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ERIN BURNETT OUTFRONT

FBI Chief "Not Confident" Terror Plot Thwarted; FBI: ISIS Militant In Beheading Videos Identified; ISIS Overruns Iraqi Base, 100 Plus Dead

Aired September 25, 2014 - 19:00   ET

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


ERIN BURNETT, CNN HOST: OUTFRONT next, breaking news, the FBI director not at all confident that an imminent attack on America has been disrupted by airstrikes. Also warning an attack could come as soon as, in his words, tomorrow.

This as Iraq's prime minister blindsides American intelligence officials with talk of a plot to blow up New York sub ways. This changing story tonight.

And he fled just days after a UVA student disappeared, arrested on a beach in Texas, Jesse Matthew is returning to Virginia. The question tonight, where is Hannah Graham. Let's go OUTFRONT.

Good evening. I'm Erin Burnett. OUTFRONT tonight, the breaking news, the director of the FBI says he is, quote, "not confident at all that airstrikes in Syria disrupted an imminent plot to attack America."

U.S. administration said stopping that plot was the reason for its first major airstrikes on Syria. Tonight, FBI Director James Comey says an attack could, in his words, happen at any time in the United States.

CNN's justice correspondent, Pamela Brown, is OUTFRONT tonight. Pam, what else did the FBI director say?

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Well, tonight, FBI Director James Comey said that he believes this group of hardened al Qaeda terrorists in Syria known as Khorasan is still intact and could still be actively plotting to attack the U.S. or Europe.

(BEGIN VIDEOTAPE)

BROWN (voice-over): Despite a series of Syrian bomb attacks in Western Syria this week, tonight the FBI director says he's, quote, not confident at all that the U.S. airstrikes have taken out the Khorasan Group. The al Qaeda offshoot sources say was planning an imminent attack on western targets.

PAUL CRUICKSHANK, CNN TERRORISM ANALYST: In one shape, way, form, the United States telegraph the fact they knew about this group and were preparing to come after them, so quite possible that some of these fighters and operatives managed to disperse before these cruise missiles took out their training camps.

BROWN: In a closed door session today with reporters, FBI Director James Comey said the FBI did not have enough intelligence to know specifics of a plot, but believed Khorasan could, quote, "carry out the attack tomorrow, next week or months from now."

According to U.S. intelligence officials, the group of al Qaeda operatives, including a former deputy of Osama Bin Laden, had already acquired materials and was in an advanced stage of planning an attack against the U.S. or Europe.

CRUICKSHANK: These are seasoned al Qaeda officers who made it their life's work to hit the United States. They may try to build new training facilities.

BROWN: Intelligence sources tell CNN at least one of the alleged plots involve recruiting westerners to smuggle bombs concealed in electronic devices or toothpaste tubes on to U.S.-bound flights.

(END VIDEOTAPE)

BROWN: And Comey said today as he awaits the final assessment of the strikes in Syria targeting buildings link to Khorasan, he says the group remains at the top of his list of concerns -- Erin.

BURNETT: Pam, thank you very much. And Iraq's new prime minister has caused a major stir today. He earlier today said his country had uncovered an imminent ISIS plot against subways in New York City and Paris. The revelation was alarming and New York City's mayor responded.

(BEGIN VIDEO CLIP)

MAYOR BILL DE BLASIO, NEW YORK CITY: Everyone should know the most important fact right now is we are convinced that New Yorkers are safe. We're convinced people should go about their normal routine. Terrorists want us to live in fear. We refuse to live in fear.

(END VIDEO CLIP)

BURNETT: We're now hearing from the State Department that Vice President Joe Biden just met with Iraq's prime minister and they're now saying that there is no specific credible threat.

U.S. officials tell CNN that intelligence and law enforcement agencies have no indications of an ISIS terror plot against U.S. transit systems. Obviously, this is hugely confusing.

Chief national security correspondent, Jim Sciutto, is OUTFRONT tonight. Jim, I mean, you know, the Iraqi prime minister comes out and says an imminent threat and it was specific against subways in New York City and Paris. You can see what it sparked today and now the U.S. government saying, they've talked to the Iraqis and it's not true?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, we saw today the worst way possible to talk about information like this. The Iraqi prime minister apparently having either old information or information that was gleaned from captured fighters in Iraq via interrogation and that's notoriously unreliable information.

Because in general, it's known that people will say anything in interrogation and if you'll share that information, you want to share that official to official first and apparently the first anyone heard about it was when the prime minister was speaking to an AP reporter.

And when I was calling intelligence officials this morning after that report, they were saying that's the first I've heard. And then by the end of the day, you have Brett McGuirk, the Obama's appointment in Iraq finally putting it to bed saying there is absolutely no specific and credible threat.

