Ransom or Repayment; Interview with Rep. Mike Pompeo; Washington D.C. Transit Police Officer Charged with Supporting ISIS; Trump in

SPECIAL-REPORT-WI-01

REPORT-WI-01

D.C. Transit Police Officer Charged with Supporting ISIS; Trump in

Trouble?; Cyber Hacks Concerning U.S. Presidential Election Examined;

American Hostage in Iranian Released as Payment for Iran Deal Reaches

Tehran; State of Trump Campaign Assessed - Part 1>

Charles Hurt, Nina Easton>

World Affairs; Hostages and Kidnappings; Policies; Terrorism; Polls>

BRET BAIER, FOX NEWS HOST: This is a Fox News alert. I'm Bret Baier in Washington.

Hillary Clinton has opened up a double-digit lead on Donald Trump in brand new Fox polls being released at this hour. Clinton has a 49 to 39 advantage. That's up from a six-point edge in June. Trump held a three- point lead in May.

Their numbers in the honest and trustworthy category are virtually the same -- just 36 percent of those surveyed feel Clinton or Trump has those qualities.

We'll have complete election coverage shortly.

But first, connection or coincidence? The Obama administration is denying that a $400 million cash payment to Iran as four detained Americans were being freed was in fact ransom. That is exactly what Republicans and other administration critics allege after an unusual delivery of a cargo plane full of euros and Swiss francs to Tehran.

Here to sort it all out for us chief Washington correspondent, James Rosen is live at the State Department tonight. Good evening -- James.

JAMES ROSEN, FOX NEWS CHIEF WASHINGTON CORRESPONDENT: Bret -- good evening.

Senior officials here at the State Department said today they were aware back in January of how bad the optics looked in this case, but they went ahead anyway because they needed, as they put it, to get creative about how to deal with a hostile foreign government like the Islamic regime.

(BEGIN VIDEOTAPE)

JOHN KERRY, U.S. SECRETARY OF STATE: We feel very comfortable that the United States of America held on to its principles, got its people home, kept faith with them. And I do not believe we have invited further situations.

ROSEN: What Secretary of State John Kerry did not mention last January when he welcomed Iran's release of five American hostages the day before as part of a prisoner swap was that the United States, as first reported today by the "Wall Street Journal", had also arranged for an unmarked cargo plane to deliver to Iran $400 million in hard foreign currency on or about the same day as the Americans were set free.

JOHN KIRBY, STATE DEPARTMENT SPOKESMAN: This was not ransom. Any suggestion that it had anything to do with ransom is absolutely and utterly false. Now yes, they were done simultaneously, and so I understand the coincidental nature here of the timing.

ROSEN: The $400 million U.S. officials said was the amount the Shah of Iran had paid the U.S. in the late 1970s for an arms purchase just prior to the Islamic revolution after which Iran seized 52 American hostages and the U.S. froze Iranian assets here.

Iran's claim to the $400 million had been pending in an international tribunal at The Hague and the U.S. fearing an adverse ruling of up to $10 billion said it negotiated a settlement worth $1.7 billion over all.

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: Iran released five Americans who were unjustly detained on Iranian and we resolved a 35-year-old financial claim with the Iranians in a way that saved Americans potentially billions of dollars.

MARK TONER, STATE DEPARTMENT DEPUTY SPOKESMAN: Secretary Kerry spoke to the settlement at the time and tried to say look, guys, I know what it looks like but there's no there, there.

ROSEN: The prisoner swap and the $400 million down payment occurred just as the nuclear deal with Iran was being formally implemented and just a few days after the regime released ten U.S. Navy sailors captured offshore.

Administration critics said it all amounted to a ransom payment that has only emboldened the state sponsor of terrorism.

REP. ED ROYCE (R), CALIFORNIA: We don't give them access to hard currency for the reason that if they get their hands on cash they give that to Hezbollah and to Hamas.

