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ANDERSON COOPER 360 DEGREES

Republicans Battle for South Carolina; Presidential Candidates Give Their Cure for Ailing Economy; Marine Manhunt

Aired January 18, 2008 - 23:00   ET

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


ANDERSON COOPER, CNN ANCHOR: And in the hunt for the marine suspected of killing Marine Lance Corporal Maria Lauterbach, we have a potentially crucial lead. We also have some exclusive and startling new pictures that show the fugitive marine.
The question, of course, is where is he now? We'll follow the chain of evidence tonight.

And a remarkable twist in a murder conviction that has haunted a Colorado cop for decades. She's been trying to free the man she helped convict. And tonight there are some stunning new developments.

We begin, however, with politics and some serious steps to finding out who the next president is going to be. Just hours from now, as I said, South Carolina's polls open for the Republican primary.

And Nevada's caucuses will get underway for both parties. The Democratic race there, getting the most attention.

CNN's chief national correspondent, John King and senior political correspondent, Candy Crowley, have been on the campaign trail all day in both states.

John let's start with you, give us the highlights from South Carolina.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Anderson, a remarkably busy day here in South Carolina, reflecting the stakes you just mentioned. Since 1980, the Republican winner here has gone on to win the nomination.

So the three leading candidates John McCain, Mike Huckabee and Fred Thompson here in South Carolina, all out from the early morning into the nighttime hours. And where they were in the state says a lot about the diversity of South Carolina.

As the governor puts it, South Carolina is all conservative, but is different conservative depending where you are. Up here in the Greenville-Spartanburg area, that's where we saw Mike Huckabee and Fred Thompson. This is the Bible Belt Region. Both of those candidates playing up their southern roots.

Mike Huckabee the former Baptist minister talking about if he were president, he would support a constitutional amendment banning same- sex marriage and a constitutional amendment outlawing abortion. Clearly trying to get the evangelical support here like he did out in Iowa; touring Christian campuses is part of that effort. Senator Thompson very much needs a win here to prove he's viable in the Republican race. He's going after the same conservative voters like Governor Huckabee, playing up his Tennessee southern roots. Also, essentially calling Governor Huckabee a fraud saying he didn't say anything about illegal immigration when he was the governor of Arkansas. And now he sounds very tough on illegal immigration.

So while the two cultural conservatives here in the Northwest part of the state, John McCain down along the Carolina coast. It is much more moderate. It is full of military installations and retirees.

Senator McCain playing up his fiscal conservatism; saying he would relish use the veto pen to take on the pork barrel spending out of the budget and, Anderson, also playing up his military history and noting that he was the one that pushed for the big military change and strategy in Iraq.

COOPER: John, we all know Rudy Giuliani is basically skipping South Carolina, focusing on Florida. But what about Mitt Romney? Why is he basically skipping it?

KING: That's a fascinating question. He spent a lot of money here over the summer and tried to court South Carolina and he just pulled out; pulled his TV ads; went to Nevada. He believes this race will go on for weeks and weeks and he wants the 30-something delegates he can get in Nevada.

But many Republicans, Anderson, are saying the south is the geographical and the ideological base of the Republican Party. And if he cannot compete here in South Carolina, how does he expect to be the party's nominee?

Governor Romney says he hopes to get those delegates in Nevada and he'll see you in Florida. COOPER: A lot of candidates in the state talking about the economy. Let's listen to some of the things they had to say today.

(BEGIN VIDEOCLIP)

FRED THOMPSON, (R) PRESIDENTIAL CANDIDATE: Everybody on the Hill and everybody in Washington wants to rush willy-nilly at some of these packages that will cost billions and billions of dollars. We need to make sure that we're targeting them in the right way.

MIKE HUCKABEE, (R) PRESIDENTIAL CANDIDATE: Nothing would more readily revive our economy and give back the capacity for economic prosperity than scrapping our current tax system, which penalizes productivity and exchanging it for the fair tax.

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: My friends, what we need to do to start with before we go any further is stop the out of control spending.

(END VIDEOCLIP)

COOPER: John, certainly a lot of different ideas for reviving the economy. Who seems to have the most traction on it?

KING: What was most striking about those answers, Anderson, is from Senator Thompson and Senator McCain, a play to fiscal conservatives here, saying sure, they're willing to have economic stimulus but only if you cut spending too. That Washington cannot spend more money, have tax rebates unless you cut spending.

And what was striking about Governor Huckabee's response today is all the lavish praise he heaped to President Bush. Remember he has sharply criticized the administration's foreign policy but he said he thought the president, on the stimulus, was doing exactly the right thing. Remember, Governor Huckabee is in a state where among Republicans, President Bush is still very popular.

COOPER: All right, John King thank you very much.

Now to Nevada and the Democrats. Before Candy gives us the highlights, take a look at this. A new CNN opinion research poll shows big gains for Barack Obama among African-American voters. He now holds a 26-point lead over Hillary Clinton among blacks; 59 percent versus 33 percent. Back in October, Clinton had a 24-point lead among African-American voters. John Edwards supporters say he's received the same -- about 4 percent.

So, Candy, in Nevada, it's the Latino voters mainly Democrats are vying for. How did the candidates make their final push today?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, what's interesting is, unlike South Carolina, Nevada doesn't have a huge history during the primary season. This caucus here is really an experiment.

No campaign knows what's going to go on here. They basically have been campaigning around the perimeter of the state. Obviously that's where the population is.

Inside Nevada, a lot of big old empty land out there. So they've been going from Vegas to Reno and then to the east and the west and obviously to the south.

Here in Las Vegas is the biggest pool of voters. They spent much of their time here. Today was a day that had some specific issues.

