I mean, other than the stability and the health plan and the aboveaverage pay. Oh, god, this better work out. Tonight on rock center, well go inside the fourstar lifestyle in light of the petraeus scandal. Well look at the privileges and also harry smith reports on one of the only people to go to jail for the financial crisis. Hes not a big shop banker, just a marathoner who made the same mistake others did trying to get a mortgage, except he uncovered a federal agent wearing a wire. I opened the door and there is this very attractive brunette standing there. Also the master bomb maker. Tonight Richard Engle tracks a terrorist that may be the most dangerous bomber in the world. Its a story that may better explain why Airport Security is the way it is in our country. And Natalie Morales volunteers for an experiment. Youre going to put me through some pain, i understand . In a radically new therapy to treat chronic pain. And she discovers a remarkable love story along the way. He kind of started to joke around with me a little bit. And the folks from c campbells try to sell some very special soup to a very special group of americans as rock center gets under way. Good evening and welcome to rock center. This past election season, the issue of fairness in all its various forms was front and center. The gulf between rich and poor, especially, and it continues as we talk about tax cuts and this fiscal cliff. But the man were going to meet here first tonight has come to symbolize unfairness when it comes to the collapse of the Housing Market that, that after all, started americas economic meltdown. In the movies he would be portrayed as the little guy crushed by the system while the fat cats get away scot free. While what youre about to see is true, it starts bhart thoners. Harry loves running. He loves putting one foot in front of the other to see how far he can go. A feeling he savors because harry just spent a year and a half in prison. Our cameras were there the first day he was released from the halfway house. His two sons met him. I couldnt have done it without you, guys. I love you, dad. I love you, too. Charlie engle went to prison for his role in the financial crisis. But he didnt work here on wall street, he was not a big time banker. He was accused of doing something likely hundreds of thousands of americans did during the housing boom. He exaggerated his income on his Mortgage Applications. Charlie found real estate a good place to make money. The Housing Market was booming for everyone. The bubble just got bigger and bigger. It did. There was no end, right . Reporter the story of how Charlie Engle ended up in prison began when he and some friends decided to go for a run. A very long run. Reporter how many miles . The run a crass the sahara ended up being a little ever 4,600 miles. Reporter the run would be both an adventure and a means to raise money and awareness for clean water projects in north africa. Accompanied by a film crew, the journey was turned into a documentary narrate bid matt damon. Running the sahara appeared on 2008. Thats charlie on the left. He was even on jay leno. All told, Charlie Engle was famous for about five minutes, long enough to catch the attention of this man with the box of files in this fuzzy photo. Agent orlander from the irs. Agent orlander saw the movie, and from the accounts we read, he said, i wonder how this charlie guy maintains this lifestyle. Who has the time and wherewithall to run across a continent . Where is his income . I laugh at lithe lifestyle wd because im living in a rented apartment and driving an 86 suburban. Reporter agent orlander spent 1700 hours investigating charlie. He even went through charlies trash looking for evidence. Charlie was kept under surveillance here at his apartment building. Still not satisfied, the irs brought in a secret weapon, a beautiful young agent, a runner, came knocking on charlies door. I open the door and theres this very attractive brunette standing there, and she says that shes interested in the building, in buying a condo in this building. Reporter what engle didnt know was the attractive runner who introduced herself as Ellen Bradshaw was wearing a hidden microphone. Do you want to go get a cup of coffee . Reporter so you started chatting, and did you find you had some interests in common . Absolutely. Just looking at her, she was athletic, you could tell. Reporter did you ask her out or did you go on a date . She actually asked if i wanted to have lunch the next day, and i thought that was great. Reporter when youre getting ready to go to this lunch, what were you thinking about . Theres no doubt that im curious about this woman. Reporter what did you talk about . By twothirds of the way through the lunch, most of her questions, looking back now, were almost like of a financial nature. Do you do any investing at all . Well, i certainly have in the past. Reporter engle told bradshaw he had taken out a couple of mortgages. I had a couple loans out there with my Mortgage Broker who didnt mind writing down that i was making 400 grand a year when he knew i wasnt. Uhhuh. Reporter unwittingly, charlie had just dropped a bomb in agent orlanders lap. Several years ago, he had taken liar loans on two investment properties. They were called liar loans because a