(END VIDEOTAPE)

ROSEN: Aides to Secretary of State Kerry may feel there's nothing left to be said about all this but the Republican chairman of the House Oversight Committee, Congressman Jason Chaffetz of Utah disagrees. He wrote to Kerry today, demanding all the documents relating to this transaction and also that the Secretary of State Kerry himself appear before the committee to answer more questions about it -- Bret.

BAIER: James Rosen at the State Department. James -- thank you.

Let's go deeper into this Iran situation with Kansas Republican Congressman Mike Pompeo. He's a member of the House Intelligence Committee. Congressman Pompeo joins us tonight from Wichita. Congressman -- good to see you. Your reaction to this story first of all?

REP. MIKE POMPEO (R), KANSAS: The story doesn't surprise me sadly. We've been tracking what happened when these hostages were released now for months. We've asked lots of questions and now we have definitive reporting that bundles of cash were transferred to a terrorist regime that continues to take American hostages.

This is a tradition foreign policy thing that we don't trade money for hostages. And in this case it appeared we traded at least $400 million, it maybe as much as $1.7 billion. This is an enormously dangerous foreign policy failure.

BAIER: Congressman -- not surprising, you hear the White House saying this is not ransom money. This is what Josh Earnest said from the podium today about this.

(BEGIN VIDEO CLIP)

EARNEST: This $400 million is actually money that the Iranians had paid into a U.S. account in 1979 as part of a transaction to procure military equipment. So what the United States did was resolve a long-standing claim at The Hague that saved the American people potentially billions of dollars.

(END VIDEO CLIP)

BAIER: They say they know the optics look bad but this is old news.

POMPEO: The fact that money was on an airplane, an unmarked cargo airplane that they've deceived the American people and Congress about, they never told us within hours of the time that these hostages were released. Just strange credulity, Bret, to think that this kind of thing is just a coincidence is something that I don't see how Josh Earnest says with a straight face.

This was a really bad foreign policy with an intentional deceit of Congress. And we still have lots of unanswered questions about how such a thing could come to be.

BAIER: Well, go into specifics about what you tried to do, what you tried to get from the administration on details of this transfer of money.

POMPEO: Yes, sir. Well, back in January, I sent a letter to the State Department asking a number of questions. Why was the money transferred, for what purpose was it transferred, how was it transferred? Why was Congress not notified immediately of the method that this was transferred? All of the things surrounding this transition between these American hostages coming home and money leaving, taxpayer money leaving heading to the Iranian terrorist organizations.

With the questions we asked, to date we've received no written responses.

BAIER: And you aren't alone. There were other lawmakers out obviously who wrote letters and tried to get information, as well.

POMPEO: Bret -- a number of letters indeed. Senator Cornyn from Texas on the Senate side and I on the House side have introduced legislation demanding that they provide us reports. We haven't got that passed into law yet. But there are dozens of lawmakers asking hard questions, lawmakers from both sides of the political aisle, who understand that their failure to treat the Iranians as the terrorist that they are and instead treat them as if they're a partner in peace is completely inappropriate and unsafe for America.

BAIER: All right. They say President Obama made it clear back in January when he said this --

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The United States and Iran are now settling a long-standing Iranian government claim against the United States government. Iran will be returned its own funds, including appropriate interest but much less than the amount Iran sought. For the United States, this settlement could save us billions of dollars that could have been pursued by Iran.

(END VIDEO CLIP)

BAIER: They're saying it's not the type of transfer of money, but the President was signaling to the American people and to Congress that that's what was happening.

POMPEO: Even after this deal, Bret, it still remains the case that the Iranians are not permitted to participate in the world financial markets. So the only way to get this money to the terrorists was to provide it in bundles and crates and packages of currency.

This was something that had been cooked up as part of the deal. Alongside of the major deal that the President views as his signature foreign policy legacy of his second term. And all the time that Congress was not told about it, while we were being asked to vote on whether or not we approve that deal.

