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Jay Y. Lee Goes to Prison; Hurricane Harvey Threaten Residents; Trump's Shut Down Strategy Not a Good Idea; U.S. Navy Facing Readiness Crisis; Transgender Proud to Serve in the Military; North Korean Spies Caught Trying To Steal Missile Plans; U.S. Defense Secretary Vows To Back Ukraine Against Russia; Russia Prepares For War Games With Belarus; Critics Question Timing Of Mnuchin Trip; U.S: 16 People Injured In Cuba Embassy Attack; Mayweather And Mcgregor Set For Las Vegas Showdown; Game Of Thrones Visual Effects Bring Magic To Life. Aired 3-4a ET

Aired August 25, 2017 - 03:00   ET



[03:00:00] NATALIE ALLEN, HOST, CNN: The head of Samsung learns his fate in a high profile corruption trial guilty of bribery, perjury, and a host of other charges. Five years in jail for Jay Y. Lee.

GEORGE HOWELL HOST CNN: We'll push on that story ahead.

Also this hour, the U.S. President Donald Trump unloads via Twitter on his own congressional party leaders. And his threat, will he likely shut the government down to pay for his border wall.

ALLEN: And fleeing hurricane Harvey. This was the scene on the Texas highway a few hours ago as coastal residents get out of the path of what meteorologist call a life threatening storm.

HOWELL: We had lot of friends there in the state that are getting out of the way.

ALLEN: They have to go.

HOWELL: From CNN world headquarters in Atlanta we want to welcome our viewers around the world. I'm George Howell.

ALLEN: And I'm Natalie Allen. CNN Newsroom starts right now.

Our top story, a stunning verdict in what is being called South Korea's trial of the century.

HOWELL: A court has jailed Samsung's Electronics chied Jay L. Lee for five years. This after he was found guilty of bribery, perjury and other charges.

Who are following the story live in Seoul, South Korea is CNN's Paula Hancocks live with us this hour. Paula, first of all, what more can you tell us about the verdict the response to what happened there with this Samsung executive? PAULA HANCOCKS, CORRESPONDENT, CNN: Well, George, the three judges

presiding over this case clearly thought that there was enough evidence that they could find Jay Y. Lee, the de facto head of the Samsung group guilty of bribery, perjury and other charges sentencing him to five years in prison.

The court case has now ended and he will be heading back to prison now with the prison guards accompanying him. Now certainly this would be a shock to those at Samsung. This would also be a shock to some supporters that we saw just on the other side of this court building. They are still there.

They are, many of them were crying when they were reading their phone seeing this verdict. They are people who support Jay Y. Lee who support the former President Park Geun-hye as well and believe that this corruption scandal has been a travesty of justice.

They are not in the majority though. Many people were hoping that the Samsung chief would face justice if in fact there was enough evidence and the judges believe that there was. There really is a sense in this country that there has been for too long a cozy relationship between big business and the government.

So certainly from many people's points of view they will welcome this verdict of five years. It does mean that he will go to prison which it didn't mean for his father. He had a suspended prison sentence a couple of times and some other top heads of these businesses as well.

Bur certainly a substantial sentence from these judges. Not the 12 years that prosecutors were asking for but more than some were expecting.

HOWELL: You mention that cozy relationship. Certainly this verdict sending a loud message corruption is a big part of why the former president lost her job and now then this case with Lee tie to the then-President Park Geun-hye on bribery charges to benefit his company.

The question here, what implications might this verdict have on the former president?

HANCOCKS: Well, I think the former president's defense lawyers will be combing through this verdict right now. It took a fair while for the judges to read out every charge, they were assessing every single interaction that the prosecutor have pointed out with Park Geun-hye as well.

So they'll be looking at this extremely carefully to find out what kind of implications it could have for the former president. Her trial is still ongoing. The trial of her confidante, at least one the trials was ended and her confidante who is really at the heart of this corruption scandal is sentenced to three years in prison but she's facing other charges as well.

So certainly they will -- they will be watching very closely to see whether or not this shows that the judges are likely to be harder on the former president than they might have been.

It's worth mentioning though that this isn't the end of the trial for Jay Y. Lee. He is able to appeal. This was the lower. There is also a higher court, there is also the Supreme Court. And if Samsung believes that he is being treated unfairly then certainly they could appeal.

[03:04:56] HOWELL: That will obviously be something we'll wait to see if an appeal in fact does take place. But again, many questions just about the simple future of that company with Mr. Lee no longer in charge able to make those decisions.

Paula Hancocks, thank you so much for the reporting. We'll stay in touch with you.

ALLEN: Thailand's Supreme Court is issuing an arrest warrant for the former prime minister after she failed to appear in a court for a verdict. Yingluck Shinawatra's lawyer told the court she was too ill to attend. That lawyer now tell CNN he doesn't know her whereabouts. Thai media are specualting she's left the company.

HOWELL: Yingluck faces up to 10 years in prison accused of mismanaging a controversial rice subsidy program that cost the country billions of dollars. The court date set now for her verdict September 27th.

Here in the United States the U.S. president's relationship with congressional republicans it appears to be getting worse at a time where he needs them the most. And now Mr. Trump is even threatening a government shutdown next month if he doesn't get funding for a border wall. Important to point out on the campaign trail this is the wall that he insisted that Mexico would pay for.

ALLEN: Well, whether the president and Congress can work together will be put to the test next month when lawmakers return from vacation.

We learn more from CNN's Jim Acosta.

