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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Ousted IRS Chief On Hot Seat; Sexual Assault Cases Plague U.S. Military; Surreal And Extensive Damage; Russia Selling Anti-Ship Missiles To Syria; Dzhokhar Tsarnaev's Boat Note; Disappearing Witnesses; Mother's Day Parade Shooting Arrest; Ticket Buying Frenzy; Hatchet Wielding Hitchhiker Arrested; Arias Trial Delay

Aired May 17, 2013 - 06:00   ET

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


(BEGIN VIDEOTAPE)

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT (voice-over): -- wasn't talking then about the scandal. It was a friendly encounter.

UNIDENTIFIED MALE: Thank you, Chairman.

LOTHIAN: A routine update on the agency's proposed budget. Today, he returns before the full committee to a much different atmosphere. Rocked by scandal, Miller will be pressed by lawmakers on the information his agency gathered, not tax checks.

REPRESENTATIVE CHARLES BOUSTANY JR. (R), LOUISIANA: It's important that he appear and come forward truthfully, openly and give us real answers to the extent that he knows.

LOTHIAN: President Obama has tried to put out this fire, expressing outrage, vowing to hold people at the IRS accountable and quickly appointing a new acting commissioner who starts on the job next week.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: We've got to make sure that it is doing its job scrupulously and without even a hint of bias.

LOTHIAN: His top aides are all appearing on new shows doing damage control.

UNIDENTIFIED MALE: The president took swift decisive action.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The fact of the matter is that this administration has a record on transparency.

LOTHIAN: While the president is trying to shift attention to his other priorities. A trip to Baltimore today will focus on middle class jobs. It follows Thursday's meeting on sexual abuse in the military and a visit with the Turkish prime minister where Syria was at the top of the agenda. But a dark cloud still hangs over this White House and critics at a Tea Party rally are keeping up pressure.

SENATOR MITCH MCCONNELL (R), MINORITY LEADER: This is runaway government at its worst. Who knows who they will target next?

LOTHIAN: Dan Lothian, CNN, Washington.

(END VIDEOTAPE)

ZORAIDA SAMBOLIN, CNN ANCHOR: There is a growing crisis in the military this morning. In very blunt language the president calls the rising number of sexual assaults shameful and disgraceful and a danger to national security. He's ordering Pentagon officials to crack down. This comes amid a series of high profile cases of alleged sexual abuse involving service members assigned to actually prevent those very crimes. Here's Pentagon correspondent Barbara Starr.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Another embarrassment for the U.S. military, this time at Fort Campbell, Kentucky, home of the 101st Airborne Division. Lieutenant Colonel Darren Haas, the officer in charge of Sexual Assault Prevention, was removed from his job after being arrested for violating a protective order to stay away from his estranged wife.

He had sent greetings to his wife while serving in Afghanistan in 2010. The incident came to light just hours after President Obama met with top brass about sexual assault in the military.

PRESIDENT OBAMA: There is no silver bullet to solving in problem. This is going to require a sustained effort over a long period of time.

STARR: The Fort Campbell firing was the third in two weeks of personnel assigned to military sexual assault prevention jobs. At Fort Hood, Texas, a sergeant first class is under criminal investigation by the Army for pandering. A Pentagon official says he may have forced someone into prostitution.

Other allegations -- abuse of sexual contact and maltreatment of subordinates. Last week, Air Force Lieutenant Colonel Jeffrey Krusinski was arrested on sexual battery charges for allegedly groping a woman near the Pentagon where he worked in Sexual Assault Prevention.

On Capitol Hill, pressure is mounting for historic changes in military law. Senator Kirsten Gillibrand is introducing legislation so in sex assault cases where there maybe jail time, the decision to prosecute is taken away from commanders and given to military attorneys. Many feel prosecutors from outside the unit will be more vigorous.

SENATOR KIRSTEN GILLIBRAND (D), ARMED SERVICES COMMITTEE: We believe enough is enough. It's time to change the system that's been held over since George Washington. It's simply not working for the men and women serving.

(END VIDEOTAPE)

STARR: Defense Secretary Chuck Hagel has ordered the retraining of key personnel involved in Sexual Assault Prevention Programs. But with a number of cases of sexual assaults and rapes on the rise in the military, key commanders are acknowledging they just are not sure what to do to solve the problem. Barbara Starr, CNN, the Pentagon.

JOHN BERMAN, CNN ANCHOR: Our thanks to Barbara.

The search is on this morning for seven people still missing after those devastating tornadoes touched down in Texas. The National Weather Service says there were at least 16 tornadoes. People in the neighborhoods hardest hit are not being allowed back to survey the damage right now. Those who have seen the scope of the damage firsthand, they tell us it is surreal and it is extensive.

CNN's Victor Blackwell is live for us this morning in hard hit Granbury, Texas. Good morning, Victor.

