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Ousted IRS Acting Commissioner Tells Congress Mistakes, Not Politics Led to Scrutiny of Conservatives; O.J. Simpson Makes Bid for a New Trial

Aired May 17, 2013 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, on the hot seat. With the temperature turned all the way up. The ousted IRS boss tells Congress foolish mistakes, not politics led to the scrutiny of conservatives.

O.J. Simpson is back in the public eye today. After years in prison, he's making a bid for a new trial, saying his ex-lawyer let him down. But wait until you hear what that lawyer is now saying.

And while the movie stars were out with all their glitter and bling, someone was making off with a small fortune of diamonds. We're digging into the mystery in one of the world's most glamorous spots.

I'm Wolf Blitzer. You're in the SITUATION ROOM.



BLITZER: There are hot seats, and then, there are really hot seats. Members of Congress turned up the temperatures today on the outgoing IRS commissioner. And while he denied any political motive in the targeting of conservative groups, the agency's inspector general revealed that senior treasury officials were, in fact, informed that an investigation was under way before the election last year.

Let's begin with our chief Congressional correspondent, Dana Bash, who watched this hearing explode today -- Dana,

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: That's right, Wolf. Steven Miller admitted in this hearing that the IRS singled out groups, political groups using conservative key words like Tea Party but did not use traditionally liberal words like progressive. That did not help his argument that their mistakes may have been stupid but not partisan.




BASH (voice-over): Two days after getting fired, the IRS chief apologized. STEVE MILLER, OUSTED IRS COMMISSIONER: What happened here was that foolish mistakes were made by people trying to be more efficient in their work load selection.

BASH: Yet Steven Miller repeatedly insisted inappropriate IRS scrutiny of conservative groups was not politically motivated.

MILLER: It was a mistake and not an act of partisanship.

BASH: His explanation? Back in 2010, the IRS was bombarded with applications for tax-exempt status, so they came up with a shortcut using words like Tea Party to I.D. groups.

MILLER: Look, they get 70,000 applications in there for 150 or 200 people to do. They triage those.

BASH: But for four hours, he couldn't or wouldn't answer many questions.

MILLER: Actually, I do not know that. I don't -- I don't recall. I don't know.

BASH: Left unanswered, who at the IRS came up with the idea? What really irked lawmakers? Miller found out the IRS was targeting Tea Party groups one year ago and never told this committee which was investigating.

REP. CHARLES BOUSTANY, (R) LOUISIANA: Why did you mislead Congress and the American people on this?

MILLER: Mr. Chairman, I did not mislead Congress nor the American people. I answered the questions as they were asked.

BASH: That only made Republicans angrier saying he had an obligation to tell Congress.

REP. PAUL RYAN, (R) WISCONSIN: How can we conclude that you did not mislead this committee?

MILLER: I did not mislead the committee.

REP. DAVID REICHERT, (R) WASHINGTON: Does this committee have the right to know the information that you knew? Yes or no? Yes or no?

REP. MIKE KELLY, (R) PENNSYLVANIA: This is absolutely an overreach and this is an outrage for all America. I yield back.

MILLER: All right.


BASH: One surprising revelation? The way the IRS finally disclosed the targeting. They planted a question at an American Bar Association meeting last Friday, the question for the woman in charge of the tax- exempt division. VOICE OF LOIS LERNER, IRS OFFICIAL: They used names like Tea Party or patriots, and they selected cases simply because the application had those names in the title.

BASH: Even then, the IRS did not tell Congress.

MILLER: We called to try to get on the calendar.

REP. PETER ROSKAM, (R) ILLINOIS: You called to try and get on the calendar. Is that all you got? You're arguing today that the IRS is not corrupt, but the subtext of that is you're saying, look, we're just incompetent.

BASH: Democrats expressed outrage, too. But also tried to take the heat off the president by pointing out IRS officials were not Obama picks.

REP. JOSEPH CROWLEY, (D) NEW YORK: Appointed by then President George W. Bush, is that correct?

UNIDENTIFIED MALE: Yes. That's correct, sir.

BASH: Miller did back up White House claims it didn't know.

UNIDENTIFIED MALE: Did you ever have any contact either by e-mail, phone, or in person with the White House regarding the targeting of tax-exempt groups from 2010 until today?

MILLER: Absolutely not.

BASH: But the inspector general revealed that in 2012, before the election, he informed Obama officials at the treasury department about his ongoing investigation. Later, Republicans said that backed up the chairman's opening statement.

REP. DAVE CAMP, (R) WAYS & MEANS CHAIRMAN: It seems like the truth is hidden from the American people just long enough to make it through an election.