JIM ACOSTA, SENIOR WHITE HOUSE CORRESPONDENT, CNN: President Trump is once again trolling one of his favorite Twitter targets, his own party. Tweeting, "The only problem I have with Senate majority leader Mitch McConnell is that after hearing repeal and replace for seven years he failed. That should never have happened. No big deal says the White House.


SARAH HUCKABEE-SANDERS, WHITE HOUSE PRESS SECRETARY: I think the relationships are fine. Certainly there are going to be some policy differences but there are also a lot of shared goals.


ACOSTA: Despite that talk of shared goals the president is threatening to shut down the government if Congress refuses to fund a wall on the border with Mexico. A threat that White House isn't knocking down.


SANDERS: We know that the wall and other security measures that the border work we've seen that take place over the last decade and we're committed to making sure the American people are protected. And we're going to continue to push forward and make sure that the wall gets built.


ACOSTA: Still outraged over his defeat on healthcare the president is also playing the blame game on the need to raise the nation's debt ceiling, a battle set for next month that could rattle financial markets. Mr. Trump claims he tried to attach a debt ceiling measure to help build and help veterans. Tweeting that, "McConnell and House Speaker Paul Ryan didn't do it. So now we have a big deal with dems holding them up as usual on debt ceiling approval. It could have been so easy. Now a mess."

Ryan's response, "Don't worry."


PAUL RYAN, UNITED STATES SPEAKER OF THE HOUSE: The path from debt ceiling is we well -- we will pass legislation to make sure that we pay our debts and we will not hit the debt ceiling.

UNIDENTIFIED MALE: Does it tiring asking you about the president every time we see you.


ACOSTA: McConnell is trying to lower the temperature refusing to take questions about his relationship with the president while explaining what is up against in the Senate.


MITCH MCCONNELL, UNITED STATES SENATE MAJORITY LEADER: I'm often asked, what is being the majority Senate leader like. The best answer I've been able to think of is it's a little bit like being a grounds keeper at a cemetery. Everybody's under you but nobody's listening. That's what you get with 52 to 48.


ACOSTA: The top GOP eight on Capitol Hill have had it. With one source telling CNN the president is attacking leaders while we're selling his agenda.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: And for our friends in the Senate, boy.


ACOSTA: A frequent target of the president's eye is Senator Lindsey Graham said he sees a strategy in the president's outburst.


LINDSEY GRAHAM, (R) UNITED STATES SENATOR: Running it against Mitch McConnell and Lindsey Graham and other the Congress is very unpopular particularly with the republican base. So there's nothing unhinged about it. It's political strategy that I'm not so sure is smart but it's a very thought-out strategy. There is nothing crazy about it. It's a political strategy.


ACOSTA: The White House did address the growing course of criticism of the president's handling of Charlottesville. Ask about GOP Senator Bob Corker stinging assessment of the president.


BOB CORKER, (R) UNITED STATES SENATOR: The president has not -- has not yet been able to demonstrate the stability nor some of the competence that he needs to demonstrate in order to be successful.


ACOSTA: Press Secretary Sarah Huckabee Sanders lashed out.


SANDERS: I think that's a ridiculous and outrageous claim and doesn't dignify a response from this podium.


ACOSTA: And for the moment the president's attacks on his party have yet to backfire inside the GOP. Poll after poll shows that while some supporters are slipping conservatives are sticking with the president, proving once again the GOP is hardly the party of Paul Ryan and Mitch McConnell, it's the party of Trump.

Jim Acosta, CNN, the White House.

ALLEN: Well, political insiders have been trying to figure out why Trump constantly goes after members of his own party especially when he needs them to enact his legislation.

HOWELL: You heard Lindsay Graham there from a few moments ago some think it is actually a strategy both to pressure Congress to act and to silence his republican critics.

[03:09:59] That topic was discussed early on AC360 just a few hours ago. Listen.


agenda, right, because Jeff Flake supports his agenda. So this is about something more. This is about, you know, it's not just about people defying him on his agenda. I think it's also about him being upset when people criticize him and that he really wants people to get in line behind him.

Whatever that means to him because other -- because otherwise, it doesn't really make sense what he's doing. I do think, you know, today when Sarah Huckabee Sanders responded to what Corker had said, I mean, they have a right to be mad. You know, that's not really what House senators usually talk about the president of their own party.

DAVID GREGORY, POLITICAL ANALYST, CNN: The president has done things obviously that has warranted that kind of criticism and that kind of judgment within his own party. But I mean, i agree. We don't know that (Inaudible) is strategy. But you made the point I think last hour which is, this may be a bluff. It may be the opening of a negotiation.

I mean, it's obviously a big negotiation. He went from Mexico is going to pay for this. I'm sure that's not going to happen. I doubt there will be a wall per se. There may be some, you know, some barrier that there could be some compromise.

And so, Bakari, to your point, I think we don't know in this instance. He is actually forcing a big fight as a total outsider saying neither party is working for you.


POWERS: Yes. But...

GREGORY: ... neither my own.

ANDERSON COOPER, HOST, CNN: Kirsten, finish your thought.

POWERS: So just to finish what I was saying and I actually wanted to get your thoughts on this hour. It seems like what he's trying to do, though, is to scare people into submission. So if he goes after people like Flake and he can defeat them then that sends a message to everybody else basically, watch out.

If you don't do what I tell you to do, if you don't get in line behind what I want you to do, you vote against my healthcare bill or you criticize me I'm coming after you and my people care more about me than they care about you.


COOPER: It also bolsters him with the base, doesn't it?


