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Lawsuit: Fox Concocted Seth Rich Story With W.H. Coordination; GOP Senator: My Party's In Denial About Trump; Scaramucci Says He'll Pay Taxes On Sale of Company. Aired 3:30-4p ET

Aired August 1, 2017 - 15:30   ET


[15:30:02] NICK AKERMAN, FORMER ASSISTANT SPECIAL WATERGATE PROSECUTOR: -- e-mail said that he was going to send the documents to Donald Trump's secretary but said instead I'm going to bring them to you personally. Do you think they would have admitted to this? And then on top of all that, I'll connect a couple more dots.


AKERMAN: You have Roger Stone, the key operative for the Trump campaign. Who was he doing talking to Gucifer who two weeks later --

UNIDENTIFIED FEMALE: Those are questions.

AKERMAN: -- took some of these documents and put them on his own website. And then two weeks later just before the Democratic convention takes place, all of these documents show up on Wikileaks after Roger Stone admits that he had a conversation with Julian Assange.

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: Can I connect it back to the lawsuit.

BROOKE BALDWIN, CNN ANCHOR: Let me just end this by saying, you know, to me, the overarching question again, these are just allegations out of this lawsuit today, which takes it to a whole other level as to whether or not the president and the White House actually touched this Fox News story, you know --

UNIDENTIFIED MALE: That's correct.

BALDWIN: -- saw the proof, and then pushed it out, knowing it was false. That's my biggest question.


STELTER: It's because this issue is damning. It's because these details are damning.


STELTER: And what we don't know is damning. The White House needs a counternarrative and what happened in May, when this crazy Fox story came out, is that they had a counternarrative. Seth Rich he was the one who leaked to Wikileaks. So it was a convenient counternarrative for the White House but end up falling apart, and the question is whether the White House wanted Fox to be putting it out at the time --

BALDWIN: Correct.

STELTER: -- and place (ph). That's what the lawsuit alleges and there needs to be more digging, more reporting to find out that's true.

BALDWIN: Correct. Crazy Fox story indeed. Brian and Gloria, and Nick, thank you.


BALDWIN: Next, Republican Senator Jeff Flake slams his own party for being in denial about the president. We'll talk about whether he's put his money where his mouth is when it comes to voting. You're watching CNN. I'm Brooke Baldwin.


[15:36:11] BALDWIN: Republican Senator Jeff Flake accusing his own party. In his words, of being in denial about President Donald Trump, in a book out today, "Conscience of a Conservative". Senator Flake is particularly harsh on his fellow conservatives, accusing them of clinching the rise of Trump.

Quoting here from the senator. "We created him, and now we're rationalizing him. When will it stop?" Senator Flake further blames his own party for not speaking out, writing that "unnerving silence in the face of an erratic executive branch is an abdication and those in positions of leadership bear particular responsibility."

So let's talk about this with CNN Senior Washington Correspondent Brianna Keilar and Brahm Resnik with us from our Phoenix affiliate w -- forgive me KPNX, where he hosts a political program called "Sunday Square Off."

So before we talk how this is playing in Arizona, Brianna, let me begin with you. I mean, how this is playing the whole Republicans in denial line among members of Congress on Capitol Hill.

BRIANNA KEILAR, CNN SENIOR WASHINGTON CORRESPONDENT: Yes, especially because Jeff Flake had some choice words for his leaders. He basically accused them, Brooke, of not being a proper check and balance against President Trump.

The Senate Republicans and Senate Democrats just had their lunches so I asked the Senate majority leader, Mitch McConnell about this and he said, you know, he hasn't read the book so he's not going to comment on it. But he doesn't want to comment on it, right, after what's been a rough week, commenting on the criticism isn't something he wants to do.

But then Senator John Thune who's also in leadership said, look, this is a party with a lot of opinions. But I also think there's a little bit of frustration with some Republicans, Brooke, because they feel like, yes, there was some criticism but he's kind of burning the house down with the criticism.

BALDWIN: Well, yes, and we know Senator Flake questioned his own, as you point out, not only party leadership but the party's own values during a TV appearance this morning. Here he was.


SEN. JEFF FLAKE (R), ARIZONA: I'm concerned that the type of policies going forward, protectionism, isolationism, are really not conservative values. And I am concerned about where the party goes if we embrace those kinds of principles. But also being a conservative means something in terms of demeanor and comportment.


