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Officials: Boston Plot Encouraged by ISIS Backers; ISIS Controls Dam, Uses Water as a Weapon; Massive Cyber Attack on Federal Government; New Clues Revealed in Mansion Murder Case. Aired 5-6:00p ET

Aired June 04, 2015 - 17:00   ET

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

WOLF BLITZER, CNN ANCHOR: Happening now -- ISIS in America. Dramatic new details on an alleged plot to kill police and behead a conservative blogger. We're learning about the suspect's final phone calls and alleged encouragement from ISIS. As concerns grow about a surge in the number of ISIS sympathizers in this country, can the FBI keep up?

Under siege. ISIS has a powerful new weapon: water. The terror group controls a major dam and has cut the flow to pro-government towns. And it can now easily launch attacks across a strategic river that's been reduced to a stream.

Plus, new clues are revealed in the Washington mansion murders. A footprint suggests forced entry into the home and an unsealed search warrant indicates the family's assistant's car was found a block away on the day of the crime.

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

ANNOUNCER: This is CNN breaking news.

BLITZER: The breaking news. U.S. officials now say the alleged Boston terror plot was encouraged by people tied to ISIS communicating from overseas. Investigators say police killed the suspect before he could kill those he called "the boys in blue."

And police moved in for the final confrontation after they learned of an alarming farewell phone call made by the suspect. New details are emerging right now. What one officials say was a plot aimed not only at police but at a conservative blocker who was allegedly targeted for a beheading. I'll speak with Congressman Ryan Zinke of the Armed Services Committee. He's a former Navy SEAL.

And our correspondents, analysts and guests, they're standing by with full coverage.

Let's get the very latest from our justice correspondent, Pamela Brown. She's on the scene in Boston -- Pamela.

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Well, Wolf, we're just learning from U.S. officials with knowledge in this investigation that one of the three men allegedly involved in this terrorism conspiracy here in Boston had been communicating online with known ISIS members.

I'm told by U.S. officials that this was more than aspirational. But then it wasn't necessarily specifically directed by these ISIS members. It's very similar to what we saw in that Garland, Texas, attack, where Elton Simpson has been talking online to known terrorists.

Officials are becoming increasingly concerned that this is -- this is a pattern that we're seeing among people living here in the U.S. and their online activity.

Now, today the family of the suspect who was killed, Usaama Rahim, spoke and, through the attorney, said that they didn't know anything about Rahim's alleged involvement with ISIS. They cast doubts on that claim, coming from authorities, that he was inspired by ISIS propaganda, and also Rahim's aunt spoke. Here's what she had to say.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I think he felt threatened, and as you all know, with the current slaughter of black men going on right now across the nation, that's enough to make any and all black men feel threatened.

(END VIDEO CLIP)

BROWN: And we have learned that Rahim made an anonymous call to his dad right before the shooting, apparently saying his good-byes. We know that, because law enforcement had been monitoring him 24/7. That raised the alarm among law enforcement in addition to the fact that he allegedly was speaking to his relative, David Wright, and saying he wanted to target the boys in blue.

And I spoke to the police commissioner here in Boston about that and why officers approached him there in the parking lot. Here's what he had to say about that.

(BEGIN VIDEO CLIP)

COMMISSIONER WILLIAM EVANS, BOSTON POLICE: We didn't want to get him on the NBTA bus, because he very well could have acted out on the bus, but we knew the urgency was there, that we had to get to him.

(END VIDEO CLIP)

BROWN: So he's saying there that they were concerned he was going to board a bus here in Boston with one of the three knives that he had recently purchased online from Amazon.com, according to the FBI.

There is a third person allegedly involved in all this in Rhode Island, Wolf. And so far, as far as we know, he has not been arrested yet. The investigation is ongoing -- Wolf.

BLITZER: Pamela Brown, thanks very much. Officials say the subject, shot dead in Boston, was just the

latest American to fall under the influence of ISIS. And there are worries that the number of sympathizers in this country is growing, and the FBI simply won't be able to keep up.

Brian Todd is here in THE SITUATION ROOM looking into this part of the story. What are you seeing?

