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Trial Begins for Ex-Trump Campaign Chairman Paul Manafort; Rudy Giuliani Claims Trump Tower Meeting Didn't Happen; Aired 9-9:30a ET

Aired July 31, 2018 - 09:00   ET


[09:00:00] POPPY HARLOW, CNN ANCHOR: -- court, this morning the former Trump campaign chairman will be in a federal courtroom in Virginia as a jury will start to be selected for the bank and tax fraud case against him.

As that begins, as we speak, the special counsel's team is going head to head with defense lawyers in a final pre-trial hearing before the first major test of Robert Mueller's 14-month investigation. It centers on Manafort's work as a political consultant in Ukraine and the tens of millions of dollars that he made doing that work and allegedly hid from the IRS.

Now friends tell the "New York Times" Manafort believes he's innocent, believes he will be acquitted. It is unclear whether he will testify in his own defense.

Let's go to the courthouse, our Joe Johns joins us now in Alexandria, Virginia.

Look, this is a final sort of tete-a-tete between both sides before jury selection gets under way. What are you hearing?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, that's about it. Jury selection is the main focus of the day here, on the rocket docket in Alexandria, Virginia, we love to call it that because justice moves so swiftly here. And it's interesting that this is a case that is brought by Robert Mueller, the special counsel investigating interference in the 2016 election. However, we don't expect a lot of conversation about collusion between the campaign allegedly and Russia. What we expect to hear more about is bank fraud, tax evasion.

What Manafort is essentially accused of is getting tens of millions of dollars from Ukraine and banking it, parking it in offshore foreign banks and not telling the tax collectors, the Internal Revenue Service. That's what he's up against here, an 18-count indictment with some 30 or more witnesses, almost three dozen, could go on for three weeks and frankly he has another trial scheduled in the District of Columbia later this year so a lot on the plate for Paul Manafort, the former campaign chairman -- campaign manager, excuse me, for Donald Trump -- Poppy.

HARLOW: Joe Johns, thank you very much.

Our crime and justice reporter Shimon Prokupecz is with me, our legal analyst and former federal prosecutor Shan Wu is also here. I should note of course that Shan, you previously represented Rick Gates, a longtime colleague of Paul Manafort who's now flipped and is cooperating with the government in the case against Manafort. So important perspective from you both.

You have a new op-ed, Shan, on Here's the headline, "Mueller Can't Afford to Lose the Manafort Trial." Why?

SHAN WU, CNN LEGAL ANALYST: I think the stakes are huge for them. It's one thing to get guilty pleas, it's another to undergo to test the fire in court. And I think that's why the pressure is so high on them. It's a challenging case in terms of the technical aspects of it and they also have to overcome potentially a negative aspect of having so many immunized witnesses. I think were they to lose that would be a huge blow in terms of the public perception and would be very bad for morale substantively, I'm sure they could march on, but I think there's a lot at stake for them.

HARLOW: Shimon, I think it's important for people to understand how this in many ways is not connected to President Trump but is also important for President Trump and his team. I mean, you heard Joe just mentioned and the prosecutors have told the judge leading up to this trial, you know, don't expect to hear the word Russia in this case. That's not what it's about but there is a web and it is connected. Explain.

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Yes, there is. There is a loan and prosecutors are going to argue that a loan that Paul Manafort secured from a Chicago bank, that loan, there were some problems with it when he filled out the records that you would, you know, to get these loans. Some of the bank employees had raised some issues with some of what Paul Manafort described in the application for the loan, and the accusation from prosecutors at this trial and what's important here, this is going to be perhaps maybe the only mention of any connection to the Trump campaign.

HARLOW: Right.

PROKUPECZ: That this bank executive essentially approved this loan under the idea that perhaps he would get a job in the Trump administration so that's going to be evidence that prosecutors intend to present.

Employees from the bank will testify but the bank executive actually is not going to testify and those bank employees are two of the five witnesses who were immunized, who got immunity from prosecution by the judge so that certainly is going to be an interesting moment because perhaps that will be the only, the only mention at this trial of any link to the Trump campaign.

HARLOW: OK, and Shan, in terms of Manafort himself, we don't know if he will make it in his own defense and if this actually makes it to trial, I mean, you know, you could have last-minute deals, who knows, there in these pre-trial sort of final meetings.

[09:05:03] But so many legal experts are pointing to what an uphill battle Manafort faces against these 32 charges. Why do you think that he has refused time and time again to cooperate with the Mueller team and to see this through?

WU: Well, again not based on the inside information, I think his team has been adamant from the start as has he that he intends to fight the charges. I think it is uphill, any white collar case is hard because of the amount of documents amassed against them. But as you saw previously in their public filings they have attacked on a number of fronts including the civil suit. So they seem pretty dogged in their determination to put Mueller's team to the test here.

