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EARLY START

Trump Lawyers and Prosecutors Wrangle in Court Over Seized Evidence; U.N. Inspectors Blocked From Syria Attack Site; U.S. and the U.K. Issue Warning About Russian Hackers; Aired 4:30-5a ET

Aired April 17, 2018 - 04:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[04:30:47] CHRISTINE ROMANS, CNN ANCHOR: FOX star Sean Hannity forced to explain after a court case reveals he is the mystery client of Trump lawyer Michael Cohen.

DAVE BRIGGS, CNN ANCHOR: Jim Comey's revenge tell-all now on sale as the fired FBI director speaks out in a new interview this morning.

ROMANS: The president reportedly holding back on Russian sanctions, even with the Russians now accused of helping block chemical weapons inspectors in Syria.

Welcome back to EARLY START. I'm Christine Romans.

BRIGGS: No comment there from Nikki Haley. I'm Dave Briggs. 31 minutes past the hour.

We start, though, with the battle over evidence seized in raids on Michael Cohen's home, office, and hotel room has moved to a New York federal courtroom. Lawyers for the president, his personal attorney, that's Cohen, and a federal prosecutor argued over how to handle material covered by attorney-client privilege.

ROMANS: The prosecutor wants a walled-off internal taint team to go through the material. Cohen wants an independent arbiter, a special master to do it, and the president's lawyers want to make the decisions themselves. The judge rendered a split decision offering something for all three parties. Her rulings and what the prosecutor is calling a fast-moving case also triggered a big courtroom surprise.

The latest now from CNN's Brynn Gingras in New York.

BRYNN GINGRAS, CNN CORRESPONDENT: Dave and Christine, a lot unfolding in court. Essentially the U.S. attorney is now going to hand over all of those seized documents to Michael Cohen. And the judge told those attorneys that they need to filter through them, see how much material, their volume, is really needed to be protected by the attorney-client privilege. Then some of those materials can also be handed over to the Trump administration.

Prosecutors are also going to do their own filtering. And then all three parties are going to reconvene in the courtroom again and that's when the judge is really going to make a final ruling on whether or not a special taint team is going to filter through the documents again before the DOJ continues their investigation. So a lot of things need to happen before this investigation can

continue, somewhat of a stall in this criminal investigation that really set forward all these things in motion. But, of course, this didn't all happen without a little bit of drama. If Michael Cohen and Stormy Daniels in the courtroom wasn't enough, we learned today that Michael Cohen was actually representing multiple people throughout the years, but in the last three years three people in particular.

We know about Trump. We know about the RNC head. And then we learned today that he has represented or he has given legal advice, rather, to Sean Hannity, and that brought a little bit more drama into the courtroom. Certainly they talked about whether or not he had dealings with Sean Hannity, what kind of dealings those were.

Sean Hannity says that he only sought legal advice from Michael Cohen and he had nothing to do with the case that is going on at this point.

Christine and Dave, back to you.

BRIGGS: All right. Brynn, thank you.

Sean Hannity gave his version on his FOX News show last night. Downplaying his attorney-client relationship with Michael Cohen, while also saying he expects their communications to be covered by attorney- client privilege.

(BEGIN VIDEO CLIP)

SEAN HANNITY, HOST, FOX NEWS CHANNEL: Let me set the record straight. Here's the truth. Michael Cohen never represented me in any legal matter. I never retained his services, I never received an invoice, I never paid Michael Cohen for legal fees.

I did have occasional brief conversations with Michael Cohen, he's a great attorney, about legal questions I had or I was looking for input and perspective. My discussions with Michael Cohen never rose to any level that I needed to tell anyone that I was asking him questions.

(END VIDEO CLIP)

BRIGGS: One of Hannity's guests, though, law professor Alan Dershowitz did gently scold him for failing to disclose his relationship with Cohen.

(BEGIN VIDEO CLIP)

ALAN DERSHOWITZ, HARVARD LAW SCHOOL PROFESSOR: I really think that you should have disclosed your relationship with Cohen when you talked about him on this show. You could have said just that you had asked him for advice or whatever, but I think it would have been much, much better had you disclosed that relationship.

(CROSSTALK)

DERSHOWITZ: You are in a difficult situation obviously --

HANNITY: Do you understand the nature of it, Professor?

DERSHOWITZ: Yes.

HANNITY: I'm going to deal with this later in the show.

DERSHOWITZ: Yes. Yes. No, I understand.

HANNITY: But it was minimal.

DERSHOWITZ: I understand that.

HANNITY: But I was candid about it.

DERSHOWITZ: But you should have said that.

(END VIDEO CLIP)

BRIGGS: Hannity made clear during the show and on Twitter afterward that his questions to Cohen were almost exclusively about real estate.