BRIAN TODD, CNN CORRESPONDENT: Wolf, tonight we're hearing of genuine concern among U.S. officials about a surge in ISIS sympathizers inside the U.S. Officials say they're tracking them for signs that they're about to mobilize, but separating the casual passive followers from those who pose real threats is a growing challenge for law enforcement.

(BEGIN VIDEOTAPE)

Boston terror suspect Usaama Rahim, raised in the United States. Radicalized by ISIS, according to investigators, killed before he allegedly was forced to attack police officers.

[17:05:07] Elton Simpson and Nadir Soofi, also raised in the U.S., shot and killed by law enforcement in Garland, Texas, as they tried to attack a Prophet Mohammed drawing contest. ISIS called them two of its soldiers. Simpson had direct communication with ISIS's best-known hacker.

Tonight a U.S. intelligence official tells CNN there are strong concerns in the intelligence community about a surge in the number of ISIS sympathizers inside the United States. The FBI is struggling to identify active consumers of ISIS propaganda.

MICHAEL STEINBACH, ASSISTANT DIRECTOR, FBI COUNTERTERRORISM DIVISION: There's hundreds, maybe thousands. It's a challenge to get a full understanding of just how many of those passive followers are taking action.

TODD: The passive followers, people inside the United States, who have been known to post pro-ISIS messages on social media. Pictures of themselves wearing ISIS logos. There's this sympathizer, who displayed an ISIS logo on a phone just feet from the White House with a tweet: "We are here, America, near our target."

PHILIP SMYTH, JIHADOLOGY.NET: It's done to kind of play off that ISIS is everywhere. They can reach their enemies.

TODD: Many of them, analyst Philip Smyth says, could be posers. But experts point out there's been a spike in ISIS activity inside the United States recently. At least 32 court cases over the past two years of people in the U.S. accused of trying to provide materiel support to ISIS.

Surveillance of ISIS suspects inside the United States is at an all-time high. U.S. officials say ISIS operatives overseas entice supporters on social media and use encrypted communications to encourage them to take action. Analyst Daveed Gartenstein-Ross, who tracks the radicalization of

Americans, worries about the next step.

DAVEED GARTENSTEIN-ROSS, FOUNDATION FOR THE DEFENSE OF DEMOCRACIES: The thing I would look for is whether ISIS is playing a role beyond just general support. But actually trying to influence targets, trying to influence the kind of action that already radicalized supporters will end up taking.

(END VIDEOTAPE)

TODD: But Gartenstein-Ross says when ISIS operatives started picking targets it makes them more vulnerable to being picked up by law enforcement.

One other thing that could help law enforcement here, analysts say that Twitter has started to aggressively take down the profiles of Twitter users who express support for ISIS in the U.S. When a profile is disabled, every message that person's posted is deleted.

Still, Wolf, monitoring every potentially pro-ISIS account, every tweet, every posting, every message. That's a monumental challenge for law enforcement. They're still trying to keep up.

BLITZER: Right. It's a major, major challenge. All right, Brian. Thanks very much.

President Bush has to conquer more territory in Iraq. ISIS has a new weapon. Water. The terror group controls a key dam in Anbar province and has cut the flow of water to loyalist towns. That's also reduced the level of the strategic Euphrates River making it easier to launch attacks.

Let's go to our Pentagon correspondent, Barbara Starr. She's got more -- Barbara.

BARBARA STARR, CNN CORRESPONDENT: Wolf, you know, the Obama administration likes to say it's a long-term strategy. It will take years to defeat ISIS, but when you see ISIS's fast-moving operations, its fast-moving tactics on the battlefield you have to wonder if the U.S. has time for that strategy.

(BEGIN VIDEOTAPE)

STARR (voice-over): This low water in a riverbed in Ramadi is an attack. ISIS has closed off a dam north of the city. Water, the ultimate weapon in this blistering desert.

LT. GEN. MARK HERTLING (RET.), CNN MILITARY ANALYST: There is this belief of, if you control the water, you can control your enemy. Which in that part of the world is basically true.

STARR: Controlling the dam, cutting the water flow, cuts supply to pro-government towns downstream, making it easier for ISIS to attack and crops to die, local officials say.

The dry riverbed also providing a potential route to attack those pro-government towns.