COOPER: Because it shows he's not beholden to anybody. He is there for the base. ALICE STEWART, POLITICAL COMMENTATOR, CNN: Right. He is doing this for his base. As we said three fourths of republicans want to see this wall built.

I truly believe that his talk about I'm going to shut the government down if we don't get funding for this wall I think that is part of his art of the deal. This is a strategy he's going to go for the most extreme option for getting that wall funded and try and hopefully negotiate with members of Congress.

As far as him going after Flake and others whether on Twitter or directly at events, they are going to as we saw in healthcare these members of Congress are going to be beholden to the members of their district and who voted them in the office. They are not beholden to Donald Trump.


HOWELL: Again, those panelists on AC360 speaking just a few hours ago. The president's criticism against members of his own party are not new. Among other GOP leaders the president has targeted six key republican senators since taking office, in particular, he criticized Senate majority leader Mitch McConnell for the failure of a new healthcare bill in Congress earlier this month.


TRUMP: I said, Mitch, get to work and let's get it done. They should have had this last one done. They lost by one vote. For a thing like that to happen is a disgrace, and frankly, it shouldn't have happened.


HOWELL: Mr. Trump later tweeted, "Can you believe that Mitch McConnell who has screamed repeal and replace for seven years couldn't get it done.

ALLEN: The president also blasted Alaska's Senator Lisa Murkowski for voting against the Obamacare overhaul tweeting, "She really let the republicans and our country down. Too bad."

Arizona Senator John McCain also voted against the bill and he had words for him as well.

You mean, Senator McCain who vote against the bill, and President Trump has some choice for him as well.


TRUMP: Who is senator -- you mean Senator McCain who voted against us getting good health care.


ALLEN: That at an off the rail news conference over a white supremacist rally in Charlottesville, Virginia earlier this month. South Carolina Senator Lindsey Graham accused Mr. Trump of stoking tensions and the president lashed out.

Donald Trump said on twitter, "Graham was publicity seeking and that his comments were such a disgusting lie he just can't forget his election trouncing. The people of South Carolina will remember."

HOWELL: President Trump is reportedly considering two options on the future of the DACA program. DACA is short for Deferred Action for Childhood Arrivals. It protects undocumented immigrants who came to the United States as children, instead of being deported they can get work permits.

Mr. Trump is considering these two options. Again, one, allowing people in the program to be grandfathered in but ending it for new comers or option number two, ending the program altogether.

ALLEN: Members are often referred to as DREAMers and their stay is subject to renewal every two years. There is an estimated 800,000 of them in the United States today and they could all be deported if Mr. Trump kills the program. The attorney general has given the administration until September 5th to decide.

HOWELL: It's a very sensitive issue, a lot of people will be looking on to see what happens.

Still ahead this hour, a monster storm brewing just off the coast of the U.S. State of Texas. Up ahead, the very latest on hurricane Harvey.

ALLEN: Also why U.S. military leaders are voicing concerns over what they call a crisis of readiness in the country's armed forces.

[03:15:01] HOWELL: And a transgender soldier in Israel is speaking out about how the military helped him after hitting rock bottom.

Around the world, you're watching Newsroom.


HOWELL: Welcome back. The U.S. State of Texas is bracing for its worst storm in many years. It's hurricane Harvey and it's gaining strength over the Gulf of Mexico. It's set to make landfall sometime late Friday or Saturday. Very strong winds, heavy flooding are expected and evacuation orders have been issued across the Gulf coast.

ALLEN: This was scene in Galveston, Texas Thursday which is already seeing the effects of the storm. Wow. Look at that, George.


ALLEN: That city had the history of deadly hurricanes the worst ever recorded in U.S. history, struck there back in 1900. We also understand Harvey has now intensified into a category two.

HOWELL: Our meteorologist Karen Maginnis is here with more. Karen, this is definitely concerning for a lot of people in Texas and throughout the Gulf coast. KAREN MAGINNIS, METEOROLOGIST, CNN: Yes. And one thing -- a lot of

things I want to say about Harvey, but one of the most important things is this is going to be a hurricane that lingers. This is not going to move out very quickly. A lot of folks have heeded the words of caution. They boarded at their homes, they've got on Interstate 37, Interstate 35, Interstate 45 headed out of Corpus Christi, Victoria, Houston, Galveston, and San Padre Island.

But just to give you an idea, this is a fairly broad system but it slow down before it makes landfall because of the atmosphere conditions across this region are very conducive to this just mushroom it.

We have a very strong category two hurricane right now. They could see a 105 miles per hour wind, some gust that are higher. Typically those higher gusts are found in that upper right quadrant.

That's what we're looking also for the potential for tornadic activity, but not just that. It is going to be the rainfall associated with this. That is probably going to be the most devastating as far as just aerial coverage is concerned.

So here we go, probably by early Friday morning we're looking at just below category three intensity and the warm water temperatures here right around 86 degrees Fahrenheit or just about 30 degrees Celsius are contributing to this developing.

There's also nothing here that's really going to prevail to push this out in any particular direction. So it has a lot a favorable environment to really mushroom. All right, the spaghetti models as we call them. Take a look at this. They're all over the place. Once this make landfall there's no clear picture as to where is going to head.

[03:19:58] Look at this one, just kind of jagged it around the southeast coast, another one does another loop. Then it may affect Louisiana. I dare say you folks in Louisiana that Gulf Coast area if haven't prepared just yet I think that now is the time. You should heed caution because take a look at this.