VICTOR BLACKWELL, CNN CORRESPONDENT: Good morning, John. Even with wide lenses and big screens and HD it is nearly impossible to relay all the devastation in this community of Rancho Brazos where those six people were killed by tornadoes on Wednesday night.

I want to tell you that the winds have picked up here. We have seen some lightning and heard some thunder. Rain certainly would hamper the search for those still missing in that community.

(BEGIN VIDEOTAPE)

BLACKWELL (voice-over): Sheriff Roger Deed has seen tornado damage in Hood County before, but this is more than damage. This is catastrophic.

UNIDENTIFIED MALE: I have seen bad, but this is about as bad as it gets.

BLACKWELL: This is the Rancho Brazos community of Granbury, Texas. Once a mix of single storey houses and mobile homes, but 200-mile an hour winds have formed damage of a scramble of glass and metal and a simple reminders of how quickly life can change. The National Weather Service estimates more than a dozen tornadoes touched down Wednesday in North Texas. It appears that at least one stayed a while.

UNIDENTIFIED MALE: They usually go street to street or jumps neighborhood to neighborhood. In this case, this neighborhood of about 110 homes, it seems to sit down on top of it.

UNIDENTIFIED MALE: I feel really an empty feeling in my stomach because the fact is this was someone's home.

BLACKWELL (on camera): When there are so many homes and cars damaged and just completely destroyed like this one, you can see that the air conditioning unit off the foundation. The windows busted out. I mean, this house will have to be demolished. It is easy to get lost in how large it is, but then you see something like this, just a child's drawing, red, pink and blue hearts.

Children lived in this community. They have lost their homes. Some of them maybe have lost family members. These are families that have to start over. This is more than just pictures of devastation on television. People now have to find a way to build a new normal for their lives, for their children. There is so much work to do and with optimism Sheriff Deeds believes they will rebuild.

UNIDENTIFIED MALE: We are taking care of business, taking care of the people and we'll continue to do so.

(END VIDEOTAPE)

BLACKWELL: And 61 of the homes in that community were Habitat for Humanity homes where people had to put in sweat equity to own their first home. I spoke with the disaster relief manager for the organization and they have said they will step forward and help those families, those homeowners rebuild -- John.

BERMAN: Victor, such amazing, tragic pictures you showed us in that piece. There were six people confirmed dead so far in this tragedy. Do we have their identities yet?

BLACKWELL: Their names have been released by the sheriff here in Hood County. They are mostly over the age of 60, the youngest person, early 30s but 60 up to age 82, two people with the same last name. Their relationship has not yet been confirmed for us. So we are hoping to learn even more about those six.

BERMAN: All right, Victor Blackwell for us in Granbury, Texas this morning. Thanks so much, Victor. To find out how you can help the victims of these Texas storms, visit our web site, the impact your world page that's at cnn.com/impact.

SAMBOLIN: Breaks your heart there. It's 8 minutes past the hour, a troubling development overnight. Russia is sending advance anti-ship cruise missiles to Syria, a sign, U.S. officials say, that illustrates Moscow support for President Bashar Al-Assad's regime.

The "New York Times" reports the missiles have advanced radar capabilities that can help the Syrian regime stop foreign forces from establishing no-fly zones, carrying out limited air strikes or supplying Syria's opposition from the sea.

BERMAN: The surviving Boston marathon bombing suspect left a note about his motive. Law enforcement found the note from Dzhokhar Tsarnaev on the boat where he was discovered hiding. He wrote that the bombings were retribution for U.S. attacks on Muslims in Afghanistan and Iraq. He referred to the Boston victims as collateral damage.

Tsarnaev also reportedly told police that an attack on one Muslim was an attack on all Muslims. Be sure to watch Anderson Cooper's special report "Back to Boston, Moments of Impact" that is tonight at 10:00 p.m. Eastern Time.

SAMBOLIN: A Justice Department investigation finds U.S. Marshalls lost track of two former members of the federal witness security program who were identified as known or suspected terrorists. A new report says one of the former witnesses is now known to be living outside the United States. The other is believed to be out of the country. It says the Marshall Service failed to inform authorities who run the no-fly watch list about terrorists giving them access to commercial flights in the United States.

BERMAN: Police in New Orleans have arrested a second suspect in a Mother's Day shooting. It is believed he and the first suspect, 19- year-old Akeem Scott, were involved in some gang activity. Scott was charged with 20 counts of attempted second degree murder during his first court appearance which is on Thursday. He's being held on $10 million bail. Three people who were shot remain in critical condition this morning.

SAMBOLIN: If you are feeling lucky your timing is perfect. The jackpot for tomorrow's night Powerball lottery drawing has grown to more than half a billion dollars. That is the second largest in Powerball history and the third biggest overall. Powerball is at $550 million. The rival Mega Millions jackpot stands at $190 million. That's ahead of tonight's drawing. I would be fine if I won the $190 million.

