they like people to get along.

So in that respect, doesn't this seem just a little too bold and certainly not like the Obama of the last term?

BEGALA: Well, that's music to my ears because I think John Boehner got the better of the president, frankly, Speaker Boehner, in the last negotiations that they had in 2011, and it suggests that the president, he does -- he has the wind at his back.

The piece that's sticking right now should be the easiest, which is locking in 98 percent of the Bush tax cuts. This was something Mary worked hard on, people like me opposed them. Democrats hated those Bush tax cuts. Now the president is willing to enshrine 98 percent of those tax cuts and the Republicans can't take yes for an answer, because they are not really fighting for lower taxes. They're fighting for the upper 2 percent of income earners and that's a losing proposition.

And 70 percent of Americans think those of us who are blessed and are upper-income Americans ought to pay a little bit more.

BANFIELD: So, Mary, why doesn't that make sense? Shouldn't the winner come in as Paul said with the wind at his back; he does have a mandate?

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: He does not have a mandate. People did not vote to increase taxes.

The reason the president's jamming this through now is because while people don't want to raise taxes in this horrific Obama recovery, sure, if he wants to say it's a fairness thing, people don't think that's fair. They want debt entitlement -- debt and entitlement restructuring, and that's what they voted for. And the reason he's doing it now is because none of the Democratic senators that were elected, and they did a great job, they really kicked our butts with these senators, none of them, not a one of them ran on increasing taxes on anybody in this kind of recovery.

That top 2 percent are the job creators. They're small businesses.

BANFIELD: He also wants Congress to give up that leverage over the debt ceiling because that is also presenting itself as another ugly battle. And you know what, Paul Begala, it is being said that that is one heck of a piece of Boehner leverage.

BEGALA: Well, it is. But I think it's outrageous. I think this brinksmanship about the budget and even the fiscal cliff is all just fine. I don't want to go over the cliff. I think it would be irresponsible.

BANFIELD: Does the president want to go over?

BEGALA: Oh, not at all.

BANFIELD: You listen to all the Republicans and the conservative media today are saying President Obama wants to go over the fiscal cliff, because then taxes go up across the board. And then it's got to be done retroactively.

(CROSSTALK)

BEGALA: Which is not what the president wants, but there's a big difference between this fiscal cliff and the full faith and credit of the United States.

The American government has never defaulted on its debt. And now there are some, not the majority of Republicans even, but there are some on the extreme of the Republican Party, and they seem to be in control, who seem to want to default on our debt. That's crazy.

And if they cannot be entrusted with the full faith and credit of the United States, they should not have that leverage. (CROSSTALK)

BANFIELD: Paul, where are the overtures though? Where were the overtures with this deal that was presented? I mean, listen, you don't have to be Mensa to know that delivering a deal like that was going to make Mitch McConnell laugh. Where were the overtures for the Democrats?

BEGALA: Well, first off, it is an overture, the deal itself, the proposal. It's not the deal. It's the proposal. The Republicans have not come with a counterproposal.

Why? They seem to be intent on falling on their sword for the 2 percent of the wealthiest Americans, many of whom themselves are happy to pay a slightly higher rate the way we did when President Clinton was president.

BANFIELD: Mary is shaking her head. And you know what? I am shaking my head, too. Listen, I have traveled enough in the Far East to know you bargain appropriately with respect. You don't come in knowing that something's laughable.

(CROSSTALK)

BEGALA: I don't travel in the Far East. You think people should just give up on their principles and the things that they campaigned on?

BANFIELD: No, but I think you do have to bargain from a position of respect.

Mary, is this something that was so disrespectful that you can't even counter, the Republicans can't even counterbargain here?

MATALIN: Here's what -- I don't know why the Republicans are so surprised.

I myself was offended and felt disrespected yesterday because the working framework, the intellectual working framework, Erskine -- from the Bowles-Simpson, from Domenici-Rivlin, going all the way back, was a basic framework of $3 of savings for $1 of revenues. We get it. It's the opening bid.

But we thought the opening bid would at least be in the framework of this planet that we have been dealing in.

(CROSSTALK)

BANFIELD: I will recommend that maybe Raoul Felder get into this and start bargaining some kind of settlement, because this is intransigence like I have seen before.