For instance, Hillary Clinton did talk about how she worried that there was some pressure being put on union voters to vote a certain way, which would be to vote for Barack Obama. And she hoped that they would still go to these caucuses and vote the way they wanted to vote.

John Edwards, Barack Obama and Hillary Clinton all came back to the original theme that has gone throughout this Democratic race and that is one of change. You know, John Edwards fighting for his life at this point, says he can change because he's the toughest. Barack Obama, he's the newest. Hillary Clinton says "Listen, I'm the one with the experience." So we're back to the original argument.

COOPER: There was also sharper rhetoric being used to draw distinctions between the Obama and Clinton camps. I want to listen to what Barack Obama said and also to a new radio ad by Clinton supporter, Magic Johnson that's playing now in South Carolina. Let's listen.

(BEGIN VIDEOCLIP)

BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: Senator Clinton has said she's ready to lead from day one. But it's important on day one to get it right, whether you're talking about war or you're talking about economic proposals. And one of the things that I have tried to do, I've been less worried about making political points on these things but getting them right.

(END VIDEOCLIP)

(BEGIN AUDIO CLIP)

MAGIC JOHNSON, CLINTON SUPPORTER: Winning comes from years of hard work and preparation, whether it's winning championships or a president who can lead us back to greatness, I always want the most prepared and experienced person leading my team. That's why I'm asking you to join me in voting for Hillary Clinton for president.

(END AUDIO CLIP)

COOPER: So the sharper rhetoric, I guess the goodwill from the other debate on Tuesday night has come and gone.

CROWLEY: You know, you and I talked the night of the debate right after it. You said how long do you think all this goodwill will last? I said until tomorrow. Basically, that's about how long it lasted.

When you have a tough campaign like this, and all of these candidates believe this is now a delegate fight. It's not a state-to-state fight. It's about how many delegates can you pick up in Nevada. How many delegates can you then pick up in South Carolina? Then, of course, February 5th, which is full of delegates.

So they are now looking at this much more strategically. And the way they have to do this is with those sharp elbows. When you have someone on your heels, you have to throw some elbows out there to slow them down. I expect this will continue.

COOPER: And it's going to continue on and on. Candy thanks. That's the big picture.

Up close tonight, a look at the battle raging in the Bible Belt. A lot of analysts believe the outcome of South Carolina's primary could change the playing field from here on out and tomorrow's outcome may turn on this simple fact. South Carolina has the biggest concentration of evangelicals in the whole country, all of America.

Recent past elections have proven they have clout, we've seen that before. But this time they're uncharacteristically uncertain about who's going to get their vote.

CNN's Gary Tuchman takes a look.

(BEGIN VIDEO TAPE)

GARY TUCHMAN, CNN CORRESPONDENT (voice-over): Worshippers in an Evangel cathedral in Greenville, South Carolina, say they know one thing for sure --

UNIDENTIFIED MALE: This is my bible. It's the Word of God. I'm a believer. I'm not a doubter.

TUCHMAN: -- but ask them about the Republican primary and things get a little fuzzy.

UNIDENTIFIED MALE: I've been thinking, I'm really still undecided.

TUCHMAN: When an upstart former Baptist minister beat the big boys in Iowa, South Carolina evangelicals began to reconsider their options. And that could have enormous consequences. They make up as much as half of the state's Republican electorate. Their dilemma, will a vote for Mike Huckabee be from the head or the heart?

UNIDENTIFIED FEMALE: I just question if he's really got the know-how. But if I knew that he did, then he would be my number one choice probably.

TUCHMAN: Abortion and gay marriage are big issues here; but not the only issues.

UNIDENTIFIED MALE: Those things are definitely important, that's for sure. But I mean, you got to eat too, you know? You got to eat too.

TUCHMAN (on camera): The Republican presidential candidates have always known the evangelical vote will be important here. But now with the muddled nature of this race, this large voting block could end up not only determining the outcome in South Carolina but could start the ground swell that propelled that candidate to the nomination.

(voice-over) Huckabee's rivals are making a big play for his Christian base.

(on camera) So you're an evangelical. And who do you support for president?

SENATOR MIKE FAIR, (R) SOUTH CAROLINA: John McCain.

Reporter: State Senator Mike Fair vouches for John McCain on marriage and abortion.

FAIR: McCain is just about pristine on both issues. That kind of clears the way, if you will, for us then to talk about what I believe is the number one thing we value.

TUCHMAN: And what is that?

FAIR: That's just the safety and well being of America. TUCHMAN (voice-over): He hopes McCain's position on the war can win a healthy slice of the faithful. But there is a trust gap.

UNIDENTIFIED MALE: Here's the host of Christian World View Today, Dr. Tony Beam.

TUCHMAN: Radio host Tony Beam says evangelicals haven't forgotten the John McCain of 2000, who blasted some Christian leaders as agents of intolerance, a comment McCain says he now regrets.

TONY BEAM, RADIO HOST: Senator, how do you expect us, as evangelicals, to trust you, when, back in 2000, you were very critical of who we are?

TUCHMAN: Beam also doesn't trust Mitt Romney, who scored an early coup here by winning the endorsement of Bob Jones III, chancellor of the fundamentalist Bob Jones University. But that was a while ago.

When we went to the school, the chancellor wasn't talking.

(on camera): How are you ladies doing today?

UNIDENTIFIED FEMALE: Good.

UNIDENTIFIED FEMALE: Fine.

TUCHMAN: We're with CNN.

(voice-over): And neither were the students we encountered. Beam says he hopes they vote for Huckabee.

BEAM: He says, "You know, I'm not a conservative candidate coming to you to convince you of my Christian value system. I'm coming from you. I'm one of you."

TUCHMAN: The question in South Carolina, will that be enough?

Gary Tuchman, CNN, Greenville, South Carolina.