Because it is going to be slowing down and it is so broad, some areas, George and Natalie, could see, could, 40 inches of rainfall. This is going to be devastating but all the way back towards San Antonio and Austin affected there as well.

ALLEN: Yes, look at those numbers.

HOWELL: I got a lot of friends back home who are, you know, talking about getting out of the way of the storm.

And Karen, you point out that northeastern quadrant the dirty side of the storm right that will affect Houston and Galveston pretty bad.

MAGINNIS: Yes. And the storm prediction center is now saying that that is an area where they're looking at into tomorrow's forecast for the potential for tornadoes, which is something you typically see with hurricanes as well. But it's going to be that northeastern coast of Texas that is now kind of in the danger zone for the risk for severe weather.

HOWELL: All right. And Karen, of course we'll be with you and we'll be covering that as well here on CNN. Thanks for your time, we'll stay in touch with you.

ALLEN: Thanks, Karen.

HOWELL: Divers have recovered the remains of a second missing U.S. sailor near the Strait of Malacca. Until recently it had been a rescue operation but the U.S. Navy called off the search for what is now eight remaining men.

ALLEN: They've been missing since the U.S. destroyer on Monday collided with an oil tanker near Singapore. Now an unbearable weight continues for the families of those still missing.

Military leaders have been warning of the so-called crisis of readiness for some time now, lawmakers and government watchdog have echoed those concerns.

HOWELL: And they all worry that the U.S. military is not as well equipped for action as it has been in past years and could be contributing to tragedies like the crash of Singapore.

Our Dianne Gallagher has this report for us.


CYNTHIA KIMBALL, JOHN HOAGLAND'S MOTHER: If not for what has happened, you just don't -- you don't think it's going to happen to your -- to your child.


DIANNE GALLAGHER, CORRESPONDENT, CNN: Her son, John Hoagland, one of the 10 presumed dead in the USS John S. McCain collision. Cynthia Kimball is yet another grieving military mother this summer whose child was killed in a noncombat accident. In just five of the major accidents since May, more than 40 servicemen and women have died.


UNIDENTIFIED MALE: I think it's probably approaching a readiness crisis.


GALLAGHER: Dealing from a variety of issues including the 16-year war on terror, increasing conflict and tensions around the globe, and budget caps tying to sequestration. Military leadership has been sounding the alarm for years.

(BEGIN VIDEO CLIP) JOSEPH DUNFORD, UNITED STATES JOINT CHIEFS OF STAFF CHAIRMAN: I think our competitive advantage has eroded right now, we would be challenged in projecting power today.

BILL MORAN, UNITED STATES VICE CHIEF OF NAVAL OPERATIONS: The unrelenting pace, inadequate resources and small size are taking their toll.


GALLAGHER: And while still under investigation a series of incidents involving Navy warships base in Japan, including the two deadly collisions this summer could be evident to strain.


ADAM KINZINGER, (R) UNITED STATES REPRESENTATIVE: We have the smallest Navy we had in a very long time but we saw the same size ocean and now you have actually more issues popping up all over the globe. So you're going to have to deploy Navy assets.


GALLAGHER: The Navy order a rare pause in operation and in an unprecedented move dismiss the seventh fleet commander Joseph Aucoin.


RUBEN GALLEGO, (D) UNITED STATES REPRESENTATIVE: We can keep, you know, disciplining some of these bad officers, but in the day we need to have a military that is fed, trained and ready to go and we're not doing that right now.


GALLAGHER: The military says more than half of Navy aircraft can't fly right now. That's twice the historic norm. In the army just three of 58th brigade combat team are considered fully ready and able to fight tonight. The Air Force is short more than 1,500 pilots and nearly 3,500 aircraft maintainers. The average age of their aircraft, 27 years old.

And marine fighter pilots are often not able to meet minimum monthly flight hour requirements, something the corps blames on budget constraint. The marines issued a one-day ground stop of all aircraft this month following two deadly crashes.


GALLEGO: If you want the modern military you have to spend the money to do it. The days of the conduits and the cheap are gone. Even if we get rid of sequestration we put the investments that we need to modernize our military it's going take pilots total of 10 years for us to catch up.

(END VIDEO CLIP) GALLAGHER: The House republicans did passed a proposal for the 2018 defense budget that includes a much bigger increase then even the presidents did but those are just proposals they're bound to change. And now we talk of looming shut down here in Washington military officials are focusing on what they can't. Adjustments to leadership and training and just waiting to find out what Washington will do.

The House armed services committee has scheduled a hearing for its first week back in Washington. The topic maybe readiness and those two deadly collisions from this summer.

[03:25:02] Dianne Gallagher, CNN, Washington.

HOWELL: Dianne, thank you. The Wall Street Journal is reporting that in the coming days the White House will tell the Pentagon to reject transgender applicants to the military.

For current transgender troops the memo will instruct the Pentagon to stop paying for their medical treatments and to consider their ability to deploy when deciding whether to expel them.

ALLEN: President Trump announced the transgender military band in a string of tweets back in July. The Pentagon said it is not received any formal guidance from the White House yet.

HOWELL: While the U.S. finalizes its transgender military band. It is a different story in Israel where about 60 transgender soldiers serve openly.

ALLEN: Military service mandatory in that country.

Our Ian Lee spoke with one soldier with credits to military with helping her transition.

IAN LEE, INTERNATIONAL CORRESPONDENT, CNN: Micha Yehudi is happy today but a couple of years ago he hit rock bottom.

MICHA YEHUDI, TRANSGENDER SOLDIER: I had never told anyone before. I really told myself I was terrified.

