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Former Trump Adviser Pleads Guilty: Manafort, Aide Indicted; Trump Seething As Mueller Probe Reaches Former Aides; FBI Opens Inquiry Into Whitefish Energy Puerto Rico Contract. Aired 5:30-6a ET

Aired October 31, 2017 - 05:30   ET


[05:30:00] ALEX MARQUARDT, CNN ANCHOR: What's in store for the special counsel and the White House? Welcome back to EARLY START. I'm Alex Marquardt.

CHRISTINE ROMANS, CNN ANCHOR: Really nice to have you aboard today.

MARQUARDT: Thank you.

ROMANS: I'm Christine Romans. It is Halloween. It is 30 minutes past the hour this morning.

Let's begin with the White House in full damage control mode after the surest sign yet special counsel Robert Mueller is focused on collusion in his investigation of Russian interference in this election.

A Republican close to the White House says President Trump is quote "seething." Aides are urgently warning the president not to lash out at Mueller after the indictments Monday of former Trump campaign chairman Paul Manafort and his lieutenant, Rick Gates.

MARQUARDT: Now, those charges weren't exactly a surprise, but what was a shock was the revelation that the campaign foreign policy adviser George Papadopoulos pleaded guilty earlier this month to making false statements to the FBI. Papadopoulos admitted to lying to agents about the timing of his contacts with Russians.

The complaint against Papadopoulos outlines a meeting that he had with a Russia-linked professor who promised dirt on Hillary Clinton.

ROMANS: It also lays out Papadopoulos' attempts to set up meetings between the campaign and top Russian officials. Despite White House attempts to downplay Papadopoulos as on overeager volunteer, he was e- mailing with campaign manager Paul Manafort. And according to "The Washington Post," he was also e-mailing with another campaign manager, Corey Lewandowski, among others.

MARQUARDT: Now, the revelation that Papadopoulos is cooperating with the FBI heightening the unease among Trump's allies.

Our coverage begins with CNN's Pamela Brown in Washington.



Monday's charges show the Mueller investigation is zeroing in on collusion with Russia and the 2016 campaign, as well as crimes committed even before the campaign.

George Papadopoulos, a former foreign policy adviser to the Trump campaign, pleaded guilty on October fifth to making false statements to the FBI about his contacts with Russia. And according to records unsealed Monday, the FBI alleges Papadopoulos falsely described his interactions with a certain foreign contact who discussed dirt-related e-mails concerning Trump's opponent, Hillary Clinton.

One of the court documents describes an e-mail sent by Papadopoulos to a high-ranking campaign official who a source says is former campaign chairman Paul Manafort, and the e-mail had the subject line 'request from Russia to meet Mr. Trump.' It went on to allegedly say Russia was eager to meet with the candidate and had been reaching out.

The documents allege that campaign official, Manafort, forwarded the e-mail to another official, Rick Gates. That e-mail said "We need someone to communicate that D.T. is not doing these trips. It should be someone low-level in the campaign so as not to send any signal."

In another e-mail, a campaign supervisor allegedly tells Papadopoulos "I would encourage you and another policy adviser to the campaign to make the trip if it is feasible." That trip to Russia never happened according to the officials -- Christine and Alex.


ROMANS: All right. Thank you so much for that.

Moments ago, Russian foreign minister Sergey Lavrov saying allegations of Russian meddling in the elections, both in the United States and Europe, are fantasies that have no limit.

So much to get to. Let's bring back "Washington Examiner" White House correspondent Sarah Westwood, CNN political analyst Julian Zelizer, and of course, Jeff Toobin is here.

I want to bring you in, Jeff, because this is just -- what a day, what a day.


ROMANS: What a day.

I want to look at something here that really -- so, we knew Manafort was -- Manafort, I think, was less of a surprise as this Papadopoulos. The fact that this man had been interviewed and arrested back in July, and then that was sealed.

Look at this. This is from these documents. "Defendant has indicated that he is willing to cooperate with the government in its ongoing investigation into Russian efforts to interfere in the 2016 presidential election." If you guys can put that up.

And then on the second page, "Public disclosure of the defendant's initial appearance, however, would significantly undermine his ability to serve as a proactive cooperator."

