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@THISHOUR WITH BERMAN AND MICHAELA

Republican Congressman Michael Grimm Indicted; Tornadoes Kill 16 in Central U.S.; All Eyes on Donald Sterling; Interview with Thurl Bailey of NBA Retired Players Association

Aired April 28, 2014 - 11:00   ET

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


(COMMERCIAL BREAK)

CAROL COSTELLO, CNN ANCHOR: Thank you for joining me. I'm Carol Costello.

"@ THIS HOUR" with Berman and Michaela starts now.

JOHN BERMAN, CNN CO-ANCHOR: Hello there, everyone. I'm John Berman.

MICHAELA PEREIRA, CNN CO-ANCHOR: And I'm Michaela Pereira.

It is 11:00 a.m. in the East, 8:00 a.m. out West.

BERMAN: We've got our eyes on a couple of stories right now, two big news conferences, one dealing with tornadoes, the second one here in New York in Brooklyn dealing with Congressman Michael Grimm and charges that have now been issued against him, federal charges.

That is U.S. Attorney Loretta Lynch. She is explaining the charges against the congressman.

PEREIRA: The other --

LORETTA E. LYNCH, U.S. ATTORNEY: ... health care fraud, perjury, obstruction of an official proceeding and the hiring of undocumented workers.

These charges stem from Michael Grimm's role in managing the restaurant that he owned and operated from 2007 until 2010 and his deliberate plan to systematically lie to every taxing authority to whom his business had an obligation to report, all as part of his scheme to evade taxes and keep more money for himself.

Now, in 2006, Michael Grimm left the government service as an FBI agent and became a small business owner of an Upper East Side restaurant known as Healthalicious.

A former Marine, a former FBI agent, who knew what fraud looked like, an accountant and an attorney, Michael Grimm was poised for success as an entrepreneur.

But in 2007 as the restaurant took off, Michael Grimm had a choice, and it is the choice faced by every business owner in America. He could run his business legitimately or honestly or he could succumb to the lure of easy money and try and cheat his way to success.

And Michael Grimm made the choice to go from upholding the law to breaking it, and in so doing he turned his back on every oath he had ever taken.

As alleged, Grimm embraced the crime of hiring undocumented workers whom he could pay in cash and off the books.

Now let me be clear. One can pay workers in cash, but cash wages still have to be reported, so that money is withheld for Social Security, Medicare, so the correct W-2s are issued and the business tax returns are accurate and also so that unemployment insurance premiums are accurately assessed.

But when it came to his restaurant, Michael Grimm never met a tax he didn't lie to evade.

In addition to lying about his payroll, Grimm's alleged to have lied to the taxing authorities about how much money the business took in, overall, failing to report over $1 million causing the business to file false federal and state tax returns and show a loss instead of the profit that it clearly ran.

And to my immediate left, the chart, the photo board here, outlines the scheme. It's really almost breathtaking in its simplicity. As you see, patrons make purchases at Healthalicious, and the restaurant takes in the receipts. It happens every day at every business in America.

Now people often use credit or debit cards and these generate a paper record. But Healthalicious was a small business, and it sold casual food, so many people used cash.

And it was this cash that Michael Grimm exploited making over a million dollars simply disappear. Grimm took the cash from the register, used part of it to pay the workers off the books --

PEREIRA: Let's bring in our chief congressional correspondent Dana Bash as we listen to this press conference that's going on in Brooklyn.

Dana, the U.S. Attorney Loretta Lynch, saying he turned his back, Michael Grimm, turned his back on every oath he's taken.

Obviously he's going to continue to serve in Congress while this plays out through the courts. Is this -- first of all, is that the truth and is his seat going to be at risk?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: First of all, to answer that, we don't know if he's going to continue to stay in office.

PEREIRA: OK.

BASH: Certainly there is precedent for sitting members, sitting members, of Congress trying to battle indictments, trying to battle criminal charges while remaining in office.

It's unclear if he's going to be one of them. We're waiting to hear more, specifically from his office, more importantly from the leadership of his party, the Republican leadership, to see what they want him to do, whether they call on him to resign.

At the very least, there's precedent for somebody who is facing criminal charges like this to be stripped of his committee assignments, would not surprising if that kind of thing happens.

So those are all the things that we are waiting to see if it goes forward.

I will tell you just in terms of the way that Michael Grimm has been perceived since he's been in Congress. This is his third term. He's serving in his third term.

He -- because when he came I, he was already associated with people, campaign fundraisers, others who were in the eyesight of federal prosecutors and were -- many of them have been facing criminal charges already, he is somebody who people were eyeing to see if the shoe was going to drop.