HARLOW: Do you think he testifies?

WU: That's a tough call. I would have to handicap it as being negative. I would not put him on if I were his lawyer.

HARLOW: Shimon, let's remind people who the judge is in this case and what he's previously said. His name is Judge Ellis and he a few months ago said point blank to the prosecutors, to Mueller's team, quote, "You don't really care about Mr. Manafort's bank fraud, you really care about what information Mr. Manafort can give you that would reflect on Mr. Trump or lead to his prosecution or impeachment or whatever." That's significant but he hasn't always swung their way so far in these pre-trial hearings and motions.

PROKUPECZ: No. In fact, Poppy, you know, the president, President Trump, used those words in a speech at a rally, you know, sort of thinking perhaps that the judge would cite those words. You know, at the time certainly it didn't make news. And that was something that the defense team was hoping they would get perhaps a dismissal on some of the accounts or perhaps some of the decisions would go their way.

But no, he hasn't. Look, this judge is known to speak his mind. He's been around a long time. He's very well known certainly in the district and, you know, he just moves things along so just because he may have this opinion of what the prosecution may be ultimately and the special counsel may be ultimately trying to do, the law is the law, and it seems like at least from everything we know now that he's going to side with the law despite, despite what maybe what some in the public think, despite what the president thinks, and perhaps, you know, what's obvious here and what many have been saying all along is that this is about putting pressure on Paul Manafort to cooperate.

I mean, there is a ton of evidence in this case against Paul Manafort. It's true. This isn't perhaps going to be the most exciting trial in the world because it's going rely heavily on documents, on financial evidence, FBI agents, other witnesses. There will be some interesting tidbits of course because we're going to be talking about some of the Manafort's lavish lifestyle and over $800,000 that he paid a tailor for suits and some of his landscaping and real estate so you're going to have --


PROKUPECZ: -- some color in that way but, you know, generally this is a very good case for the prosecution. And it is hard to believe that Paul Manafort hasn't -- had any kind of plea negotiations.

HARLOW: Right.

PROKUPECZ: Or tried to plead guilty in this case.

HARLOW: Look, he still could go. It could go up to the last minute.

Really quickly, really quickly, Shan. You write, "The 800-pound gorilla in the room will be President Trump." Why?

WU: Because the -- both sides are very careful about that. They're trying not to mention Russia. I understood that government witnesses have been told should stay away from that topic and stay away from Trump. Obviously the judge will be very concerned about keeping this pristine. He doesn't want there to be some argument later if there's a conviction that the case was tainted through references to Russia or to Trump.

HARLOW: Thank you both, Shan Wu, Shimon, appreciate it.

This morning the president says, quote, "Collusion is not a crime." Sound familiar? The president's attorney Rudy Giuliani said that yesterday right here on CNN. But earlier this morning the White House said it's not coordinating on its messaging with Rudy Giuliani.

Abby Phillip joins me now.

And the White House -- these sources were explicit to say not only are we not coordinating we can't control what he says.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Exactly. I mean, Rudy Giuliani's media blitz yesterday seemed to catch a lot of people by surprise in part because he seemed to be breaking new ground in a couple of key areas. Some crucial areas. The first one you just pointed out, saying that collusion is not a crime and suggesting that perhaps the goalposts moving here in terms of what the administration considers to be wrongdoing.

The president reiterating that message on Twitter this morning, but then he also added on another front saying that there was perhaps a meeting before that infamous Trump Tower meeting with Don Jr. and Russians that before that meeting, that was a planning meeting for the Trump Tower meeting, that would be news to a lot of people and after Giuliani said that in his interview with CNN, he then tried to walk it back in a subsequent interview. Listen.


RUDY GIULIANI, PRESIDENT TRUMP'S ATTORNEY: He said there was a meeting with Donald Jr., with Jared Kushner, with Paul Manafort, with Gates and possibly two others in which they, out of the presence of the president, discussed the meeting with the Russians. We checked with their lawyers, the ones we could check with, which was four out of six, that meeting never ever took place. It didn't happen.

(END VIDEO CLIP) PHILLIP: So first Giuliani indicated that there was a meeting that happened, but he talked to people saying that the president wasn't present for it. Then he's saying later in the day the meeting didn't happen at all. All of this leading to only one conclusion really which is that Giuliani might have confused the situation even more with all of his appearances on the air yesterday. A source telling CNN that that wasn't at all coordinated with the White House press shop, not entirely surprising but certainly indicative of a White House perhaps trying to distance themselves a little bit from all of that chaos, Poppy.

HARLOW: Certainly seems like it. Abby Phillip at the White House. Thank you very much.

