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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Notre Dame: Manti was "Perfect Mark"; Americans Held Hostage in Algeria; Preparing for Gun Control Battle; World Waits for Armstrong Admission; FAA Grounds Boeing 787 Dreamliner

Aired January 17, 2013 - 06:00   ET

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


ZORAIDA SAMBOLIN, CNN ANCHOR: Duped at Notre Dame. One of the most inspirational sports stories of the past year proves to be a hoax. Who is to blame?

JOHN BERMAN, CNN ANCHOR: So, is the Dreamliner a lemon? Boeing's troubled jumbo jet now grounded in America and Europe, too.

SAMBOLIN: An expensive lemon. Standoff in the desert. Americans are among those held captive right now by militants in Algeria.

Good morning to you. Thank you for being with us this morning. I'm Zoraida Sambolin.

BERMAN: And I'm John Berman. It is 6:00 a.m. in the East, January 17th. And I got to say, we've been talking about it all morning. It is a crazy, nutty story. The inspirational story behind Notre Dame linebacker, Manti Te'o's, amazing season a hoax.

So, you may remember the events that Te'o says motivated his award- winning season, his grandmother and his girlfriend dying on the same day. His young girlfriend supposedly passing away leukemia. Here's what he said at the time.

(END VIDEO CLIP)

MANTI TE'O, NOTRE DAME LINEBACKER: I cried, I yelled. Never felt that way before. This is six hours ago, I just found out grandma passed away, and you take -- you know, the love of my life. Last thing she said to me was, "I love you."

(END VIDEO CLIP)

BERMAN: So America was told how Te'o fought through the grief over her death as he led the Irish to the BCS Championship game. But it turns out the girlfriend did not die. In fact, the web site "Deadspin" reports that the girlfriend never existed. So Notre Dame University says Te'o was the victim, pure and simple, of a hoax.

CNN's Ted Rowlands is live in South Bend, Indiana, this morning. Ted, this one -- I've never seen anything like it.

TED ROWLANDS, CNN CORRESPONDENT: Yes. It is a headscratcher, John, to be sure. And this morning, there are a lot of questions out there. But one thing that is absolutely clear this morning, especially here in South Bend is that the University of Notre Dame is standing by their star football player.

(BEGIN VIDEOTAPE)

ROWLANDS (voice-over): University of Notre Dame Athletic Director Jack Swarbrick fought back tears while discussing Manti Te'o at a late news conference. He is convinced Te'o was the victim of an elaborate hoax.

JACK SWARBRICK, ATHLETIC DIRECTOR, NOTRE DAME: The thing I am most sad of, sad about, is -- sorry. The single most trusting human being I have ever met will never be able to trust in the same way again in his life.

ROWLANDS: During the football season, the story of the star linebacker enduring the death of his girlfriend and grandmother on the same day transcended sports. People from around the world were touched by how in love Te'o seemed to be with Lennay Kekua, the girl he called his soulmate.

TE'O: I cried, I yelled, never felt that way before. Six hours ago, I found out grandma passed away, and you take, you know, the love of my life.

ROWLANDS: On the day of his girlfriend's supposed funeral, Te'o played football. After the game, Notre Dame's football coach, Brian Kelly, actually awarded the game ball to the girl we now know doesn't exist.

UNIDENTIFIED MALE: I want to award this game ball to Lennay, and I'd like Manti to have this ball to take back to Hawaii.

ROWLANDS: Te'o told his coaches about the hoax on December 26th. Notre Dame kept the truth under wraps, despite the fact that the media was still telling the story leading up to the national championship game.

SWARBRICK: From the outset, we established a parameter that this was Manti's story to tell. We wanted to know if it would be told. We wanted to know at the appropriate time when it would be told, but it was his to tell.

ROWLANDS: Many of the people including one of the reporters that broke the hoax story doesn't think Te'o's story adds up.

UNIDENTIFIED MALE: Te'o's story that he is completely innocent this doesn't really shake through with us.

ROWLANDS: What still isn't clear is why didn't Manti Te'o ever mention that he never actually met Lennay when talking about how much he loved her. How did the story about how they first met at a football game start and if it wasn't true, why didn't he correct it? And how could he have been so in love with someone he had never actually met face to face?