They owe the American people and Congress answers. They did not provide them to us.

BAIER: You just said money to the terrorists. You mean money to Iran. Are you convinced that they're then giving money to terrorists?

POMPEO: Bret, there's no doubt about that. Even the administration acknowledges that some of the money that's been returned to the Ayatollah is ending up in the hands of terrorists or fomenting terrorism all around the world.

This is the same country that's allowing al Qaeda to run free inside of their nation, inside the Islamic Republic of Iran. There's no doubt that the money that the Iranians now have their hands on is going to Hezbollah and Hamas and places all around the world where the Iranians are committing acts of terror.

BAIER: I want to ask you two quick questions about the election. One is Hillary Clinton. You had an effort under way to prevent her from getting intelligence briefings based on the e-mail scandal and her testimony in front of the Benghazi committee. Are you still trying to do that?

POMPEO: We are. But it appears that we're not going to be successful. It's absolutely the case that she has demonstrated that she is not capable of securing those important American secrets and we shouldn't provide her any more until we've become convinced she knows how to handle it and keep that information secure. Our soldiers, sailors and airmen deserve that -- Bret.

BAIER: And last thing -- there are many Democrats now saying and some Republicans saying that they think the Donald Trump campaign is coming unhinged and there's disarray inside. Are you concerned about it?

POMPEO: I'll let the Trump campaign speak to that. Having spent a lot of time with Secretary Clinton as part of the Benghazi committee, I can assure you she's unfit to be the president of the United States.

BAIER: Congressman Pompeo -- thanks for the time tonight.

POMPEO: Thank you -- Bret.

BAIER: A counterterrorism sting has a 13-year veteran of the Washington, D.C. transit police making history tonight and not the good kind. He's facing terrorism charges for allegedly trying to help ISIS terrorists. Busted by federal authorities, the suspect was in federal court this afternoon.

Correspondent Doug McKelway is in Alexandria, Virginia tonight.

(BEGIN VIDEOTAPE)

DOUG MCKELWAY, FOX NEWS CORRESPONDENT: It is the first time a U.S. police officer has been arrested for providing material support to ISIS. 36-year- old Metro Transit Officer Nicholas Young of Fairfax, Virginia was arrested at Metro Transit Police headquarters this morning.

At his home, police officers swarmed amidst curious neighbors.

UNIDENTIFIED FEMALE: He was just a little weird. He was a little closed - - I'm sorry -- he was a little closed off.

MCKELWAY: In his first appearance this afternoon, he asked for a court- appointed attorney. The criminal complaint describes a disturbed man, a convert to Islam who confided to undercover agents that he tortured animals as a child, had a Nazi eagle tattoo on his neck, hated Jews, was prone to domestic violence and owned many assault weapons. A Justice Department source described him as thirsty for violence and deeply impressionable to ISIS social media.

EARNEST: We know that part of the strategy that is used by extremist groups around the world including ISIL to use social media to try to recruit followers in countries around the world.

MCKELWAY: Young was under FBI surveillance. The bureau tipped off to his suspicious behavior six years ago by Metro Police. Agents found that he had cultivated a relationship with Zachary Chesser (ph) who was arrested in 2010 after he threatened the producers of the TV show "South Park" after their unflattering depiction of the Prophet Muhammad.

He also met frequently with Amin el Kalifi (ph), arrested near the U.S. Capitol in 2012 donning what he thought was a suicide vest supplied by undercover agents. Their arrests made Young nervous. He told an undercover agent that in case he was being monitored, he quote, "frequently took the battery out of his cell phone", and if betrayed, quote, "that person's head would be in a cinder block at the bottom of Lake Braddock.

(END VIDEOTAPE)

MCKELWAY: Young also confided to undercover agents that he knew how to gain access to a court house with multiple guns undetected and distribute them to others inside. Ultimately, he did get in a courthouse, not with guns, but in shackles -- Bret.