He was arrested in July. We learned about it yesterday. No leaks -- I mean, a really tight, tight investigation -- a tight lid on this.

What does this tell you?

TOOBIN: Well, proactive cooperator -- the only interpretation of that that is meaningful to me is that he was wearing a wire. He was working actively for the government in an undercover capacity from July to October, tape-recording either phone calls or meetings with people that the Mueller team was interested in.

And, you know, that puts a whole different spin on how much this investigation is still perhaps reaching into the inner sanctums of the White House because certainly, the people he would want to talk to were the people he worked on the campaign with.

MARQUARDT: Julian, we know that Steve Bannon has started to encourage the president and the people around him to mount a campaign against the special prosecutor. His lawyers, for now, are advising him not to fire Mueller. But short of that, what could he do to hamper -- to slow down this investigation?

[05:35:10] JULIAN ZELIZER, CNN POLITICAL ANALYST, HISTORIAN AND PROFESSOR, PRINCETON UNIVERSITY, AUTHOR, "THE FIERCE URGENCY OF NOW": Well, obviously, I think the president is hoping as few people talk as possible at this point if there is anything to hide. That's what the administration wants to do.

That said, this is an administration whose principal strategy relies on tearing down the opposition. That has gotten him in trouble. That's why we have the Mueller investigation.

But I think that temptation to go where Bannon is inviting him will be very strong because I still think that's the principal weapon he has -- his Twitter bully pulpit and he really wants to use it. He doesn't let facts get in his way and that is how he tries to change the conversation.

TOOBIN: Well, I think it's -- he has "FOX NEWS." I mean, you know, you have "FOX NEWS" beating the drum that this is a bad investigation, plus Hillary Clinton was worse, and that motivates his base.

And if you look at how Donald Trump has conducted his presidency it's all about keeping his base engaged and motivated and not about reaching out to independents or people on the side. It's not working perfectly, to say the least. I mean, even his base appears to be shrinking somewhat.

But it is true that there is this core of people who just want to hear bad things about Hillary Clinton and bad things about Mueller, and they're feeding them. ROMANS: And the president kind of feeds into that with his tweets with all caps, "NO COLLUSION" --

TOOBIN: Right.

ROMANS: -- and why aren't you talking about Hillary, question mark, question mark, question mark.

Let me bring in Sarah quickly, and let's talk about Sarah Sanders at the podium in the briefing room yesterday. Maybe one of the hardest jobs in Washington yesterday was trying to say this is not a big deal -- listen.


JONATHAN KARL, CHIEF WHITE HOUSE CORRESPONDENT, ABC NEWS: Can you just explain what George Papadopoulos' role with the campaign was?

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: It was extremely limited. It was a volunteer position. And again, no activity was ever done in an official capacity on behalf of the campaign in that regard.

KARL: What about the outreach that he was making to campaign officials to try to put together this meeting?

SANDERS: You mean the outreach that was repeatedly denied and pushed away and said --

KARL: Well, that's what I meant --

SANDERS: -- we're not going to take any action on that?


ROMANS: And then, in the documents yesterday from a campaign supervisor who "The Washington Post" identifies as Sam Clovis to George Papadopoulos, "I would encourage you and another foreign policy adviser to the campaign to make the trip, if it is feasible."

Sarah --

SARAH WESTWOOD, WHITE HOUSE CORRESPONDENT, WASHINGTON EXAMINER: Right. I think this sort of jives with what I've heard from talking to sources in and around the White House, which is no one in the White House is overly concerned that any actual collusion took place at any meaningful level of the campaign.

But, there was a concern that when confronted by investigators some people would not be truthful. Somebody would do something stupid -- try to shred a document, try to cover up an e-mail, and would get in trouble. And that appears to be exactly what happened.

So there is not a lot of real concern that I've heard from folks that any collusion took place. I think, in fact, there's a confidence that none did. But there is that fear that it's the cover-up, not the crime, that's

going to get folks in the White House in trouble. That seems to be exactly what George Papadopoulos has proven is entirely possible in this investigation.

TOOBIN: You know -- you know what I love about this is that if you follow the White House's explanations over time, first it was there was no contact between the campaign and Russia at all. This whole thing is all made up.

Then it was well, there was absolutely nothing illegal about anything involving connections between Russia and the campaign. Now it's well, there was contact and maybe even a little bit of collusion, but not any real collusion.