BLITZER: And Dana is joining us now. Dana, so the bottom line, is that a smoking gun if you will, the fact that the inspector general told Congress that last June, June 4th, specifically, he told the treasury department's general counsel and the deputy treasury secretary, both political appointees from the Obama administration, that this investigation was under way?

BASH (on-camera): Well, you can be sure that those are going to be questions that Republicans are going to ask that very treasury official, Neil Wolin, who is going to be testifying before another House committee next week. However, what he specifically said is that he told treasury officials the investigation was under way. Really towards the beginning, if you look at the timeline, towards the beginning of the investigation, in general. So, if he would have told the treasury officials, Obama officials about the findings that they had found that conservative groups were being targeted that certainly would be a smoking gun. The fact that they knew that this investigation was going on after Republicans in Congress were screaming from the rooftops that the IG should investigate, maybe not so surprising.

BLITZER: Maybe not necessarily a smoking gun, although some will try to make it sound like a smoking gun.

BASH: Oh, absolutely.

BLITZER: All right. Dana, thanks very much.

The president, he got out of town today. He was in Baltimore pushing job growth. One of his agenda items over shadowed by the swirling scandals.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And I know it can seem frustrating sometimes when it seems like Washington's priorities aren't the same as your priorities. I know it often seems like folks down there are more concerned with their jobs than with yours. Others may get distracted by chasing every fleeting issue that passes by, but the middle class will always be my number one focus. Period.


BLITZER: All right. Joining us now, our chief political analyst, Gloria Borger, and our chief national correspondent, John King. Gloria, so this damage control effort, it's under way by the administration.


BLITZER: Is it working?

BORGER: Well, it's certainly hard to know right now, Wolf. If you look at it from the public's point of view, the president has a point there which is the public doesn't like the IRS. It probably doesn't like members of Congress much more than the IRS. So, this is a fight where to them, at least, there's kind of no hero. Maybe there's a villain and if they find that the Obama administration is at fault.

So, the president has no choice at this point but to try and pivot on it. I'm told that at a meeting yesterday with outside strategists, you know, they said to the president get out of town, maybe do some town halls, try to talk to real people out there, and focus them back on your agenda. That's all that he can do right now and hope Republicans overreach.

BLITZER: In effect, trying to change the subject?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Trying to change the subject. And Wolf, the timing here is damning for the president because of where we are. We're in the second term. We're heading into the six-year midterm election. After that election, it will take about 20 seconds for the 2016 presidential campaign to begin. The risk for the president here.

Look, they did fire the acting commissioner pretty quickly. They had paused for a couple days than they -- the risk is that people look at the IRS and agencies they don't like to begin with. They don't blame the president personally, but I think, what about the treasury secretary? Why, for example. Here's the question. Why was the White House counsel told a couple weeks ago that the president finds out from news reports?

BORGER: That's a good question.

KING: The White House counsel was told of the findings, not the investigation, but of the findings, and they don't immediately tell the president. The risk is like happened to George Bush after Katrina when people thought the administration of the Iraq war whether they supported it or not was incompetent. Do people think these guys are having a hard time running their government, keeping their hands on the lever? The competence question.

BORGER: And credibility, because they lose, you know, they lose credibility here. Here's an administration that has been talking about the things government can do for you. Big government. First of all Obamacare, OK? Big government. Now, immigration reform. Who's going to police the borders? Government.

So, this goes to the key question of credibility in government. People don't have it. They're not going to support government providing solutions to any kind of large problems which also goes to what Obama wants to do for the rest of the term.

BLITZER: All right. Listen to the now ousted acting commissioner of the IRS testifying today. I'll play a little clip.


MILLER: I think that what happened here was that foolish mistakes were made by people trying to be more efficient in their work load selection. The listing described in the report while intolerable was a mistake and not an act of partisanship.


BLITZER: Is that argument going to work?

KING: God bless him for standing up for his friends and colleagues at the IRS, but that was the ultimate bureaucratic answer. He disputed. I don't think this is targeting because he thought targeting would be nefarious of political reasons. He took issue with a lot of the characterizations. He seemed to suggest that he didn't have an obligation or the agency didn't have an obligation to go back and tell the Congress.

Once it did have its findings and it knew that Congress was asking these questions, that it didn't have an obligation. They made a stand and noted a very calculated plan to put this out in the public domain. Once they realized that report was in the pipeline to come out and be published and they were going to be hammered for this.

They did this in a defensive, calculated way. Their initial response to protect themselves. Mr. Miller did not help himself today.