BAIER: Doug, thank you.

Up next, does Donald Trump need an intervention? Well, he's getting one according to close allies. We'll explain.

First, here's what some of our Fox affiliates around the country are covering tonight.

KSAS in Wichita as three-term Kansas Congressman Tim Huelscap is upset in the Republican primary. The Tea Party lawmaker who has been a persistent annoyance to GOP leaders was defeated by obstetrician Roger Marshal.

Fox 7 in Austin where state house officials say Texas Medicaid will cover the cost of mosquito repellant for pregnant women amid concerns over the Zika virus. The first mosquito-transmitted cases in the U.S. mainland have been discovered in Florida as we reported. Texas officials say they've confirmed 90 cases of travel-related Zika in that state.

And this is a live look at Sacramento from our affiliate Fox 40. One of big stories there tonight, firefighters still battling a 4,000-acre vegetation fire that's prompted an evacuation order for one neighborhood. Officials say 35 homes are threatened at this time. They don't know what sparked that fire.

That's tonight's live look outside the Beltway from SPECIAL REPORT.

We'll be right back.

(COMMERCIAL BREAK)

BAIER: As we told you at the top of this program, Hillary Clinton now leads Donald Trump by ten points in the brand new Fox poll. Donald Trump is dealing with what most campaign watchers call a horrible 72 hours of self-inflicted wounds and negative press coverage.

In the primary, the pundits and the watchers were wrong almost every single time about the impact on Trump and his campaign. But tonight, there's increasing talk of strife inside that campaign from sources inside that campaign. There are also key aides speaking out about Trump's family and friends stepping in to try to stop the bleeding and reset this race.

Senior national correspondent John Roberts is in Jacksonville as Donald Trump prepares for a rally tonight in the crucial swing state of Florida.

(BEGIN VIDEOTAPE)

DONALD TRUMP (R), PRESIDENTIAL NOMINEE: If you look at his wife, she was standing there, she had nothing to say. She probably -- maybe she wasn't allowed to have anything to say.

I always wanted to get a Purple Heart. This was much easier.

You can get the baby out of here.

JOHN ROBERTS, FOX NEWS SENIOR NATIONAL CORRESPONDENT: After a disastrous 72 hours where Donald Trump repeatedly ran over his message with a series of highly-criticized eruptions, Fox News gas learned that Republican leaders and campaign officials alike want what amounts to a strategic recalibration to get Trump back on track.

Fox News is told that Trump will likely hear from a number of close advisers including Reince Priebus, Newt Gingrich and Rudy Giuliani about the need to focus solely on Hillary Clinton, the Obama administration record, and what he will do for the nation if elected.

NEWT GINGRICH, FORMER HOUSE SPEAKER: He has not made the transition to being the potential president of the United States, which is a much tougher league. People are going to watch you every single day. They're going to take everything they can out of context. And he's not yet performing at the level that you need to.

ROBERTS: At a rally in Daytona Beach, Florida Trump appeared to get the message, teeing off on the $400 million the administration sent to Iran just as the American hostages were being released.

TRUMP: I turn on the news and I see $400 million being shipped in cash -- and they didn't want dollars. It's being shipped in different currencies and it's being shipped overnight to Iran.

ROBERTS: Our new Fox poll suggests Trump has some work to do when it comes to the issues. On who voters trust to deal with terrorism, Trump has lost a substantial lead from back in May. Trump also lost ground on who would be better to restore trust in government though Trump still leads on the economy and who best to destroy ISIS.

TRUMP: It was Hillary Clinton that she should get an award from them as the founder of ISIS.

ROBERTS: As he did during the primary campaign, Trump is again warning that the deck will be stacked against him in the November election, claiming the system is rigged. Trump insisted today his campaign is unified, despite saying yesterday he's quote, "just not there yet", ready to endorse House Speaker Paul Ryan though he did give his blessing today to running mate Mike Pence to issue a full throated endorsement.