Civilians have been on the run since ISIS seized Ramadi last month. Water, not the only battlefield tactic. Massive IEDs inside heavy armored vehicles helped win Ramadi, the U.S. expecting more of them, rushing new anti-armor weapons to Iraqi forces.

For its part, the State Department defending Tony Blinken, the No. 2 official, for publicly suggesting 10,000 ISIS fighters had been killed by airstrikes, saying it's a sign ISIS is under pressure.

HERTLING: It's never good to have someone who's in the State Department talking about the effects of combat operations. And be that's what that was.

There is no military person in the world that will support a body count as an indicator of success.

ANTONY BLINKEN, DEPUTY SECRETARY OF STATE: It's the fact that a serious number of people have been taken off the battlefield.

STARR: But Blinken was using an old number. The latest body count, 13,000 ISIS killed.

GEN. JOHN ALLEN (RET.), BROOKINGS INSTITUTION: This will be a long-term campaign. Aspects of it will likely take a generation or more.

STARR: But a long-term strategy may fall short of understanding Iraq's here and now.

(END VIDEOTAPE)

STARR: Now, it's not to say that there haven't been some interesting impacts from U.S. airstrikes. A U.S. Air Force general revealed that an airstrike happened after intelligence officials saw one of those social media tweets. An ISIS operative had posed in front of something that they could identify overseas. A building, a command center. They were able to work the intelligence on that, and within hours launch airstrikes to take out that target.

So the lesson to ISIS in all of this may be the same lesson to all of us. Be careful about what you post on social media.

BLITZER: All right. Good point, Barbara. Thank you.

Let's go to Baghdad right now. Our senior international correspondent, Nick Paton Walsh, is on the scene for us.

Nick, ISIS famous for brutality, but could the opposition galvanize itself and basically deal with ISIS in some of these cities that are being targeted?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, that's been the hope for some time, but it's yet to materialize. And if you look at the geography of how this Euphrates River being cut off affects locals there, they're really caught, those in the pro- government areas, between ISIS-held Ramadi and ISIS-held Fallujah, which is further downstream.

Now, these people caught in between have been crying out for weapons, the local tribesmen, as they have to the south of that area for months. But they haven't got them. We saw ourselves, Sumahaddin (ph) with tin metal, chipboard AK-47 mockups, which are extraordinarily poor on the battlefield. They are also now, it seems, potentially facing a severe lack of water. We're hearing reports of dozens of families fleeing that area.

So, Wolf, instead of security forces, Shia fighting groups massing for the counterattack in that area towards Ramadi, we're instead seeing fears of a shortage of water, the potential as Barbara mentioned they could use lower river beds, lower water levels to cross over and hit those pro-government positions. But also normal people, who are supposed to be the ones everyone's fighting for keeping them happy in the Sunni heartland, in fact fleeing that area further away south -- Wolf.

BLITZER: Is there any sense you're getting that the Iraqi army will actually try to retake Ramadi? We know it's been almost a year they've been promising to try to retake Mosul. That hasn't even started yet. What about Ramadi?

WALSH: Well, the narrative has always flipped, really, from what you expect it's going to be. Right now, we're expecting the most offense, as you say. And then it was about pushing out of Anbar. Now it's about recalibrating the strategy to get back what they hadn't lost before they hadn't started their strategy. It's always a mess.

And now the narrative, of course, is, well, they're losing even more potentially of the ground between Ramadi and Fallujah because of this absence of water. It's a tricky one, because Baghdad had announced the beginning of the operation to retake it. They seemed to be moving in a semicircle around it southwest and east. But at this stage, there's no obvious sign they're moving into the urban areas.

In fact, the opposite. The civilians, they're supposed to be fighting for, the Sunnis there, actually leaving themselves because of the problems with the river, and that goes to the heart of whether or not the pro-Shia government here in Baghdad is willing to apply the resources to that area to defend that Sunni heartland or if simply their chaos, disorganization or lack of political will, as some say, is going to let Sunni ISIS dominate that Sunni area faster? Without the water, no one can really live there -- Wolf.

BLITZER: Yes. That's true. Nick Paton Walsh, thanks very much. Joining us from Baghdad.