BORGER: My favorite part of Mr. Miller's testimony if there is a greatest hits today was when he was asked by members of Congress, did you intentionally mislead us? And his answer was, he didn't mislead them, but he answered your questions as they were asked. That's not a really good answer to give members of Congress.

BLITZER: You want to give them the truth, the whole truth, and nothing but the truth in its proper context.

BORGER: Their job is oversight. They should be allowed to do it.

BLITZER: It's interesting, though. Lois Lerner, when she released it at the American Bar Association, first rule of bad news damage control. If you got bad news, you release it. Don't wait for your enemies to get ahold of that. And that's clearly was on their mind. All right. Guys, thanks very much.

Up next, the Powerball jackpot hitting $600 million, and it's climbing. If no one beats the odds tomorrow, it could be approaching, yes, $1 billion.

Also coming up, glamour, glitter, and bling. While movie stars were out showing their style, someone was making off with some very valuable diamonds.


BLITZER: Be on the lookout for lottery fever this weekend. Tomorrow night's Powerball jackpot will be worth at least $600 million. They sell Powerball tickets in 43 states plus the District of Columbia and the U.S. Virgin Islands. One of those states, New Jersey, that's where CNN business correspondent, Zain Asher, is standing by. Has the fever gotten very intense already, Zain?

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: It is absolutely very intense over here, Wolf. I actually caught one man in the middle of buying ten lottery tickets and another man telling me that he spends on average $80 a day in general on lottery tickets. He says that tomorrow would absolutely be no exception. I do also want to say that if you are spending that kind of cash on lottery tickets, it is very important that you do not spend more money than you can afford to lose.

The jackpot right now, Wolf, as you know stands at $600 million. It is, of course, the second largest in U.S. history, and you do have the choice of either annual payments or a lump sum payment and the catch, of course, with the lump sum is that you do get a little bit less money. You would get in this case, $376 million. I personally would not be complaining about that. However, what I probably would complain about is the chances of winning.

They are absolutely dismal. One in 175 million. Those are your chances of winning tomorrow. And actually, that's an improvement because previously, just a couple of years ago, it would have been one in 195 million. So, I guess, we are getting closer. That's not stopping people, though. I did actually speak to one woman and I asked her what would you spend the money on. Here's what she had to say.


UNIDENTIFIED FEMALE: I would pay off my mortgage. I would pay off my parents' house, their mortgage down the shore. I would buy a shore house myself right on the beach and definitely donate to the cancer society. My mother is a cancer survivor two times already. So, I would donate to that charity and probably another charity. And set up a college fund for my children.


BLITZER: Just think about it, Zain, 300 million --$600 million. What you could do with all of that money, and I know you've been thinking about it.

ASHER: I have, indeed. There are a couple of things you could do with that money. First of all, you could buy your own private island in Hawaii. The Island of Lanai costs roughly $500 million to $600 million. You could also buy the Washington Wizards. The price tag for the Washington Wizards is roughly around $400 million. And this is my favorite. You could actually buy your own private space ship. Virgin Galactics spaceship tube is roughly $400 million as well -- Wolf.

BLITZER: I don't know if Ted Leonsis, the owner of the Washington Wizards is ready to sell the Washington Wizards, but $400 million is $400 million. All right. Zain, thanks very much. We'll see if there's a winner this weekend.

When we come back, an old lottery ticket found in a cookie jar turns out to be a winner. And you probably can't begin to guess just how much that one was worth.

And O.J. Simpson comes face-to-face with the man he blames for 33 years he's serving in prison right now. Could his former attorney destroy his attempt to win back his freedom? That and a lot more news coming up right here in the SITUATION ROOM.


BLITZER: Here's a quick look at some of the other stories we're monitoring right now in the SITUATION ROOM. At least nine people are set to be dead. More than 70 others wounded including children after two cars exploded simultaneously in Kandahar City, Afghanistan. The spokesman for the governor of the province says the cars were packed with explosives that detonated as an Afghan national police vehicle passed. Most of the people in the area had gathered for a picnic. Wall Street wrapped up a fourth straight week on a high with the Dow finishing up at a record of more than 15,350 points. The boost comes on the heels of new signs of improvement in the economy, including a measure of consumer sentiment soaring to its highest level, get this, in nearly six years. And a report showing a bounce back in the leading economic indicators for the month of April.

This next story comes from our Chicago affiliate, WGN. It's almost too good to be true but it is. Talk about some amazing luck. A man was cleaning out a cookie jar filled with old lottery tickets and took them into a convenience store to have them scanned. It turns out, one of them was worth a winning number of $4,850,000.

He says he and his family will use the winnings to pay off their home which happens to be facing foreclosure. Congratulations.