LEE: Back then, Yehudi was a female army captain and didn't feel right in her skin so she went to commanding officer and said she wanted to transition to a man.

YEHUDI: I cried during this interview from the moment the reaction came out of his mouth. He said, OK and that was it.

LEE: Yehudi credits Israel's for helping him make the transition. Today, he marches for transgender right at Jerusalem's gay pride parade. Israel says roughly 60 transgender soldiers serve openly in the country's military.

In the United States the future of transgender soldiers could change. It started with the tweet from President Donald Trump, ordering a ban on trans soldiers in the U.S. military. That message left thousands of U.S. military personnel in limbo. Yehudi said any notion transgender people aren't up to the task.

YEHUDI: If I'm not tough then I don't know what I am. I wouldn't be here if I wasn't tough enough. I wouldn't be alive.

LEE: Israel also grapples with equality, gay couples still can't marry and religious conservatives view the community as an abomination.

Shira Banki was murdered two years ago at this gay pride by an ultra- Orthodox extremist. And while the LGBTQ community fights for their rights in society, in the Israeli army they've been accepted.

As for President Trump Yehudi urges him to get to know trans soldiers.

YEHUDI: They're no different to anyone else. They just want to -- do they just love their country like I love mine.

LEE: A country where soldiers can march the beat of their own drum.

Ian Lee, CNN, Jerusalem.

ALLEN: Coming up here, North Korean spies caught on camera trying to steal secrets. We'll have our exclusive report.

HOWELL: Plus, more trouble for the U.S. treasury secretary and his wife. What it has to do with the solar eclipse as Newsroom continues.


[03:30:00] GEORGE HOWELL, CNN ANCHOR: Welcome back to our viewers around the world. You're watching CNN Newsroom good to have you with us. I'm George Howell.



ALLEN: The headlines this hour, a South Korea court has sentenced Samsung Electronics Chief Jay Y. Lee to five years in prison after he was found guilty of bribery and other charges. The conviction is a blow for Samsung, the world's largest smart phone maker, and South Korea's largest family corporation, excuse me.

HOWELL: Thailand Supreme Court has issued an arrest or for the former prime minister of that nation, Yingluck Shinawatra as she failed to appear in court to hear the verdict in her negligence trial.

Yingluck faces up to 10 years in prison, the court sent a new date for her verdict, that date, September 27th.

ALLEN: A potentially devastating storm has headed for the State of Texas. Hurricane Harvey bring into a category to and set to make landfall late Friday or Saturday. People along the Gulf Coast getting ready, many are heading inland, others are filling sand bags, stocking and getting supplies. HOWELL: The U.S. Defense Secretary James Mattis has pledged support for Ukraine against Russian aggression. He met with the Ukrainian President Petro Poroshenko in Kiev on Thursday.

At a news conference, Mattis said the U.S. does not and will not recognize Russia's seizure of Crimea.


HOWELL: We have an exclusive report now showing how North Korean spies were caught allegedly trying to steal missile technology in Ukraine.

ALLEN: It was uncovered during an elaborate sting operation and even caught on camera. Here's our Nick Paton Walsh with the story.

NICK PATON WALSH, CNN CORRESPONDENT: Natalie, George, North Korea's made some extraordinary leaps forward in terms of its missile technology in the past months but its (Inaudible) how about as a code and of course much the finger-pointing is happened towards the former Soviet Union with its past glory of missile technology and construction.

Some people have pointed the finger towards Ukraine. They're being the prey to some degree, some suggest, but they claim they've actually being a predator intercepting, according to these exclusive pictures of Ukrainian security service operations antiseptic some key North Korean spies.


WALSH: Caught in crime that could ultimately leads to nuclear war. And caught to Ukrainian garage, North Korean spies are secretly filmed photographing missile designs part of their country's biggest bid to hit the USA with a nuclear tipped rocket.

North Korea recently made a huge leap forward in its intercontinental ballistic missiles leading to panic about where most likely in the form of Soviet Union, they've got theses advances.

But this is where those spies journey ended. In first access to North Koreans convicted of missile technology espionage, Ukraine security services have revealed how 2011 sting operation caught one of several North Korean attempts to steal their superior missile designs.

Here, X5 as a court documents refer to the man considered the main spy is allowed to make cement railings. He spent months scouting out Ukrainian missile experts, some of whom alerted the security services. He is reluctant to speak to me.

UNIDENTIFIED MALE (through translator): Well I'm just near the end of my period of stay and I want to go home as soon as possible, and get it over with.

WALSH: Do you have a message for your wife, your family, if they can hear you? UNIDENTIFIED MALE (through translator): I don't want to give a message due to the security, my security and security (inaudible).

WALSH: The security services began tailing the men shown in the surveillance video. Officials say the trail ended here when fake documents were offered to them which the North Koreans photographed. They were then arrested.

The men were given eight years, X5 who partially admitted guilt in a maximum security colony, where he shares a room with eight others.

This tiny space here haunted by the uncertainty of what happens when on release late next year. He returns to North Korea, a hero or a traitor.

X32, his accomplice said to be the technical expert, didn't submit guilt. He is happy to meet this perhaps just so we can film his refusal to talk to.

Obviously, what's going to their mind is what happens to them when they return possibly late next year to North Korea.

[03:35:00] Ukraine is keen to shows us the sting operation in a bid to deflect claims missiles from this factory huge mass are being used now North Korea's latest launches.

A security service officer behind the sting told us North Koreans have been effectively banned from Ukraine since 2016 after multiple espionage case have been detected and insists they never got Ukrainian secrets.