This morning, new indicators show North Korea could be in the middle of building new missiles contradicting the president's claim that the regime is no longer a nuclear threat. We will have the latest on that.

Also shutdown showdown? Not quite. The president's repeat threat of a government shutdown not exactly shaking Republicans.

And FEMA has its own emergency and new report uncovers a major sex scandal, the agencies ex-head of HR resigning. We have the latest.


POPPY HARLOW, CNN ANCHOR, NEWSROOM: Welcome back. This morning, images from US spy satellites along with other evidence now show North Korea appears to be building new missiles.

This is according to a story that "The Washington Post" broke late last night. Officials familiar with the intelligence say work is underway on one or possibly two intercontinental ballistic missiles. This is happening as denuclearization talks continue with the United States. So, the timing is significant.

And the president said a day after his summit with Kim Jong-un "there is no longer a nuclear threat from North Korea."

Let's go to Will Ripley. He has reported inside of North Korea nearly 20 times. Will, I think it's important note you witnessed - you traveled far inside of North Korea, you witnessed the supposed destruction of one of their nuclear testing sites earlier this year.

So, when you look at this new reporting, it shows us that North Korea has not put the brakes on when it comes to its weapons program and you note Kim Jong-un never said he would.

WILL RIPLEY, CNN CORRESPONDENT: And why would he at this point when he doesn't have anything in writing even forcing him to declare the inventory of nuclear weapons that he possesses.

And, frankly, he has a huge defense industry, tens of thousands of people who are employed developing these missiles and he's going to keep them working until the very last moment, not to mention the fact that his government believes that nuclear weapons are really the key to his survival and his regime's survival, Poppy.

HARLOW: We have not heard anything from the White House commenting on this "Washington Post" reporting, but we did hear from Secretary of State Mike Pompeo in his Senate testimony last week.

And when he was pushed by lawmakers on where's the progress, how can you assure Americans on all of this, sort of these promises on denuclearization, he said "we have not been taken for a ride."

Does this reporting change that?

RIPLEY: Well, the US knows that North Korea is continuing on with its nuclear program. What they are looking at as an encouraging sign is that they haven't launched a missile since November of last year.

And the dismantlement apparently of the Sohae satellite launching site and what we supposedly saw the destruction of the Punggye-ri nuclear site, although a lot of experts dispute whether that really affected the sites as all, whether they could re-dig those tunnels, the US knows that, at this point, they're in the early stages and this is going to be a very long process.

And until they get a commitment from Kim Jong-un to start giving up these warheads and these missiles, the work is going to continue there. And they just have to basically learn as much as they can about the size and scale of his arsenal before North Korea declares the inventory, so they can catch the North Koreans in a lie if they try to say that they have less capability than they actually do.

HARLOW: There's also something very significant sort of deep down in this reporting from "The Washington Post" and that centers around the enrichment of uranium and what this intelligence tells us on that front. What is it?

RIPLEY: Well, we know that they are continuing to enrich uranium at facilities. And they did recently make upgrades as well. They're believed to be making upgrades to the Yongbyon nuclear reactor.

So, the fuel to put in nuclear warheads North Korea is still producing, which shows that they're continuing to expand their capabilities. So, even though they're not testing, their production capabilities - and US officials have publicly confirmed this - their production capabilities have not only not changed, but they're increasing at the moment.

HARLOW: You know the regime well. I mean, you are one of the few reporters who has been inside so many times. Do you think this is a strategic play by the regime to say, see, we can still do it, we're still doing this?

RIPLEY: I mean, every conversation I had with North Korean officials over the last three-and-a-half years, they said repeatedly they would never give up their nuclear weapons.

So, frankly, I, like many people who study the Korean Peninsula, were skeptical that the Singapore summit would lead to this rapid denuclearization that some administration officials had publicly stated they hoped would happen. In a matter of months perhaps. That simply just isn't realistic.

HARLOW: Will Ripley, thank you for the reporting. We appreciate it as always.

President Trump says he is willing to meet with Iran's leaders without preconditions whenever they want. But this morning, an Iranian lawmaker says he is not worried about that because the president's withdrawal from the Iran nuclear agreement has done so much damage, it's - in his words - worse than any possible pre-condition.

The president's offer is an abrupt shift in his tone. It comes eight days after he tweeted in all caps this.


Let's go to the State Department. Our senior diplomatic correspondent Michelle Kosinski joins me now.

That was 8 days ago.


HARLOW: Then late yesterday, the president says, yes, I'm open to meeting with Iran without any conditions. What changed?

[09:20:04] KOSINSKI: I mean, he was threatening them with the ultimate punishment for Iran's continued bad behavior. Same with the secretary of state.