Check this out. An unbelievable play for LSU's Raph Rhymes who seizes the chance to run the bases after rival (INAUDIBLE) dives to catch it in center field and misses. As he's coming in for home plate, he gets flipped head over heels by the other team. Even that didn't stop him from scoring a home run. You saw it right there.

When we come back, another dramatic day in court for O.J. Simpson. Why his ex-attorney could derail his fight to win back his freedom?

And a CNNMoney exclusive. Bernard Madoff speaking out from prison about the notorious Ponzi scheme that stole billions of dollars from thousands of people. You're going to hear why he says he isn't sleeping right now and what haunts him the most.


BLITZER: Happening now, O.J. Simpson goes head to head with the man he blames for the 33 years he's currently serving in prison. Could his former attorney end up derailing O.J. Simpson's fight for freedom?

Plus, a CNNMoney exclusive. Bernard Madoff speaking out from prison about the notorious Ponzi scheme that cost thousands of people billions of dollars. You're going to hear what he says haunts him the most right now about the whole thing.

And a brazen jewelry heist at one of Hollywood's biggest events. Details on the potentially hundreds of thousands of dollars in diamonds stolen during the famed Cannes Film Festival.

I'm Wolf Blitzer. You're in the SITUATION ROOM.



BLITZER: Another dramatic day in court for O.J. Simpson who came face-to-face with the man he blames for the 33 years he's now serving in prison on robbery and kidnapping convictions. His ex-attorney, Yale Galanter. But Galanter told the court just the opposite today, arguing it was O.J. Simpson who, quote, "screwed up." And joining us now, Joey Jackson, he's our CNN and HLN, I should say, legal analyst. Joey, thanks very much for coming in. In the O.J. Simpson trial, as you know, we're getting two very different versions. O.J. Simpson's version of what his lawyer did or did not do, and the attorney, Yale Galanter, saying something very different.

Listen to what O.J. said on Wednesday, what Yale Galanter, his attorney, former attorney, I should say, said today.


UNIDENTIFIED FEMALE: If you understood that you could have actually been convicted based on the state's evidence at the close of its case, would you have insisted on testifying?


UNIDENTIFIED FEMALE: And again, the reason you didn't is because Mr. Galanter told you you could not be convicted?

SIMPSON: Yes. He didn't believe I could be convicted.

UNIDENTIFIED MALE: Did you ever advise Mr. Simpson that he didn't have to testify because the state hadn't met its burden of proof?

YALE GALANTER, FORMER SIMPSON ATTORNEY: The -- no. We, you know, O.J. and I discussed testifying or not testifying basically since the day after his arrest. And O.J. was very reluctant to testify. I thought the defense faced with this type of evidence was viable. O.J. liked the idea. I always told O.J. that, you know, we're going to have to wait and see and, you know, obviously, a decision is always his.


BLITZER: A very different version. Who do you think is more compelling?

JOEY JACKSON, HLN LEGAL ANALYST: Surprise, surprise. Now, let's talk about why both of them are interested witnesses, Wolf, as a matter of law. That means something. What it means is that both have an interest potentially to fabricate. Why? Let's speak about O.J. first. He may have an interest in fabricating or does because of the fact that his life depends upon this.

Nine to 33 years is a long time, so you better believe that any defendant similarly situated in his position may say something that's less than truthful. Let's turn our attention to Yale Galanter. Now, his reputation is at stake, his credibility is at stake. When you're a lawyer, that's all you have. And so, as far as he's concerned, he may in taking the stand have some motivation to say things that are in keeping with accepted practice to show that he's a good attorney.

He's more than a good attorney. That he, you know, is a great attorney, that he knows what he's doing. So, I think both of them are interested witnesses. The final thought, Wolf, is this. It's up to a judge to assess the credibility and make a determination is it, A, O.J.? Or is it, B, Yale Galanter?

BLITZER: Another key point is whether or not Yale Galanter, the attorney, notified O.J. that the prosecution was interested in a plea deal that potentially he would have pleaded guilty but not gotten 33 years in jail. Maybe a year or two in jail and very different statements coming from O.J. and Yale Galanter. I'll play the clips.


UNIDENTIFIED FEMALE: Did you have discussions with him about potential plea negotiations?


UNIDENTIFIED FEMALE: OK. The subject never came up?

SIMPSON: Well, it came up because I asked why did they offer those guys pleas and I was the only guy that was not trying to run, you know, get out of town. And I was the guy that was ready to talk to the police from day one. And, so, I couldn't understand why they hadn't offered me a deal that they were offering these guys.