Mary Matalin, Paul Begala, it's always a pleasure. Thank you both.

BEGALA: Thanks. It is the site of some of the most violent battles in Syria's civil war. Before the fighting, millions of people called Aleppo home. But, tonight, we are seeing many of the people return to this mess and it's not because the battle's over. It's for some other reason. You will be surprised. But Arwa Damon is one of the first -- or one of the few journalists who is actually in Syria reporting firsthand. And we have got her report coming up next on 360.

(COMMERCIAL BREAK)

BANFIELD: A little girl taken away from the parents who had loved her since birth, and then returned to a biological father who had never even met her. How can that be legal? And can the Supreme Court do anything to come to the parents' rescue? Baby Veronica is her name, and her gut-wrenching story comes when 360 continues.

(COMMERCIAL BREAK)

SESAY: Tonight, a CNN exclusive. The first on-camera interview with eccentric millionaire John McAfee since he went on the run from police in Belize.

The name may be familiar. He created the computer antivirus software bearing his name.

Police in Belize want to question McAfee about the murder of his neighbor nearly three weeks ago. Just days before the murder, McAfee's dogs were poisoned to death, and he had a dispute with the neighbor.

For weeks McAfee has only done phone interviews with the media or shared his thoughts on the blog he created just a few days ago. But just hours ago, CNN's own Martin Savidge found McAfee in Belize in an elaborate disguise, and he talked on camera. He joins us now from Belize with his exclusive interview.

Martin, good to have you with us. Police in Belize have repeatedly said this guy is not a suspect in the death of his neighbor and that he has no reason to fear being harmed. So why is McAfee still on the run? How does he explain it?

MARTIN SAVIDGE, CNN CORRESPONDENT: Yes, it's a very good question, and it's a question I put to him. As you point out, we heard from him many times while he's been on the run. This is the first time you see him, and it makes all the difference in the world.

And the conversation I had with him ranged from the stone-cold credible to the almost amazing and unbelievably crazy kind of story. And then it switches back to the credible again.

I began by asking him the questions the authorities want to know, which is, did he have going to do with the murder of his neighbor, Greg Paul? He said absolutely not. Did he hire somebody to kill him? No, he did not. Does he know who killed Greg Paul? No, he does not.

Then I said, "Why don't you just go in and just explain that to the police?" And that's where the crazy comes in. He launches into this explanation that it's a government plot. They're out to get him. They're going to kill him if they capture him, and it all goes back to a bribe he didn't pay to a politician.

It is clear that for John McAfee, he feels like a man running out of options and the walls are closing in.

(BEGIN VIDEOTAPE)

SAVIDGE: Are you afraid?

JOHN MCAFEE, SOFTWARE MOGUL: Wouldn't you be, sir?

SAVIDGE: And what have these weeks been like? It's been three weeks now.

MCAFEE: It hasn't been a lot of fun. I miss my prior life. Much of it -- much of it has been deprivation. No baths, no -- well, poor food at least. Here we're in bliss. Hot showers. A stove. So we're fairly happy right now.

SAVIDGE: How is this going to end? How do you see this coming to an end?

MCAFEE: I don't have a crystal ball. I'm going to continue to fight until something changes.

SAVIDGE: You won't turn yourself in?

MCAFEE: I will not.

SAVIDGE: So it will either be that somehow either you get away or the authority comes and get you?

MCAFEE: One of those two. Get away doesn't mean leave the country. It means that, No. 1, they will find the murderer of Mr. Paul. No. 1, the people of this country who are, by and large, terrified to speak out will start speaking out, and something will change.

But I will certainly not turn myself in, and will not be finding (ph). I'm not going to stop my blog, by the way, WhoIsMcAfee.com.

(END VIDEOTAPE)

SESAY: Well, Martin, let me ask you this. What do authorities in Belize make of all of this? I mean, what are they saying?

SAVIDGE: Well, they're angry. They're frustrated. They can't believe any of the things he says. It's crazy. They say in their minds that there is no truth and that this is a democratic country with a professional police force. He has nothing to fear. Just turn yourself in. That's all they ask. And only quick questions.