BURNETT: How though do they know, Jim, you're saying that he may have gleaned it from some sort of interrogation. People may say anything under interrogation, but obviously sometimes it might be true. How were they so quickly able to be so confident?

SCIUTTO: Because you've gotten conflicting explanations from the Iraqi prime minister. Iraqi officials said a short time ago that they got it from interrogation, but then just through Brett McGuirk, said the Iraqi prime minister told him actually I was speaking more of the general threat from these terrorists.

As you and I know intelligence is not an exact science. There are always things kind of percolating, things here and there. But you have to corroborate them before you take them seriously.

And New York today, a city that takes terror threats seriously, they were responding as the mayor and the police commissioner said, they were executing contingency plans as a result of this. As it turns out completely unnecessarily.

BURNETT: All right, thank you very much, Jim Sciutto.

Joining me now is Pentagon spokesman, Rear Admiral John Kirby. And Admiral, thank you so much for being with us tonight. You know, of course, the FBI director, James Comey, today said his, quote, his words, "not confident at all that plotting by the Khorasan Group was actually disrupted by those airstrikes" that you all were carrying out.

Are you still carrying out strikes directed at the perpetrators of what we were told was an imminent threat to the U.S. homeland?

REAR ADMIRAL JOHN KIRBY, PENTAGON SPOKESMAN: Well, our focus in Syria has been since then really against ISIL. I won't telegraph future operations, of course, but I would say that we are still assessing the results of that strike against Khorasan Group.

And we can't say with any great definition or specificity that we know we disrupted that particular plot. We do know we hit the targets we were aiming at. We do know they were valuable targets to that group, but again we are still assessing it. BURNETT: So you're still assessing it, but of course, the FBI director said he's not confident at all. I mean, are you saying you agree with him or is he -- sounds like he's less confident than you are.

KIRBY: Well, we can't say with great confidence today as you and I are talking that we know definitively that we disrupted and completely derailed that plot that they were working on. But again, we're working through the analysis as best we can.

BURNETT: So the question, though, that comes from this, is whether you think airstrikes alone will do job.

KIRBY: We do not think that airstrikes alone will do the job and we've said that repeatedly. What has to happen here in the end is good governance, that's what is going to be -- good responsive government, that's what's going to get rid of this group and their ideology. That takes time.

I understand that. We also don't think that military power alone will do this. What really has to happen is the Iraqi people and the Syrian people have to work together and have to work on behalf of their own citizens.

Again, that is going to take some time. We are but one component of a much larger comprehensive regional strategy against ISIL.

BURNETT: All of that of course is true, and big picture of course what you are saying is true, but in the near term, to get from where the world is today to a good governance situation in the Middle East, where this isn't happening, there is a lot that needs to happen and of course, part of that is boots on the ground.

Which as this administration has made clear, will not be American boots. But my question to you is, whose will they be? The United States has spent $25 billion, people in the Pentagon training Iraqi soldiers who have not stood up and fought ISIS. So this concept of Iraqi soldiers will do it, Syrian rebels thanks to U.S. training is a little bit hard to swallow, isn't it?

KIRBY: I understand the concern. I'll tell you the Iraqi security forces, there are some of them that did not perform well. Others are. They are still defending Baghdad or in and around the capital. They are stiffening their defenses. They are taking background. They are fighting.

Now, it's a mix. I understand that. ISIL still controls a wide swathe of territory inside Iraq and they want more. They're trying to get the Mosul Dam back after we took it away from them.

ISF and Kurdish forces took it away from them and we have to keep repelling them. But the ground forces that matter the most are indigenous ground forces.

If we've learned nothing else over 13 years of war, it's that you have to have local support on the ground, local forces that trained and capable to the threat.

BURNETT: So is the new leader of Iraq any better than Maliki if he's putting a threat out there that may not even be credible?

KIRBY: Well, I can't speak for the reasons in which he put that threat out. What I can tell you is that we see positive vectors here in the Iraqi government as they begin to form.

Prime Minister Abadi has made it clear that he wants to stand for an inclusive responsive government, one that can respond to the needs of all Iraqis. That's what we like to see. Things are moving in the right direction. But they have a long way to go and he knows that and we will continue to support him as he does.

BURNETT: All right, Admiral Kirby, thank you so much as always.

KIRBY: My pleasure. Thanks for having me.

BURNETT: And OUTFRONT next, the masked militant seen in these ISIS beheading videos. The United States now knows this man's identity. That breaking news next.