It was pretty clear from many newspaper reports and reporting that CNN has done that he was the subject of criminal probe but not to the extent that we are seeing right now.

A lot of the discussion was about his campaign finances and whether he did anything along those lines, illegally.

What you just heard from the U.S. attorney, Loretta Lynch, was more about what he did before coming into Congress, as you heard her say, a million dollars he failed to report.

BERMAN: And of course a lot of people know Michael Grimm for the State of the Union address when he threatened a political reporter from New York, threatened to "break him like a boy" and toss him over the balcony for asking him about the investigation.

Break him like a boy, it may be that Michael Grimm now has to face these charges like a man.

Dana Bash, our chief congressional correspondent, thanks so much.

Another big story we're following right now, we're just getting updated on the figures from the tornado death toll at this point.

Officials now say 16 people are confirmed dead, crews right now searching for more victims.

PEREIRA: The violent weather hit several small towns across Oklahoma, Arkansas, Iowa, Nebraska and Missouri.

Sadly, it was not just sheds and outbuildings that were being ripped apart. Authorities say one of the tornadoes was half a mile wide. It wiped out home after home in the towns of Mayflower and Vilonia just north of Little Rock, Arkansas.

BERMAN: In addition to the 16 people now confirmed dead, more than 100 were treated at area hospitals.

A news conference in the town of Mayflower is set to begin @ THIS HOUR. That town has been hit so hard. We'll bring you this news conference live when it happens.

Meteorology student James Bryant tells CNN the devastation there, far more than expected.

(BEGIN VIDEO CLIP)

JAMES BRYANT, METEOROLOGY STUDENT, UNIVERSITY OF CENTRAL ARKANSAS: We knew there would be damage because we did see the tornado on the ground. We knew it would cross the freeway. We knew there would be damage.

But we weren't prepared for the scene that we were about to roll up to. This is really, really bad damage.

There were cars flipped everywhere. There were people screaming. It was really a tough scene.

(END VIDEO CLIP)

BERMAN: You can see that damage in these pictures here.

Our Chad Myers at the scene of the devastation in Mayflower. Chad, give us a sense of what you're seeing there on the ground.

CHAD MYERS, AMS METEOROLOGIST: Friends helping friends, neighbors helping neighbors, it warms your heart a little bit, but we know that there are still people that are missing.

The people right here, trying to pick up this mess, this was actually someone's home. They lived here. Friends helping friends.

And of all of this that you see, and I'll bring you around this side, and as far as you can see, the owners of this property, this is all insured. What they're weeping inside about is a 60-pound Black Lab that they lost during the storm. The owners were in that structure right there, and so was the dog in that basement.

But after it was all done, somehow they lost track of the puppy. And they were here last night. We were here this morning looking for the puppy because we were with them last night, and they still have not found that Black Lab.

So, all of this destruction, yet the heart hurts for something like a puppy dog. And this is what you feel. This is what you feel now, because it's very scary. And then it gets very sad.

John and Michaela?

PEREIRA: And, Chad, you know, just seeing the devastation around you, it's just heartbreaking to say the least.

We understand, though, what could make this worse is that there could be more bad weather headed that way.

MYERS: You bet there could. Not so much here, we're now in the cold air, so that's good, because it's the cold air that pushes up the warm air.

But 200 miles east of here is that same warm air that was here yesterday, and so those storms will fire today in maybe the same strength but just a little bit farther to the east.

And we're going to try to get to them later today and into tomorrow, because we assume other towns will get hit by other very large tornadoes today and tomorrow.

PEREIRA: Chad Myers there in Mayflower. And, again, we're going to take you to that news conference when it happens. We want to get an update on the situation on the ground.

We're also going to speak with a storm chaser who was following this tornado outbreak across the Midwest, straight ahead.

BERMAN: Yeah, the devastation, they are saying, worse than they expected.

Plus, new video that shows the ferry just as it began to sink off the coast of South Korea, the day no one realized so many children would lose their lives, and the cell phone video inside the ship from a boy who never made it out.

Stay with us.

(COMMERCIAL BREAK)

PEREIRA: Rescue teams are right now digging through mounds of rubble where homes once stood. A string of tornadoes overnight ripped through several small towns in the Central Plains and in the South.

Sixteen people are confirmed dead, 14 alone in Arkansas. One person was killed in Oklahoma and one in Iowa.

BERMAN: We want to bring in storm hunter Michael Wilhelm from WHNT News 19 in Huntsville, Alabama. He joins us by phone now from Mississippi where he is.