[04:35:07] He said Cohen never represented him on any matter involving a third party. Cohen's other two clients in the last year were ultra wealthy men who paid hush money through Cohen to women they allegedly had affairs with.

ROMANS: James Comey's new book now freshly on sale in bookstores nationwide for about the past four and a half hours. Some customers headed out to Kramer Books in Washington, D.C. at midnight to get their copy. The former FBI director's new interview with NPR set to air this morning. Comey says he's concerned about the president interfering with the special counsel's Russia investigation. He tells NPR he thinks, "It is very important Deputy Attorney General Rod Rosenstein stays in his job because I do think he has conducted himself honorably with respect to his appointment of the special counsel and his assertion of that special counsel's work to the rule of law. And so I really do think it would be an attack on the rule of law for him to be fired or for the special counsel to be fired."

BRIGGS: Regarding President Trump's weekend tweet calling for Comey to be incarcerated, the ex-FBI director says, quote, "The president of the United States just tweeted that a private citizen should be jailed. And I think the reaction of most of us was, meh, it's another one of those things. This is not normal. This is not OK. There is a danger that we will become numb to it and we will stop noticing the threats to our norms."

The president continuing his attacks on Monday, tweeting, "Comey drafted the crooked Hillary exoneration long before he talked to her, lied in Congress to Senator Grassley, then based his decisions on her poll numbers. Disgruntled, he, McCabe and the others committed many crimes."

ROMANS: All right. This morning President Trump has ordered a hold on new sanctions against Russia. New sanctions that were just announced Sunday by his U.N. ambassador Nikki Haley. Here's what she said then. (BEGIN VIDEO CLIP)

NIKKI HALEY, U.S. AMBASSADOR TO THE U.N.: So you will see that Russian sanctions will be coming down. Secretary Mnuchin will be announcing those on Monday if he hasn't already. And they will go directly to any sort of companies that were dealing with equipment related to Assad and chemical weapons use.

(END VIDEO CLIP)

ROMANS: The "Washington Post" reports the president was upset about the sanctions rollout. And the plan is now in a, quote, "holding pattern." White House Press Secretary Sarah Sanders tamping down expectations, telling reporters the administration is only considering new sanctions and a decision will be made in the near future.

BRIGGS: Russian military officials say investigators from the U.N. watchdog group OPCW will be allowed to enter the city of Douma so they can investigate the site of last week's suspected chemical attack that killed dozens of civilians. Despite having U.N. clearance, inspectors have not been able to get to the location. The United Kingdom says Syria and Russia are blocking them. One Russian diplomat calls that claim fake news.

CNN's Nic Robertson tracking the latest for us live from Moscow this morning.

Good morning, Nic. 9

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, good morning, Dave. I mean, what appears to be happening to the chemical weapons inspectors team in Damascus is that the Syrians and the Russian are slow rolling them. Just at the beginning of the weekend the Russians and Syrians were saying get that team in here quickly. We'll get the visas to them fast. They'll get access to the ground. We control the situation in Douma. We've got security in Douma. We even know that journalists have been out in the neighborhood of Douma just yesterday.

But what we're hearing from Russians now is that this OPCW team will have to sit tight again today, Tuesday. Why? Because the Russian and Syrian security services need to go and test the route and check out that it's safe for this team to go out into the neighborhood of Douma. So what Russia has been saying all along and they continue to say and we heard it again from their representative of the OPCW yesterday is that this was a fake attack, that this was put on for show by the NGO, the White Helmets on the ground. That this was paid for by the United States and Great Britain.

On the other hand, they also say their own inspectors have been there and there was no sign or sight of anyone that had been affected by a chemical weapons attack or any evidence of a chemical weapons attack. So Russia has got these two different narratives going. The realty on the ground is the OPCW can't get out there because they are being slow-rolled by the Russians and the Syrians. Quite why we just don't know. BRIGGS: All right. Nic Robertson live for us in Moscow this morning.

Thanks.

Meanwhile, President Trump preparing to welcome Japanese Prime Minister Shinzo Abe to his Winter White House at Mar-a-Lago today. The two expected to tackle North Korea and trade during two days of pivotal meetings. Abe was apparently thrown off guard upon learning of Trump's plans to meet North Korean leader Kim Jong-un face-to-face next month. Abe being dogged by a corruption scandal at home and in need of some type of policy win. The White House saying fair and reciprocal trade and investment programs will be explored between the U.S. and Japan,

[04:40:02] ROMANS: All right. New developments this morning in two of the controversies surrounding embattled EPA administrator Scott Pruitt. The Government Accountability Office says a $43,000 sound proof booth for Pruitt's office violated federal spending laws. The congressional spending watchdog says Pruitt's staff failed to notify Congress before spending more than five grand on office improvements. The EPA rejects that interpretation saying the law only applies to aesthetic improvements.