Brahm, he's up for reelection next year, we've been reporting on effect, you know, talking to challengers, that the Trump administration has already courted a number of potential challengers to face him. How is this playing in Arizona?

BRAHM RESNIK, "SUNDAY SQUARE OFF" HOST, KPNX 12 NEWS: It seems like Jeff Flake just can't win this argument in Arizona. On the left, they're saying, you know, you go, Jeff, because they like the criticism of Trump, but then they look at his voting record, which has been largely with Trump, and especially last week when he voted four times in support of the ObamaCare repeal, in particular the skinny repeal, which made a mockery of the whole process he rips in the book, and he voted for that while the book was shipping.

On the right, Jeff Flake has always had a problem with the base, the Tea Party base. He has that problem to this day. This does not make it any better. In fact, it probably makes it worse by ripping the president.

BALDWIN: I talked to one of his potential challengers who was a little coy with me on exactly what she's up to or what the White House said to her. But Brahm, are these challengers, are they actually making headway against him?

RESNIK: No. The challenger you spoke to, former state Senator Kelli Ward, she's a doctor. She ran against John McCain just, like, less than a year ago, lost to him in 2016. Gave him a good run. McCain got just over 50 percent of the vote in that primary, so she gave him a good run.

But didn't seem to be a very effective state-wide candidate if it ever came to that in the general election. This time, again, using the same playbook firing up the Republican base, shifting to Trump. I got to tell you, I don't put much stock in what they're doing.

[15:40:02] I don't think any of the candidates they've talk about, A, will either run, or B, have much of a chance of defeating Jeff Flake, even given his problems with the Republican base.

BALDWIN: We'll see. That's a race we'll watch closely for sure. But Brianna, let's get to this video. This is slick stuff coming out of the house speaker's office on Twitter today. Roll it in case you haven't seen it.


REP. PAUL RYAN (R), HOUSE SPEAKER: I had the opportunity to travel down to Texas, to go to the Rio Grande Valley and spend time with our border patrol. When you see what they're up against, it really gives you even greater respect for what they do. They clearly need more tools and more support to do their jobs effectively. That's why we're going to get this done this week.


BALDWIN: What's this about?

KEILAR: Slow-mo, Paul Ryan on a horse. I mean, that video has everything.

BALDWIN: In a helicopter. Aviators.

KEILAR: Exactly. So, this is about -- actually, I was talking to one of Paul Ryan's aides today, and this is about drawing some attention to something the past last week which was an appropriations bill that included money for the wall. And very few people, I think, know about that, because there's been so much coming out of the White House that is a, quite frankly, a distraction to everything happens here on Capitol Hill. It seems to win out getting the attention, and you don't always see what's going on here on Capitol Hill.

So that was something certainly that the speaker's office wanted to draw some attention to. They have a lot of Republicans in the House who this is a priority for them, building the wall, which of course was one of the main promises, if not the main promise of President Trump, and so that's really what this was about. But some of the -- I guess, aesthetic or artistic choices there, I can't really speak to that, Brooke.

BALDWIN: I guess we can online. Brianna, thank you. Brianna and Brahm, appreciate both of you.

Let's move on. The drama surrounding the now-former communications director, Anthony Scaramucci is now hitting his finances. Scaramucci will now have to pay millions of dollars in taxes. He hoped would be delayed by his now no longer White House gig.

With me now, Cristina Alesci, CNNMoney correspondent and Linette Lopez, back with us, senior finance correspondent for Business Insider. Has covered Scaramucci for a couple years now.

But Cristina, first to you on your reporting. How many millions are we talking about here?

CRISTINA ALESCI, CNNMONEY CORRESPONDENT: Well, Brooke, if he doesn't get another government job, Scaramucci stands to lose deferring millions in taxes. We don't have the exact number but we're pretty comfortable reporting millions. Here is the deal. Scaramucci is in the process of selling his investment firm, SkyBridge. Now, in some cases, the government give incoming officials special permission to defer taxes when they sell assets or investments to avoid potential conflicts of interest between their job and their financial holdings. Now, before his ouster, Scaramucci's attorney indicated Scaramucci was going to apply for this special permission if he hadn't done so already.

Now, the point is moot. His attorney telling me today that he'll pay the full tax at the close of the sale. The sale of the firm is not closed yet, Brooke, it's still under regulatory review.

BALDWIN: So what happens if he finds another job? I mean, can he still qualify for the tax benefit?