Yesterday, Mike, you were in Arkansas witnessing these devastating twisters tear through there. Tell us what you saw.

MIKE WILHELM, STORM HUNTER, WHNT NEWS 19 (via telephone): That's right, John. I was in Little Rock, and before the storm actually issued a tornado warning, I could see the potential for rotation, so I drove a few miles up Interstate 40 and I was near Roland and Mayflower and saw the tornado touch down about five to 10 minutes after 7:00 p.m., local time.

PEREIRA: Michael, you know, we know that as a storm hunter you have certainly seen your share of tornadoes and devastation.

Give us an idea of how this one compares to what you've seen in the past.

WILHELM (via telephone): This was horrible. I did witness the tornado in Tuscaloosa three years ago to the day from yesterday, which was horrible.

This one was also extremely bad. There was a damage path of about a half mile wide across Interstate 40.

There were -- I saw -- when I saw the tornado, I saw numerous semi trucks heading that way and I knew they were going to into the tornado if they didn't pull over. And sadly many of them didn't.

BERMAN: Mike, the forecast here had been coming for days that the storms were headed that way.

As you were driving through, did you get the sense that people heeded the warnings?

WILHELM: I do believe that some did. There was numerous people that did pull over right after I did. And there were definitely a lot of people that were aware of what was going on. There was also quite a few who probably weren't.

PEREIRA: We've heard from some people this morning on CNN that they felt emergency response was really rapid. Have you witnessed the same thing?

WILHELM: I did. As a matter of fact, as I was getting back in my car, I was stuck there for about two or three hours because it was blocked. But there must have been over 100 emergency vehicles, ambulance, police, fire, that rapidly got on the scene. I was really impressed with how fast they got into position.

BERMAN: Every storm has its own characteristics. (inaudible) stories of tragedy behind here. What was distinctive about this as you were watching?

WILHELM: As I was watching it, it was obvious that there was something bad going on, probably a tornado, but it wasn't one of those that you could very easily see a well defined tornado. I could see the transformers blowing, and there was obviously something going on. But it wasn't one of those very clear, obvious frontal systems that you see, at least not from my vantage point.

PEREIRA: You know, it's interesting. We know you work for WHNT News 19 there in Huntsville. You sound shaken up, Michael, by what you've seen.

WILHELM: It is something you never get used to. It's a really tough experience, and now all this weather is coming back our way. I'm in position now. We're expecting severe weather in north Alabama this afternoon and evening, so we're going to be on the watch for that and send our reports into the National Weather Service and back to channel 19.

BERMAN: Michael Wilhelm, thanks so much for being with us. We appreciate your time and please be careful.

PEREIRA: Yes, please do take care.

BERMAN: We know this weather is not over yet in that area. Appreciate it.

WILHELM: Thank you, John and Michaela very much.

BERMAN: Coming up for us, he allegedly made racist, offensive, simply vile comments. Now all eyes are on the owner of the Los Angeles Clippers. He sparked an investigation of all kinds in the NBA. We'll tell you about it coming up.

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PEREIRA: Well, if you're not a baseball -- well, basketball fan, rather, you might not have known the name Donald Sterling. Betya do now. There's growing outrage over racist talk attributed to the Los Angeles Clipper's owner, Donald Sterling.

He's allegedly heard saying all sorts of offensive things about African-Americans on audio recordings that have been released online.

BERMAN: Yeah, you don't have to be a sports fan to be offended by this. You have to be a human being.

PERERIA: Not at all.

BERMAN: (inaudible) argument allegedly with his then-girlfriend -- not his wife, by the way. He is married. I'm not judging, just making sure you understand. Sterling takes particular offense at this picture obtained by TMZ sports of her posing with NBA great Magic Johnson.

Listen to this.

(BEGIN AUDIO CLIP)

V. STIVIANO, FORMER GIRLFRIEND OF DONALD STERLING: People call you and tell you that I have black people on my Instagram. And it bothers you.

DONALD STERLING, OWNER OF THE CLIPPERS: Yeah, it bothers me a lot. If you want to broadcast that you're associating with black people. Do you have to?

STIVIANO: You associate with black people.

STERLING: I'm not you, and you're not me. You're supposed to be a delicate white or a delicate Latina girl.

STIVIANO: I'm a mixed girl.

STERLING: OK, well --

STIVIANO: And you're in love with me. And I'm black and Mexican, whether you like it or not.