Plus the Pentagon says airstrikes are slowing the advance of ISIS. But as militants kill as many as 300 Iraqi soldiers near Baghdad, is that true? A live report.

And breaking news, the case of a missing UVA student, the suspect is in custody heading back to Virginia. Tonight where is Hannah Graham.

(COMMERCIAL BREAK)

BURNETT: Breaking news, FBI Director James Comey says he believes the United States has identified the ISIS militant seen in this video next to James Foley. Comey did not publicly identify the militant by name, but the United States says the same man is heard speaking in the video showing beheadings of American journalist, Steven Sotloff and British aid worker, Davis Haines.

So they are now saying this is the same man in each of these beheading videos. CNN's justice reporter, Evan Perez, has been following the story. Evan, this is, you know, at one point people say you can do voice identification and find out if it's the same voice. But that's very different than actually finding who that person is, whose voice it is. How did they do that?

EVAN PEREZ, CNN JUSTICE REPORTER: Well, Erin, the FBI has been working on this with British experts and with some experts from the private sector in the last few weeks. And one of the things they have been doing is going over the videos, piecing it together.

Analyzing not only the voice, but also the figure that you see in the video and comparing to what they know about the militants that have gone over to Syria. And they have been able to identify they believe that it is someone with a London accent and they believe they know who it is. Now, they won't exactly give us, you know, the fine detail of how

that is, but that is the process we understand that has been going on.

BURNETT: Why aren't they identifying who this person is? They have identify -- they talk about one of the leaders of ISIS and Khorasan by name. They talk about all these people by name, why not the name of the man who identifies himself as the killer in the videos?

PEREZ: Well, the FBI has an ongoing investigation that it is focused on and it is their practice the not to identify those persons when they are doing it. And what is interesting is we don't know whether or not the person in the video, the person we see and hear, is the person who is actually the person that killed these people.

So that is the other thing that the FBI is frankly not able to answer. They don't know if the person who is speaking is the person who actually was the killer -- Erin.

BURNETT: All right, thank you very much, Evan.

I want to bring in "New York Times" columnist, Nick Kristof, who spent a lot of time in Iraq and also the co-author of a new book, "A Path Appears, Transforming Lives, Creating Opportunity." Also with us, former CIA counterterrorism official, Phil Mudd.

Phil, I want to start with you. Why haven't the United States -- if they've been able to find out, you know, the accent and now a name of who they say that this is, why haven't they've been able to find him?

PHIL MUDD, CNN COUNTERTERRORISM ANALYST: My first guess is that they haven't really confirmed who he is yet. But let me give you a different answer. This guy is a potential gold mine. I'm sort of sitting on the edge of my chair here remembering what I used to do.

When you get the name of somebody, he's already irrelevant in a sense. He's going to die out in Syria. But what he's signalling you with that name is information about where he potentially got money to travel, who gave him documents, who were his friends.

What I always worried about in the business of intelligence was, what do we not know about potential networks that are out there? And if they have a name that they have confirmed, they are potentially building out the network around this guy to determine if there is a route extremists are traveling to Syria that we don't know about today.

BURNETT: And Nick, that's a convincing case for why this person is so significant. So that's why I want to ask you, obviously 94 percent of Americans are aware of these beheading videos because of that man, because they were so barbaric.

That changed the tide here. Some would say that is what caused this to become a war, but my question to you is, is this one person worth it? Is it worth it? Is it worth to be so obsesses with this one person? NICHOLAS KRISTOF, "NEW YORK TIMES" COLUMNIST: Well, as a journalist who reports in these places, I want see him held accountable. I want to see him rot in jail at some point. And I think that Phil is absolutely right, there is an intelligence gold mine to be had.

But I mean, already there have been a lot of British journalists think they know exactly who he is through their reporting. So I think we have some good ideas about that. The trick is what you do with that information afterwards.

And the fact that the beheading videos do serve a certain ISIS purpose. They do serve as a recruitment tool elsewhere.

BURNETT: And Phil, in terms of the -- you were talking about other paths. Obviously we've been focused on the foreign fighters from the United States that may have gone up to a hundred, right, that could be over there fighting. How concerned are you that there are paths that they don't know anything about? How concerned are you that they don't even know whether that number isn't real?

MUDD: The number isn't real and the reason is quite simple. If you sit in Dulles Airport or JFK, if you want to tell me that you can confirm that every 17-year-old who is traveling to Turkey who says he's going out to meet his family isn't actually thinking that he wants to go into Syria?

You got to be kidding me. I understand what the FBI is saying. They're asking every day what is your estimate of breadth of this problem. The difficulty we face though is two-fold.