GOV. MIKE PENCE (R-IN), VICE PRESIDENTIAL NOMINEE: I talked to Donald Trump this morning about my support for Paul Ryan, a long-time friendship. He strongly encouraged me to endorse Paul Ryan at next Tuesday's primary. And I'm pleased to do it.

(END VIDEOTAPE)

ROBERTS: Both the Trump campaign and the Republican National Committee today also pushed back hard against reports that the RNC is reviewing its rules in the event that Donald Trump exits the race. RNC officials told me today they don't have any expectation that he would do that while the Trump campaign says any talk about such an idea is absolute fiction -- Bret.

BAIER: John Roberts in Jacksonville. John -- thank you.

Hillary Clinton is just finishing up a rally right now in Commerce City, Colorado. Earlier, Clinton visited a Denver company that makes neckties and scarves and launched new attacks on Donald Trump about outsourcing.

Brian Fallon is spokesman for the Clinton team -- he joins us tonight from Clinton campaign headquarters in New York. Brian -- thanks for being here.

I want to start with that subject of outsourcing. Hillary Clinton spending a lot of time about that in Colorado, that Donald Trump makes his -- some of his items overseas in China and elsewhere. Here is a Trump super PAC ad that is airing tonight. I would like to get you to respond.

(BEGIN VIDEO CLIP)

HILLARY CLINTON (D), PRESIDENTIAL NOMINEE: I don't think you can effectively restrict outsourcing. There's no way to legislate against reality. So I think that, you know, the outsourcing will continue.

But I don't think there's any way to legislate against outsourcing. I think that's just a dead end.

(END VIDEO CLIP)

BAIER: That's in India. The person goes on to say thank you for saying that. It makes a lot of us feel happy. Is it disingenuous for Secretary Clinton to make this outsourcing pitch?

BRIAN FALLON, CLINTON CAMPAIGN SPOKESPERSON: Not at all -- Bret. What Secretary Clinton was saying there was that while it may be impossible to ban private enterprises in the United States from outsourcing jobs and the manufacturing of goods to foreign countries, she strongly believes that we as a government should not be incentivizing it and creating a perverse incentive to encourage businesses to do just that.

That's why in this campaign she has proposed stripping companies of tax benefit if they engage in outsourcing. And for Donald Trump who is going around the country trying to portray himself as a champion of the working class when the way he has run his businesses has been rely on outsourcing of the products that carry the Trump name makes him a hypocrite.

So yes, today she was visiting this necktie manufacturer in Colorado, because Donald Trump previously had said that the reason he needs to outsource his clothing lines is because they can't make those products here in America. That's an outright falsehood as she proved today by visiting this very plant that is manufacturing neckties here in America. Donald Trump could be making them here in America but he would rather do it more cheaply by employing workers abroad. That's something that voters deserve to know.

BAIER: You know, shortly after making that speech in India and talking about outsourcing, something that India obviously is very happy about, India made a donation to the Clinton Foundation, a big donation. Do you know if the Clinton Foundation is under investigation?

FALLON: No. And Bret -- there's no basis to believe that. I have no knowledge of that, and there's no evidence to that effect. That has been a baseless report that's been circulating out there. The Clinton Foundation does extremely valuable work across the globe when it comes to things like providing drinking water in countries in Africa, preventing juvenile diabetes and encouraging healthy habits here in the United States for school children.

So the foundation continues to be unfairly the subject of many partisan attacks. But President Clinton and Secretary Clinton are extremely proud of the foundation's work.

BAIER: Ok. Well, the FBI director wouldn't answer the question. And Peter Switzer who's been following it says that definitively it is being investigated. So you're saying -- and we know the IRS is investigating -- so you're saying you don't know of any investigation?