UNIDENTIFIED MALE (through translator): It's impossible, impossible, I'm telling you, he says. There is not a single North Korean in Ukraine barred those imprisoned. We deported those who breaking the law and North Korea withdrew the rest.

WALSH: The two prisoners have met North Koreans diplomats from Moscow once, but otherwise they had never called their recent home in five years, Isolation, loneliness, and discipline, at the sharp end of this deadly game.


WALSH: Natalie, George, as you point out that actually the court documents against those two spies you saw there suggest they're in fact particularly focused upon something called the SS24, that's called the scalpel.

It is an intercontinental ballistic missile, a key part of any potential designed to expand North Korea's missile reach. And of course while Ukraine says nobody obtained any secret information, the fact they were so focused on exactly what they wanted will certainly raise some concerns. Natalie, George.

ALLEN: Fascinating and freighting.

HOWELL: Absolutely.

ALLEN: Excellent report there, Nick Paton Walsh for us, thank you.

HOWELL: The U.S. Defense Secretary was in Ukraine Thursday with a strong message for Russia. James Mattis vow that the United States will not recognize Russia's seizure of Crimea and will back Ukraine against Russian aggression.

ALLEN: His remarks coming as both the U.S. and Russia move military assets into that region. Here is our Brian Todd with more.


BRIAN TODD, CNN CORRESPONDENT: On Ukraine's Independence Day, U.S. Defense Secretary James Mattis inspects top units of Ukrainian soldiers on parade, and Ukraine's president, hence, he may need the counter threat from his most bitter enemy who he says is on his soil.

PETRO POROSHENKO, PRESIDENT OF UKRAINE: Minimum number Russian troops now, regular tourists, they are now being on the occupied territory is about 3000. This is extremely dangerous.

TODD: Since Vladimir Putin's forces invaded Ukraine and seize Crimea in 2014, Ukrainian forces have battle pro-Russian separatists in Eastern Ukraine.

More than 10,000 people have been killed. The Kremlin has steadfastly denied it has any troops inside Ukraine and absurd claim according to analysts.

BEN JUDAH, AUTHOR, FRAGILE EMPIRE: It's been abundantly clear that Russia has been undertaking a major military intervention in eastern Ukraine for some time.

Vladimir Putin's objectives in Ukraine are to paralyze, undermine and ultimately destroy a Ukrainian government that wants to move towards integration with the European Union and with the West.

TODD: The U.S. and its NATO allies are preparing to send their own signal to Putin. American B-1 bombers and a B-52 Stratofortress which can carry up to 70,000 pounds of bombs are about to be deployed with NATO forces in exercises in the Czech Republic.

Analysts say it is a show of force aimed at Russia, which is about to conduct massive military exercises of its own. In an operation called Zapad, Russian troops estimated to number in the tens of thousands in their partners from Belarus will display their firepower and tactics in territory they control near (Inaudible) borders.

MICHAEL KOFMAN, RESEARCH SCIENTIST, CNA: Zapad is really Russia training for high-end fight with the West, with NATO and the United States.

TODD: Analysts say in Zapad, Putin will pull out all the stops deploying his commandos, paratroopers, air forces and armored units fine tuning for the battle. KOFMAN: I would expect quite a few live fire exercises. I would

expect logistics drill, shipping forces. I would expect Russian air power practicing at ranges. I would expect missile range regimens firing missiles at various, you know, practice ranges.

TODD: Experts say this is part of an ambitious military buildup by Putin who made a show of visiting one of his sprawling bases in the Arctic earlier this year.

JUDAH: Over the last 10 years, Russia has been rebuilding its capacity to engage in military intervention in the territory of the former Soviet Union and in the Middle East, and broadly has achieved that objective and the exercises that we will be seeing a part of that long process.

TODD: As menacing as the Russian exercises are to the U.S. and its NATO allies, analysts say there also an opportunity to they say by monitoring those exercises to reconnaissance and other intelligence, the U.S. military can learn a lot about Vladimir Putin's weapons upgrades and about his ability to deploy his combat forces at Europe's doorstep.

[03:40:00] Brian Todd CNN, Washington.


HOWELL: Brian Todd, thanks. Still ahead here, the U.S. treasury secretary again under fire for an official government trip to Fort Knox, Kentucky. It's not because of what his wife said, but rather the solar eclipse.

ALLEN: All right, we'll hear that. Plus, the devastating consequences at the victims that the mysterious attack at an American Embassy, get treatment.


HOWELL: Welcome back, so there were headlines this week about a trip to Kentucky by the U.S. Treasury Secretary Steven Mnuchin after his wife got into a social media spat with a critic.

ALLEN: Now it seems a second controversy is brewing from the same trip and has to do with the solar eclipse. Here is Randi Kaye.


RANDI KAYE, CNN CORRESPONDENT: It was built as a trip to Kentucky for a lynching and tour Fort Knox. Onboard, the government plane Treasury Secretary Steven Mnuchin and his wife Louise Linton. They're rejoining Senate Majority Leader Mitch McConnell.

STEVEN MNUCHIN, TREASURY SECRETARY, UNITED STATES: I will be only the third secretary of the treasury that's ever actually gone inside Fort Knox.

KAYE: As exciting as that sounds, the whole trip government plane included may have been a ruse do the Mnuchins could view the eclipse all compliments of U.S. taxpayers.

After all, this was the first solar eclipse in a continuous path since 1979, Fort Knox had 97 percent totality, now with all being investigated by a government watchdog group.