One, you're right, Erin. You can't figure out all of them and the second thing is, in the world of terrorism, two people count. That's a cell.

BURNETT: That's an interesting way of putting it. Nick, in terms of these videos themselves as a recruiting tool. How powerful do you think they have been as a recruiting tool?

KRISTOF: I think they have been powerful. I think they've disgusted the west, but already the other day, yesterday, we had the beheading of a French tourist in Algeria by a group that now aligns itself with ISIS because it has been recruited.

In Pakistan, as well, we have a Taliban offshoot that has aligned itself with ISIS. And it's because of its barbarousness. That it's kind of extreme. The same things that make it particularly repugnant to us make it a recruiting tool elsewhere and a jihadi tool --

BURNETT: What about the issues? You know, there was a reporting, Phil, I think a lot of people may not realize, the beheading seems like they're trying to return to 2,000 years ago. Yet according to the United Nations, in this year, 45 people have been executed in Saudi Arabia in 2014.

Eight were beheaded in August, OK, for nonviolent crimes. So I'm talking about sorcery and drug smuggling. These are not people in the desert beheading people. This is the Saudi Arabian government.

MUDD: But the difference here, though, is in the Islamic world and in the world of terrorism, these guys are putting videos out in environments where an 18-year-old who is very emotionally vulnerable is going to say there is only one game in the extremist world that is willing to take on the Americans and willing to take on governments that are viewed as corrupt.

And that game is in Iraq. People in the world that I lived in don't talk about beheadings in the square in Saudi Arabia. They will talk about the one good extremist game in town that is even more game- on than al Qaeda and that ISIS. This is very effective in the world that I lived in five, ten years ago.

KRISTOF: But it does create a certain awkwardness when we are going after ISIS because it is so barbaric and it's crucial for us to have Sunni allies in that fight like Saudi Arabia and that Sunni ally is also beheading people. It's necessary, but it is awkward.

BURNETT: Yes, I mean, they are an ally of the United States and they're beheading people for sorcery.

KRISTOF: And also furthering a certain Jihadi culture, which is perpetuating the problem.

BURNETT: Yes, ISIS fighters come from there and other countries in the gulf. Thanks to both of you.

OUTFRONT next, new details on how ISIS militants took over a base just 40 miles from Baghdad. There was no airstrike. The question is these strikes are getting so much attention around the world, but are they really working at all?

Plus, he asked a cashier if it's safe to stay on the beach and then the police caught the man wanted in connection with the disappearance of Hannah Graham. That's next.

(COMMERCIAL BREAK)

BURNETT: Iraqi officials telling CNN ISIS has seized control of a base between Baghdad and Fallujah killing at least 113 Iraqi soldiers and there are warnings that number could grow.

Ben Wedeman is OUTFRONT. Ben, how could this happen? They were talking about these airstrikes and how successful they've been and how the words this week from U.S. government, the advance of ISIS has been halted, has been stopped, but then we hear this.

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Halted perhaps not correct, but slowed down would be more precise. What happened is, this is a base in an area that had been overrun by ISIS. So the base was completely surrounded, cut off from any means of supplies.

They were running low on food, on water. Some of their commanding officers apparently deserted them. Others simply didn't answer their appeals for help. This is the story of one of the survivors of that incident.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): An armored vehicle entered the brigade and blew up. And then ISIS started firing and another Humvee entered the brigade and blew up, as well. A lot were killed, many were wounded. Myself and others escaped toward the orchards. Less than 200 survived from four regiments. The rest were either killed or wounded.

(END VIDEO CLIP)

WEDEMAN: And of course, this incident took place not as you said before 40 miles from Baghdad, it's basically 25 miles to the west of the outskirts of Baghdad -- Erin.

BURNETT: I mean, even closer. And as you say, to say that the onslaught has been halted inaccurate, perhaps slowed down. But when you hear a story like the one you just told, Ben, it makes people perhaps understand why the Iraqi army seems in many cases to be running, to not want to fight. Are they going to fight from what you can tell when you hear stories like you're talking about in Baghdad?

WEDEMAN: What we understand is that many of the soldiers are ready to fight, indeed eager to fight because they're defending their homes and their families. The problem is the leadership has proven time and time again in Mosul and various other places in Iraq that it is corrupt.

It is incompetent. It simply doesn't have the ability or the will to lead these men when the fighting really gets tough. And the result is that many are doubting the ability of the Iraqi army to do its job.

The Iraqi prime minister has called for an investigation to find out why the commanding officer simply did not do their job. I spoke with another Kurdish commander who told me, look, the Iraqi army simply doesn't seem to be up to the task that is facing it at the moment.

