This is a rush transcript from "On the Record ," December 3, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight: How does this happen? Shackled, a 17-year-old boy allegedly shackled and held captive in a home and abused. Now, there are horrifying new details about the disgusting tale of torture in California. The boy says he escaped from his home. He ran into a gym barely clothed with a shackle around one of his ankles. Couple was arrested yesterday in connection to the case, and last night, police arrested a third suspect. And get ready for this. It is the aunt of the 17-year-old -- his aunt.

So what was going on in that house? Did neighbors ever notice anything strange happening at the home? Joining us are Rachel Portillo and Jennifer, neighbors who lived near the alleged crime scene.

And let me go first to you. Rachel, do you know the Schumachers, the husband and wife who lived in that home?

RACHEL PORTILLO, NEIGHBOR OF ALLEGED CAPTORS: Yes, I do.

VAN SUSTEREN: Tell me, how did you meet them, Rachel? And did you ever see anything unusual going on in the house?

PORTILLO: I met them. They live straight across from my house. And I just came out one day and I met county paramedics were there, so I ran across, gave them my number. She's a new neighbor. And I just said, You need help, I'm right across the street.

VAN SUSTEREN: So everything was -- every...

PORTILLO: And that's how we met.

VAN SUSTEREN: All right. So everything's seemingly normal. Jennifer, let me go to you. How long have you lived -- how long have you been neighbors to the Schumachers, who live in this home where this boy was?

JENNIFER, NEIGHBOR OF ALLEGED CAPTORS: I met Kelly probably November of last year, is when I started speaking with her.

VAN SUSTEREN: Have you ever met -- Jennifer, have you ever met the young man, the teen who was in the home?

JENNIFER: I was never formally introduced to him. I saw him a few times walking with her, taking the kids to and from school. And Kelly told me that he was her nephew and that he was staying with them temporarily because he was having problems at home.

VAN SUSTEREN: Jennifer, did you ever see anything unusual about the boy? Did look like he wasn't fed? Did he look like he was abused or in any sort of trouble?

JENNIFER: He looked fine to me. I never really saw him close up. Like I said, I just saw him walking up and down the street with her. I saw him a couple times mowing the lawn. I never really saw him close up, so I don't -- I can't really say for sure.

VAN SUSTEREN: Rachel, have you ever met this young man?

PORTILLO: Yes, I did. I believe when he first came into the home, they brought him across the street. We got introduced as Kyle (ph). And he just smiled and said hello, listened to everybody's conversations. And he just stood quiet.

VAN SUSTEREN: When was the last time...

PORTILLO: That's the first time I met him.

VAN SUSTEREN: When was the last time you saw this young man, Rachel? And did anything look unusual the last time you saw him?

PORTILLO: Yes. I'd say about three weeks ago, we were both coming out to bring our garbage cans in, and I seen a difference in him. I thought he was just growing because he's a young boy, and he was really thin and pale. And we waved at each other as we walked to our garbage cans, and then we both went back towards the home. That's the last time I seen him. But he waved like a real -- he waved and smiled. And I said, You've grown, and that's the last time I'd seen him.

VAN SUSTEREN: Jennifer, is there anything unusual about the Schumachers, or do you know anything about their personal lives, how they make a living, anything like that?

JENNIFER: Nothing unusual that I know of. They seemed like a completely normal family to me. Kelly seemed...

VAN SUSTEREN: Do you know how...

JENNIFER: To me, when she was over here with her children, she seemed like a very affectionate mother.

VAN SUSTEREN: How about Mr. Schumacher? Do you know what he does for a living?

JENNIFER: You know, I don't want to name the company that he works for, but I believe it has something to do with installing cable televisions.

Watch Greta's interview

VAN SUSTEREN: All right. Now, Rachel, when you saw him most recently, did he say anything to you, or did he ever suggest that he was in any distress at all?

PORTILLO: We walked pretty -- he was walking pretty quick and waving and smiling. I'm not sure, maybe he was trying to reach me or just -- he just, like, walked pretty quick and smiled and waved. But he waved always until he got to his destination.

VAN SUSTEREN: Jennifer, what did you think when you heard the news that he had bolted, apparently, from the house, gone to a gym, said that he'd been shackled, and the Schumachers were arrested?

JENNIFER: I couldn't believe it. In fact, one of the neighbors down the street told me about it, and I said, You have to have the wrong house. That can't be. It has to be a different house. And then when I saw their house on the news, I was just in shock. I couldn't believe it.

VAN SUSTEREN: Rachel, what did you think?

PORTILLO: I thought everything was normal. He walked with Kelly. He helped with the kids, did his chores, he waved at us. But he never played like his age, any friends. He just didn't do the things a child should be doing. We worried about him. We asked Kelly often about him.

VAN SUSTEREN: Let me ask you this -- when you heard about the -- when you heard about the arrest, what did you think?