(END VIDEO TAPE)

COOPER: With polls in South Carolina set to open just hours from now, the Christian evangelical vote remains a wild card.

We are going to dig deeper with CNN senior political analyst David Gergen, who has been an adviser to Republican and Democratic presidents, including Bill Clinton, and David Brody, senior national correspondent for the Christian Broadcasting Network, who is coming to us from the campaign trail in Columbia, South Carolina.

David Brody, as Gary Tuchman pointed out in his piece, evangelicals are not voting in this primary solely on the so-called family values issues. What are the other major issues that they're voting on -- the economy?

DAVID BRODY, SENIOR NATIONAL CORRESPONDENT, CHRISTIAN BROADCASTING NETWORK: Yes, partly the economy, Anderson, also partly patriotism. That's a big part of it as well.

In other words, John McCain is tapping into this idea that there are patriotic folks, big time, down here in South Carolina and therefore they look at McCain's integrity, his strong character. That type of thing plays well.

I was down here in Columbia, South Carolina, on the stump today, and Mike Huckabee speaking predominantly about the economy, not the life issue, not the marriage issue. Maybe he feels he has it sewn up. But indeed there is more of a shift, more of a focus to the economy.

COOPER: David Brody, how much do you think that is that he -- Mike Huckabee just feels confident he has the evangelical vote and now he's just trying to broaden out to others?

BRODY: Yes, I think that's a big part of it and there's no doubt about it. And the other part of it here too is let's not forget the national security evangelicals, shall we say.

That's a huge part of the equation down here, Anderson, this idea that sometimes evangelicals are put in a box; that it's about the life issue, that it's the marriage issue. But the last time I checked, evangelicals didn't want to get blown up as well. So there's a whole complicated formula down here. And we will have to see how it plays out.

COOPER: David Gergen, according to most polls, you have John McCain and Mike Huckabee, the front-runners. McCain of course lost in 2000 in South Carolina largely because evangelicals turned out for George Bush. What is different this year? Why is McCain more competitive now?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, one thing, George W. Bush is not in the race. And that helps a lot.

He has had some of the same smears, but he's been ready for it this time. Anderson, he also spent a lot of time preparing for this race. He's been down in South Carolina, starting a couple years ago. He started making intensive efforts in South Carolina to wrap up the establishment. So he's doing better.

His big hope also in this race is that Fred Thompson will draw away evangelicals. Thompson and McCain have this friendship, and both of them really intensely dislike Mitt Romney.

COOPER: David Brody, even though Mitt Romney spent almost $3.5 million on advertising in South Carolina, he's already left the state to focus on Nevada caucuses. Why do you think Romney's campaign never really took off in South Carolina?

BRODY: Well, there is the whisper campaign down here, obviously, regarding the Mormonism factor.

But the reality is that many times what we're seeing, especially in Iowa -- and it seems to be the case down here in South Carolina -- is that evangelicals have -- quote -- "found their man" in Mike Huckabee. And I think Mitt Romney probably saw the writing on the wall and moved on.

It's going to be interesting here, Anderson, to see exactly how much support may trail off for Mitt Romney here in the last 24 to 48 hours, because if he's not campaigning here in the state, will that 1 percent, 2 percent switch hands? And, if it does, does it go to Huckabee, go to McCain? Romney appeals to both camps, so it will be interesting to watch.

COOPER: David Gergen, how do evangelicals factor into the races in other upcoming primaries, like Florida and states voting on Super Tuesday? Where do they -- what are the numbers?

GERGEN: Well, not so much in Florida, but they will start figuring in the Super Tuesday states, in the Southern states in particular, Georgia, for example, or Tennessee. You get a lot of the Bible Belt where they will figure in.

They will not figure in much in California, New Jersey, obviously, New York, Connecticut, the big races, but some of the smaller states, where you can pick up some delegates.

So, it's important for John McCain not only to win this in order to get into Florida against Giuliani, but also to close down Mike Huckabee, so that McCain can try pick up some of the Southern states.

COOPER: What did Mitt Romney do wrong in South Carolina? At some point, he pulled out his advertising, pulled out his focus in order to be more competitive in Michigan. Clearly, that worked for him there. Do you agree with David Brody the whisper campaign had a big effect?

GERGEN: I think there's been a wariness about him. We saw that among evangelicals out in Iowa, when Huckabee won. We're seeing this now again in South Carolina.

I think he made a tactical decision - If I stay in South Carolina, it's going to look like I had a big loss. I will go out of here, get out of here. The press won't give it as much attention. I will try to win Nevada, and then the press will have to report that.

So, the night may wind up, McCain gets one, he gets one, or Huckabee gets one, he gets one. But he then winds up having three gold medals and two silvers, which is not bad, from his point of view.

COOPER: Interesting.

David Gergen thanks very much.

GERGEN: Thank you.

COOPER: David Brody, you as well.

Still to come tonight - a massive manhunt and some new leads.

(BEGIN VIDEO TAPE)

COOPER (voice-over): New developments in the case of the murdered Marine, new surveillance video showing the suspected killer who is still on the run tonight, but investigators say they have credible information on where he may be.

Also tonight, a cop who now says she helped send an innocent man to jail for murder.

UNIDENTIFIED FEMALE: The day he got convicted, I was just almost sick to my stomach.

COOPER: Tonight, breaking news, why even prosecutors say the case was botched. We're "Keeping Them Honest" -- when 360 continues.

(END VIDEO TAPE)

(COMMERCIAL BREAK)

COOPER: A shot in the arm, that's what President Bush calls his plan to save the economy. He unveiled a $140 billion relief package today he hopes Congress will pass.

For most Americans, however, it may be too little, too late. According to a new "Fortune" magazine poll, more than three in four Americans believe we are already in a recession.

Now, the candidates have their own cure for the economy. They want you to hear it. Tonight, you will.