BURNETT: Sobering words. Ben Wedeman, thank you very much. And we're now getting details about what the United States is trying to do about this given that the Iraqi army is not able to do the job. The United States is trying to do it through airstrikes.

So what are actually hitting? Are they working? Tom Foreman is OUTFRONT. Tom, you've taken a look at exactly where they have been striking. Obviously the more important steps in determining whether this is even working.

TOM FOREMAN, CNN CORRESPONDENT: Absolutely, Erin. And the air campaign according to the Pentagon officials really is working. They swept across the northern part of Syria. The next day they focused a little bit more back over here in Iraq and then they pounded away at the oil production facilities. This is what they've been hitting, the command and control

structures in Syria. We said all along you can't get ISIS unless you hit the Syrian side of it. So they tried to take out training facilities and communication facilities and finance facilities, and vehicles and people moving around.

So that's been one of their targets over there and then most recently, they have gone after the portable oil refineries, trying to take away income which amounts to about $2 million for ISIS every day. So all of that, if you look at the air campaign with these coalition forces, all of that seems to be working as planned at this point -- Erin.

BURNETT: So working as planned when you talk about whether it's making a difference. Is it making a difference? When you have Ben Wedeman saying that ISIS just slaughtered Iraqi soldiers 25 miles from Baghdad.

FOREMAN: This is the catch to all of it. Look at this. This is it the frequency of bombings. We've updated it since last night. Look at this. That's from back in early August. They worked at it, worked at it.

Big spikes here, there had been more than 200 airstrikes overall right now, around 200. But does it really make a big difference? Well, the problem is, when we start talking about attacks right down in here, as Ben was talking about, at that level, and the fact that ISIS still holds or has heavy influence all through these region, you have to understand why the Pentagon keeps saying this is a long slow process, this is not a knockout punch. Even for all the big bombings lately, this is going to be something that will take a long, long time and there must be some kind of follow-up on the ground.

If the troops cannot fight back more effectively than what we saw, if their leadership is not strong enough, there is simply no way that air power can get the job done, every military analyst says that.

BURNETT: Every single one. Thank you very much, Tom Foreman, including retired Colonel Peter Mansoor, our military analyst.

And, Colonel, you and I have talked about this, but you raise the very, very sobering fact that when American embassies were attacked in East Africa, the United States responded with tomahawk missiles on then the headquarters of Osama bin Laden, three years later, 9/11 happened.

Yet again, we are in a situation where air strikes are being relied on to disrupt what they say is another imminent terror attack.

COL. PETER MANSOOR, CNN MILITARY ANALYST: This shows the limitations to the president's strategy. Without American advisers on the ground committed with those Iraqi units, we don't have the visibility on what's going on. That battle took place over a period of hours and maybe a couple of days and yet, we didn't launch any air strikes to prevent the post from being overrun. If we had American advisers embedded in those regiments that were overrun, you can bet every American aircraft in the Gulf would have been surrounding that base and destroying the ISIS fighters trying to take it.

BURNETT: So, is it still an intelligence problem? I mean, when you put it that way, it seems frankly pretty shocking that the United States wasn't there given now there is an Iraqi government that's supposedly working with the U.S.

MANSOOR: It is an intelligence problem. If you look at the distribution of airstrikes in Iraq, the vast majority are up in Mosul and on the border with the Kurdish region.

BURNETT: Yes.

MANSOOR: Very few are around Baghdad. And so, we have a deficit of information there and it's because we don't have people on the ground with these units and so we don't know what's gong on.

BURNETT: In terms of this Iraqi base, how significant of a story is this? You're talking about more than 100 dead and what was a very quick and horrific slaughter. And those are the boots on the ground. That is it. And the United States has said it would take up to a year to train some of the Syrian rebels that they say they're going to be training to join the fight.

MANSOOR: I think it's -- you know, we could turn that around and say it will take probably a year to retrain the Iraqi army and instill competent leadership in the formations there. This is not going to be quick, because this shows that the Iraqi army still is not ready. At least they fought. In Mosul, they just gave up. So, here, I guess that's progress, but it's not much.

BURNETT: So, then when does the decision need to be made? For all the criticism coming at the United States for there need to be boots on the ground, but the U.S. saying there won't be American boots. How much time is there when you keep hearing about even the U.S. itself saying that some of these air strikes were to prevent an imminent attack from a terror group not called ISIS, called Khorasan which the American public had not heard about until days ago?

MANSOOR: Well, the ISIS threat is a latent threat and they're planning or ready to launch strikes against Europe and the United States in the immediate future. So, we have a little bit of time there.