GALANTER: They'd made plea offers to everybody else. Everybody else was getting probation. O.J. knew about the meeting. O.J. said to me he would take probation also. He basically wanted, you know, his position was that he should be entitled to get the same thing that everybody with the guns got. And you know, we broached that topic with Chris and David and they wanted five to seven, two to seven. They wanted a significant amount of prison time. I told them I didn't think O.J. would go for that. I went back to O.J. after that meeting and told him, and he said, no how, no way.


BLITZER: This is a key, key issue right now, whether or not there was legal malpractice, whether or not Galanter informed O.J. of any plea deal.

JACKSON: Sure. It's very important, Wolf. And why is it important? Because when you are establishing ineffective assistance of counsel you're really looking at two things.

One, the deficiency of the attorney's performance and, number two, that that prejudiced the outcome, meaning because of that deficiency, it affected the result. You got convicted.

So, clearly, in the event that O.J. was informed of a plea deal if there was one and he said no, then certainly that's outcome determinative. So that is a critical issue and again, Wolf, it's a question of fact.

Did he, was he offered a plea deal and did Yale Galanter inform him of that? Certainly as an attorney, you have an obligation to do that. And so the judge is going to assess who is credible, who is not credible, who should I believe? And the final thing, Wolf, is it's by a preponderance of the evidence standard that this is measured. It's not at this hearing beyond a reasonable doubt. The judge has to assess by a preponderance of evidence is the standard met where he deserves -- that is O.J. -- another trial.

BLITZER: The burden on O.J. is enormous right now. Bottom line, does it look like he potentially could win this hearing?

JACKSON: You know, I always hate to be a fortune teller. I think certainly the judge has a basis to do whatever the judge wants to do. If the judge says listen, I'm going to err on the side of safety, and I'll believe O.J., I'll put credibility into him, I think that he establishes by preponderance of the evidence that there was ineffective assistance. I'll give him a new trial.

At the same time, the judge could conclude, you know what, there is just not enough here. It's he say, she say, we say, they say, no conclusive proof and therefore I deny it. So it is good to be the judge. Since I'm not the judge, I'll leave it to the judge, Wolf.

BLITZER: All right. We'll wait for the judge to make that decision. All right, Joey. Thanks very much.

JACKSON: A pleasure. A privilege.

BLITZER: From superstar to murder suspect to convicted felon, much of the world has been captivated over the years with O.J. Simpson. Our Brian Todd is here in THE SITUATION ROOM with a closer look why he's got this part of the story for us.

He has been around for a long time.

BRIAN TODD, CNN CORRESPONDENT: He has, Wolf. Captivate is a good word. O.J. Simpson has captivated America for better or for worse for about four decades now.

That's why this past Wednesday when we had breaking news on the White House e-mails on Benghazi, the president's statement on the IRS and a crucial moment in the Jodi Arias trial, we still found time to tell you about O.J. Simpson's court appearance.


TODD (voice-over): We were riveted to the screen this week, seeing him in court, talking about how he grabbed his memorabilia back from dealers in Las Vegas, the first time we had heard him speak publicly in years.

SIMPSON: That is what I told everybody involved, that if they don't give it to me, I'm going to get the police in there.

TODD (voice-over): Why would we take such an interest in a puffy, shackled, 65-year-old O.J. Simpson? Michael O'Keeffe of the "New York Daily News" says it is the O.J. Simpson story that pulls us in. Michael O'KEEFFE, "NEW YORK DAILY NEWS": We're drawn to O.J. because he has been in the public eye for going on 40 years now and we've really seen a spectacular rise and then a spectacular fall in his life.

TODD (voice-over): America first took widespread notice of Simpson when he sprang into the NFL in 1969, the Heisman Trophy winner out of USC with an electric smile and catchy name who would later be nick named Juice. Playing on bad Buffalo Bills teams didn't diminish the attraction.

Simpson became the first running back to gain 2,000 yards in a season. Several all-pro years followed. Then he became David Beckham before Beckham, a transcendent sports and marketing icon. The Hertz ads from the '70s live on on YouTube.

SIMPSON: Get a forward pass from Hertz, the superstar in-rent a-car.

O'KEEFFE: We want to be like O.J. We did the O.J. run through the crowded airport like he did in those Hertz commercials.

TODD (voice-over): He crossed seamlessly into Hollywood with roles in movies like "The Towering Inferno" and later the "Naked Gun" trilogy.

On screens big and small, as an actor, pitch man, network football analyst, O.J. Simpson observers say had a charm, that smile, that guy next door vibe, that made whites and African-Americans equally comfortable with him.

