Callahan called from a federal prison in North Texas just a day after details of her letter went public.
According to Callahan, she was with Hailey in the days immediately following her disappearance. She says she knows it was Hailey because the girl she was with matched the description and pictures of the missing girl being searched for on TV.
Callahan said Hailey was taken by a drug dealer from Odessa and his girlfriend to settle a drug debt owed by Hailey's mom. Callahan called the dealer a "very, very bad man."
During the call, Callahan also said Hailey is dead, implying that she was given so much drugs she died.
Callahan went on to describe a secluded spot in Odessa where she thinks the drug dealer may have dumped the body.
Police in Abilene have confirmed Callahan's letter prompted investigators to pursue new leads that, they say, are still being followed.