Khorasan is different. That is an offshoot of al Qaeda or a part of al Qaeda. And that group is truly deadly. They were planning strikes against us. And so, I would imagine that we would re-hit those targets right away if the battle damage assessment shows that we haven't destroyed them.

But, look, these guys have already dispersed now. They will be very hard to locate. And it shows again the limitation when you don't have troops on the ground, you're not going to be sure that you're going to absolutely destroy these targets.

BURNETT: All right. Thank you very much, Colonel Mansoor. And, of course, to emphasizes to our viewers, the director of the

FBI said tonight he is not confident at all that those air strikes in Syria disrupted the plot to attack America and an attack could happen at, quote, "anytime".

OUTFRONT next, breaking news, new details about the suspected abductor in the case of the missing UVA student. Including allegations of a criminal past new tonight. We have the very latest there, including the hunt for him and President Clinton on the unrest in Ferguson after an unarmed black teen was shot and killed.

Plus, iPhone 6 sales, scalpers lining up to line their pockets.

(BEGIN VIDEO CLIP)

KYUNG LAH, CNN CORRESPONDENT: Didn't I see you yesterday? Yes? You said you were buying an iPhone for your friend yesterday? You bought one yesterday. Are you buying more today?

UNIDENTIFIED MALE: Yes.

LAH: For more friends?

UNIDENTIFIED MALE: Yes, yes.

LAH: You must have a lot of friends in China.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BURNETT: Breaking news tonight, a major development in the case of missing university of Virginia student Hannah Graham. According to the Virginia police, Jesse Matthew was investigated for an alleged rape in 2002. He was never charged, though, due to a lack of evidence. Matthew is being brought back it Charlottesville, Virginia. He was arrested last night on a beach, on the Bolivar Peninsula, just outside of Galveston, Texas. That was a long, long way from Charlottesville. It was where Ed Lavandera is tonight with the latest.

And, Ed, you were there on this island. I want to start, though with these new allegations that we are hearing tonight about Jesse Matthew.

ED LAVANDERA, CNN CORRESPONDENT: Well, as you mentioned, this was a case the chief prosecutor in the town of Leesburg, Virginia, Erin, tells us that Matthew was investigated for the sexual assault back in 2000, while he was a student at Liberty University there. Now, the case didn't go anywhere. He wasn't arrested and he wasn't charged.

The prosecutor says that the woman didn't want to go forward with the case and that also Matthew had told them that the woman had consented. Nevertheless it's just another wrinkle in this bizarre case and now all of the attention is here on the Bolivar Peninsula, people trying to figure out just why Jesse Matthew ended up here before he was arrested.

(BEGIN VIDEOTAPE)

JESSE MATTHEW, SUSPECT: They took all my clothes.

LAVANDERA: Jesse Matthew was arrested 1300 miles away from Charlottesville, Virginia, where authorities say he was the last person to see 1-year-old Hannah Graham. The University of Virginia sophomore disappeared almost two weeks ago. Matthew will soon be headed back to Virginia where he is charged with abduction with intent to defile. He told a Texas judge he will not fight extradition.

Virginia investigators are already trying to talk to the Matthew while he sits in the Texas jail but his Virginia lawyer says he's not making any statements.

SHERIFF HENRY TORCHESSET, GALVESTON COUNTY: They're going to talk to him. If he says nothing, then he says nothing. If he starts talking to them or communicating, that's fine, too. Or he might just say I want my attorney and never say another word.

LAVANDERA: Since Virginia authorities launched the hunt for Matthew earlier this week, the 32-year-old fugitive made his way to the remote stretch to the Texas Gulf Coast, a quiet beach community in Galveston County.

(on camera): This is the spot on the boulevard peninsula beach where Jesse Matthew was arrested Wednesday afternoon. It's a remote spot and this is the area where he had set up a tent just off the only highway that brings you into this area and it's far from any of the homes that are around here.

Kind of a surreal experience for you?

UNIDENTIFIED MALE: Yes, it was.

LAVANDERA (voice-over): Mike Rotenberg (ph) was fishing on the beach and spoke with Matthew.

UNIDENTIFIED MALE: He said his name was George. I mean, he seemed real nice, real soft spoken, big guy. And said he was down here from New Jersey, was looking for a job.

LAVANDERA: Rotenberg says it looked like Matthew had camped out on the beach a day or so and Matthew wanted one of the fish he just reeled in off the shoreline.

UNIDENTIFIED FEMALE: A few minutes later, I caught a red fish and he came back and got it and asked if they were good eating. And I said, yes, they're good eating, no problem.

LAVANDERA (on camera): He wanted it to eat.

UNIDENTIFIED MALE: He wanted it to eat.