BERMAN: I'll take that. Not a bad consolation price. Better than turtle wax.

Coming up on EARLY START, an internet sensation who rose to fame for a daring rescue is now charged with murder. What the hatchet wielding hitchhiker is now accused of doing.

SAMBOLIN: And we have the latest on the Jodi Arias sentencing. The brother and sister of her victim, Travis Alexander, give emotional pleas.

(COMMERCIAL BREAK)

SAMBOLIN: Welcome back. It's 14 minutes past the hour. The internet celebrity known as Kai, the hatchet-wielding hitchhiker has gone from famous to infamous after being accused of murder. The homeless hitchhiker appeared on late night talk shows earlier this year for his colorful rants about coming to the rescue of a woman by hitting her attacker with the back of a hatchet.

But now he's on the other side of the law. He is charged with the brutal beating death of a New Jersey lawyer.

(BEGIN VIDEOTAPE)

SAMBOLIN (voice-over): From heroic hitchhiker to alleged murderer.

UNIDENTIFIED MALE: Smash, smash, smash.

SAMBOLIN: Caleb McGillvary better known as Kai, the hatchet wielding hitchhiker is behind bars in Philadelphia, accused of beating a New Jersey lawyer to death inside his home. Earlier this year, Kai skyrocketed to viral video stardom after this rambling TV interview captured the lively hitchhiker describing how he saved two victims from a deranged attacker.

CALEB MCGILLVARY, "KAI THE HITCHHIKER": So came from behind with a hatchet, smash, smash, smash.

SAMBOLIN: That interview amassed close to four million views on YouTube. Kai even made a hilarious cameo on Jimmy Kimmel.

UNIDENTIFIED MALE: You're that dude with the hatchet.

SAMBOLIN: Four months after being held a hero, the homeless hitchhiker became the subject of a massive manhunt for allegedly killing 73-year-old New Jersey Attorney Joseph Galfi, Jr.

THEODORE ROMANKOW, UNION COUNTY PROSECUTOR: This man was well-known. That doesn't mean he did not or could not become involved in a crime.

SAMBOLIN: On the run since Monday, Kai took this picture. His long hair cut off, police say to try and conceal his identity.

On Thursday night, police tracked him down at a Philadelphia bus station. It's still unclear how Galfy and the hitchhiker know each other. Police say Galfy drove to pick Kai up and spent the weekend at Galfy's home.

Kai's last post on Facebook appears to indicate their encounter was sexual in nature.

Police are still investigating exactly what happened. Until more is known, the internet's hitchhiker is off the streets and behind bars.

(END VIDEOTAPE)

SAMBOLIN: That beating victim was a well-respected attorney with more than 40 years of experience in New Jersey.

JOHN BERMAN, CNN ANCHOR: Federal and state investigators in Texas still do not know the cause of the deadly fire and explosion at a fertilizer plant last month. They have not ruled out the possibility that the fire was intentionally set. Fifteen people, you'll remember, were killed by that powerful explosion. Dozens were injured in that. Buildings, you'll remember, leveled in that area, in the small town of West. So many homes damaged or destroyed.

Bernie Madoff says that he can't sleep in prison. The convicted Ponzi schemer tells CNN Money that he's consumed with guilt over his son's suicide. He just can't sleep in his North Carolina prison cell, he says. Madoff is serving a 150-year term for the massive fraud. He says he only works a few hours a day, so he has plenty of time to think about all the collateral damage that he caused.

SAMBOLIN: Seventeen minutes past the hour.

New delays in the Jodi Arias murder trial. Defense witnesses scheduled to testify on her behalf have been pushed back now to Monday, but not before two siblings of the man she killed delivered emotional victim impact statements to the court.

Casey Wian Reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Stephen Alexander was in the U.S. Army in 2008 when he found out his brother, Travis, had been murdered. As his killer, an emotional Jodi Arias, sat and watched, Alexander told jurors about the unanswered questions that haunt him to this day.

STEPHEN ALEXANDER, BROTHER OF TRAVIS ALEXANDER: How much did he suffer? How much did he scream? What was he saying? What was the last thing he saw before his eyes closed? What was his final thought in his head?

WIAN: Next, sister Samantha Alexander approached the podium, crying even before she spoke.

SAMANTHA ALEXANDER, SISTER OF TRAVIS ALEXANDER: Travis was our strength, our constant beacon of hope, our motivation. And his presence has been ripped from our lives.

WIAN: Defense witnesses are expected to speak about several mitigating factors that could spare Arias' life, including her lack of criminal past, her past efforts to convert to the Mormon faith and her talent as an artist.