SWARBRICK: You know, I think as Manti tells the story, you will see the same thing I saw, it does fully line up.

(END VIDEOTAPE)

ROWLANDS: John, university officials say they expect that Manti Te'o will tell his story in some form over the next couple of days. No word from Te'o or his agent as to specifics, when he will tell his story and how he will tell the story.

BERMAN: As you said there, there is no question though that Notre Dame is really standing behind him right now. They say they believe the story 100 percent. Clearly they do. You said we are still waiting to hear from Te'o in some kind of public statement where he talks out loud. I do understand he released a statement on paper.

ROWLANDS: He did. He released a statement. I'll read some of it for you. He said, "I developed an emotional relationship with a woman I met online. We maintained what I thought to be an authentic relationship by communicating frequently online and on the phone. And I grew to care deeply about her. To realize that I was the victim of what was apparently someone's sick joke and constant lies and is, painful and humiliating."

BERMAN: There are a great number of questions about the journalism involved in this story from the very beginning. There is no question there was some great journalism here at the end from "Deadspin." How did they uncover this?

ROWLANDS: Yes, really, they said -- for some reason they thought that the story maybe didn't add up and they went through and they started to look at all of the pieces of the story, including the girlfriend at Stanford University.

There was a story written by the local newspaper here, supposedly with Te'o's help talking about this very romantic meeting about how they meet, eyes, et cetera, and they found out she didn't go to Stanford. There was no record of her at Stanford.

They also looked at other pieces of this puzzle. Take a listen to what one of the reporters told us last night.

(BEGIN VIDEO CLIP)

TIM BURKE, EDITOR, DEADSPIN.COM: Several articles insisted she had either been a Stanford student or Stanford alumni, and nothing checked out there. We called all of the mortuaries and funeral homes in Carson, California where several reports reported that she had been buried. They had no information on it. And that told us something really weird was going on here.

(END VIDEO CLIP)

ROWLANDS: Something really weird going on, absolutely and there are still something really weird going on here, John. And I think until Manti Te'o addresses the media in some form, people will have questions about this story.

BERMAN: All right, Ted Rowlands in South Bend, Indiana. Great to have you there, as we said, I mean, never seen anything like this.

All right, now it's 6 minutes after the hour. Now to the winter storm warnings in effect today from Mississippi to Washington, D.C., meteorologist, Jennifer Delgado with a look at that.

JENNIFER DELGADO, AMS METEOROLOGIST: Hi, guys. You are right. We are tracking some snow out there. Right now, it's affecting parts of Mississippi, but most of the area right now for areas including south and parts of mid-Atlantic, dealing with rain.

But as we zoom in a bit more for you, you kind of see in Mississippi, Jackson, you're dealing with snow, some of that coming down Interstate 55. Now for Mississippi as well as Alabama, it's going to be a little lighter there. We move into areas like Virginia as well as into North Carolina, that snow is going to be quite heavy, some of these locations up to about 8 inches.

For Atlanta, rain for you right now in the morning, and then for parts of the northeast or should say Mid-Atlantic, like Washington, D.C., you're dealing with showers right along Interstate 95, so when is the snow going to come in?

Well, once we get this cold air to kind of chase up and catch up with the rain, we'll see that changing over to snow. More in the late morning as well as in the afternoon into the evening, you can kind see for yourself, some of these totals, the happiest is going to be north of Interstate 40.

It's really affecting areas like Roanoke as well as into the mountains of North Carolina. Here is the time for you. You can see in the morning for the southwest and you can see for regions like Alabama and then as we go into parts of Virginia, this is going to last until 1:00 a.m.

For Washington, D.C., guys, we are talking potentially 1 inch to 3 inches of snowfall, but tomorrow is going to be tricky out there, very icy conditions on the roadways anywhere the storm has move ahead long. Back to you.

BERMAN: Every Washington south, you get 1 inch to 3 inches of snow. We know it's a big, giant deal. Jennifer Delgado, thanks very much.

SAMBOLIN: Even the president has waited on that, right? Everybody makes it a big deal. It's 7 minutes past the hour.