But in June 1994, a much more ominous and bizarre chant of "Go, O.J., go," pockets of small crowds in L.A. cheered Simpson as he led police on that notorious white Bronco chase. Simpson's trial for the murder of his ex-wife, Nicole, and Ron Goldman, marked the first time America had been transfixed on TV for a court case.

Eventually he was acquitted, but just as compellingly as he brought Americans of all races together in admiring him in the '70s and '80s, his trial cast the deepest and most disturbing divides.

O'KEEFFE: It pitted black against white and people who -- rich against poor. No one didn't have an opinion about whether or not O.J. was guilty. You either thought he was guilty or you thought he was the victim of racist police and incompetent prosecution.


TODD: O'Keeffe says it was also one of those watershed cultural moments when America was shaken out of its habit of fawning over celebrities. After the Simpson murder trial, we were never quite as shocked again when we found out that our idols, people like Michael Jackson and Lance Armstrong, weren't quite what we thought, Wolf.

BLITZER: Fascination, I sense, with O.J. Simpson is still multigenerational.

TODD: It is. The younger people remember the murder trial and all the sensation around that, when we were watching TV every day watching that trial. People of your generation, my generation remember him playing football. We remember his movies, the ads.

He really is transcendent in that way. And when you talk to very young people, you try to compare him to somebody now like, I don't know, maybe Lady Gaga, to try to get across to them, this guy was a huge superstar in the '70s and 80s. It's hard to put it into words. He was everywhere.

BLITZER: It seems a lot of us always will remember exactly where we were when we were watching that Bronco chase.

TODD: Where were you?

BLITZER: I was on the North Lawn of the White House. I was the White House correspondent and with you late that night and there I was, getting preempted by O.J. Simpson, because the whole world was watching.

TODD: The White House wasn't quite as important that night.


BLITZER: -- all during the Bill Clinton administration.

TODD: We were all kind of transfixed, just waiting to -- it was kind of odd, in a way. We were kind of watching the unraveling of his life. I remember saying that to my wife at the time. This is just more bizarre than you can even imagine.

BLITZER: Yes. And it's still bizarre.

TODD: Yes.

BLITZER: All these years later. We'll see what happens next week in that hearing in Las Vegas.

Good report, Brian. Thank you.

Just ahead a CNNMoney exclusive, from billionaire to prisoner, now making just $40 a month. Bernard Madoff speaking out about the notorious Ponzi scheme that he created that destroyed thousands of lives.

And a brazen jewelry heist in the middle of one of the world's great film festivals. Details on hundreds of thousands of dollars' worth of diamonds stolen at Cannes. Stand by.



BLITZER (voice-over): His fall has been spectacular. Once a billionaire and head of his own finance firm, these days Bernie Madoff is a prisoner, just a number. He's making $40 a month. He is serving a 150-year sentence after admitting to a Ponzi scheme that stole billions of dollars from thousands of investors.

And now he says this.

"It was certainly never my intention for this to happen. I thought I could work myself out of a temporary situation, but it kept getting worse and worse, and I didn't have the courage to admit what I had done."


BLITZER: CNNMoney's Aaron Smith spoke exclusively with Madoff by phone. Aaron is joining us now.

Aaron, you got a really fascinating glimpse into Madoff's day-to-day life. He is in Buckner, North Carolina, at a federal prison there. He says he is not sleeping. What is his explanation?


One of the first things that he mentioned to me when he called me last week -- and he actually called me several times -- he basically said that he is haunted by his son's death; he feels responsible for the death of his older son, Mark, who, as we know, committed suicide. He hanged himself on December 11, 2010; that is actually the second anniversary of his father's arrest.

So this is one of the first things that he mentioned. He also said that it is very difficult for him to be separated from his family. He mentions that he was married 50 years to his wife, Ruth. And he just feels disconnected. He may have called me because he feels lonely.

BLITZER: Did you know him from before, Aaron? I mean, why would he call you? How did you set up this phone interview?

SMITH: I wrote him a letter and I included my number in the letter. I told him that I had written many stories about him over the last several years. And I used to speak to his lawyer, but he no longer is being represented by that lawyer, Ira Sorkin.

And I wanted to get his point of view. I never really had any direct contact with him. So he called me collect and I put money into his account, his prison phone account. And I spoke to him three times last week.

BLITZER: How did he sound? What was the nature of his voice? Did he have any sort of -- he is 75 years old. Did he -- he knows the enormous damage he caused so many people out there who invested all of their money in him, hoping that they would be able to retire one day, live comfortably. He bankrupted so many families, decent people.

How did he sound to you?