With "Raw Politics," here's CNN's Tom Foreman.

(BEGIN VIDEO TAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): Everyone in both parties knows the goal - get more money into more hands and spent in more places.

But, out on the trail, contenders are working some of the states hit hardest by the downturn. And they disagree on how an aid package should work. Republicans want to appear fiscally responsible. So, they don't want anything that looks like a quick-fix handout.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: What we need to do to start with, before we go any further, is stop the out-of-control spending.

FOREMAN: Democrats suggest the Republicans are leaning too much toward giving tax breaks to employers, not employees.

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: At least according to what we have been told, it leaves out 50 million working Americans.

FOREMAN: For all the talk on the trail, an answer to the puzzle of the crashing economy will have to come long before the election. So, in D.C., economic analysts say leaders better block out the campaign noise.

BOB GREENSTEIN, CENTER ON BUDGET & POLICY PRIORITIES: We have to have a clear, single focus. Does it boost the economy right now? Anything else, no matter how meritorious for the long term, if it's not stimulus, it doesn't go in the package. That's got to be the test.

(END VIDEO TAPE)

COOPER: But, Tom, obviously this plan to produce the stimulus package doesn't really involve the candidates, except those who are senators already. So, why are they all talking about it so much?

FOREMAN: You are absolutely right, Anderson. And they're fighting this way because the race is so close.

Let's look at the Republican side. The magic number of delegates you need if you want to become the nominee, 1,191. Right now, Romney has 54. Huckabee has 22. McCain has 15. There are 55 more delegates up this weekend to be considered. But, on tsunami Tuesday, the great big voting on February 5, 1,020 delegates will be divided among the contenders.

And with so many states voting and so much confusion over who the front-runner might be, you could see two or more contenders come out and charge toward a photo finish at their convention. Wouldn't that be something?

On the Democratic side, also a very confusing situation -- look at the total delegates. Hillary Clinton is leading, but look at vote delegates. In vote delegates, Barack Obama is leading.

What are vote delegates? All those people who went to primaries, all those people who went to caucuses and actually decided, as Americans, who they want for this nominee, more of them liked him than her.

So, why is she ahead? That's because the Democrats have something called super-delegates, important Democrats, elected officials who are Democrats, who get to go to their convention and they cast delegate votes on their own. They can decide who they like.

And, right now, more of them are saying they will back Hillary Clinton, meaning it is possible that the Democrats could actually choose a nominee that most of their followers did not choose in the popular vote.

It's unlikely, just like it's unlikely that the Republicans will make it all the way to the convention that way. But it could happen -- Anderson.

COOPER: It's getting complicated.

Exclusive new pictures that could prove critical in the case of the murdered Marine - that story is coming up.

But, first, Erica Hill has a 360 bulletin. Erica?

ERICA HILL, HEADLINE NEWS CORRESPONDENT: Anderson, some tense moments for U.S. Capitol police this afternoon. They arrested a man who was walking with a shotgun near the Capitol Building. No one was injured. No shots were fired.

An alleged confession in the San Francisco tiger attack -- cops say, in court documents, one of the two survivors admits to taunting the big cat before it escaped its zoo enclosure. The third victim, of course, was killed. Police also say tests show all three had alcohol and marijuana in their system.

And actress Lindsay Lohan being sent to the morgue -- it's all part of her punishment for drunk driving. As part of that, she's going to work two four-hour shifts over two days at the morgue. She was of course arrested twice last year twice on DUI charges and pled guilty.

Headed to the morgue.

COOPER: That could be good for her.

HILL: Definitely an educational experience.

COOPER: That's right. Open up her eyes, perhaps, a little bit.

Stay right there, Erica. We have got an update on the party animal down under. Remember this guy, yes, this teenager? He threw a big party while his parents were away. He's in Australia. He's wearing always those sunglasses. And now he got into a fight over those sunglasses at a radio station. We will show you the video. "What Were They Thinking?" we wonder.

And, later, the search for the man accused of killing Marine Corporal Maria Lauterbach, new leads in the manhunt and new surveillance video that is helping investigators working the case. We will show you the tape and the latest developments - when 360 continues.

(COMMERCIAL BREAK)

COOPER: Erica, we have got a "What Were They Thinking?" follow- up.

Now, remember this kid? Corey Delaney is his name. We told you about him a couple days ago. He's now a full-fledged media sensation in Australia.

COOPER: That's him. He seems to like to go around without his shirt. He also wears those sunglasses. He has become famous because he threw what he called the best party ever; 500 people partied at his parent's house.

HILL: Nice.

COOPER: His parents obviously were away. He was arrested. Lots of things were thrown at the police. There was a broken police car, like $20,000 worth of damage. Those are his parents, who really don't know what to make of it all.

COOPER: And there's Corey and some of his...

HILL: Whoa.

COOPER: ... yes, friends running around naked.

HILL: What was that?

COOPER: The other guy in the back is carrying a dog.

Anyway, his parents tried to call him for days now. Corey keeps hanging up on them, apparently. Now the parents are speaking out.

(BEGIN VIDEOCLIP)

COREY DELANEY'S MOTHER: He has to realize the damage that he's created, and he has to take responsibility.

(END VIDEOCLIP)

COOPER: Yes.

HILL: Yes, I agree.

COOPER: Well, lots of luck with that.

The other issue, as we learned the other day, is that he will not take off his sunglasses.

COOPER: That's him at his -- at a local radio station. The deejay tried to get the glasses off, tried to grab them.

HILL: Oh, no, Corey's not having that.

COOPER: Yes, I know. Corey resisted and then finally bolted from the deejay booth.

HILL: Oh. Wow.

COOPER: I don't know. People are now assaulting this young man. And he walks out.

HILL: Man, look at that.