(END AUDIO TAPE)

BERMAN: Imagine how the players on the Clippers felt about this. More than 70 percent (inaudible). And that's the Clipper team in this protest, this silent protest before a playoff game yesterday. They wore their warm-up uniforms inside out, so people could not see their logo. It was kind of a uniform statement heard around the world.

In Malaysia --

(AUDIO DIFFICULTY)

(BEGIN VIDEOCLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Ignorant folks want to advertise their ignorance, you don't really have to do anything. You just let them talk. And that's -- that's what happened here.

(END VIDEOCLIP)

PEREIRA: Want to extend the conversation with former NBA player and vice chairman of the NBA Retired Players Association, Thurl Bailey.

BERMAN: Thurl Bailey in Salt Lake City right now. First off, let me say it's an honor to speak to you. I'm a big fan of the old jazz teams.

Could I get your reaction, just in a general sense to these comments?

THURL BAILEY, NBA RETIRED PLAYERS ASSOCIATION: Well, I think my -- personally, my first reaction was it's -- it was kind of incomprehensible that in this day in age that we deal with this. I mean, I think we know there's a level of racism still going on in this country.

But at this level when you have a man who is in a very powerful position who is the owner of an NBA team, a sport which really embodies and embraces diversity, you talk about how global the game is, it just, I think in -- in simplicity it's just sad.

PEREIRA: You know, it's interesting. Your -- some of your colleagues have rushed to be heard on this. Michael Jordan, for example, we know that he owns the NBA Charlotte Bobcats. He released a statement. I want to read it to you.

It says, "In a league where the majority of players are African- American we cannot and must not tolerate discrimination at any level." NBA legend Kareem Abdul-Jabaar, who was -- we know was a Clippers special assistant back in 2,000, told us here at CNN, "I know him. I know his voice. I am not surprised by this very much."

Are you surprised? Have you had dealings with him? BAILEY: Well, I've never had dealings with him personally. But obviously, you know, it really is about being a part of that NBA family. As the vice chairman of the NBA Retired Players Association, we hear stories from a portion of our membership of what they had to endure back in the day to even be a part of this great sport, you know, the racism they had to endure.

And now to come this far, and to be in a situation where at this level it is still happening, I mean, it's just really unfathomable. And it's -- it's -- I think our sentiments from the NBA Retired Players Association is much like everyone else's.

There's no room for it here. This has to be dealt with. I know that Commissioner Silver has a balancing act on both ends and the fact that you have to make sure that all of the facts are there, but on the other side there has to be some swift action taken immediately.

BERMAN: You say there's a balancing act here. I'm not sure how much balancing really needs to be done. Because you've spoken about the NBA family as well. You know, the players have all come out against it. Coach Doc Rivers has made it clear he'd have a hard time. He's really have to consider whether he would go back and coach next year.

What do you think will happen at this point? And will it happen by tomorrow night when the Clippers are set to play at home again in the playoffs?

BAILEY: Well, I think it has to happen immediately. And when I say the balancing act, I don't mean -- I think we all know what needs to happen. Commissioner Silver has that responsibility to make it happen. And I'm sure that he will.

But, you know, this goes way beyond the basketball realm.

BERMAN: Yeah.

PEREIRA: It certainly does.

BAILEY: We're talking about our society. We're talking about young people who we're trying to teach the fact that we need to be more tolerant. This goes to families who aren't necessarily just basketball fans, but you talk about how global this game is and how this is -- this is far reaching.

And I think hopefully the bottom line will be that all of us will learn something from this that we need to be more tolerant in the way we deal with people and even in the corporate world. I mean, we've got to be able to know the people that we're dealing with before we get to this point.

PEREIRA: Thurl Bailey, we want to say thank you. We really appreciate getting your perspective on this as a retired player. It really means a lot to us. And hopefully some of the young kids will reach out to you and get some advice from you.

I was just thinking about that. I was thinking, you know, I used to go to those games in Los Angeles when I lived there.

BERMAN: That was back when they weren't very good.

PEREIRA: Right. And I was a fan even then. But I was thinking about these young men. Chris Paul. We know that he represents the players Union. That's a struggle for them. What do they do? Do they make a stand? They did what they felt they could do and felt was appropriate.

BERMAN: I think they make a stand. If players are making a stand, the fans are making a stand, I expect the corporate sponsors to make a stand. I think this is over by tomorrow. That's my prediction. You heard it here first.

PEREIRA: You done?

BERMAN: I'm done.

PEREIRA: We're gonna take a short break here.

The sun is up across the Midwest. We know that (inaudible) by tornadoes are getting a chance to look at all of the damage. We'll have the latest on the tornado outbreak, plus A look a look at where the extreme weather is headed next.