lender didnt have to verify a buyers assets or income. During the housing boom, several of the mortgages written in the United States were liar loans worth an estimated 300 billion. The big banks paid those brokers more money for a liar loan than they would for a fully documented prime loan with full documentation and down payments because they could get more money for them because they would charge that borrower more interest. Reporter Neal Barofsky was the Inspector General for t. A. R. P. , the bailout for the banks. Specializing in moral fraud, he specified that the banks were doing mortgage frauds. Buying them and selling them at enormous profit. Whether they can pay them off in a couple years really doesnt matter to you when youre just bundling them up and selling them. Reporter until the Housing Market began to collapse. Thats when they began to default on their loans. The ceos of the banks were hauled sbooin front of a Congressional Committee and chastised for these liar loans. The buyers got bailouts for millions. Meanwhile, the government was about to drop the hammer on charlie for what he said to bradshaw and orlander at lunch during that meeting. Reporter did you say i hope i see you again . Absolutely. Whats funny is after that lunch t all ended pretty quickly. Reporter the Attorneys Office was conducting its own investigation. In the end, charlie was indicted for mortgage fraud, and in case you didnt know, lying on a Mortgage Application is against the law. People will see this and say, he was just another one of those guys rolling the dice, trying to make a buck. You were gambling. A lot of people were doing that. Reporter engle says he did not write down the income figure on his loans, but he admits he signed the closing documents. Reporter did you look at the fine print . Did you know what you were signing . No. But the fact is, thats not uncommon, either. Reporter to this day, charlie insists he didnt lie. But a jury didnt buy it, and the tape sure didnt help his case. I had a couple good liar loans out there. I did have liar loans, but im not the one who told the lies. Reporter who told the lies . The brokers, the banks, the people who as a borrower, we all know were not in charge of the process. Reporter charlie was convicted in large part because of the testimony of the Mortgage Broker on one of his loans who, along with charlies loan officer and the seller of the property, all pled guilty to conspiring to sell several banks a fraud mortgage. Hes already pled guilty to mortgage fraud, to all these things. He forged his parents signatures on loan applications. Reporter and the government is using this guy to testify. Exactly. He ended up getting 20 years in prison while i got 21. Reporter he sent a statement saying, mr. Engle was convicted by a jury of fraudulently obtaining more than 1 million in four mortgage loans. That same office also fostered a case of more than 2. 9 billion. Somehow, those banks so hungry for those liar loans, by and large escaped criminal prosecution. Reporter what surprises me as somebody who has kept a pretty close eye on this over the last dozen years how people at the top of the food chain had to take a fall or been prosecuted or that the government even tried to go after them. Why is that . You know, that is the 64,000 question. I think if you were to ask the folks in washington, they will tell you that there is a lot of behavior that while it was unethical and perhaps morally suspect didnt rise to the level of criminal conduct. Reporter is it sometimes just easier to go to the guy who is on the bottom of the food chain . Its certainly a lot easier, but that doesnt make it right. And it doesnt really accomplish the broader goals that you want from your department of justice in the aftermath of a crisis, and thats to make it very clear that if you break the law, if you do this type of unethical behavior that you will be held accountable. And all the Charlie Engles in the world rotting in jail arent going to accomplish that goal. It may not surprise you to learn that Charlie Engle is petitioning for a new trial hoping to overturn his conviction. Charlie still owes the banks 250,000 in restitution. Up next here tonight, on the trail of the man u. S. Officials call the largest single threat to america. And later, the pitfalls of four stars. Life at the top of the military, according to those who have been there. Bye daddy bye bye girls, love you. Daddy, we made you a video for your trip yeah, watch it on the airplane ok here you go. Aw, thanks girls. Yeah hey. I also made you a video. Aw, thats so sweet. You probably shouldnt watch it on the plane. Say bye to daddy bye girls bye vo share videos instantly on the Samsung Galaxy s3. Amber, brown and black. Exclusively on verizon. [ male announcer ] every time you say no to a cigarette you celebrate a little win. 