COOPER: Yes.

HILL: You know, I got to say, though, the parents coming out, he has to take responsibility. Really? That's what you're coming with?

HILL: You don't have anything -- I mean, he's 16.

COOPER: Yes. Well, he won't answer their phone calls anyway.

HILL: Hmm.

COOPER: I will tell you, though, we have actually found some pictures of Corey without his glasses. Are you ready?

HILL: Stop. I want to see it.

COOPER: Do we have a drum roll? COOPER: There you go.

HILL: I'm ready.

COOPER: There he is. Let's look. That's him. But I guess he had black hair.

HILL: I can't tell, because he -- without the glasses, I can't tell it's him.

COOPER: That's the best photo we could find. I don't know even know where we found that one.

HILL: How about that?

COOPER: Oh, there -- see, and there's him with glasses again.

HILL: That looks a little more appropriate.

COOPER: Yes.

HILL: And no shirt, so I guess it must be him.

COOPER: Yes. Apparently, he walks around without a shirt all the time. I don't know.

HILL: Yes.

COOPER: I guess even when it's cold out. I don't know.

HILL: Well, he's got that jacket with the big furry hood, so I'm sure that keeps him warm.

COOPER: That's true. It's true. The head loses so much heat.

HILL: You know, the head and the feet, you got to keep them covered.

Up next, Erica, what could be a major break in the case in the search for the Marine suspected of killing pregnant Marine Maria Lauterbach. There's new surveillance video that might -- just might -- help police track him down. We will take a look at that.

Also ahead, breaking news in the case of a man convicted of a gruesome murder 12 years after it happened. Drew Griffin has stunning new information -- coming up.

(COMMERCIAL BREAK)

COOPER: You're looking at a frame of video taken at an ATM in Jacksonville, North Carolina, on December 24. It shows Cesar Laurean, the main suspect in the murder of pregnant Marine Maria Lauterbach -- her remains, of course, found just one week ago.

Now, police say that Laurean withdrew money from the ATM using her account, after they say he killed her. Tonight, the new picture and another surveillance video could perhaps get police closer to tracking Laurean down -- also tonight, potentially crucial new leads to where he may be hiding.

Randi Kaye joins us with the latest.

What have you learned?

RANDI KAYE, CNN CORRESPONDENT: Well, we were taking a look at that new video that you just mentioned. And, if we take a look at it right now, you can see what's on it. It's actually Lowe's video from the Lowe's store in Jacksonville, North Carolina.

Now, don't look at the guy who's circled. That's the friend that police are not identifying, but just to the left of him on your screen is supposedly Cesar Laurean, according to authorities, coming there to buy supplies such as paint and concrete blocks and a wheel barrow.

That supposedly is Laurean wheeling out those cement blocks and then his friend right behind him with the wheel barrow. This tape was taken on December 16, which would have been two days now after authorities say that Maria Lauterbach was killed. So once again, that's him entering a Lowe's supply store.

COOPER: So the fact we see him taking a wheel barrow and stuff like that, it seems incriminating. I mean, it seems sort of startling.

KAYE: Significant, yes.

COOPER: But this was two days after she had already been killed?

KAYE: Two days after. But authorities are looking at this very closely, because they think that he was at this store, possibly, to try and cover his tracks.

The fact that he was buying paint, Anderson, could be very significant, because supposedly, whoever killed Cesar Laurean [sic] had actually tried to paint over the blood that had spattered on the walls. So the fact that he was buying paint, very significant.

Also, the wheel barrow, which can be used to move around a lot of dirt in the backyard, where she was found buried - also very significant. Now, one thing I want to mention is that he admits he buried her back there. He says that she took her own life in his house. But he doesn't admit that he killed her.

COOPER: Right. He had claimed to his wife that she had killed herself in front of him.

KAYE: Right.

COOPER: By slitting her own throat.

KAYE: Yes.

COOPER: Seems highly unlikely.

We also have this ATM picture.

KAYE: Right.

COOPER: What do police make of that? I mean, he's using her ATM card?

KAYE: Absolutely. And they know there was a withdrawal from her account or some type of activity on her account on Christmas Eve. And what we have is this picture -- there it is again -- that they say is Cesar Laurean walking up to the ATM machine.

Now, what we don't see on this is what they also say they have, which is some more surveillance video of him trying to cover up the camera, using a cloth and trying to prevent it from actually capturing his face. But they do believe that's him.

What's significant here is that yesterday we got this search warrant where they wanted -- authorities wanted to look at the Western Union bank account of Cesar and Christina Laurean, his wife. Because they know that there was a transfer made into their account sometime between December 10 and January 12.

COOPER: Really?

KAYE: Very significant. She was dead as of the 14th of December, and they know someone used her account after she was dead.

COOPER: How are police treating Cesar's wife? Because we learned yesterday that she actually knew about -- that Maria Lauterbach was dead a full day before actually saying anything.

KAYE: Absolutely. Before she came forward. Which gave him really -- gave her husband about an eight-hour lead on authorities.

COOPER: Right.

KAYE: Right now, though, still the sheriff is saying that she's cooperating. She brought them the notes that he'd supposedly written. She let them into the house with their search warrant.

COOPER: And they think he's still in America? Or maybe Mexico?

KAYE: They think he's actually still in Mexico, which is where he has some family. But one quick thing I want to mention about the wife is that authorities are now saying that they had some early leads and some new information from neighbors, saying that they saw Mrs. Laurean, Christina Laurean, actually painting the inside of this home sometime in the last month in December. So that could be very significant, as well.

COOPER: All right, Randi Kaye, staying on it. Thanks, Randi.