So, I mean, I wouldn't put a lot of stock in the explanations that the White House is putting forward because they keep retreating into finer and finer distinctions.

ROMANS: What about this investigation when you look at how this rolled out yesterday? Talk to me a little bit about how you think Mueller is conducting this investigation and its scope.

TOOBIN: Well, I think the thoroughness of it is really remarkable. You know, what's worth remembering is that the false statement that Papadopoulos made to the FBI was in January of 2017 --

ROMANS: Pre-special counsel.

TOOBIN: -- four months before Mueller was appointed. So this investigation has been going on for a long time. They are now starting to assemble all the e-mails.

You know, we always think in terms of who was interviewed, what was the -- you know -- that's, in many respects, the less important part of an investigation like this.

The more important part is getting the e-mails and the physical -- the evidence that can't be doctored, that can't be -- that doesn't lie, and assembling a narrative from there. And that's what you saw in the documents that were released with the Papadopoulos guilty plea and that's indispensable.

[05:40:04] ZELIZER: I mean, Mueller's a different kind of opponent than Trump has faced, meaning most of Trump's opponents have been political and so the bully pulpit slash "FOX NEWS" platform is very powerful.

But that's not really what motivates Mueller. He's not running for election and he's operating in a pretty closed room with his associates. And so, I think it's going to be hard for the president to simply stop it with these shifting explanations that often defy the facts that are very clear, right in front of us.

TOOBIN: Well, and you talk about, you know -- you were asked the question of well, Bannon wants to attack Mueller. I mean, like for what? You know, the idea that the whole thing is a hoax? He now has a guilty plea.


TOOBIN: He now has someone admitting to a felony. He's got a pending indictment against Trump's former campaign chairman.

Even if he were to fire Mueller, which I don't think he will, that indictment is still there. That case still has to go to trial. So, you know, this investigation now has so much momentum that it's pointless to think about short-circuiting it.

MARQUARDT: But that indictment -- sorry -- right now is not necessarily campaign-related. So to what extent do you think Mueller is actually trying to flip Manafort?

TOOBIN: Well, I'm sure he is trying to flip him but remember, that indictment charges a conspiracy that includes the time when Manafort was the campaign chairman. So to say that it's unrelated, I think, is not --

MARQUARDT: Premature.

TOOBIN: Well, I don't know what I -- I think it's just wrong.

ZELIZER: This is the campaign manager that we're talking about. The person brought in that summer to make sure there's no rebellion within the Republican convention.


ZELIZER: And so, it was -- it is automatically campaign-related.


TOOBIN: I'm sorry. And he's accused of covering up the fact that he was tied to the Ukraine --


TOOBIN: -- the Ukrainian faction that was highly sympathetic to Russia. So the idea that this is somehow completely unrelated is just inaccurate.

ROMANS: Sarah, final word to you. How does the White House respond besides just deflecting to oh, Hillary Clinton and Uranium One, or whatever they're trying to do to deflect? And saying that well, Manafort -- you know, we heard yesterday Manafort -- one of our sources saying Manafort -- these were bad guys when they came, they were bad guys when they left.

I mean, how does that -- how does that help them?

WESTWOOD: Well, we've seen Trump supporters try to go after Mueller's credibility in the past, alleging that he is somehow some sort of partisan actor. But that's going to be very difficult because keep in mind Manafort is just the tip of the iceberg in this conspiracy outlined in the indictment that includes what many believe to be Democratic lobbyists.

If Tony Podesta, the brother Clinton's campaign chairman John Podesta, is under enough scrutiny to have to step down from his lobbying firm, this is what could become a bipartisan investigation that sweeps Democrats up in its web as well. And it would be very hard for the White House to argue Mueller is acting in a partisan fashion if Democrats are also starting to get in trouble in this investigation.

ROMANS: All right. Sarah Westwood, Julian Zelizer, and Jeffrey Toobin, thanks, you guys -- everybody, for coming in bright and early this morning to hash this all out.

MARQUARDT: Thanks so much.

ROMANS: Stay tuned.

MARQUARDT: A lot more coming today.

ROMANS: All right.

Everyone knows slavery was the cause behind the Civil War, so why did the White House chief of staff say this?