SMITH: He sounded very calm and collected. He sounded almost sort of grandfatherly, but it sounds like he's in pretty good health. He doesn't necessarily sound like how you might envision a 75-year-old man who has been in prison for several years coming across. He is clearly very intelligent.

When he started talking about the trades he used to do and he started going into the Wall Street jargon, I have to admit some of it was over my head and I found it a little bit intimidating at times. And I started to think about how he used to communicate with his investors.

And I can totally see how someone would give him money. He is very reassuring and he definitely sounds like a man who knows what he is doing.

BLITZER: He caused his son to commit suicide; he destroyed so many people's lives.

What does he do now?

SMITH: He has a job where he makes $40 a month -- that is a month. And he basically cleans off phones and computers and he checks to see if they're still working. These are the computers and the phones for the prison system.

He emphasized that this not a technical job. It requires no skill whatsoever. And that's what he is doing right now. He says that he only works a few hours a day, which I think gives him a considerable amount of down time to basically think about where he is right now.

BLITZER: Thanks very much. Aaron, good work.

Aaron Smith from CNNMoney, doing an excellent job reporting on Bernie Madoff.

You can read more of Aaron Smith's interview on Bernie Madoff at

A brazen jewelry heist amid the glitz and the glamour of one of the entertainment world's biggest events, the Cannes Film Festival. Diamonds worth hundreds of thousands of dollars and owned by one of the leading jewelers to the stars stolen from a hotel room.

Here's CNN's Atika Shubert.

ATIKA SHUBERT, CNN CORRESPONDENT: Well, Wolf, Cannes is all about glamour, but all of that bling, it seems, has attracted attention of the criminal kind.


SHUBERT (voice-over): Chopard is the name in bling at the Cannes Film Festival. The Swiss jeweler not only drapes the rich and famous in diamonds, it even makes the coveted 24-carat gold Palm d'Or award.

But now someone has pulled a Hollywood worthy heist on a set of Chopard jewels. It happened at the Novotel hotel in Cannes. French police say the jewels were stashed in the hotel safe of a Chopard employee. Thieves gained access and simply unscrewed the safe and took it off the wall. RAFFAELLA ROSSIELLO, SPOKESWOMAN, CHOPARD: There is currently a police investigation under way so we cannot -- can only let you know that the value of the pieces stolen is far lower than those in the figures circulating in the media. The jewelry stolen are not part of the collection of the jewels that are worn by actresses during the Cannes Film Festival.


UNIDENTIFIED MALE: Paris Hilton is hosting a party in Vegas tonight.

UNIDENTIFIED FEMALE: Where does she live?

SHUBERT (voice-over): The jewels were stolen at the same time the Sophia Coppola film, "The Bling Ring," was premiering at Cannes, a movie about a group of teen thieves robbing celebrity homes. Twitter buzzed with speculation of a PR stunt, but French police say this heist is for real.


UNIDENTIFIED MALE: We had so many beautiful things.

SHUBERT: Cannes is a massive show case for glamour. A-listers flaunt tens of millions of dollars in clothing and jewels every single day of the festival. It seems that also makes it a tempting target for thieves.

Well, Cannes is no stranger to theft. In 2009 there were two heists on stores by Chopard and Cartier, totaling nearly $30 million in jewels. So comparatively, this one is just a drop in the bucket, Wolf.

BLITZER: Atika Shubert reporting for us. Thank you.

Coming up, a drone jet takes off from an aircraft carrier, the first step toward stealthy robot warplanes operating without human controllers.

He left Congress after a scandal involving sexting and lewd messages, but is Anthony Weiner now about to run for mayor of New York?



BLITZER: After a sex scandal during his time as South Carolina's governor, Republican Mark Sanford has now completed a remarkable comeback, returning to Congress this week.

So can Democrat Anthony Weiner make a similar comeback?

After a sexting scandal ended his congressional career, he may soon be running for mayor of New York. Here's CNN national political correspondent, Jim Acosta.

JIM ACOSTA, CNN CORRESPONDENT: Wolf, there just might be another politician following in the footsteps of former South Carolina Governor Mark Sanford on the comeback trail. But Anthony Weiner can just ask Sanford, redemption doesn't come easy.


ACOSTA (voice-over): Anthony Weiner has plenty to chat about these days.

The former New York City congressman who resigned after he was caught exposing himself online may have revealed something new this week, that he's running for mayor of the Big Apple. A New York TV station obtained these images of Weiner and his wife shooting what appeared to be a commercial outside their home.


UNIDENTIFIED MALE: (Inaudible) shoot a commercial yesterday?

ANTHONY WEINER, FORMER N.Y. CONGRESSMAN: I don't have any comment (inaudible) for that.