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And perhaps the simplest way to introduce this next story is this. The next time youre at the airport and you feel yourself perhaps getting frustrated and having to remove your shoes, think of this story, and it may make a lot more sense. Same goes for the ban on boarding an aircraft while carrying liquids. Tonight we report on the worlds master bomb maker, perhaps the most dangerous single individual threat to the United States, a man who specializes in planting explosives on aircraft bound for america. Richard engle set out on his trail on a dangerous journey to an al qaeda stronghold where the effort to protect american lives is risking making even more enemies. Reporter if youre looking for the man u. S. Officials describe as the worlds most dangerous, you need to come here to the tip of arabia to a place where men wear daggers in their belts, where carts are drawn by camels and the capital is one of the oldest cities in the world. This place is yemen. Reporter and somewhere in this enchanted country, ibrahim asyria is hiding. Hes the top bomb maker who has become the al qaeda of the arabian peninsula. The group is now the most active terrorist organization targeting the United States. This is an individual who dedicated his life to putting together bombs that can kill americans. Reporter we spoke with author Gregory Johnson in the old city of sunna, yemens capital. His latest book is on al qaeda and asyri who, he says, spends his days building what asyri would consider the perfect bomb. It has to be Strong Enough to get through western security, and b, it has to be Strong Enough to bring an airliner down to crash it. Reporter asyra has already come close. He used one to bring down a flight on Christmas Day in 2009. And the next year he shipped more bombs to chicago hidden in printer cartridges. In both cases, even though the plots ultimately failed, the explosives made it all the way through Airport Security. Each bomb that ibrahim puts together is better than the last one. Reporter al qaeda is proud of asyris work. The groups online videos show how he once fit a bomb into a tape cassette case. Another, he molded into the back of a picture frame. Both of those bombs killed their targets, a city official and korean tourists. But what motivates him . Asyri who grew up in saudi arabia joined al qaeda because he was outraged as iraq and abu grabe. He turned so ruthless, he even turned his little brother sabela into a serial bomber. Al qaeda documented the operation. Here abdullah is saying a last goodbye to his big brother as he heads off with his underwear bomb to blow himself up next to the saudi prince. The bomb blast went almost directly upward, so it blew a hole in the roof. Blew a hole in the roof . Its a very powerful bomb. Reporter amazingly, the explosion directly in front of the prince didnt kill him, but the attempted assassination made stopping asyri an even higher priority of the United States and its allies. The place they think theyre most likely to find him is yemens deep south, so we decided to go there. We left sunna and headed for the province of abian. The dark areas of our map are mostly ungoverned, where nobody is in charge. To ensure our safety, the Yemeni Government supplied us with an escort. Foreigners need permission to come to this part of the country. It remains a dangerous place. In fact, until recently, al qaeda, and most likely asyri, actually ran things here. While almost no one in the world knew about it, for a year, al qaeda and its ally established a mini state in this part of yemen, and this building was its headquarters and main courtroom. In these rooms, al qaeda judges dispensed summary justice according to their strictest interpretation of islamic law. This young man was punished for nothing more than stealing electrical wires from utility poles. Can i see what happened to you . So it was cut off here. And how did they do it . With a little knife. They did it with a little knife. The horrors of al Qaeda Justice didnt end there. One of al qaedas most notorious acts while it was in power happened on this basketball court. The militants brought a man they accused of spying for the americans, helping them find targets for their drones, and they crucified him on this lamp post. The cross bar they used to do it is still here. They left him hanging for three days and forced children to play below so they would learn a lesson. 21st century crucifixions may have been the last straw. This past may, the government finally acted helped by american advisers. It sent fighter jets and troops to attack the al qaeda stronghold. To take back this town, Yemeni Forces lost more than 200 men. Now theyre more or less in control here, but the governments grip remains tenuous and their leaders are still routinely targeted for assassination. Translator night and day, there is fighting around the clock. This farmer says that even after the governments bombing campaign, the terrorists just went underground. Theyre here right now . Translator yes, theyre around. Theyre in the market, theyre over there. Reporter theyre still here . Yes, theyre still here. Theyre just lying low. Reporter how important is it for asyri, for al qaeda to have this state where they can operate with total impunity. Most certainly it gives them the time and place to plot. Reporter senor mudd was the terrorist official for both the cia and the fbi. They want to return to the golden age of islamist. It gives them a place to say thats where they can do it, and that place is yemen. Reporter how important is it to catch him . Hes had the will to reach u. S. Shores. Cant get much higher than that. Reporter the tough job of finding asyri falls to these