Citizens for the responsibility and ethics in Washington is requesting all records concerning that plane ride. The group suggest that government plane was used for a trip that quote seems to have been planned around the solar eclipse to enable the secretary to secure a viewpoint in the path of the eclipse' totality.

Worth noting, this Instagram post from Senator McConnell's press team, showing the two men at Fort Knox before viewing the solar eclipse from the rooftop. Look closely, notice the pair of special viewing glasses and McConnell's hand.

The watchdog group is digging to find out how often Secretary Mnuchin has used government planes for travel in lieu of commercial planes and the justification for that use.

This marks the second time this week that Mnuchin and his wife are taking heat for this very trip. Upon landing in Kentucky, Louise Linton had posted this photo on Instagram.

Flaunting her wealth and tagging a series of luxury designers that led to an Instagram spat with an Oregon mom who was offended by Lincoln's post writing in response, glad we could pay for your little getaway #deplorable.

JENNI MILLER, OREGON MOM, CRITICIZED LOUISE LINTON: Just seems ridiculous and quite frankly offended me as someone who paid for part of their trip.

[03:45:00] KAYE: Instead of letting it go, Louise Linton ripped into Jenni Miller, the Oregon mother of three with a long, condescending rant calling Miller adorably out of touch, suggesting she go chill out and watch the new Game Of Thrones.

MILLER: There are probably better ways to spend her time and money than trying to make me feel bad about my simple cute life.

KAYE: Louise Linton, a former actress from Scotland had long touted her wealth and Hollywood lifestyle of all things she once played Marie Antoinette in his costume party seen on episode of CSI.

Linton who has since changed her Instagram page setting to private, later apologized. In a statement she said I apologize for my post on social media yesterday as well as my response. It was inappropriate and highly insensitive.

A spokesperson for the Treasury Department told us this with official business to discuss tax reform and that later in the day, the Majority Leader, Secretary Mnuchin, Kentucky's governor and a few others visited the gold depository at Fort Knox.

We're told this was a plan trip that had been previously scheduled for August but postponed to accommodate the congressional calendar. There was no mention in the Treasury Department statement of the eclipse viewing.

Also Treasury did tell us that Secretary Mnuchin is reimbursing the government for his wife's travel, which is long-standing policy when civilians travel on military aircraft. Randi Kaye, CNN, New York.


ALLEN: The U.S. State Department says it is taking the sonic attack on its embassy in Cuba, very seriously. Some of the 16 victims are suffering from mild traumatic brain injury. Others may have permanent hearing loss.

HOWELL: And now, U.S. officials are sharing new details about how it all happened. Our Michelle Kosinski has more for us.


MICHELLE KOSINSKI, CNN CORRESPONDENT: The symptoms started being reported in November by at least 16 American diplomats and family members in Cuba.

According to the State Department, at a time when relations had been thawing and long-standing harassment of U.S. diplomats there can stop.

There was nausea, dizziness, headaches, but also permanent hearing loss, and perhaps most alarming mild traumatic brain injuries, concoctions.

Congress officials told CNN, they believe a sophisticated device operating outside the range of human hearing could have been placed inside or outside the diplomats' homes, a sonic weapon, sound waves to incapacitate people are used today.

Elrad is the technology that directs high decibel sound at people making them feel dizzy and sick. It's used as crowd control in Israel and the U.S.

It's used on ships to deter pirates but that's audible sound. In the Cuba incidents, some diplomats did report hearing loud noises like a screech or buzz at times, that could be very similar to an Elrad which can also be small, and easy to move.

But another case is, no unusual sounds reported. Woodrow Wilson Center Fellow Sharon Weinberger wrote The Imagineers of War, on U.S. weapons research that has included sound beyond the range of hearing.

The problem that the -- you know, that you find in the literature -- in the published literature on this is when they've tested weapons, you know, an acoustic -- an acoustic bazooka is that they tested.

It doesn't have the same effect on, well in this case on animals, so it is not an effective weapon in that said. People can be badly harm though by both powerful low and high-frequency sound waves that you can't here but affect similar to what the diplomats experienced. HUNG JEFFREY KIM, CO-DIRECTOR, MEDSTAR GEORGETOWN UNIVERSITY HOSPITAL: So you do not know whether you're hollow even hearing it or how loud these noises are and then if you get caught and exposure to these noises, you're going to have permanent damage in your ear as well as in your brain.

KOSINSKI: Michelle Kosinski, CNN, the State Department.


HOWELL: Wow. Interesting story and certainly that investigation will continue there. Still ahead here, the bookers, they say Mayweather and many gamblers are putting their money on McGregor. We look at the odds on one of the most hype boxing matches ahead.

ALLEN: Also visual artists bring fire breathing dragons to life in a TV drama Game of Thrones, just ahead, we'll see how that magic is made.


HOWELL: It's one of the most hyped boxing bouts in recent history. It is just a little over a day away, Floyd Mayweather and Conor McGregor will square off on Saturday after months of promotion, and well, a lot of trash talking for sure.


ALLEN: Mayweather is the overwhelming favorite and many think this will be a one-sided match. Still for lots of gamblers, their money is on McGregor. Our Don Riddell spoke with the Las Vegas bookmaker to find out why.


DON RIDDELL, CNN CORRESPONDENT: Jay Kornegay you've been in the Las Vegas bookmaking game for 31 years now. We're approaching this extraordinary fight this weekend between Floyd Mayweather and Conor McGregor. Have you ever seen interest like this?