SESAY: How -- how hard was it to get to him? SAVIDGE: Extremely difficult. Yes, this was something that was weeks in the making. You would have conversations with him. He has over a dozen cell phones. He changes them all the time. There were passwords, there were code words. Strangers who asked us one thing, we had to respond the right way. Get into one vehicle, chase off. Get into another vehicle, switchbacks, U-turns. I didn't know where we were going; I didn't know where we got to. I had no idea how to even get back. It was just a really bizarre, almost a bad spy movie.

SESAY: Yes. Marty, thanks. Great work with exclusive interview. Appreciate it.

Now, coming up, a custody battle over a little girl named Veronica could be heading to the Supreme Court. She was taken away from the only parents she ever knew and returned to her biological father under a little-known law designed to keep Native American children in Native American homes. We'll update you on baby Veronica's story next.

(COMMERCIAL BREAK)

BANFIELD: A train derailment in New Jersey causes a highly toxic chemical leak into a river. So what caused this disaster? That's ahead on 360.

(COMMERCIAL BREAK)

BANFIELD: A mom and dad in South Carolina are hoping that the Supreme Court will take up the case that has turned their lives upside-down and left them without their 3-year-old daughter that they raised since she was a newborn.

Her name is baby Veronica, but she was returned to her biological father under a federal law that's designed to keep Native American children in Native American homes.

The only parents that Veronica ever knew until she was taken away say that that law should not be applying in this case. They filed a petition with the U.S. Supreme Court, and the biological father's response to that petition was due today.

We're going to dig deeper into the legal issues that surround this in just a moment, but first, Randi Kaye has the story of baby Veronica.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): This is video from the last time Matt and Melanie Capobianco saw their little girl, Veronica. New Year's Eve, 2011. They had raised her for two years and were in the process of adopting her when a South Carolina family court ordered them to hand her over to the girl's biological father.

UNIDENTIFIED FEMALE: Do you think this is in her best interests?

UNIDENTIFIED MALE: I think so. KAYE: ... a man Veronica had never even met.

MATT CAPOBIANCO, FOSTER DAD: For our little girl to be put in a car with strangers and driven to Oklahoma and having no recourse or control over it, it is all -- I mean, you know, we're her parents. I'm her father. You know, I'm supposed to be there to protect her.

MELANIE CAPOBIANCO, FOSTER MOTHER: You want to be an engineer when you grow up?

VERONICA, SUBJECT OF CUSTODY DISPUTE: Yes.

KAYE: Now 3, Veronica is caught in the middle of one of the strangest adoption cases we've ever heard.

It all began in 2009 before she was born, when Veronica's biological mother put her up for adoption. The Capobiancos were thrilled when an adoption attorney connected them with Veronica's biological mom. She told them the girl's father, Dustin Brown, had agreed to waive his parental rights.

When Veronica was born, it was Matt who cut the umbilical cord. Ever since, she'd lived with them in South Carolina.

MELANIE CAPOBIANCO: I guess people think that we're not supposed to love her until the ink is dry. We're supposed to kind of care for her until, you know, everything is, you know, years down the line and she's adopted.

KAYE: The Capobiancos were heartbroken when, just four months after they brought Veronica home, her biological father filed for paternity and custody, even though he had already signed a legal document saying he would not contest Veronica's adoption.

He was able to do so, thanks to a little-known federal law from 1978 called the Indian Child Welfare Act. You see, Brown is part Cherokee and a member of the Cherokee nation, which means Veronica is part Cherokee, too.

Congress passed the law after finding 30 percent of Indian children were being removed from their homes, and almost all of them were being placed with non-Indian families. The law is designed to keep Indian children with Indian family members and protect the interests of those children.

MELANIE CAPOBIANCO: I don't know how tearing a child away from the only family she's ever known without any transition period and no visitation is in her best interest.

KAYE: The attorney general for the Cherokee Nation thinks the law is working.

TODD HEMBREE, ATTORNEY GENERAL, CHEROKEE NATION: It's not anyone's ever intent to rip a child away from a loving home, but we want to make sure those loving homes have the opportunity to be Indian homes first. KAYE: After the family court ruled in Dustin Brown's favor, the Capobiancos petitioned the South Carolina Supreme Court, hoping the higher court would overturn the ruling.