UNIDENTIFIED MALE: You want to be mayor?

WEINER: Well, I ran for mayor in 2005, (inaudible) in 2009. So I care a great deal about my city.

ACOSTA (voice-over): Weiner may not have confirmed to CNN producer Adam Reese (ph), but the late-night comedians are treating it as a done deal.

DAVID LETTERMAN, CBS HOST: Every time you look at the guy, you're thinking, oh.

The face doesn't ring a bell, but -- I don't know.

ACOSTA (voice-over): Weiner knows overcoming his past will be a challenge.

WEINER: We'll have a chance to -- if I decide to run, and as a campaign chance to discuss that.

ACOSTA (voice-over): But not impossible.

UNIDENTIFIED MALE: Congratulations, Congressman.

ACOSTA (voice-over): Just ask Mark Sanford, the former South Carolina governor whose extramarital affair didn't stop him from winning a seat in Congress.

Gossip gurus at TMZ caught up with Sanford this week.

UNIDENTIFIED MALE: Do you think Anthony Weiner has a chance at mayor?

MARK SANFORD, FORMER GOVERNOR OF SOUTH CAROLINA: I'm more worried about trying to get it right in my own life. ACOSTA (voice-over): But Weiner is getting a taste of the coming scrutiny, with Politico reporting that his wife, Huma Abedin, a former top adviser to Secretary of State Hillary Clinton, did outside consulting work in her final months at the department. A Clinton spokesman said Abedin complied with her disclosure requirements, adding, "This was neither special nor an arrangement."

WEINER: There are many people who operate as consultants throughout the federal government. But I'm very proud of the work that my wife has done on behalf of Secretary Clinton.

UNIDENTIFIED MALE: But you understand how many people would have an issue with it? (Inaudible) for the government; she's being paid by taxpayers and here she is, on the side, getting private money?

WEINER: OK, so why don't you -- it sounds like you want to interview her yourself. I've already given you an answer.

ACOSTA (voice-over): It was a flash of that legendary Weiner passion --

WEINER: I will not yield to the Cabinet (ph).

ACOSTA: -- that has him close to a decision on running.

UNIDENTIFIED MALE: Days, weeks, can't much more than that.

WEINER: It's going to be soon. If I decide to run, I'll obviously be running because I think I can win.


ACOSTA: Last month, two polls showed despite some voter unease about a Weiner candidacy, the former congressman would enter the mayoral race in second place, behind New York City Council president, Christine Quinn, who is still the favorite. Wolf?

BLITZER: Jim Acosta with that report, thank you.

Coming up, a shocking new twist in this week's spy scandal.

Why would Russia now want to blow the cover of the CIA's Moscow station chief?

Also coming up, an unmanned jet takes off from a U.S. aircraft carrier and it's about to take drone warfare to a whole new level.


BLITZER: Remotely piloted drones, already devastating weapons in the fight against terrorism. But now America's taking a big step toward extending its reach, launching an unmanned jet from an aircraft carrier. That could soon lead to stealthy robot warplanes operating without human controllers.

Here's our Pentagon correspondent, Barbara Starr. (BEGIN VIDEO CLIP)

BARBARA STARR, CNN REPORTER (voice-over): This is aviation history.

With a deafening engine roar, a Navy X-47B jet takes off from the deck of an aircraft carrier. There is no pilot onboard.

REAR ADM. TED BRANCH, U.S. NAVY: This is really a red letter day.

STARR (voice-over): Experts say that is no exaggeration. Peter Singer wrote a book on America's drones.

PETER SINGER, AUTHOR: It's notable that it was one of these things they said never ever would happen, and they were able to do it.

STARR: It looks like the B-2 stealth bomber, but this is just a prototype. Eventually the Navy wants to build planes like this that will carry weapons and land back on the deck of an aircraft carrier, all controlled by computers.

It means the Navy can attack the most dangerous targets without putting a pilot at risk. And because they are carrier based, the U.S. can send them almost anywhere in the world without having to rely on other countries for bases. Singer says the advances in technology means it's almost like having an actual pilot in the cockpit landing a jet.

SINGER: The F-18, for example, has a system where there's a pilot inside it, but computers are taking over many of the primary tasks when it's doing something like landing on an aircraft carrier.

BRANCH: The aircraft is commanded to go to places, and do certain missions. And then it has -- we envision it will have programming to be able to sense the environment.


STARR: The Navy will now have to consider the moral and ethical implications of having warplanes not under the constant control of human beings -- Barbara Starr, CNN, the Pentagon.


BLITZER: Happening now, spy war is heating up.