Up next, a story we have been planning to bring you about a murder case in Colorado. The man convicted of the crime was only a teenager when it all happened. Years later many didn't believe he did it. It was an incredible story that got even more incredible. Tonight, some breaking developments. But first, here's tonight's "Beat 360," Mitt Romney on the campaign trail greeting a future voter. That's the picture. "Beat 360," you come up with the caption which is better than one from our staff.

Our staff winner was Kate, who came up with, "Get your big mitts off me."

OK. It's not too bad. You think you can do better? Go to cnn.com/360. Send us your submission. We'll announce the winner at the end of the show. See if you can beat Kate on that one.

(COMMERCIAL BREAK)

COOPER: Major development in a story we have been following. It's unfolding tonight out of Colorado, the murder of a young woman and the man convicted of the crime.

Now, we'd planned on bringing you our report this evening, but then something happened just a short time ago that stunned all of us, especially Drew Griffin, who has been investigating. He brings us the latest.

(BEGIN VIDEO TAPE)

LINDA WHEELER-HOLLOWAY, POLICE INVESTIGATOR: I told my husband never make me choose between you and my...

DREW GRIFFIN, CNN CORRESPONDENT (voice-over): She raises draft horses on her Colorado ranch. But her real job, as a cop and investigator for more than 30 years, has been putting hardened criminals behind bars, which is why what she is about to say is so surprising.

WHEELER-HOLLOWAY: The day he got convicted I was just almost sick to my stomach.

GRIFFIN: Linda Holloway says one man she helped put in prison for murder back in 1999 is innocent, and she has known that every single day for the eight years Tim Masters has been locked up.

(on camera) Is the murderer still on the loose?

WHEELER-HOLLOWAY: Yes.

GRIFFIN (voice-over): Why is this tough top feeling such anguish? To understand, we need to go back two decades to February 11, 1987, the day a 37-year-old woman named Peggy Hettrick was found dead and sexually mutilated in an open field in sleepy, safe Ft. Collins, Colorado, her bare legs pointing directly at a trailer where a 15- year-old boy named Tim Masters lived with his dad.

(on camera) It was a field just like this, and Masters would have to cross it every morning to catch a school bus to go to school. But on that morning, he saw something, something he couldn't believe - the body of a half-naked woman lying there. He would later explain he thought it was a mannequin. He kept walking, got on the bus, went to school and said nothing. That, more than anything else, would make Tim Masters suspect No. 1, in a murder investigation that would follow him for the next 12 years.

WHEELER-HOLLOWAY: Because Tim Masters found the body and didn't report it, people couldn't get over it, that there has to be something wrong with that.

GRIFFIN (voice-over): Based on that alone, Tim Masters was pulled out of school, brought into this interview room in the Fort Collins Police Department and, without an attorney, was interrogated over and over for hours.

Five different officers peppered him with questions.

TIM MASTERS, CONVICTED OF MURDER: I don't know what happened.

GRIFFIN: Masters was even strapped to a lie detector and then lied to when police said he failed.

UNIDENTIFIED MALE: Yesterday, did you murder that girl?

MASTERS: No.

GRIFFIN: For seven hours, the 15-year-old stuck to the same story - he saw the body, didn't report it because he thought it was fake. And, though the victim had been savagely stabbed and mutilated, there was not a trace of her blood on him, not on any clothing, not in the sinks of his trailer, not even on his hunting knife collection.

(on camera) He never broke. No physical evidence, right?

WHEELER-HOLLOWAY: None.

GRIFFIN: But Holloway says she and the rest of the Ft. Collins police never looked for another suspect.

WHEELER-HOLLOWAY: I got caught up in that, too, where it's like he's good enough. Just keep working on this Tim Masters lead until you have enough pieces of the puzzle in order to take him down.

GRIFFIN: Tim Masters grew up and joined the Navy, and for 12 years, Peggy Hettrick's murder remained unsolved.

Until 1999, when the same old suspect, Tim Masters, now a grown man of 27, was brought back into court, tried and convicted and sentenced to life.

What was the new evidence that finally caught him? No new evidence at all. Just Tim Masters' old sketches.

And Masters' attorney says police and prosecutors used these old sketches to paint their own picture of a killer.

(on camera) I don't understand how he ever got convicted in the first place. ERIK FISCHER, ATTORNEY: When they allow them to paint somebody as a dangerous sexual pervert, it's easier to convict somebody.

(END VIDEO TAPE)

COOPER: When we come back, those prosecutors are now judges, which makes new allegations against them even more troubling. Did they hide evidence that Tim Masters was innocent? Does new DNA testing reveal the real killer?

Just hours ago, a stunning development. Find out what happened. We're "Keeping Them Honest," next.

(COMMERCIAL BREAK)

COOPER: Before the break, we told you about the murder of a young woman in Colorado and how a new development this evening is turning the case upside down. We'll have the breaking news in just a moment.

But first, more on the man accused of the crime and what some believe was an outrageous rush to convict him.

Once again, here's CNN's Drew Griffin.

(BEGIN VIDEO TAPE)

GRIFFIN (voice-over): When she heard that, after 12 years Tim Masters had finally been charged with murder, the former lead investigator, Linda Holloway, was thrilled, until she saw the new evidence that broke the case.

WHEELER-HOLLOWAY: I kept thinking, there's no way he's going to get convicted. They don't have any evidence against him.

GRIFFIN (on camera): But what prosecutors did have were these: Tim Masters' own drawings, one of them a body bleeding, being dragged across a field. Another showing what could be a stabbing, a wound. A diagram of the field; the spot where the body was placed.

(voice-over) A forensic psychologist hired by prosecutors told the jury these all add up. Whoever drew them was the killer and worse, could kill again. That psychologist, Dr. Reed Malloy, wouldn't talk to CNN for this report and, by the way, never interviewed Tim Masters.

And remember this - 12 years had passed. Tim Masters was no longer 15 years old and skinny. He was a grown man.