And joining us here in the SITUATION ROOM is Republican Congressman Ryan Zinke of Montana. He serves on the Armed Services Committee, previously served as a U.S. Navy SEAL commander.

Congressman, thanks very much for coming in.

REP. RYAN ZINKE (R), MONTANA: Great to be here. BLITZER: I want to get to what's going on in Iraq right now.

That Ramadi dam and all that other stuff, but do you believe that U.S. law enforcement, the FBI and others, are really equipped adequately to deal with this apparently emerging, growing ISIS threat to the United States?

ZINKE: Well, this is a dynamic threat, as you point out. No, I don't think they are. But I do think we need to take steps revoking passports for ISIS fighters that are U.S. citizens abroad, when you do address women joining ISIS ranks. WE need to close our southern border down. There's a lot of things we can do within the United States that we're not doing. But it's a serious threat.

And by the way, the first person that was killed, ISIS, was a poor woman from Great Falls, Montana, there, decapitated in a parking lot in Oklahoma. So as far as way as Montana from Washington, D.C., it affects us, too.

BLITZER: And there's been evidence, if you listen to what FBI officials in all 50 states, there's some indication that ISIS sympathizers are at least are on the loose.

ZINKE: So I think we have to take it as a serious threat, and look at what we can do to protect our citizens. No. 1 job of the government is to protect our citizens.

BLITZER: Is there enough manpower at work right now? Do you need more funding for the FBI, for other law enforcement?

ZINKE: Well, I think law enforcement's stretched, particularly what's happening with the divisiveness and what's happening in Baltimore and the mistrust of law enforcement in places locally. That has to be shored up, and it can really only happen locally. You know, one step, or one size fits all mantra from Washington, D.C., at the local level oftentimes is not effective.

[17:15:10] BLITZER: Let's talk about Iraq. You served in Iraq. You were a Navy SEAL. This dam near Ramadi. Clearly, ISIS controls it. They're shutting it down. Water going to the more moderate Sunni tribes, for example. They lose that water, it's over.

ZINKE: Well, what we're seeing is, ISIS is sophisticated. They have an organization like a cabinet. They have ministries of defense and ministries of information, and propaganda, and finance, and municipalities. And when they move in they do control the structure, as well as taxes, critical infrastructure.

These are very talented individuals at doing what they're doing. A lot of them were former Sunni commanders, from the Saddam Hussein, you know, era. So when they go in and control an area, they look at what's critical, and certainly in that area, water remains the most critical resource.

BLITZER: So how do you beat them in this area? Because it doesn't look like the Iraqi military is really, at least not yet, showing up? ZINKE: You go back to one of the serious threats that's emerged

is Iran. The Shia militia are Iran backed and in some cases Iranian- led. And so if you do see territory from the U.S., conceded by ISIS, then who controls it? Is that area then controlled by Iran? Is it controlled by Shia militia or the centralized government?

What we're seeing is -- I've often said it's a free fall. It's dynamic. But we need a policy of what we're going to do in Syria. We need a policy of whether we're going to shore up directly the Kurds and work with the Sunni tribes directly, because they're not getting support from the centralized government.

BLITZER: Congressman Zinke, I want you to stand by. We have more to discuss, including the body counts that we're now getting. How many thousands of ISIS fighters, supposedly, are being killed in U.S. airstrikes?

Much more coming up right after this.

(COMMERCIAL BREAK)

[17:21:45] BLITZER: We're back with Republican Congressman Ryan Zinke of Montana. He's a former Navy SEAL commander. He's a member of the Armed Services Committee.

What do you think about all these body counts that we're getting? You heard the deputy secretary of state, Tony Blinken, say that the U.S. airstrikes over the past nearly a year have killed 10,000 ISIS fighters? Now they're saying maybe in the last -- that was an old number. Now it's really 13,000. How do they know that?

ZINKE: Well, it's reminiscent of the Vietnam War. How do they get to these figures? The number of bombs dropped? Pounds of ordnance? Certainly, we have no forces on the ground to verify it. And our intelligence is done by air. I think the numbers are speculative at best.

BLITZER: So what's the point of releasing numbers like this? Because it's simply to reassure the public that these airstrikes are working? Is that it?