Following a developing story this morning, Americans and other foreign nationals are being held hostage in Algeria. We are now being told 30 Algerians actually escaped after Islamist militants attacked a gas field. Two people were killed. Defense Secretary Leon Panetta was quick to call it a terrorist attack.

Let's bring Elise Labott. She is CNN's foreign affairs reporter. She is live in Washington for us. I know that you have been covering the story since it broke. So reports are saying that this attack is in response to France's military offensive against Islamist militants in Mali. What do you know? ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: WeLL, that's what they are saying. This group, this al Qaeda-related group that's called "Mask Brigade" is saying it's in response for Algeria giving France its air space.

But what we're told by our sources, Zoraida, is that this attack has a very sophisticated level of planning, which indicates it could have predated this French intervention in the last week or so.

So this group does have a lot of criminal ties, we are wondering if it could have been something for money or to raise Islamic credentials with al Qaeda and perhaps they just used this as an opportunistic excuse to launch this attack -- Zoraida.

SAMBOLIN: What is being done to get them out, Elise?

LABOTT: Well, the Algerians have the lead. They say they won't negotiate with terrorists. They say they don't negotiate for hostages and of course, the U.S. doesn't do that either. But you have the United States, France, Britain, Japan, all these countries whose citizens are there.

The U.S. does have assets in the region so they could be planning some kind of rescue operation, Leon Panetta, the defense secretary, says they will spare no efforts to try and get them out, but it's unclear really how they could do that unless they launch some kind of attack.

It doesn't look like they are ready to give these terrorists some of their demands, which include the release of their prisoners, which are held by Algeria and their groups, want them sent to Mali where all these Islamics are kinds of hanging out right now.

SAMBOLIN: These are developing details and I know that you are watching them for us so we appreciate it. Elise Labott live for us in Washington.

And President Obama's call for new legislation to reduce gun violence is receiving a cool reception on Capitol Hill. On Wednesday, he unveiled a list of proposals. It includes the ban on the sale of assault weapons and instituting background checks on all gun sales.

The president released his proposals one month after the massacre in Newtown, Connecticut, that killed 20 first graders and six adults.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If there is even one thing we can do to reduce the violence, if even there's one life that can be saved, then we've got an obligation to try.

(END VIDEO CLIP)

SAMBOLIN: There are many members of Congress who have already said they believe that gun control laws are an attack on the second amendment rights to bear arms. A new poll shows a slight drop over the past month in support of gun control measures. A CNN/"Time" magazine/ORC poll right there shows that 56 percent support a ban on semi automatic weapons. But that is down from 62 percent in December, in a poll taken right after the Sandy Hook massacre.

BERMAN: So the world awaits Oprah Winfrey's one on one interview with disgraced cycling legend Lance Armstrong. It starts tonight. It's widely reported that Armstrong will admit to doping. But what else is he going to say? The interview hasn't aired, but damage control is already well underway. A source telling us that Armstrong is already in talks to return some of his endorsement money.

Boeing with a jumbo-sized PR problem on its hands today as more airlines move to ground its much hyped Dreamliner. We'll have the latest, coming up.

SAMBOLIN: Plus, going nowhere, high drama on the high seas with the U.S. Navy ship stuck. We'll have details on that.

(COMMERCIAL BREAK)

BERMAN: Welcome back to EARLY START, everyone. It is a major blow to Boeing. Their most advance plane yet, the 787 Dreamliner, now grounded here and overseas because of the risk of battery fires.

This has forced two Japanese carriers to make emergency landings. United is the only U.S. airline right now flying the Dreamliner, and the FAA has ordered it to stop for now.

CNN'S Sandra Endo is live in Washington with these details. Not a great moment for Boeing.

SANDRA ENDO, CNN CORRESPONDENT: Absolutely not, John. The lithium ion batteries used on Boeing's marquee plane, the Dreamliner, are really what's in question here. Citing potential a fire risk, the Federal Aviation administration is temporarily grounding all U.S. operated Dreamliners. This comes after a second battery incident on a Boeing 787 in less than two weeks.

In a statement, the FAA says, "Before further flight, operators of U.S. registered Boeing 787 aircraft must demonstrate to the FAA that the batteries are safe and in compliance."