JOHN KELLY, WHITE HOUSE CHIEF OF STAFF: The lack of inability to compromise led to the Civil War and men and women of good faith, on both sides, made their stand.


ROMANS: Those comments from John Kelly, next.


[05:46:48] MARQUARDT: White House Chief of Staff John Kelly says a lack of compromise was the root cause for the Civil War. In a "FOX NEWS" interview he was asked about the removal of historic, but controversial plaques honoring George Washington and the Confederate Gen. Robert E. Lee.


KELLY: Robert E. Lee was an honorable man. He was a man that gave up -- gave up his country to fight for his state, which 150 years ago was more important that country. It was always loyalty to state first back in those days -- now, where it's different today.

But the lack of inability to compromise led to the Civil War and men and women of good faith, on both sides, made their stand.


ROMANS: Both sides, Kelly said. It's similar to President Trump's Charlottesville comments. Kelly, who is from Boston, made no mention of slavery which, of course, was the central conflict leading to the Civil War.

MARQUARDT: Now, the FBI is looking into a $300 million contract with Whitefish Energy that was struck with Puerto Rico's Power Authority to rebuild the island's power grid after Hurricane Maria.

Members of Congress have raised concern over the way that the contract was awarded to a small Montana firm which, it turns out, has ties to the Trump administration.

Our Leyla Santiago has more from San Juan.


LEYLA SANTIAGO, CNN CORRESPONDENT: Christine and Alex, the FBI now wants more answers on this. They have opened a preliminary inquiry to find out more about that $300 million deal between Whitefish Energy and Puerto Rico's Power Authority.

Now, the governor is still standing by his decision to call for the termination of that contract. He says that he has no evidence of any wrongdoing but he says this has all become a distraction. A distraction, he says, because of controversy. Many have questioned how a 2-year-old company based out of Montana with very few employees landed such a big deal with such big responsibilities to restore Puerto Rico's power grid.

And I've got to tell you, as we were out and about talking to people today, we definitely sensed the frustration. We even talked to subcontractors of Whitefish and they tell us that they are very frustrated because of what they believe are politics getting in the way. What they believe are delays in progress.

And for so many on this island of 3.5 million U.S. citizens, now the question is where do we go from here. So many are waiting to see what will happen next when it comes to restoring energy and power for the people on this island nearly six weeks after Hurricane Maria struck -- Christine, Alex.


ROMANS: All right. Leyla Santiago, thank you for that.

"HOUSE OF CARDS" is being canceled after its sixth season. The announcement comes less than one day after star Kevin Spacey was accused of sexual misconduct by "STAR TREK: DISCOVERY" actor Anthony Rapp. Rapp says he was 14 years old at the time.

A source tells CNN the decision to end the series and the allegations facing Spacey are not related.

[05:50:00] MARQUARDT: And Netflix, which produces the show, did not offer an official statement on its cancellation but it did address the allegations in a joint statement with the company that co-produces the series, saying executives traveled to Baltimore to make sure that the cast and crew feel safe and supported. They said that as scheduled, Spacey was not working on the set right now. ROMANS: All right. The head of the top consumer watchdog has a message -- a plea for President Trump. Allow consumers to stand up to their credit cards and stand up to their banks. That's next.


MARQUARDT: The indictments and guilty plea in the Russia probe are no laughing matter unless you happen to be a late-night comedian. Then -- well, listen.


SETH MEYERS, HOST, NBC "LATE NIGHT WITH SETH MEYERS": A source close to the Trump administration told CNN today that the indictments of two former Trump campaign officials have zero to do with the White House. To be fair, you could say the same thing about President Trump on any given day.

[05:55:03] Wow, he allegedly laundered $1 million through a rug store. And now only that, the rug he bought wasn't even convincing.

He added also, there is no collusion. He is so bad at this. It's like getting pulled over and saying I wasn't speeding officer and also, there's no cocaine in the glove compartment.

STEPHEN COLBERT, HOST, CBS "THE LATE SHOW WITH STEPHEN COLBERT": The first indictment in the Russia investigation and who's our first lucky winner? Why, it's former Trump campaign manager Paul Manafort, seen here looking innocent before proven guilty.

Now, I know it's almost Halloween but it really feels more like Christmas.