ZINKE: Well, perhaps it's an overall dialogue that we're winning. Clearly, we're not winning. Air operations alone has been a dismal failure, and we continue to lose ground. And it seems every day a policy is, again, is in free fall, but there remains threats.

What are we going to do with Syria? What are we going to do with Iran? What happens if Iran gets a nuclear weapon, and can you remove the Iranian influence out of the eastern side of Iraq?

Right now, I don't see any indication they're leaving anytime soon.

BLITZER: You heard Barbara Starr, Pentagon correspondent, report just a little while ago, they're using social media to try to pinpoint where to attack, since they don't have forward control personnel on the ground. They get, they see something going on in social media, and then they launch a strike. Does that make sense to you?

ZINKE: Well, it makes sense up until it's reported, and then, of course, ISIS is sophisticated. They'll look at it, and they'll probably do a series of false leads.

Certainly, Facebook, social media, has become an important part of recruiting and communications. And that will continue. They'll be -- they'll be careful on what they present and where they present.

But to -- look at our intelligence feeds from Facebook and their social media, it shows how dismal our intelligence is.

BLITZER: Have you seen these latest reports that Iranian troops, Revolutionary Guard forces, are actually moving in in major numbers into Syria to try to help Bashar al-Assad's regime?

ZINKE: Well, I've had reports, although I haven't seen any confirmation of them. But again, it's how far Iraq is going to move in or Iran, and what happens if we do push ISIS out? Will that area then be backed and controlled by an Iranian-backed or heavily influenced or perhaps controlled militia?

This is a question that, again, what happens is, is as we proceeded by our inaction, it has consequences. And what we're seeing now is the consequences of our not showing resolve, not showing resolve with our allies. And hands off, it does have consequences.

BLITZER: Congressman Zinke, thanks very much for coming in.

ZINKE: Always a pleasure.

BLITZER: Coming up, we have new clues. They're now being revealed in that Washington mansion murder case. A footprint suggesting forces entry into the home and an unsealed search warrant indicates the family's assistant's car was found a block away the day of the crime.

(COMMERCIAL BREAK)

[17:29:34] ANNOUNCER: This is CNN breaking news.

BLITZER: There's more breaking news. We're now seeing indications of what's being described as a massive data breach potentially affecting 4 million federal workers here in the United States. The data breach involves the government's Office of Personnel Management and the Department of the Interior. "Washington Post," the "Wall Street Journal," others, are reporting the story. We're also now getting official confirmation from the Office of Personnel Management.

Chinese hackers, according to the newspapers, are suspected of breaching the government's computer system last December. Let's bring in our justice reporter Evan Perez.

Evan, I've just been going through this statement released by the Office of Personnel Management here in Washington. Four million workers, their personal identity, their information, sensitive information, may have been hacked, and now these other news organizations saying Chinese hackers may have been responsible?

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, Wolf, the bottom line is if there is a government agency that hasn't been hacked it's likely because -- it's like people -- probably because they haven't found it yet. This is something that the DHS says now they -- it was part of their detection system, OPM, the Office of Personnel Management has a new system in place calmed Einstein, which was -- which basically helps detect when there's massive amounts of data being pulled out of government computer systems at OPM in particular. It's where they detected this breach.

The Chinese sources are always the first place that the government looks for possibly intrusion, simply because there's a lot of collection going on, they believe. The FBI knows that there's a lot of collection going on by the Chinese government agencies, the Chinese military, of personal data from U.S. government employees. So according to a statement we got from OPM and from the Department of Homeland Security, they say that notifications are being sent to four million people whose personal information may have been compromised as a result of this breach.

The FBI has an open investigation. We have a statement from them now that says the FBI is working with our inner agency partners to investigate this matter and obviously, Wolf, this is something that will be taken very seriously, because we've seen many other breaches before. We've talked about the breaches at the White House, the breaches at State Department that were intended to steal government secrets.

This is different. This is about stealing the information of Americans and what appears to be happening. According to officials that I've talked to in recent months, is the Chinese are building a massive database of Americans in general. Their health care information. And it's not really clear what exactly they're doing this for or what exactly it's going to be used for, but there is a massive effort to collect as much information as possible on Americans.

BLITZER: All right. Stand by. I want to expand our conversation now.