Mike Pompeo, days ago, was encouraging Iranian protesters, encouraging people to get rid of their government, calling Iran's leaders thieves basically. And now, he is agreeing with the president that, sure, let's talk if you want to. Listen.


MIKE POMPEO, SECRETARY OF STATE: If the Iranians demonstrate a commitment to make fundamental changes in how they treat their own people, reduce their malign behavior, agree that it's worthwhile to enter into a nuclear agreement that actually prevents proliferation, then the president said he is prepared to sit down and have a conversation with them.


KOSINSKI: OK. So, there seems to be a lot of inconsistency here. It's very similar to what went on leading up to the summit with Kim Jong-un where you had all of these threats and rhetoric and then, OK, let's sit down and talk anytime you want. Oh, no, no, no, let's not sit down and talk anytime you want, let's make sure you do something historic. OK you don't have to do anything historic, let's just talk.

I mean, it just goes back and forth. Remember, at one point, President Trump called Kim Jong-un things like honorable and smart.

Are we going to see something similar to that here? It is absolutely unclear where this goes. What we know is that Iran is now working with the Europeans to try to salvage anyway possible the Iran Nuclear Deal.

Iran has said now that there are no negotiations with the US now that the US has left the Iran Nuclear Deal.

You could say there is no risk in talking. If both sides want to talk and come to the table with the same kind of mindset, great. Good things could come out of that.

The real risk, though, is when the US sits down with dictators and murderers and the mindset is nowhere near the same, and then you hand these people wins or approval or let them get away with things, as we have already seen with Kim Jong-un and Vladimir Putin, Poppy.

HARLOW: Michelle Kosinski, thank you for the reporting from the State Department this morning and putting it all in context for us.

President Trump's tactic to get border wall funding, threaten a shutdown. But will that negotiating move work this time? Did he really mean it? Is he bluffing?

Also, we're moments away from the opening bell on Wall Street. Stocks look like they will open pretty flat today. All eyes will be on the tech sector. Apple is set to release its earnings after the market closes today. And it could make Apple be the first trillion dollar company in the United States if all goes well. We'll keep an eye on it.


HARLOW: All right. Welcome back. So, the president is repeating his shutdown threat over border funding. Many Republicans are not biting, though. Listen to Republican Senator Kennedy of Louisiana.


SEN. JOHN KENNEDY (R), LOUISIANA: Look, I'm a big believer in hitting things head on. And if the president wants to shut down the government, that's his prerogative. I think it would be a mistake. And I don't think it's going to be necessary.


[09:27:26] HARLOW: Also, Republican Senator John Thune called the threat "a negotiating tactic." Leader Mitch McConnell flatly said we will be funding the government in a timely manner.

With me now Rachael Bade, our political analyst, and Perry Bacon, senior political writer at "FiveThirtyEight". Nice to have you both.

Rachael, at this point, do Republicans just not believe the president? Do they write this off as bluff? RACHAEL BADE, CNN POLITICAL ANALYST: Listen, I think Republicans know

that this is not a bluff on the president's part. The question here is about timing. And that's why you're seeing Hill Republicans downplay this and saying that there's not going to be a shutdown before the midterm elections, that the president is well aware that that could really upend their battle to keep the majority and cost them the House and the Senate.

There was a meeting at the White House where Speaker Paul Ryan and Majority Leader Mitch McConnell thought they got the president's approval for a plan to basically kick any shutdown fight over a wall until after the election.

They want to just get a couple of spending bills done before the election and not deal with the border security issue because they know it's going to be contentious until after the midterms.

But there is a conservative constituency that thinks that a shutdown fight before the election is a good idea. I will say this is a minority of the Republican Party.

And, again, you saw "The Wall Street Journal" today calling out the president and saying, "Does Trump even want to keep the majority in Congress?"

And the reason they're asking that is because they think a shutdown before the election is a terrible idea.

HARLOW: It's a good point. But, Perry - and I'm glad Rachael brought up the timing because everyone knows there will be a funding fight, but Republicans would prefer that to be, say, in December.

But in Trump's tweets threatening the shutdown, he didn't lay out a timeline, right? And I wonder if you think that he wins either way, right? He wins if he gets the funding, right, following through on a campaign promise, and he wins at least optically if he can point to Congress and doesn't get the funding and says, it's all them, it's the establishment, Congress can't get anything done. How do you see it?

PERRY BACON, SENIOR POLITICAL WRITER, "FIVETHIRTYEIGHT": I don't agree. I mean, he campaigned on this wall. And now, he's had two years where his party controlled the House and the Senate and the wall funding has not happened.

I mean, if you listen to McConnell and Ryan and the other Republicans' comments, they're kind of ignoring the president. They have been doing this for about year-and-a-half now.