(on camera) In July, after more than three months of waiting, the Capobiancos got more bad news. The Supreme Court here in South Carolina ruled in favor of Veronica's biological father.

It wasn't an easy decision for the court, though. The justices were split 3-2. In the majority opinion, they wrote they are upholding the family court's ruling with a heavy heart.

(voice-over) The majority opinion concluded the biological father and his family have created a safe, loving and appropriate home for her.

Those in the dissenting opinion argued federal law shouldn't trump state law, finding "father knowingly abandoned his parental responsibilities in every respect."

Lawyers for Dustin Brown say, quote, "He is a good parent, and Veronica is happy, healthy and thriving." Since she went to live with her biological father, the Capobiancos say they have only been allowed to speak with her once.

MATT CAPOBIANCO: We told her we loved her. She said, "I love you, too." And that was it. That was it.

KAYE: But Matt and Melanie haven't given up. They are taking their case to the United States Supreme Court.

MATT CAPOBIANCO: You don't ever stop fighting for your child, ever.

KAYE (on camera): The United States Supreme Court according to our legal experts doesn't take that many cases. They get 7,000 cases a year, and they take about 80. Why do you think they should take this one?

MATT CAPOBIANCO: So many families have been hurt by the misuse of this law, and you know, we've said before, too, we don't think it's necessarily a bad law, it was bad-intentioned but it's definitely being misused. It doesn't apply. She wasn't removed from an existing Indian home. She was never in an Indian home. She was with us from the very beginning.

KAYE (voice-over): And in some ways, Veronica is still with them. Her bedroom is still set up.

MELANIE CAPOBIANCO: You know, I look around, and I see her toys and her books and her little cook set. It makes it harder. But taking it away is the hardest.

MATT CAPOBIANCO: You know, this is her home. It will always be her home. But she's going to come home. She's going to play with this stuff again. MELANIE CAPOBIANCO: It's a symbol of our hope that she's coming home.

KAYE: Randi Kaye, CNN, Charleston, South Carolina.

(END VIDEOTAPE)

BANFIELD: That is just heartbreaking.

Joining me now live is CNN's senior legal analyst, Jeffrey Toobin. It's hard to even start an interview seeing the emotion like that.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: It is -- it is really as bad a case as I have ever encountered.

The thing you have to keep in mind, at least in the background, is the Indian Child Welfare Act was based on addressing a real problem. You know, Indian families had been broken up unjustly for decades, just kids ripped away from their parents. So Congress passed this law.

The problem is it certainly does not seem to apply in this circumstance, especially when you have a father who signed away his parental rights.

BANFIELD: That's what interpretation of the law is for. Look, I'm no judge, but isn't that what the judge is supposed to do? He's supposed to look at that law and interpret -- there was a lot of room, wiggle room for interpretation there, isn't there?

TOOBIN: Well, I mean, that's why the court split 3-2. It's hard to know exactly how this law applies.

BANFIELD: Even at trial level, even at trial level.

TOOBIN: You know, more judges have ruled in favor of Brown, the birth father, than the Capobiancos so far. So it is not an easy legal question.

Why I think the Supreme Court might really take this case is that it has a lot of the features that the Supreme Court looks for in the very few cases they have. A very deeply-divided South Carolina Supreme Court, a conflict between state and federal law, something the court tries to resolve, and also, varying interpretations around the country of the Indian Child Welfare Act. So I really do think, even though the odds are always stacked against getting review in the Supreme Court, they really might get it here.

BANFIELD: And what about this very technical aspect of Veronica's case? She went from being a newborn baby into the Capobiancos' home, so she wasn't taken from an Indian home, which is the spirit of why this law was enacted.

TOOBIN: That's the spirit of the law, but what the law says refers to the status of children who are Indian or Native American, and she certainly qualifies under that. So the focus of the law is more on the status of the child than where the child lived.

That's why South Carolina, the dissenters in South Carolina were so upset, because South Carolina says, no, look at the best interests of the child. Look at where she's lived, and they said keep her with the Capobiancos.