LAVANDERA (voice-over): Moments later, sheriff deputies converged and arrested Matthew. Texas investigators took Matthew's car and say Virginia investigators are searching inside looking for any clues that might help them find Hannah Graham.

JESSE MATTHEW SR., SUSPECT'S FATHER: To kill or hurt somebody, that's not my son.

LAVANDERA: Jesse Matthew's father spoke out for the first time Thursday. He says his son would not have harmed Hannah Graham. Matthew played football at Liberty University, an evangelical Christian university founded by Jerry Falwell.

MATTHEW SR.: I can see him many trying to give the girl a ride home or help her out.

(END VIDEOTAPE)

LAVANDERA: And, Erin, we're told that the Virginia investigators that are here have been trying to speak with him to try to get some sort of information that might help them in the hunt for Hannah Graham. But it's not exactly clear how long it will take for them to extradite Jesse back to the state of Virginia. We're told that could take another day or two.

BURNETT: And I'm also just curious, I mean, where you are. It is a remote part of Texas. You're talking about an island off the coast of Galveston. You talked to people there who saw Jesse Matthew.

Was there any indication of why he would choose that place or why he would choose the story line that he chose with the fake name and to be from New Jersey?

LAVANDERA: You know, we've been trying to find any kind of clues that perhaps he knew someone here in the area. This is definitely a place that you have to not just drive toward the Houston area, you really have to go out of your way to get down here to this stretch of the coast. And in fact, from the town of Galveston, there is no direct road into this area. You have to get on to the ferry to get on to the peninsula that we're on.

So, the fisherman that we spoke with who had spoken with him that day or yesterday afternoon said he didn't really get the sense that he knew anyone around here.

BURNETT: All right. And of course, at this point no indications Hannah Graham was with him. The hunt still on for Hannah Graham whether she is tell alive tonight.

Ed, thank you.

And OUTFRONT next, even though it bends, the new iPhone has lines bending around the block. But here's the question: have you looked at those lines?

Plus, President Clinton talking about race and the violence in Ferguson. Why he thinks there is actually less racism today.

(COMMERCIAL BREAK)

BURNETT: All right. Let's check in with Anderson for a look at what is coming up on "AC360." Hi, Anderson.

ANDERSON COOPER, CNN ANCHOR: Hey, Erin. Yes.

We're going to have much more on the breaking news tonight on the program -- the skies are quiet over Syria and Iraq, but word on the details that ISIS may have been planning terror strikes on subways in the U.S. and New York. And that at least according to Iraq's new prime minister, quickly shut down however by Brett McGurk, deputy assistant secretary of state for Middle Eastern affairs. I'll talk to him about that, and why the Iraqi prime minister is saying stuff that turns out to not, in fact, to be true.

Also breaking news in the case of missing college student Hannah Graham. New information about Jesse Matthew, this suspect, who was arrested yesterday in Texas. We're now learning details about a 2002 investigation that also focus on him. Jean Casarez is on the ground in Charlottesville, Virginia, with the latest.

Also, take a look at this video, a split second decision by a decorated South Carolina trooper caught on dash cam video. This man pulled over for a seat belt violation, shot by the trooper when he tried to get his driver's license. We'll tell you why the trooper said he shot him. Sunny Hostin and Mark Geragos weighing on that.

All ahead at the top of the hour, Erin.

BURNETT: All right. Anderson, looking forward to seeing you in just a few moments.

But now to tonight's money and power, Apple says it received nine complaints about the iPhone 6-Plus bending after it's been in people's pockets for too long. But the problem isn't stopping people from buying the iPhone. In the United States, you may have noticed a lot of people in line for the iPhone are Chinese. The reason: it has not yet sold in China, which is the world's largest smartphone market.

That means big money for Chinese buyers who come to the United States, and play the iPhone line well.

Kyung Lah is OUTFRONT.

(BEGIN VIDEOTAPE)

LAH (voice-over): This is where China's black market for the iPhone 6 begins, a line outside the Apple store in Pasadena, California.

(on camera): How many can you buy at a time?

JO TRAN, HONG KONG RESIDENT: Two.

LAH: Two at a time?

TRAN: Two.

LAH (voice-over): Two per person, every store, every time. Carrying Chinese passports, wads of cash. Nearly every single person in this line is a mandarin speaker, buying the iPhone 6 and 6-plus, that's not on sale yet in China because the government hasn't approved it.

UNIDENTIFIED MALE: I bought the iPhone from the (INAUDIBLE), and the price is kind of crazy, you know?