As you mentioned, John, United Airlines is the only U.S. airline with six Dreamliners in service and says it will immediately comply with the directive. And nearly all other international operators with Dreamliners are following suit.

Now, Boeing defends their advanced plane, which debuted in 2011, saying in a statement, "We are confident the 787 is safe and we stand behind its overall integrity. We will be taking every necessary step in the coming days to assure our customers and the traveling public of the 787's safety and to return the airplanes to service" -- John.

BERMAN: All right. Sandra Endo, it will be a busy, busy week for Boeing. Thanks very much.

SAMBOLIN: Sixteen minutes past the hour. Let's get you up to date. Here is Christine Romans.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Good morning again you two.

Americans and other foreign nationals are being held hostage in Algeria at this hour. Islamist militants a gas field near the country's border with Libya, targeting foreign employees working there. Two people killed. Several hostages, including Americans, were seized. Thirty Algerians who were taken hostage somehow managed to escape.

An American soldier accused of murdering 16 Afghan civilians, nine of them children, he is set to be arraigned today. His defense attorney says that Staff Sergeant Robert Bales will plead not guilty. He's being held at a base in Washington. Bales allegedly murdered the civilians in nighttime raids last March. He could face the death penalty if convicted.

A U.S. Navy minesweeper has run aground on a reef near the Philippines. The Navy says the USSS Guardian, part of a Seventh Fleet, was headed to its next port of call when it got stuck in the Sulu Sea. No world of injuries among the crew of 81. Crew members are trying to figure out how to set the ship free of that reef.

And Notre Dame officials say linebacker Manti Te'o was the target of an elaborate hoax. The Web site Deadspin says his girlfriend whose death was said to be an inspiration for Te'o during some of the team's biggest games, the girlfriend never existed. Notre Dame officials say he was duped into an online relationship. In a statement, Te'o called it, quote, "someone's sick joke."

BERMAN: It's the subject of every water cooler.

ROMANS: It really is.

BERMAN: It's the reason for water coolers to have discussions about this story.

SAMBOLIN: I can't wait to hear from him. Just to see what he has to say, how he explains it all.

Thank you, Christine.

ROMANS: You're welcome.

SAMBOLIN: Seventeen minutes past the hour. It's time for your "Early Reads", your local news that is making national headlines.

And we're beginning with a story in "The Chicago Tribune." The city council committee has given initial approval to staggering $33 million payout to settle two cases of police misconduct, including a settlement $22.5 million settlement to this woman right here. Her name is Christina Eilman. It is believed to be the city's largest settlement to a single victim of police misconduct.

So, here's a back story. In 2006, Eilman was arrested at Midway International Airport during a bipolar breakdown. She was released the next day in one of the most crime-ridden neighborhoods. Eilman was abducted, she was raped, and was either thrown or she fell out of a window seven floors up. She survived, but she suffered severe and permanent brain damage.

BERMAN: What an awful story.

SAMBOLIN: Oh, it's terrible. I remember when it happened. It's just an awful. What an outrage also for the community.

BERAMN: All right. So do you keep going over your smartphone minutes?

Well, Facebook, they want to help. The company started offering free voice calling in the U.S. through their Facebook messenger app. Unfortunately for all you Android and Window users, it's only available on the iPhone for now. So, you know, Skype offers something like this.

In my understanding of it, and admittedly I have limited understanding for almost anything. But my understanding of this is, you know, you do wrack up data. If your data plan is limited, you actually could end up paying more than you would --

SAMBOLIN: A lot more. It's happened to me. I have been the victim with a 14-year-old son. You can really rack it up. So, you have to go back and say, can you up it.

BERMAN: Be careful.

SAMBOLIN: Yes, and they make you pay.

All right. So, you might wait longer and you might pay more. So, you would say, sign me up for that, right?

BERMAN: Big news in the airline industry could mean bad news for travelers, Christine Romans has that in today's "Road Warriors".

ROMANS: I do.

The American Airlines boards is expected to make a decision about the U.S. Airways merger by the end of the month. If it does happen, travel experts say air fares could go up, less competition, means higher prices. Also be prepared for some computer hiccups caused by combining computer systems which may delay some flights.