Joining us now, law enforcement analyst, the former FBI assistant director, Tom Fuentes, our global affairs analyst, former Army Delta Force officer, retired lieutenant colonel, James Reese, and former Democratic congresswoman, Jane Harman, she served on the Intelligence Armed Services, Homeland Security Committee. She's now president of the Woodrow Wilson Center here in Washington.

Tom, this is very disturbing, the statement from the Office of Personnel Management says they have notified approximately four million federal workers. Their most sensitive, personal information may have been compromised. They didn't say Chinese hackers but that clearly is the suspicion. What's going on over there? TOM FUENTES, CNN LAW ENFORCEMENT ANALYST: Well, the suspicion is

that they pick OPM because every employee from every government agency has their data there. That's where the records are kept of who's working for the government. Across all the agencies, across all the branches. So that record is centrally kept there, all the pensions, everybody that retires, all those records are kept there, and they can easily go in to an individual or a group of individuals and destroy their credit ratings.

You know, this could be used for blackmail and extortion and all kinds of dangerous things, because if somebody starts to wreck your -- the pay that you're receiving from the federal government or the credit that you're receiving toward retirement or the pension you're receiving from the government, that's pretty serious. And if they can go after hundreds if not even millions of employees, that's a lot to worry about.

BLITZER: Jane Harman, what's very disturbing, if you take a look at this, it says that four million federal workers, their information may have been compromised back in December, but now it's June, and only now they're being told to take certain steps to protect themselves. That's pretty disturbing.

JANE HARMAN (D), FORMER U.S. REPRESENTATIVE: Well, it is -- this whole thing is disturbing. I'm also reading the material that OPM just put out. It's basically a notice to workers and a press release. It says they detected an intrusion before this April, and then took additional steps to protect themselves. I assume the additional steps were the installation of the Einstein system, which are -- a whole government uses or most -- many parts of our government.

And that's supposed to prevent these problems. It's supposed to detect them and then block outsiders from hacking, and that obviously didn't happen here. So maybe you're right. Maybe this happened in December and this is the same, old intrusion. But nonetheless, a six- month delay is a huge problem, and what I worry about is, as Congress dilly dallies about passing cyber security legislation, our government agencies are vulnerable, our infrastructure is vulnerable, and our country is vulnerable.

BLITZER: What about that, Colonel Reese? What's your reaction when you hear a disturbing report like this?

[17:35:05] LT. COL. JAMES REESE, CNN GLOBAL AFFAIRS ANALYST: Yes, well, Wolf, one of the problems is, and again, it goes across the board because a lot of times budgets drive how we look at security, and a lot of our security is reactive in nature. We see something, try to block it. And we do this and we try to block it. We do this, and my company, and a lot of people are starting to do this, we call persistent penetration.

You've got to have people on the outside, a third party, trying to hack your systems, and you try to get there before the hackers from China, from a Russia, from east Africa, trying to do these things, because as Tom said, yes, they could be nefarious in nature but there's also an economic espionage aspect, especially on the Chinese side.

They start building these databases to find out where they can invest, where they can take some of these things and buy these different companies. As most of us know, the Chinese are swallowing up large swaths of business and other elements of the U.S. infrastructure.

BLITZER: So, Tom Fuentes, what do you do about that if in fact these are Chinese hackers responsible for this breach, this hacking of four million federal workers?

FUENTES: Wolf, the information is already out the door. There's not a lot you can do with it. And when they notified four million employees that your information has been passed probably to a foreign government, there's not much they can do about it. You can't move. You can't change all your -- you know, four million people aren't going to suddenly change their Social Security numbers and all their Internet accounts, and move out of their house.

You know, it's just impossible. You're locked in. If another country has that information, they've got it.

PEREZ: And it's -- you know, it's almost every week we hear of these types of intrusions, Wolf. We reported recently about one -- they hit millions of former and current employees at the Postal Service. We know obviously the White House and the State Department which was more aimed at espionage of national security information, but this is more, I believe, and Tom, I think, is pointing to it correctly, which is, it's an economic espionage that is the goal here.

BLITZER: And so what should the U.S. government do about this? File some sort of protest with the governments of China, Jane?