(Singing to the tune of "O Christmas Tree"): Paul Manafort, Paul Manafort, you're just the first of many.

We also learned about an FBI investigation into former Trump foreign policy adviser and groomsman offering you ecstasy at the ceremony, George Papadopoulos.

While working to elect Donald Trump, he repeatedly tried to arrange a meeting between the Trump campaign and Russian government officials. You can't do that. That's Don, Jr.'s job.


ROMANS: Colbert having way too much fun.

MARQUARDT: Lots of fun, those two.

ROMANS: All right, 56 minutes past the hour.

President Trump will reveal his pick for Fed chair Thursday and it looks like current chief Janet Yellen may be out of the running. That's what a White House official tells CNN. Leading the U.S. Central Bank is one of the most powerful posts in the world. The current frontrunner, Fed governor Jerome Powell. Now, sources warn the president could still change his mind.

Powell is a Republican. He's been on the Federal Reserve's board since 2012. He would be the first former investment banker to chair the Fed and the first individual who is not an economist in more than 40 years.

Powell has supported Yellen's agenda. They worked together here over the past year so it probably won't be a major shift in monetary policy if Powell -- if he gets the job.

Yellen was appointed by President Obama in 2013 and if she is not renominated she would be the first Fed chief in nearly 40 years to not get a second term. She is, of course, the first woman to run the powerful Central Bank.

Let's get a check on "CNN Money Stream" this morning.

Let's look at the markets. Global stock markets higher around the world after Wall Street stepped back from a record territory yesterday.

U.S. stocks dropped after news broke that those long-awaited corporate tax cuts, maybe they could be gradual. "Bloomberg" reports the House is considering a progressive rate cut over several years.

Sprint and T-Mobile's rumored merger appears to be over. Reports of a collapse broke Monday.

SoftBank, the Japanese conglomerate with the majority stake in Sprint, is calling off negotiations. The concern was over the ownership structure of the combined business.

Reps for all three companies did not immediately comment. Both stocks tanked on the news.

The head of the top U.S. Consumer Watchdog has a personal appeal for President Trump. Stand up for consumers over banks and credit card companies.

Consumer Financial Protection Bureau chief Richard Cordray making a last-ditch plea to Trump to preserve a rule that allows consumers to take their credit card company or bank to court instead of being forced into arbitration.

Cordray acknowledged the odds are long. He wrote in his letter, "Many have told me I am wasting my time writing this letter," adding that the rule protects people who want to band together and right the wrongs done to them by these companies.

Cordray, a Democrat, is an unpopular figure among Republicans. Many have called on Trump to fire him.

Today's Halloween, October 31st. MARQUARDT: Happy Halloween.

ROMANS: Happy Halloween.

MARQUARDT: Trick or treat.

ROMANS: And a little-known fact for you in history. About 500 years ago today, Martin Luther tacked those "95 Theses" on the door of the Wittenberg church --

MARQUARDT: I did not know that.

ROMANS: -- that began the Protestant reformation -- 500 years ago today.

MARQUARDT: It's a twofer today.

ROMANS: There you go -- Halloween.

Thanks for joining us. I'm Christine Romans.

MARQUARDT: And, I'm Alex Marquardt. "NEW DAY" starts right now.


LEON PANETTA, FORMER DIRECTOR, CIA: We kind of have crossed a threshold. Bob Mueller is a tough and dedicated prosecutor.

SEN. MARK WARNER (D), VIRGINIA: Papadopoulos is direct evidence the campaign was being contacted by Russians.

UNIDENTIFIED MALE: His case involves the core of what Mueller is investigating, which is possible collusion.

SANDERS: Today's announcement has nothing to do with the president. The real collusion scandal has everything to do with the Clinton campaign.

UNIDENTIFIED MALE: (INAUDIBLE) e-mail chains about Russia.

CARTER PAGE, FORMER TRUMP CAMPAIGN FOREIGN POLICY ADVISER: It may have come up. There's nothing major.

REP. ADAM SCHIFF (D), CALIFORNIA: The Manafort and Gates indictments are significant.

KELLY: All of the activities were long before they ever had any association with the campaign.

UNIDENTIFIED MALE: This idea that we had nothing to do with Russia is long gone.