FALLON: Well, there's a lot there -- Bret. Let me quickly unpack it all. First of all, Peter Switzer has been widely discredited. The claims that he's made about the Clinton Foundation a year ago were debunked and he himself was forced to admit that he had no evidence of any of the quid pro quo allegations he was making with respect to the foundation.

Secondly, you can't read anything at all into Director Comey's inability to answer that question. As a former Justice Department spokesperson I can tell you that somebody in Director Comey's position would never answer a question one way or the other if a member of Congress were to ask him in a public setting whether an entity was under investigation.

BAIER: So --

FALLON: The fact that he declined to answer that tells you nothing.

BAIER: Yes.

FALLON: And lastly, it's not at all known that the IRS is actually investigating the Clinton Foundation. The Republican members of Congress called for a baseless investigation into the foundation. They received a form letter back from the IRS. They leaked that letter and tried to pretend that it was announcing a formal investigation. That's not at all what the letter --

(CROSSTALK)

BAIER: Ok. Well, let's follow up on that. Why do you think former President Clinton's speaking fees from overseas entities jumped dramatically after Mrs. Clinton was appointed secretary of state?

FALLON: Bret, the president has given speeches to all kinds of entities, both within the United States and abroad. All of them went through a rigorous vetting process that was conducted at the State Department during the years that Hillary Clinton was the secretary of state.

If he gave the speech, it was because the people that inspected it and reviewed it and vetted it deemed that there was no conflict whatsoever. And all allegations suggesting that there was a conflict are coming from people like Peter Switzer who again has been widely discredited and has had to admit that he didn't have any evidence to prove any quid pro quo.

BAIER: You don't think there's any problem there. I get that. But when foreign entities pay Secretary Clinton or the former president to speak or they make large contributions to the Clinton Foundation after they speak, do you think that they expect something in return?

FALLON: Well, if they do then they're completely foolish for thinking so. And again, there's never been any evidence -- shred of evidence to suggest that any actions were ever taken by the State Department because of any speech that was ever given by President Clinton.

(CROSSTALK)

BAIER: Ok. So the Clinton Foundation --

FALLON: And all allegations to the contrary have been discredited.

BAIER: This last one on this -- the Clinton Foundation signs this memorandum of understanding with Valerie Jarrett in 2008 pledging to disclose all contributions. Secretary Clinton said as much to the Senate Foreign Relations Committee during her confirmation hearings. Why did the Clinton Foundation fail to live up to that obligation?

FALLON: I'm not aware of how you can say that they failed to live up to that obligation. They filed the same forms on an annual basis and disclosed their donors. In fact, they go above and beyond the legal requirements in disclosing who gives money to the foundation. And again, all those dollars, all those donations go to performing life-saving work across the globe.

An the foundation, prior to this campaign, was widely praised by Republicans left and right. You had many Republican officials, Jeb Bush, who was a candidate for president during the primaries, Carly Fiorina, many other top Republicans appearing at the Clinton Foundation events and praising the work of the Clinton Foundation.

It is only now that Hillary Clinton is running for president that the Clinton Foundation has suddenly come under fire with these baseless allegations.

BAIER: Ok. We've been over the e-mail back and forth and I heard Robby Mook talk about it and what Director Comey said and what you all are saying. I'm not going to go down that road.

But I do want to ask you about the breaking news on this $400 million cash payout to Tehran. The administration is talking about it one way. Secretary Clinton obviously supports the Iran deal. Do you see any change and the campaign -- do you see any change in Iran, how it's acting as a result of this Iran deal?

FALLON: Well, first of all, Bret, the day began with a complete falsehood being tweeted out by the Trump campaign. Donald Trump tried to suggest that Hillary Clinton was involved in this $400 million payment to Iran. And of course, independent fact checkers verified over the course of today that that happened -- that transaction took place more than a year after she departed her position as secretary of state.

BAIER: So she doesn't support that?

FALLON: I'm not saying that. I'm just saying that Donald Trump --

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