BANFIELD: Really, really quickly here. Last question. And that is, OK, let's just say the Supreme Court is actually favoring the Capobiancos here. And now they have to assess that this little child has had about a year-plus of living with a new father in a more cognizant phase of her life.

TOOBIN: And if the Supreme Court grants review, maybe they'll hear argument in March, maybe there will be a decision by June. So again, that will mean a year...

BANFIELD: And a half.

TOOBIN: ... plus with the Browns -- with Brown. Even if -- even if they win, that will mean taking her back. It's just hard to think of a good resolution to the case like this.

BANFIELD: Exactly what I was going to say. No winners, really, in this case. Jeff Toobin, thank you.

It's a real sad story.

More on it of course, we will keep following it.

Also, a deadly attack on a college campus. A faculty member among those killed. Where the murder took place and the weapon believed to be used all coming back when 360 continues.

(COMMERCIAL BREAK)

SESAY: Hello again. I'm Isha Sesay with a "360 News Bulletin."

A bridge failure caused the derailment of a train carrying toxic chemicals in New Jersey. Several cars toppled into the Delaware River, including one that spilled vinyl chloride. Eighteen people were sent to the hospital with breathing problems.

CNN's Arwa Damon is one of the few western journalists in Syria tonight. She's reporting citizens of the city of Aleppo are returning home or, in some cases, to what's left of their homes. Many buildings are left in ruin due to fighting between opposition fighters and government troops. Plus, food and water is hard to find. But that's not stopping people from returning with hopes that opposition forces may be getting the upper hand in the civil war.

A faculty member and one other person were killed at Casper College in Wyoming today before the attacker apparently committed suicide. Police say there were no firearms involved, but that the attacker used some type of sharp-edged weapon.

And this surveillance video could show one of the two winners of the $587.5 million Powerball jackpot. It's from a gas station in Maryland. Witnesses say he walked in to check the numbers and lo and behold, they matched. He hasn't officially come forward as the winner. A family in Missouri has been confirmed as the owner of the other winning ticket -- Ashleigh.

BANFIELD: So we are just two days away from "CNN Heroes," an all-star tribute, Our annual broadcast saluting the top ten heroes of the year.

AND here's what's great about it. The recognition that they get often helps them to do even more for other people. So tonight we catch up with three past honorees who are joining forces to help hundreds of orphans in Malawi.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR (voice-over): Marie Da Silva was a nanny in the U.S. when she started a school for AIDS orphans in her native Malawi. Honored as a top ten CNN Hero in 2008, she's now joined forces with two other honorees.

Magnus MacFarlane-Barrow was recognized in 2010 for his work feeding schoolchildren around the globe.

MARIE DA SILVA, HELPING AIDS ORPHANS: He started his organization in Malawi so I just asked him to consider us.

MAGNUS MACFARLANE-BARROW, FEEDS SCHOOLCHILDREN: I was very struck by her. I felt we were people who could work together.

DA SILVA: This is the stove.

COOPER: Today, Magnus' organization, Mary's Meals, provides free porridge daily to all 400 of Marie's students.

MACFARLANE-BARROW: Am I giving them too much?

DA SILVA: His support means the children will always have something to eat. He is a saint to me.

COOPER: 2010 honoree Evans Wadongo makes solar lanterns for rural African communities. Evans visited Marie's school, and recently his team taught students to build their own lamps.

DA SILVA: For the family, it cuts the costs, and for the children, it's helping them to study. Evans really motivated our kids to be inventors. They've come up with their own little models.

COOPER: Now, Marie's students plan to supply lamps to their communities. With creativity and compassion, these CNN Heroes are helping each other to change even more lives.

DA SILVA: CNN heroes coming together to work together. It's a family. How sweet is that?

(END VIDEOTAPE) BANFIELD: Very sweet. And don't forget to tune in this Sunday night, 9 p.m. Eastern, for "CNN Heroes, An All-Star Tribute." It's hosted by our Anderson Cooper. That's live from the legendary Shrine Auditorium in Los Angeles, better than the Oscars. Trust me.

Back after this.

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BANFIELD: That does it for this edition of 360. Thanks for watching. "ERIN BURNETT OUTFRONT" starts now.