ALESCI: That's a great question, and it's controversial. It's not clear, but one thing is clear, Scaramucci was well aware of the benefits associated with delaying a payment in taxes. Actually, Jeff Zeleny, our colleague, reported last night that people close to Scaramucci says he talked about this tax deferral quite frequently. And optically, at this point, though, even if he lands another job, ethics experts say it'll be tough for him to apply for tax deferral with a new job because it might come across, like he's abusing the program and just trying to get a job to avoid paying the taxes right now.

BALDWIN: OK. And then Linette, just turning to you, you've covered Scaramucci for a couple years --


BALDWIN: -- his investments, potential conflicts of interest, you know. What do you make of all this.

LOPEZ: I know that people close to Scaramucci were talking about him keeping a job in the White House -- you know, remember that he was at the Export-Import Bank before he was a communications director. So, I think that there was some confusion about whether or not he was going to be able to keep that position and that would have qualified him for this certificate.

I think it just kind of shows you how quickly he was just blown out of the Trump universe. Because people close to him were talking to him very recently, maybe even up to 12 hours ago, and he seemed pretty confident that he'd be able to keep -- stay in the administration. And Sarah Huckabee Sanders kept that kind of open-ended at the press conference yesterday, said -- she said he has no position at this moment. But, you know, moments slip away pretty quickly right now.

[15:45:05] BALDWIN: We're a -- what's the mooch up to today? Have we had a mooch spotting?

LOPEZ: We did -- I think there was a mooch spotting, I think, TMZ grabbed it. They're pretty good at that kind of stuff. I know that from people close to him, that he wants to keep a low profile and that he's focused on closing this deal. There are a lot of regulatory issues, not just on the U.S. side but also on the Chinese side. You know, HNA has gotten in trouble from the Chinese government. President Xi Jinping calls its a white rhino, which are these massive conglomerates that went on an international buying spree, buying up assets all over the world.

And now that the Chinese government is concerned about keeping money inside the economy, they're talking about having some of these companies sell assets. And they're making sure that every single dollar that goes out of China and into an American bank account for a deal like this, like the SkyBridge deal, is actually going to SkyBridge or going to whoever is on the other side of that deal. And doesn't go into a bank account in the Cayman Islands or, you know, they just want to make -- they want to batten down the hatches in China and so there's difficulties on both sides of this issue.

BALDWIN: We're watching to see where he lands and what happens to all that millions of dollars.

LOPEZ: Yes, wishing him luck.

BALDWIN: Linette, thank you. Cristina Alesci with that reporting, thank you as well.

Coming up, President Trump's new chief of staff, General John Kelly lost his own son who died fighting the war in Afghanistan. I'll speak live with the Purple Heart recipient who actually served under General Kelly's son, Lieutenant Kelly, and how he remembers the man and his father, next.


[15:51:00] BALDWIN: He is the new face running the West Wing, a retired four-star marine general, a man of order and discipline. But General Kelly also has a tragic past.

Now General Kelly is the most senior U.S. military officer to lose a son or a daughter in Afghanistan. First Lieutenant Robert Kelly killed in combat, stepping on a land mine in 2010. The president along with his new chief of staff visited Robert's grave in Arlington back in May there.

I want you to just listen to a speech that General Kelly made. This was four days after losing his son. He did not mention his loss once, instead really focusing on honoring the lives of two other marines.


LT. GEN. JOHN KELLY, NEW WHITE CHIEF OF STAFF: The truck explodes. The camera goes blank. Two young men go to their God.

Six seconds. Not enough time to think about their families, their country, their flag, or about their lives or their deaths, but more than enough time for two very brave young men to do their duty into eternity.

That is the kind of people who are on watch all over the world for us this afternoon.


BALDWIN: In fact, General Kelly really speaks about his son. Here is one time he broke his silence.


KELLY: He's the finest man I ever knew.


KELLY: Just is. Yes, finest guy. Wonderful guy.

Wonderful husband, wonderful son, wonderful brother. Brave beyond all get-out. His men still correspond with us. They still mourn him as we do.


BALDWIN: With me now, U.S. Marine Corporal Sebastian Gallegos who served with Lieutenant Kelly in Afghanistan and is the recipient of a Purple Heart. Sebastian, thank you so much for joining me and thank you just for your service to this great country.


BALDWIN: I think to understand maybe who General Kelly is, let me just begin by asking you about his son, Lieutenant Kelly, under whom you served.