But if you have frequent flier miles with either airline or you've earned elite status, folks say, don't worry because usually airlines work hard to accommodate loyal customers.

In other travel news, there may be a pilot shortage on the horizon and it could result in fewer flights to smaller cities. Starting in August, a new rule will require copilots to have as many flight hours as captains before they can work in a cockpit. A lot of pilots are about to retire. It will take 8,000 new pilots a year to replace those retiring pilots. Analysts say larger airlines will scoop up available pilots, leaving regional airlines scrambling.

All right. Some gun owners might not like all the talk of stricter gun control. But so far, gunmakers are reaping the benefits. That's coming up.

(COMMERCIAL BREAK)

SAMBOLIN: Twenty-three minutes past the hour. We are minding your business this morning. U.S. stock futures trading mix this morning after markets closed mixed yesterday as well.

BERMAN: And Christine Romans has business headlines this morning, including some information on gun stocks.

ROMANS: That's right.

Well, you say Dow arrow is pointing down. That's likely because of Boeing. Boeing shares down 3 percent in premarket -- Boeing is one of the 30 of the Dow stocks -- because of the Boeing Dreamliner problems.

And gun stocks, you know, all this talk about limiting gun violence, trying to ameliorate the situation of gun violence in schools and movie theaters has sent gun stocks through the roof. I want to show more on the run on guns and how gunmakers have been really doing well here.

Smith & Wesson over the past 52 weeks is up 92 percent. Since Newtown, it's up almost, looks like, you can see right there, it's up nicely, since Newtown.

I want to look at Sturm and Ruger. Sturm & Ruger is up 27 percent over the past year. It is also up since Newtown.

So, all this talk about limiting guns, gun ownership, has meant people are rushing to get guns, they're buying these things, industry calls modern sporting rifles like the one used at Newtown. Those are on back order or sold out around the country. You can't even get them.

Many of the stocks of retailer whose sell these things are also going up. Business has been very good for the gun industry it is frankly thriving.

Similar to CalSTRS, the California teachers retirement plan, the New York state comptrollers' office says it is freezing its investment in commercial firearms manufactures. Not selling like (INAUDIBLE). But freezing their investments, because some investors, especially investors who are teachers, they don't really feel great about owning commercial firearms even as stocks are going up and it's a good investment.

I want to take quickly. We've got some rules to prevent foreclosures. We're seeing a lot of these new sort of housing related rules ruling out this month. Federal officials issuing new rules for mortgage services Thursday. They want to protect homeowners facing foreclosures.

They're going to put some restrictions in here on foreclosures. Mortgage servicers has to consider all the alternatives, before they foreclosure, hmm, that would seem like a no brainer. And they have to have a very clear mortgage statements, and they have to give people early warnings on whether interest rates are going to go up on their payments. Things that sound like reasonable to do, now federal officials are saying they're going to put that into -- you know, put that into practice.

SAMBOLIN: Plan B of being reasonable.

What's the one thing we need to know about our money?

ROMANS: You can still refinance. Today is the day to refinance your mortgage. Rates are still low. We'll hear a new 30-year fixed rate mortgage, 3.4 percent. It's what they were the most read --

SAMBOLIN: Look at that.

ROMANS: I know. They might even be lower when we get a new read on 2.66, the 15-year rate. That is the popular refinancing tool. Even as we talk about getting -- talk about getting people into mortgages they can afford. You know, helping people understand, keeping people out of foreclosure.

We're talking about all of this, and I want to remind people, rates are still very, very low. If you have a mortgage in 5 percent or 6 percent zone and people still do, you need to think about refinancing. It's money on the table you're leaving.

SAMBOLIN: Two-point-six-six.

ROMANS: Can you believe it?

SAMBOLIN: No, I can't. I actually circled. I was shocked.

BERMAN: She got on the phone. She was on the cell phone.

SAMBOLIN: Incredible. Thank you very much.

ROMANS: Thank you very much.

SAMBOLIN: So, how would you like to make a living surfing the web and hardly working at all?

BERMAN: I would like that.

SAMBOLIN: It's what Berman does every day.

So, one guy did it by outsourcing himself. How he pulled it off for a little while anyway.

(COMMERCIAL BREAK)