PORTILLO: I didn't believe that, either. I was looking out my window, and I just couldn't believe that they were walking Kelly out. And I just still didn't understand why until I heard the news that night.

VAN SUSTEREN: Jennifer, do you know Caren Ramirez, who at least is reported to be the young man's aunt? Have you ever seen her or talked to her?

JENNIFER: I've seen her at their home. I've never talked to her or been introduced to her, no, but I have seen her at their home.

VAN SUSTEREN: And what -- did it look like she was living there?

JENNIFER: It looked to me like she was just a family friend that would come there often and stay. My husband did comment that when he went to their home, it looked like she was possibly living in the garage.

VAN SUSTEREN: Did you -- Jennifer, did you ever wonder why this young man wasn't in school or even ask if he was in school?

JENNIFER: Well, see, the way Kelly explained it to me, that he was temporarily staying with them, so I just assumed it was because -- he was not enrolled in school because he was with them temporarily. So I didn't go into further detail with her with that, so...

VAN SUSTEREN: Rachel, is there any chance in your mind that this young man staged this or made this up at all? Is there any suggestion to you?

PORTILLO: No. No. I -- there's too much -- I see too much hurt and pain. I hadn't seen him, but I heard and I seen pictures and -- no, there's no doubt in my mind that something went on there.

VAN SUSTEREN: Rachel, Jennifer, thank you both.

JENNIFER: Thank you.

PORTILLO: Thank you.

VAN SUSTEREN: Henry Lee, reporter for The San Francisco Chronicle, joins us once again. Henry, nice to see you again tonight. Henry, now, Caren Ramirez has been arrested, is that right?

HENRY LEE, SAN FRANCISCO CHRONICLE: That is correct. And just late- breaking news within the past hour, she is apparently not the boy's aunt. We've been getting conflicting information. But she was taken into custody last night in Berkeley. All roads seem to lead to Berkeley nowadays, Greta. But she is in custody now, back in San Joaquin County. Probably be in court as early as Monday. The Schumachers will be court Thursday, tomorrow. I'll be there. We'll see what charges are filed.

VAN SUSTEREN: Do you know how the young man is doing? Is he still in the hospital?

LEE: He was just released today from the hospital and is now back with CPS in Sacramento County.

VAN SUSTEREN: What about his condition? There was a report when he first -- by the woman who worked at the gym -- at the gym that she thought he was about 10 or 11 or 12 and was surprised to find he was 17. Is he -- how did -- any information on his health?

LEE: He's doing fairly well. We are not getting details about his specific condition because of medical confidentiality rules, but apparently, he has been released from the hospital and is under social services' care.

VAN SUSTEREN: Is there any information as to what went on in that household? Now, we know that he says that he was chained and that three people have now been arrested, but any details about what was going on in his life?

LEE: All we know, Greta, is that he was chained at times in the garage of this two-story home. We are also learning today that he was only able to escape Monday afternoon simply because of a ride in the Schumachers' SUV. He was taken somewhere, taken back -- and they're not telling us exactly what happened, but because of the specific ride, he was somehow able to, after being returned to the house, escape through a window, hop over an eight-foot wall, and then get help at the gym. So but for this ride, he would not have been able to make good his escape.

VAN SUSTEREN: Are the Schumachers talking? I mean, what would possess someone to chain a 17-year-old, if, indeed, this -- you know, we know this happened as the 17-year-old at least as reported at the gym?

LEE: Well, certainly very shocking to hear all of this, Greta. But of course, there will be some people in some quarters who will say, Well, this was an uncontrollable kid with behavioral issues -- certainly not an excuse by any stretch of the imagination to treat a boy like this.

We have no idea what transpired, how long this boy had been there, although we do believe he had been there for at least a year. He had been seen outside from time to time early on doing chores, taking the groceries from inside the car. He also would walk the biological children of Kelly to their school, and then Kelly and the boy would walk back by themselves. So definitely was not going to school. And we can only imagine what kind of life he was living inside, behind closed doors.

VAN SUSTEREN: So what is the relationship? How did the Schumachers end up with this boy, if it's not their son and he'd been in some group home? And if Ramirez isn't the aunt, how in the world did this group end up together?

LEE: All we do know is that, amazingly, Caren Ramirez pleaded no contest last year to abusing this boy, the same boy that we're all talking about. So after she was convicted of that, he was sent to a foster home. But somehow, we think that Ms. Ramirez got into contact with the Schumachers, asked to be housed at their home, pleaded for help, said she was a homeless woman. They may have taken her in. And from then on, we think things must have definitely spiraled out of control as far as their efforts to hide what was going on.

But Mrs. Schumacher's mother spoke to me today. She said she doesn't have specifics, but that's what she believes, that a mutual friend got in touch with Kelly and that's how Caren got in touch with the family.

VAN SUSTEREN: Henry, thank you.

LEE: Thanks, Greta.

VAN SUSTEREN: All right.



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