FISCHER: The basic gist of what we understood from the jurors was, again, what I said before. They were afraid to let him go.

GRIFFIN: But the testimony on the drawings wasn't the only damaging testimony. Linda Holloway was also called to the stand. She was asked by Erik Fischer, point blank, "You don't believe Tim Masters is guilty, do you?" Holloway froze, afraid her answer would throw away years of detective work. She said nothing. Masters was convicted of first- degree murder and sentenced to life.

(on camera) So doesn't it bother you that, when you were there and had the chance to defend an innocent man, you didn't?

WHEELER-HOLLOWAY: By answering that one question, yes.

GRIFFIN: Now Holloway is back on the case, this time on the side of the defense. The defense says new DNA testing they conducted proves Masters never even touched Peggy Hettrick, let alone stab her to death and drag her into a field.

And "Keeping Them Honest," we found a special state prosecutor assigned to review the case, says the original prosecutors and police failed to disclose four significant pieces of evidence that pointed away from Tim Masters, including that surveillance of Masters produced nothing suspicious; that an FBI profiler hired by police told them Masters' sketches proved nothing.

And a plastic surgeon hired by police, who said it would be difficult for a 15-year-old boy to make such skillful incisions to the woman's body.

(on camera) Significant pieces of evidence.

DON QUICK, SPECIAL PROSECUTOR: Yes. How significant is something that still needs to be determined.

GRIFFIN: You're a prosecutor, right? Would it be significant in the case you were prosecuting?

QUICK: I think that -- that's what we stipulated to them.

GRIFFIN (voice-over): Maria Liu, Masters' new attorney, is fighting to get a new trial.

MARIA LIU, DEFENSE ATTORNEY: I think there was a lot of pressure to solve this, and what -- the only person they could remotely conjure as being the best suspect for this was the kid who didn't report the body and who had the scary doodles.

WHEELER-HOLLOWAY: This is after a successful first-degree murder conviction.

GRIFFIN: The two prosecutors, seen here in friendlier times, are now both judges. They would not talk to CNN, and they no longer talk to the cop they once worked with. But later this month, they will have to talk on the witness stand and defend a prosecution that their lead investigator no longer believes in.

WHEELER-HOLLOWAY: It has, you know, torn me up inside when I had to go against people and stand up and say, "I think you're wrong."

(END VIDEO TAPE) COOPER: As we said, there's breaking news in this case just tonight. Drew, in a matter of second's time, we learned of an almost unbelievable twist. What happened?

GRIFFIN: A real shocker. A hastily-called news conference, 5 p.m. out in Denver by that special prosecutor, who is now saying that DNA testing done by the defense not only points away from Masters, but actually points, Anderson, to somebody else.

(BEGIN VIDEOCLIP)

QUICK: The results of this comparison was to confirm the presence of DNA consistent with the alternate suspect and inconsistent with Tim Masters. It is our belief, as special prosecutors in this case, that this new evidence meets the constitutional requirements of rule 35-C that requires a vacation of the original conviction and sentence and entitles Mr. Masters to a new trial.

(END VIDEOCLIP)

GRIFFIN: Masters gets his new trial and, Anderson, that alternative suspect, we're learning from Masters' defense attorneys, is an old boyfriend of Peggy Hettrick's, somebody who police only briefly looked at 21 years ago.

COOPER: And this person has been out this entire time, because they basically seem to have railroaded this guy. So does Tim Masters get out of prison right away?

GRIFFIN: It would seem so. But I talked to his attorneys tonight. They are going to wait until Tuesday morning, partly because this has come as such a shock and such a stunner. They weren't prepared for it. They don't know where to bring him, where to put him.

They are going into court Tuesday morning, they said, with a change of clothes, street clothes that they insist Tim Masters is going to wear walking out of that courthouse on Tuesday. A free man, Anderson, after all this time in prison for something he didn't do.

COOPER: Unbelievable. We're going to stay on the story. Drew Griffin, great job. We're going to keep you updated, as well.

For more on the incredible story, check out our website. That's where you can see more of Tim Masters' interrogation tape when he was a kid. Just go to cnn.com/360.

Up next on the program, remembering a hero of the Cold War who fought his battle on a chess board. Legendary and controversial chess champion Bobby Fischer.

And for the first time an NFL star is charged in the Balco steroid scandal - details when 360 continues.

(COMMERCIAL BREAK)

COOPER: He was at one time an unlikely champion for our country; a kind of a Rocky Balboa with brains. Born in Chicago, raised in Brooklyn, Bobby Fischer may have been the best chess player ever. He died of kidney failure in Iceland. And what a strange life he led. Take a look.

(BEGIN VIDEO TAPE)

BOBBY FISCHER, FORMER CHESS CHAMPION: This was not an arrest. This was a kidnapping.

COOPER (voice-over): Before he vanished, before some would say he went crazy, Bobby Fischer was an American hero who used rooks and pawns to crush the Soviet Union.

GARRY KASPAROV, FORMER CHESS CHAMPION: He was the great warrior. So for him the game of chess was not only a piece of art but also an element of the psychological warfare.

COOPER: Born Robert James Fischer, the prodigy was consumed by black and white squares. By 15 he was a chess master.

UNIDENTIFIED MALE: The amazing Bobby Fischer. Barely 15 years old.

COOPER: And in 1972, he achieved international fame.

FISCHER: Yes, I'm going to -- I'm going to work on it. I want to be very well prepared.

COOPER: In the midst of the Cold War, the brash Fischer did the impossible, defeating grand master Boris Spassky of Russia to become world champion. His victory, historic and unsurpassed by any American since, was watched by tens of millions around the world.

But something strange happened after that. Fischer vanished, for decades living in self-imposed exile.