JAY KORNEGAY, VICE PRESIDENT, LAS VEGAS HOTEL & CASINO SUPERBOOK: I've never seen anything like. It is a very intriguing fight as were reaching two fan bases. You know, not just the boxing side or the UFC side, we're seeing both. And that's why seeing record amounts on this fight.

RIDDELL: What do you mean by record numbers? What kind of figures are we talking about?

KORNEGAY: Well the record amount was to set that couple years ago at the Pacquiao-Mayweather fight, and the estimates were about $50 million on that fight.

We're going to look at price $50 million to $70 million on this fight, easily surpassing last two years ago when we saw Pacquiao fight Mayweather. RIDDELL: Fascinating. And where is the money going because everybody

-- I mean everybody thinks they know what's going to happen. Everybody has got some very clear idea in some Mayweather's overwhelming favorite. All right, so, is everybody's betting on Mayweather?

KORNEGAY: No, everybody is betting on McGregor. We've got 92 percent of all the tickets that I have been on McGregor.


KORNEGAY: ... as soon as we open the gate -- well, there's a few reasons why. You know, first of all it's the low-risk, high reward scenario.

A lot of people like to bet a little to win a lot and then when you look at Conor, that's exactly what you are getting. Plus, you get all the UFC fans.

You know, they are open for McGregor. They're hoping for their sport, you know, to beat the bad guys of the boxing world and there is some dislike for Mayweather out there as well.

But the mainly, I think the reason why we're seeing so much money on Conor is because you can risk only $100 and win $425 and collect $525 compared of laying $600 to win $100 on Mayweather. So that low-risk, high reward scenario is the main reason.

RIDDELL: How bad is that going to be to your operation here and bookers in general if somehow McGregor wins this.

KORNEGAY: It's not going to be very good. I was here when we were booking Tyson-Holyfield fight in '96 and you know it took quite a punch there.

And I'll tell you, if McGregor wins this fight, it's going to be a stiff job to the jaw. I mean we'll still be open on Sunday, we just might need raise our prices on the chicken fingers.


RIDDELL: What are your emotions going to be like during the fight or watching the fight knowing what's at stake for your operation here? What's it going to be like here?

KORNEGAY: I'm going to be very nervous. You know, I don't want to sweat it out and I am not really sweating it out.


KORNEGAY: You know there is little anxiety there. I know that everything will take care of itself in the long run.

But certainly, I will be root for Mayweather looking like there is no doubt that we're going to need Mayweather with those first four rounds are really critical. So once I get to that round, may be I'll relax a little bit and open a beer.


ALLEN: He'll be fine. Everyone is going to make a little money. Don't worry about it.

HOWELL: I'm sure he will. A lot of few good money on that bet fight. So Game of Thrones, the HBO show that has rewritten the rules of TV drama with multimillion dollar budget, creators built a world centered on power, violence and dragons.

ALLEN: And as millions get ready to watch season seven, the finale on Sunday, our Clare Sebastian takes this through the magic behind those iconic dragons.


CLARE SEBASTIAN, CNN CORRESPONDENT: In the fantasy world of Game of Thrones' fire breathing dragons of the ultimate weapon of war. Behind the scenes, it took an army to create them in the world they inhabit.

[03:55:00] THILO KUTHER, CEO, PIXOMONDO: We had a meeting with HBO and they were talking about how the how important the dragons will be for the coming seasons, and how much the character put personality will be a major part of the -- of the story.

SEBASTIAN: Pixomondo joined Game of Thrones in season two. One of 27 visual effects companies the show his hired to date. Their job is to create dragons to coming of age.

KUTHER: If this animal is getting bigger then the balance, the muscle structure, the way it actually lifts up in the air is changing this becoming more complicated than it has something tiny with it's a hop of few feet. And this was an incredibly challenging thing to develop.

SEBASTIAN: To do, he says the artist had to take something familiar.

KUTHER: They went to a supermarket and they said that the chicken tool and how the muscle structure should be. You know when that dragon comes in and they like shoot -- and the ice starts to like breakup.

SEBASTIAN: It works like this, which is made, Game of Thrones, master class for the next generation.

KUTHER: I'm going to work on characters, suggesting dragons, when their little babies trying to tiny bits of flower to what they are now as just huge beast, resonates well with everyone I think.

SEBASTIAN: For this final year, visual art students, it was part of the inspiration for that thesis film. You learn something from watching Game of Thrones?

UNIDENTIFIED FEMALE: Yes, I think so. Definitely, that not everything has to be CG, so like the wolves, they were real wolf, the deadly green screened in. That wasn't CG and to me, that was really eye opening in a way.

LUKE DITOMMASO, PROFESSOR SCHOOL OF VISUAL ARTS, NEW YORK: I think the original intent was to write a story that was so grand, that it was completely unbound by the constraints of regular production and visual effects has made a show like Game of Thrones possible.

Visual effects is not the driving of force of the show. I think it is the drama that has built around people's relationships is not trying to be a fantasy story. This could control, this could be a real thing. I think that is what makes the magic of it.

SEBASTIAN: A magic that has taken TV drama in an epic scale. Clare Sebastian, CNN Money, New York.


ALLEN: Sure we've met (Inaudible), we have not seen.

HOWELL: Well are we losers now. I don't if that's all right.

ALLEN: The whole world is watching it except you and me. Thanks for watching us. We appreciate it. I'm Natalie Allen.

HOWELL: And I'm George Howell. The news continues after the break with our colleague Hannah Vaughan Jones live in London. You're watching CNN, not Game of Thrones this time -- CNN, the world's leader.