KIRK NURMI, DEFENSE ATTORNEY: This is a girl right here now that you pledged when you were selected as jurors, that after hearing or after possibly convicting her of first-degree murder and finding aggravating factors, that you would consider giving Ms. Arias life.

WIAN (on camera): In a trial full of gripping moments, one of the last could come from Jodi Arias herself next week, when she's expected to beg for mercy from a jury that has already convicted her of an especially cruel first-degree murder.

Casey Wian, Phoenix.

(END VIDEOTAPE)

BERMAN: Nineteen minutes after the hour right now.

And coming up, how police say a man tricked his own girlfriend into taking an abortion pill.

SAMBOLIN: And we'll get a check on the financial markets. Is the Dow's record run about to hit the skids?

(COMMERCIAL BREAK)

BERMAN: Welcome back, everyone. Minding your business this morning.

Price swings on Wall Street and on Main Street.

SAMBOLIN: So, Christine, let's start with stocks.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Things are looking good this morning. A bright note in terms of futures right now. So, we are expecting maybe a higher day for stocks.

But markets hit the pause yesterday from the record run. There were weaker housing and jobless claims data. The Fed officials are debating when the Fed should stop propping up the economy. That makes stock investors nervous, because they have had an incredible run here.

The Dow was up 16 percent so far this year. The NASDAQ is up 14 percent. The S&P 500, 15 percent.

The S&P 500, that's the gauge I really watch for your 401(k). The stocks in your 401(k) most likely reflect what's happening in the S&P 500. This has been among the best bull markets in a hundred years or so. This chart I made for you shows how bull markets have stacked up. These are the top five bull market since 1929. This is the fifth best.

The S&P 500 index, you guys, is up 145 percent since 2009. Now, remember what's happening in 2009. The world was falling apart, right? So, if you were brave enough to buy at that very moment, you're up 145 percent. Most of us weren't that brave and we were slowly getting in after that.

Only half of Americans are invested in the stock market. Half of Americans are not invested in this. All of you, though, almost all of you fill up your tanks.

So, here's an important number for me to tell you about. Gas prices are moving up again, just in time for the summer driving season. You can see the national average is now $3.62 a gallon. That's according to AAA. Midwest states are seeing the biggest spikes because of problems at area refineries. Folks in Minnesota are seeing the biggest spikes in gas prices now averaging $4.15 a gallon.

SAMBOLIN: Oh, boy.

ROMANS: That's 53 cents higher than the rest of the country. I'm sure it's terrible in Chicago.

SAMBOLIN: I'm headed there. So, I will share.

ROMANS: Yes, it's tough in Chicago. I live in New Jersey where taxes are low. So, we have low gas prices relatively in New Jersey. But when you start heading to the Midwest and the Upper Midwest those are higher, and because of some of those refinery issues, experts are telling us --

SAMBOLIN: On top of taxes, right?

ROMANS: Yes, expect it to keep moving up.

BERMAN: So, what's the one thing we need to know about our money?

ROMANS: If you got a house, if you are financing a house, if you want to buy a house, mortgage rates are ticking up again. The average rate for a 30-year fixed mortgage is now 3.51 percent. That is still historically low, I should point out. The average rate for a 15-year, that's a popular refinancing, 2.69 percent. Still very, very low, but in the last couple of weeks, they have ticked up a little bit. Again, it's all that talk about the Fed and whether the Fed is going to have an exit strategy from propping up the economy. If that were to happen, would rates start to rise a little bit? And that's what you're seeing reflected in the mortgage market.

SAMBOLIN: All right. Thank you.

ROMANS: You're welcome.

BERMAN: Coming up here, is that commute getting you down? How about taking a helicopter? Might give you a lift, a little a short cut. Russian President Vladimir Putin is taking to the skies.

SAMBOLIN: And we have a very, very special first pitch at last night's Tampa Bay Rays game. How a surprise catcher threw this little girl a big beautiful curve. Wait until you find out who that man is.

(COMMERCIAL BREAK)

BERMAN: A desperate search under way right now. Seven people still missing after 16 tornadoes ripped through northern Texas.

SAMBOLIN: And this is unbelievable. A man under arrest for tricking his girlfriend into an abortion.

BERMAN: And then, a dancer who once defended Michael Jackson accusing him of being a pedophile and child sex abuser. But now, Michael Jackson's nephew is coming to his uncle's defense.

Welcome back to EARLY START, everyone. I'm John Berman.

SAMBOLIN: And I'm Zoraida Sambolin. Twenty-nine minutes past the hour.

BERMAN: And we begin with the staggering, almost surreal tornado damage in north Texas. Six people are dead. And right now, the search is on for seven who are still missing this morning.

And people who live in the hardest hit neighborhoods say it could be days, maybe even a week before they'll get to see what, if anything, is left of their homes.