In 1992, he surfaced in Yugoslavia for a rematch against Spassky. The win earned him $5 million. Following Yugoslavia, however, Fischer returned to being a recluse. And in 2004, was arrested for traveling on an expired passport.

He was granted citizenship in Iceland.

FISCHER: What is your name?

COOPER: It's also where he railed against ESPN reporter Jeremy Schaap and his father, the late Dick Schaap, who had said that Fischer didn't have a sane bone in his body.

FISCHER: Acted kind of like a father figure, and then later like a typical Jewish snake, he had the most vicious things to say about me.

COOPER: Fischer also renounced his American citizenship and even applauded the terror attacks on 9/11.

FISCHER: This is all wonderful news. This is a good time to finish off the U.S. once and for all. This just shows you what goes around comes around, even for the United States. I want to see the U.S. wiped out.

COOPER: Iceland would be his home and where his life became increasingly bizarre. From time to time he would emerge to spew hatred at Jews.

In the end, gone was the clean-shaven young man; in place, a paranoid eccentric.

For Bobby Fischer, checkmate came at the age of 64.

(END VIDEO TAPE)

COOPER: Strange life.

Coming up - our "Shot of the Day," Esteban Colberto, a.k.a Stephen Colbert, head to head with Lou Dobbs on immigration. And it's Lou like you've never seen him before.

But first Erica Hill joins us with the "360 News and Business Bulletin." Erica?

HILL: Anderson, fierce clashes to report today in southern Iraq leaving at least 30 people dead in the cities of Basra and Nasiriyah. Another 55 were wounded when the fighting broke out between security forces and members of a messianic Shiite cult.

There is more fall-out from the sports doping scandals. Former pro football star Dana Stubblefield now admits to making false statements to a federal grand jury about his use of performance- enhancing drugs.

And really not what you want to hear, but I've got to tell you, not a pretty day on Wall Street. The markets again tumbling within minutes of the president's announcement of an economic stimulus plan. At the closing bell, the Dow finished the day off 59 points, more than 500 points off for the week. The NASDAQ lost six. The S&P fell eight, Anderson.

COOPER: All right.

Now to tonight's "Beat 360;" we all know how it works by now. We put a picture up on the 360 blog. We ask people to submit a caption that's better than one of our own. We cue the cheesy music, Erica does a little dancing.

Tonight, here's the picture; Mitt Romney on the campaign trail greeting a future voter of America. Now, here's the caption that a member of our staff, Kate, came up with: "Get your big mitts off me."

I actually kind of liked it.

HILL: I think that's a pretty good one.

COOPER: Tonight's viewer winner -- it's good -- John in Cleveland, says, "Waa, I said I want Mommy, not Romney." There you go. Thanks so much.

HILL: That poor kid looks so freaked out.

COOPER: I know. Romney -- Mommy, not Romney. Thank you.

I'll be here all week. Check out the other suggestions; a lot of you playing along at cnn.com/360.

Erica, "The Shot of the Day" is next. Through the magic of editing, Lou Dobbs is a guest on "Colberto Reporto Gigante." That's a great TV moment. We'll play the tape for you when 360 continues.

(COMMERCIAL BREAK)

COOPER: Time now for "The Shot of the Day." It's from "The Colbert Report." Here's the setup - a skillfully edited tape supposedly showing Lou Dobbs facing off over immigration with Stephen Colbert's supposed Latin alter ego, Esteban Colberto. As Esteban approaches the interview - it's obviously him trying to sneak across, breaking the fence there --

HILL: There he goes.

COOPER: And of course, he brings the chicas.

HILL: Got to have your ladies with you.

COOPER: Exactly. All right. Here's the interview. Lou's part of the interview was actually cut from an earlier one that he did with Stephen Colbert. Let's watch.

(BEGIN VIDEO TAPE)

STEPHEN COLBERT, HOST, COMEDY CENTRAL'S "THE COLBERT REPORT": (speaking Spanish)

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": I do.

COLBERT: (speaking Spanish)

(END VIDEO TAPE)

COOPER: The question, of course, is did Lou know about all this? CNN says yes, he did, and apparently Lou loved it. So there you go.

HILL: You know, Stephen Colbert was in the purple with the gold tie. That's a good look for him.

COOPER: Have you ever watched "Sabado Gigante"?

HILL: I love "Sabado Gigante." It's more like "Sabado Gigante"!

COOPER: I know. And there's always, like, a beautiful woman.

HILL: Always.

COOPER: And then like a college professor and a guy in a clown suit and confetti falling from the ceiling. HILL: Oh, it's fantastic.

COOPER: It's the way TV should be.

HILL: I actually -- I don't speak Spanish, but I love Spanish language television.

COOPER: Me, too. See, I don't speak Spanish, either, but I watch that and "Primer Impacto" and all these things.

COOPER: It's great. There used to be this great Mexican soap opera called "Al Premio Mayor" (ph). It was fantastic. It was a guy with braids. It was very funny. I don't know what he said, but I made up great stories in my head.

COOPER: Excellent.

Well, if you see some amazing video, some great Spanish television, tell us about it - cnn.com/360.

Actually, we should do like a weekly -- our favorite clips from Spanish television.

You can go to the website and you can see the "Shot" again. You can see other segments from the program. You can read the blog. You can get coffee made there for you. You can do the crossword puzzle. There's a whole lot of things.

HILL: Is there anything you can't do there?

COOPER: I don't think there is. We have links to just about everything.

HILL: Can I send my laundry there?

COOPER: Sure. They will do the laundry very quickly.

HILL: I don't iron either. So that's even better.

COOPER: There you go. And they'll press and fold - cnn.com/360.

For our international viewers, CNN Today is next. Here in America, Larry King is coming up.

Have a great weekend. Thanks for watching. I'll see you Monday.

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