LAH: Kind of crazy? In Hong Kong, this man flipped his iPhone-6 just minutes after buying it to a Chinese mainlander at a thousand dollar profit. This woman stuffed her suitcases with 30 iPhone 6s to resell to the Chinese, the world's largest smartphone market.

In Beijing, the black market is right outside the Apple store. This man offering the still unavailable iPhone 6. Look at a popular Chinese online shopping site, and you'll see the going price for the 6 and 6-plus, $2,600 to $3,200 U.S. That's 10 times the face value.

You can see China's insatiable hunger for the iPhone whenever the American phones go on sale in China. That frenzy extends to the U.S.

Back in California, most of the Chinese shoppers don't want to explain why they're buying so many phones. It's not illegal to do this in America, but they are technically skirting import taxes if they smuggle them into China. This man already carrying one iPhone 6.

UNIDENTIFIED MALE: Now taking uptown.

LAH: Insists he is buying his two 6s for friends. But when we came back the next day and walked down the line again, guess who we saw? Wearing the same shirt.

(on camera): Good morning. Didn't I see you yesterday?

UNIDENTIFIED MALE: Yes.

LAH: Are you buying more today?

UNIDENTIFIED MALE: Yes.

LAH: For more friends?

UNIDENTIFIED MALE: Yes, yes.

LAH: You must have a lot of friends in China.

UNIDENTIFIED MALE: Yes.

LAH (voice-over): He's got a lot of familiar company.

(on camera): Waiting in line again, huh?

(voice-over): A lot of company.

(on camera): People came back, same people?

UNIDENTIFIED MALE: Some people, I think 20 or 30 people.

LAH (voice-over): And why not, says Shant Anjuyn, he would not tell us why he, too, has been standing in more than one line to buy multiple phone phones.

SHANT ANJUYN, APPLE CUSTOMER: Got to make money somehow.

(END VIDEOTAPE)

BURNETT: I mean, Kyung, the story is incredible, a lot of people felt funny in the lines and felt strange saying, why are these people from China in line? But they -- I mean, one iPhone could pay for their whole flight as one person was just saying. What happens, though, 30 iPhones in one suitcase, does anybody notice in customs? Just no problem?

LAH: You got to get caught, right? And so far we haven't heard of anybody who got caught. And so far the people here think the risk is worth it. So, that's what we understand.

If you're wondering if Apple knows about this? Well, they're aware of it but wouldn't officially comment on this story.

I have to tell you, Erin, they're still here. You have seen these people three days in a row. So, it's still going on.

BURNETT: Plus, Kyung, in that store, if the guy wears the same shirt, they're like you, they got to know it's the same guy. I mean, you know?

All right. Thank you, Kyung. I mean, it was a noticeable shirt, that's all I'm saying. Kyung Lah, thank you very much.

OUTFRONT next, president Clinton tells me why he thinks America is less racist after the Ferguson and George Zimmerman cases.

(COMMERCIAL BREAK)

BURNETT: The police chief of Ferguson, Missouri, Tom Jackson, has issued a video apology to the family of Michael Brown, the unarmed black teen who was fatally shot by an officer. Bu in an exclusive interview, Ferguson police chief Tom Jackson tells our Ana Cabrera today that despite calls for his resignation, he is not going anywhere.

(BEGIN VIDEO CLIP)

CHIEF THOMAS JACKSON, FERGUSON POLICE DEPARTMENT: I have talked to a lot of people who have initially called for that and then have changed their mind after having meetings and discussions about moving forward. Realistically, I'm going to stay here and see this through. You know, this is mine and I'm taking ownership of it.

(END VIDEO CLIP) BURNETT: This is mine, he says.

Well, the unrest in Ferguson and what it says about race in the United States were a key part of our discussion at the CNN special town hall with President Bill Clinton last night. And it definitely caught your attention. This is our Bing pulse analysis of what you were most interested in last night. We tracked your reaction to our special.

It breaks out responses minute by minute, by Republicans, Democrats and independents. And the moment all of our viewers agreed on was this answer from President Clinton about Ferguson.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT: I actually think we're less racist, less sexist, and less homophobic than we used to be. I think our big problem today is we don't want to be around anybody who disagrees with us. And I think that in some ways can be the worst silo of all to be holed up in.

BURNETT: Intolerant intolerance.

CLINTON: Yes. Now, it may be that people who disagree with us are disproportionately have a different race, a different religion, live in a different section of the country. But I think that's what's really at the root of many of our problems today.

(END VIDEO CLIP)

BURNETT: And, of course, you can see the full town hall now online or on your DVR.

Thanks so much to all of you for participating in our Bing pulse survey. And, of course, thanks for watching. I'll see you back here same time tomorrow night.

"AC360" begins right now.