At that time his dad was a three-star general. But you told me when we talked on the phone earlier today that he never used that to his advantage. Tell me about that, and tell me why you think he didn't.

GALLEGOS: I think that Lieutenant Kelly's legacy stands independent of who his father was. And he never wanted to rely on his father's clout in the Marine Corps, at the time being a very respected general.

Lieutenant Kelly exhibited everything about what you would want in a leader, and he never wanted to rely on his father's name to help him succeed in the Marine Corps. He had served four years prior to becoming an officer as -- in Falloujah as an infantry marine before he became a mustang, and became an officer in the Marine Corps. And so his legacy stands on its own.

BALDWIN: It was November of 2010 when he was killed after stepping on a land mine while leading a platoon of marines in Southern Afghanistan, killed instantly. And so that makes, as I mentioned, General Kelly is the highest ranking member of the military to lose a son or daughter in Afghanistan. And Sebastian, how do you think that changes someone, especially as a leader?

GALLEGOS: Well, you know, the dichotomous relationship between him being a Gold Star family member and a general grade officer is something that he couldn't separated if he wanted to, and he would never ask anyone to do anything that he himself had not offered. And what he and his family have given for this country are more than anyone could ever hope to offer for us.

BALDWIN: It was General Kelly who bestowed the Purple Heart on you in Texas some years ago, and I know when we spoke, you initially wanted to decline it, from what I understand. You just couldn't fathom accepting an award for an event that took your friend's life is part of the reason. But, you know, you finally agreed because of your respect for his son, Lieutenant Kelly.

[15:55:09] Can you just tell me about the moments when you finally were face to face with the general?

GALLEGOS: Well, in the Marine Corps, you have to accept -- you don't have to accept -- you don't have to have a ceremony for the medal, it will just hit your paperwork. And there wasn't a significant amount of officers that I had respect for. And because Lieutenant Kelly passed away, I didn't feel the need for it.

But General Kelly, the place he holds in my heart for his son and his family was -- you know, when he asked me to accept it from him, even though a higher ranking general of the Marine Corps at the time was there to give it to me, it was a -- you know, so soon after his son passed away. And to my understanding, his son got in contact with him to let him know to take care of his marines who were getting hurt and sent back stateside so fast. Because General Kelly and his son alike both would always put their men before anybody else, and in front of that only country.

BALDWIN: And now here we are, General Kelly, day two on the job as the White House chief of staff. How do you think he will do? I mean, you made the point to me on the phone that this is someone who has never been political.

GALLEGOS: Yes. What I would want to urge people to understand is not to conflate any politic or the ideas of any administration with him. I think that he's never been a partisan political figure and should not be seen as such.

And no matter which way you lean, the kind of command for respect and discipline that his presence connotes will no doubt elevate any office, let alone any subordinates that he's in charge of. If anybody could bring discipline to that office, there's nobody more qualified and nobody more willing to give themselves to service of this country than General Kelly and his family.

BALDWIN: Corporal Sebastian Gallegos, thank you so much again for serving this country and just for providing this voice for all of us to learn a little bit more about this four-star general. Thank you so much.

GALLEGOS: Yes ma'am.

BALDWIN: Thank you. Just in to CNN, the head of the DEA sending an e-mail to his entire staff telling them to essentially ignore what President Trump said about arresting suspects to rough them up. Those details are next.


BALDWIN: First here on CNN, the head of the DEA has just instructed his staff to ignore comments made by President Trump about roughing up criminal suspects. Just a reminder what the president said, first of all to police officers this week in New York.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: And when you see these thugs being thrown into the back of a paddy wagon, you just see them thrown in, rough. I said, please don't be too nice.


BALDWIN: So in response to that, the acting administrator of the Drug Enforcement Agency sent an e-mail to all of his agents that read in part, "In writing to you, I seek to advance no political, partisan, or personal agenda. Nor do I believe that a Special Agent or Task Force Officer of the DEA would mistreat a defendant. I know that you would not, so why do I write?

I write to offer a strong reaffirmation of the operating principles to which we, as law enforcement professionals adhere. I write because we have an obligation to speak out when something is wrong. That's what law enforcers do."

I'm Brooke Baldwin. Thanks for being with me. The Lead with Jake Tapper stars now.

JAKE TAPPER, THE LEAD WITH JAKE TAPPER HOST: A major admission from the White House --