HARMAN: Well, we've done that before. You know, round up the usual suspects. We've complained to China. We don't know, at least based on this information, we don't absolutely know it was the country of China. Could be a criminal syndicate operating out of China. But nonetheless, we are very vulnerable. And the systems have to work better, and the private sector has to have confidence that when it notifies our government of intrusions it will be protected and there will be -- you know, its liability will be protected.

And that's what this legislation is that Congress has not yet passed, after years of warnings. I mean, we just saw a really bad movie this week in terms of the surveillance laws expiring, and finally Congress picked up the ball. It's way late to be having a much more robust set of statutes out there to protect America.

PEREZ: There is a new strategy, Wolf, and I think what Jane was talking about, was the strategy of naming and shaming. And when they have determined that it is, they know where a hack came from. We saw what they did with North Korea and the Sony hack a few months ago. Well, the plan is, that now we're going to name and shame. We're going to identify people, or at least the entities, the military in this case, perhaps in China. They charge some military officials, members of the People's

Liberation Army, a special hacking group in Shanghai that specializes in this stuff. The Justice Department, National Security Division, charged some individuals in that case. It's going to be a year before we ever bring them to court but it's a very worthwhile thing.

BLITZER: Colonel Reese, very quickly, if you were one of those four million federal employees whose personal information, very sensitive information, may have been hacked by Chinese hackers, what would you do about it? What should you do?

REESE: Well, first off, Wolf, the government is going to -- you know, we got to put an alert on your systems to see if anything is going out. Very candidly, even when those things happen the chances of people's personal information or PII, being used are pretty slim, but you need to put an alert out there and let all your credit cards, all those systems that we live by day to day, you got to get it out there and alert it.

BLITZER: I want all you guys to stand by because we're going to continue to follow the breaking news. Four million federal employees, their personal information may have been hacked by Chinese hackers.

There's other breaking news as well coming into THE SITUATION ROOM. Authorities have just revealed new clues in a brutal murder discovered inside a burning mansion right here in the nation's capital. Stand by. We have new information.

[17:39:35]

(COMMERCIAL BREAK)

BLITZER: More breaking news. Investigators today revealed new clues in the grisly killings of four people discovered inside a burning mansion here in Washington, D.C. While one suspect is under arrest, the newly revealed clues raise serious questions about a personal assistant to one of the victims, a man police questioned but have not charged.

Let's get the latest from our senior Washington correspondent Joe Johns.

What are you learning, Joe?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, Wolf, in the middle of all this, police intensify a search for more clues in the murder of those four people at that house as we learned in court documents more about the employee who dropped off $40,000 there on the same day the Savopoulos family died.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): The personal vehicle of Jordan Wallace, driver and assistant to murdered CEO Savvas Savopoulos was recovered by police a block away from the crime scene on the day of the fire and murders. That according to the latest search warrant. [17:45:02] Authorities were looking for forensic and physical

evidence linking Jordan Wallace to this offense, the search warrant for the vehicle said, but so far he has not been arrested nor charged. The footprint discovered on the door to the Savopoulos home appears to be an important clue in the investigation into the quadruple murder in Washington, D.C. According to unsealed court records, quote, "The door is broken near the lock and a shoe or boot print is visible on the exterior suggesting forced entry."

MIKE BOUCHARD, FORMER ATF OFFICIAL: Seeing a boot mark on the door would be a quick indicator to police that firemen wouldn't have done that.

JOHNS: The takeaway, that whoever killed the family and the housekeeper may have left this print as a clue. Blood found on suspect Daron Wint's shoe when he was arrested matches at least one of the four victims, law enforcement sources tell CNN. It is unclear if police believe Wint left the imprint on the door of the Savopoulos home. He remains the lone suspect in the case but police believe he had help.

BOUCHARD: I think there's definitely someone else, but I think this shows that law enforcement is being very careful and meticulous in not rushing to judgment and locking people up just to close the case.

(END VIDEOTAPE)

JOHNS: The court papers say on the day of the murders, Jordan Wallace sent pictures of the cash in a red bag and text messages to a friend who asked how much money it was. Wallace replied, 40. At 10:26 a.m. that morning, Wallace wrote a text to Savopoulos that said package delivered. As to why his car was recovered at the scene on the day of the murders, a source tells CNN he told police someone alerted him to the fact the house was on fire.