BRIGGS: Meantime, the EPA's own watchdog office says two Pruitt aides who received substantial pay raises through a loophole in federal salary rules, those aides each had an earlier pay increase that was previously undisclosed. Documents show the raises where signed off by Pruitt's chief of staff who in some cases wrote Pruitt's name alongside his signature. Pruitt has denied knowing in advance about those raises.

Another Trump Cabinet member apparently in the clear, though, this morning. The Interior Department's watchdog has found Secretary Ryan Zinke's travel patterns "generally followed policy" despite recent scrutiny for mixing business with pleasure and chartering pricey military and private aircraft. Report says most of those flights last year were by the book.

ROMANS: Allegiant Air facing congressional scrutiny and a sharpest drop in its stock price. All thanks to claims of suffered three and a half times more safety problems than any other U.S. airlines. The allegation has come from a "60 Minutes" report. It details more than 100 serious mechanical problems from 2016 to October 2017 including mid-air engine failure, smoke in the cabin, rapid descends, and aborted takeoffs.

Now three Democratic lawmakers want to examine how the FAA handled these incidents. And Allegiant stock has taken a hit, losing 11 percent over the past couple of trading days. The airline disagrees with the reporting calling it a one-sided narrative that cherry-picked interviews and facts. But many experts agree that the safety concerns were overstated. Mainly because most occurred on MD-80 planes. Some of the oldest operating today. But Allegiant has already retired half of its MD-80 planes and plans to retire the rest by the end of this year. Also the budget airline serves many smaller airports without major carriers. So experts say it's not likely to lose many bookings. BRIGGS: All right. Ahead, cyber spies from the Kremlin could be

trying to hack into your home office router. We'll be live in London for the new warning next.

ROMANS: And punches instead of prayers at this place of worship. That's just ahead.

(COMMERCIAL BREAK)

[04:46:43] ROMANS: A joint warning this morning from the U.S. and the UK. Russian hackers are targeting routers and other devices that control the flow of internet traffic.

Let's go out to London and bring in CNN's Erin McLaughlin for the latest developments. And certainly this is a stern warning from the U.S. and the U.K.

ERIN MCLAUGHLIN, CNN CORRESPONDENT: A serious warning and an unprecedented warning, Christine. This is the first time the sort of joint alert has been issued by the United States and the United Kingdom. The purpose of the alert officials say is twofold, to warn industry about these attacks and to call out the Kremlin.

The statement reads in part, "The U.S. and U.K. governments have high confidence that the Russian state sponsored cyber actors were behind this malicious cyber activity that aimed to exploit network infrastructure devices. This activity threatens the safety, security and economic well being of the U.S., U.K., and international allies."

Now network infrastructure devices have been described really as the nexus point for huge amounts of internet traffic. And potentially vulnerable because they're seen as less well maintained than computers or other devices. And according to this alert, what hackers have been doing is they've been scanning the internet trying to trick these devices into handing over log-in details. Once they have that, they have control of the device. And in the words of one U.S. official, a tremendous weapon in the hands of the adversary.

Now Russia has denied any involvement in any sort of cyber attacks. But U.S. officials say this has been going on, Christine, since 2015.

ROMANS: All right. Certainly a stern warning there. Thank you so much for that, Erin.

BRIGGS: Violence erupting at a Sikh Temple in Greenwood, Indiana. A fight involving about 150 people broke out Sunday during the process of selecting new temple leaders. Police say some of the old leaders did not want to relinquish power. Nine people suffered minor injuries in this brawl and were hospitalized. Authorities are reviewing surveillance video from that temple.

ROMANS: Former Illinois governor Rod Blagojevich running out of legal options this morning. The U.S. Supreme Court has refused to hear his appeal. That means he will continue serving a 14-year sentence for corruption in a Colorado prison. The 61-year-old Blagojevich was convicted in 2011 of attempting to sell the U.S. Senate seat left vacant by Barack Obama in 2008. He was impeached by the Illinois House of Representatives, removed from office by the state Senate in 2009. At his corruption trial, a jury returned 18 guilty verdicts against him.

BRIGGS: Arizona Republican Senator John McCain is hospitalized, in stable condition, after surgery for an intestinal infection. The 81- year-old lawmaker has been undergoing treatment for brain cancer in Phoenix. McCain's office released a statement saying he has remained engaged in his work as chairman of the Senate Armed Services Committee. And last night McCain's daughter Megan tweeted her admiration for his "intense grit and determination." Thanks to his doctors and everyone praying for him.

ROMANS: All right. Even a price hike can't slow Netflix down. The streaming service now has 125 million subscribers, blowing away all expectations.

[04:50:01] We'll tell you why "CNN Money" next.