BLITZER: All right, Joe, stand by. I want to get some more insight from experts. Once again the former FBI assistant director Tom Fuentes is here. And we're also joined by Matthew Horace, he's a former ATF special agent in charge.

Matthew, what do you make of these developments? Because I want to be precise. Jordan Wallace, Jordan Wallace in this particular case, he has not been charged with anything right now, only some suspicion. In fact, stand by for a moment. I want to take a quick break. Think about that for a moment. We'll take a quick break. Much more when we come back.

(COMMERCIAL BREAK)

[17:51:39] BLITZER: We're following the breaking news in investigation of four killings inside a Washington, D.C. mansion. The former FBI assistant director Tom Fuentes is joining us, as is the former ATF special agent in charge, Matthew Horace.

Matthew, what do you make of these late breaking developments that they're looking at this vehicle from the assistant, Jordan Wallace? Hasn't been charged with any crime but they're looking seriously at what his testimony was, what he was saying. What do you make of this?

MATTHEW HORACE, FORMER ATF SPECIAL AGENT IN CHARGE: Well, Wolf, remember, complex investigations are a marathon, not a sprint. The fact that he's a suspect remains. And just because he isn't in custody does not make him a suspect. In fact a part of the investigator strategy may be to leave people who we're looking at or on the streets but there's a reason. As long as they're out, we can keep going back to them time and time again.

If they were arrested on any probable cause at this point and plead the fifth, we lose that measure of communication. Investigators are hunting down leads, they're following leads, they're talking to people, they're interviewing suspects and witnesses, they're analyzing the evidence that came out of the house and they're going back to Wallace and talking about him time and time again.

BLITZER: What do you think, Tom?

FUENTES: I agree completely. You know, the aspect of leaving him out where he can still communicate freely and put a psychological squeeze on him in a sense of he knows the police are zeroing in on him. It's common knowledge, I'm sure, on his part and any other co- conspirators that the police are going to get them eventually. And, you know, just the strain for him to know that that shoe is going to drop on him at some point here is probably significant once (INAUDIBLE).

BLITZER: So far one arrest is Daron Wint, Matthew. They're looking at others. The police, as we've been reporting, you heard Joe Johns' report, the police don't believe this individual allegedly acted alone. Does it look like there probably was a broader conspiracy here?

HORACE: Well, of course, Wolf, what you have here, let's stop and think. We have the arson, a complex crime. But in addition to that we have the predicate offenses, extortion, burglary, murder, torture and a whole host of other crimes. I don't believe that this crime could have been committed by one person. The investigators know it, they're running down leads that lead them to other suspects, and relatively soon, slow and steady wins the race. We all will see more people in custody in this case.

BLITZER: And forensic evidence they have is pretty good right now. The DNA on that pizza slice they found in the garbage can as well as blood on the shoe of the suspect, Daron Wint.

FUENTES: Right. And also what happens when there's more than one person involved. It could be just that one was the most savage, was the most psychopathic that tortured that kid. And the one -- the other ones are not going to want to go down the drain with him. That's when you start to have cooperation where people come forward and say look, it was his idea, he did the worst of this. We just thought we'd make a few thousand dollars. We didn't know anybody would get hurt. So the idea that someone at some point is going to cooperate and give up their pals is pretty huge possibility.

BLITZER: Let's be precise, Jordan Wallace, the assistant, has not been charged with any crime. I just want to be precise on that.

Guys, thanks very, very much.

Coming up, breaking news, a massive cyber attack on the federal government. The personal information of millions of current and former federal employees may be at risk right now.

[17:55:10] Plus, dramatic new details on the alleged plot to kill police and behead a conservative blogger. Officials say the plot was encouraged by ISIS and we're now learning why the suspect's final phone call led police to move in.

(COMMERCIAL BREAK)

BLITZER: Happening now, encouraged by ISIS. We're learning more about the connection between a dead terror suspect in Boston and ISIS fighters overseas. Was the terrorist group giving orders to kill police and behead a critic of Islam.

[18:00:04] Massive cyber attack. A U.S. government agency is hacked. Four million people could be affected. Their personal information now at risk. Is China to blame?