(COMMERCIAL BREAK)

BRIGGS: 4:54 Eastern Time. And anger is still simmering at that Philadelphia Starbucks where two black men were arrested. The men now agreeing to meet with the coffee giant CEO.

[04:55:02] Protesters chanting and singing during a sit-in yesterday. The cafe briefly closed. African-American leaders are calling the chain anti-black. Philadelphia's police commissioner initially said his officers did nothing wrong and now adds the officer did not want to make the arrest. The store manager called police because the men were sitting in the store without placing an order. They were arrested for trespassing, but not charged. They said they were waiting for another man to arrive. That person did arrive at the store as they were being arrested.

Starbucks says the manager is no longer working at that store. But not clear if she was terminated or relocated by Starbucks. The men have agreed to meet with Starbucks CEO Kevin Johnson but the timing has not yet been worked out.

ROMANS: Actor Harry Anderson found dead yesterday in his North Carolina home. No cause of death was disclosed but a police spokeswoman said no foul play is suspected. The 65-year-old comedian best known for playing the eccentric judge Harry Stone on "Night Court." The show lasted nine seasons starting 1984. Anderson's "Night Court" co- stars remembered him on Twitter last night. Markie Post writing she will talk about him later but for now, she said, I'm devastated.

BRIGGS: Kendrick Lamar will have to move all those Grammy Awards aside to make room for his Pulitzer Prize. Lamar's album "Damn" capturing the prestigious award on Monday. A historic first for a rap artist. The Pulitzer Music Award is typically given to classical or jazz artists.

ROMANS: The Pulitzer for Public Service awarded to the "New York Times" and the "New Yorker" for their stories that helped drive the Me Too movement. And the prize for national reporting went to the "Times" and the "Washington Post" for coverage of the president's possible ties to Russia.

BRIGGS: An American woman and a Japanese man crossing the finish line first in the Boston Marathon. 34-year-old Desiree Linden, a two-time U.S. Olympian who lives in Michigan overcoming the cold, wet, brutal weather, constant rain, brutal winds.

ROMANS: Look at that.

BRIGGS: To post a winning time of two hours, 39 minutes, 54 seconds. Her first marathon win ever. On the men's side, Yuki Kawauchi pulled of a shocking upset with the time of 2:15:58.

ROMANS: My gosh.

BRIGGS: Becoming the first Japanese man to win the Boston Marathon since 1987. And we have to congratulate our colleague, former anchor of this show.

ROMANS: He made it. John Berman made it. He said he survived. His goal was to survive. Look, it was cold. He was watching -- he was watching the weather forecast. The forecast for 30-mile-an-hour winds and an inch of rain. And he had not been training in cold weather. And he made it.

BRIGGS: And there ain't going to be no rematch. He raised more than $16,000 as well.

ROMANS: That's awesome. That's awesome. Berman made it. Good job, Berman.

BRIGGS: Good job.

ROMANS: He won't be walking for four more days.

Let's get a check on "CNN Money" this morning. Global stocks rising overnight as Syria fears fade. Wall Street closed higher after some big U.S. companies reported strong earnings. The Dow rose more than 200 points. Both the S&P 500 and the Nasdaq gained about 1 percent. Earnings season, the expectations are pretty high. Look at these profit growth forecasts. For the S&P 500, 17 percent. That'll be the best since 2011.

Pharmacy stocks jumped on news that Amazon will not start selling prescription drugs. Rumors have been swirling that it would break into the pharmacy business and disrupt the pharmacy business. But CNBC reported that Amazon putting those plans on hold. That set Rite Aid and Walgreens up more than 6 percent, CVS soared 7 percent.

Even a price hike can't slow Netflix down. The streaming service added more than 7.4 million subscribers in the first months of 2018. That's a 50 percent jump from last year. For a total of 125 million users. That blew away all expectations. Especially after Netflix raised prices at the end of the year. Now Netflix credits success to a blitz of original programming, including a reboot of "Queer Eye" and the launch of a new talk show from David Letterman, kicking off with an interview of course with the former president Barack Obama. All told, Netflix introduced 32 original series and movies during the first quarter. That doesn't come cheap. Netflix plans to spend $8 billion on content this year alone.

Domino's ramping up the food delivery wars expanding to the great outdoors. Domino's will now deliver pizza to 150,000 outdoor locations. Its new delivery hot spots include beaches, parks, even famous locations like Central Park and the Gateway Arch in St. Louis. Over the past decade a growing number of delivery services have forced Domino's to innovate including experimenting with drone delivery and self-driving cars, and partnering with voice assistance for digital ordering.

Getting a pizza at the beach.

BRIGGS: There's long been delivery at my beach.

ROMANS: Is there?

BRIGGS: Long lines in fact of pizza deliveries.

ROMANS: Really?

BRIGGS: OK. EARLY START continues right now with the latest from Sean Hannity link to President Trump's personal lawyer.