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Paul Manafort Trial Continues; President Trump Once Again Calls Russia Investigation a Hoax; China Strikes Back in Trump Trade War. Aired 3-3:30p ET

Aired August 3, 2018 - 15:00   ET



BROOKE BALDWIN, CNN ANCHOR: A woman known as the Manhattan Madam.

Investigators appear to be interested in Kristin Davis' ties to longtime Trump adviser Roger Stone, who she has known for a decade.

Shimon Prokupecz is all over this for us today, our CNN crime and justice reporter.

And, Shimon, how are these two connected?


Really, this case has everything. Right? Today, we are talking about madams. Yesterday, we were talking about ostrich jackets. There really is everything here. It's really not clear exactly why the special counsel would be interested in her, and, as you said, she is a longtime friend, associate, close friend of Roger Stone.

He is the godfather to her son. So there are a lot of questions, and it certainly seems that this has to do with some of Roger Stone's more personal life, perhaps maybe his finances. We know that that's something that the special counsel has been looking at. Others who have come before the special counsel, there have been others who have been asked questions about Roger Stone, but exactly why her, we don't know.

Roger Stone, obviously, he's the colorful person that he is, issued a statement in response to this. She was at the special counsel on Wednesday.

And here is what Roger Stone had to say about it. He said that: "Kristin Davis is a longtime friend and associate of mine. I am the godfather to her 2-year-old son. She knows nothing about Russia collusion, WikiLeaks, collaboration or any other impropriety related to the 2016 election, which I thought was the subject of this probe."

He then said that he understands that she appeared voluntarily. "I am highly confident she will testify truthfully if called upon to do so."

We don't know if she actually testified before the grand jury. We believe, though, that she just met with special counsel, and, again, really this story, this investigation just has everything. As to what her role here is and what exactly the special counsel wants from her, we really don't know.

BALDWIN: Shimon Prokupecz, thank you so much for the reporting piece of this.

Let's get some legal analysis.

With me now, Joey Jackson, CNN legal analyst, and Bob Bianchi, who is the former head prosecutor in Morris County, New Jersey.

So, gentlemen.

Joey, let me start with you.

So the fact that Mueller's team met with Davis this week, this Manhattan Madam, as she is known in a previous lifetime of hers, what does your gut tell you about what they're looking for as a lawyer?

JOEY JACKSON, CNN LEGAL ANALYST: Brooke, always a pleasure.

And always a pleasure with you, Bob Bianchi, too.

Listen, here's the reality. The reality is, is we can't look at this in isolation. You have to look at this in the broader context. Right? We have this probe that is going on by the special counsel. And what shoe has not dropped? The shoe relating to, I won't say collusion, because it's not a crime, conspiracy, right, which is the agreement to commit an illegal act.

And if you do an illegal act with a foreign power, it's problematic. How does all this relate? Well, Stone happened to be an adviser, strategist to the campaign, and Stone apparently was in contact with a Twitter handle that was tied back to the Russians and Russian intelligence officers.

So it demonstrates to me that the special counsel is focusing on Stone. And, remember, Brooke, we cannot look at this interview in isolation. Who else were they looking at? They were looking at Andrew Miller, another associate of Stone. They are looking at other people who are of, relating and concerning Stone.

So what it means to me is they are trying, that is, the special counsel, to get that nexus to Russia. What does Roger Stone know and who would know what he knows, but people familiar with him, his associates and people who have an understanding of his M.O., modus operandi, and that would be, of course, someone who you are the godfather to your 2-year-old son.

Finally, Brooke, it should be noted the special counsel asked the question as to whether he was actually the father of the son. And so it demonstrates to me that the special counsel is trying to establish that link to Russia, so that once and for all we can put to bed the question who if anyone on Trump's campaign was colluding -- excuse me -- conspiring with Russia to interfere with the election.

BALDWIN: So, it's what she knew, if she knows anything, that is germane to what question you pose.

And, so, Bob, over to you. I was talking to this documentarian last hour, who did this whole documentary on Netflix on Roger Stone. And so they have all this footage that is sitting on the cutting room floor.

And he was saying the most recent part of the arc of the relationship that was Kristin Davis and Roger Stone was the fact that she was his personal assistant, his clerical assistant, and that a lot of information would have come through her.

That said, Bob, the fact is that she went in to talk to the Mueller team on Wednesday voluntarily. What would that tell you?

ROBERT BIANCHI, FORMER PROSECUTOR: Brooke, great to be on with you and with Joey. Always a pleasure.

It tells me that there is disaster, storm clouds looming over Mr. Stone. Look, in addition to what Joey had indicated, and I agree completely with his analysis, you also have Russians that have been indicted, you have got this Guccifer 2.0 that he is actually, Roger Stone, in contact with.


And as a former prosecutor that puts the case together, you don't just interview witnesses that you think may or possibly could have information. That gets done. But to bring her in means that there was something that they were specifically looking for.

And the thing that I love about all this Russian collusion/conspiracy investigation is, the last person that you want if you are the target of an investigation coming forward is your attorney, your accountant, your personal assistant/secretary. And that's what she is.

And we have all of that here because, these people are a repository of data. They know where the bodies are buried. They know where all the skeletons are. So, I don't think that I -- I agree with Joey. If you take the overall arching look at this, she had information that was relevant to Russian interference with the election.

And if, in fact, it's true that they are going to call her into the grand jury, despite what other people may opine, prosecutors just don't put random people into a grand jury. They do it for a specific purpose.


BIANCHI: So I see the evidence mounting here in a very at least poor way with respect to Mr. Stone and potentially others.


So she may know something that they want to get their hands on that they know that we certainly don't know, but I'm wondering, Joey, back to your last point about how this has gotten personal and they are going into Stone's personal life and they're asking questions about this woman's kid who he is the godfather, but they are asking could he be the father, and why is that at all related to conspiracy in Russia?

JACKSON: I think it's absolutely related.

And follow me here, right? What prosecutors do is, you follow the money and you follow the family. What are you looking for? You are looking for ties. You're looking for links. You're looking at associates.

Now, you might then say, as the incredible journalist you are, this is a 2-year-old child. What do you mean associates? What associates would a 2-year-old have? Well, slow down. Here is the reality. Two- year-olds, right, need to be fed, need to be clothed. They have trust funds established for college education.

That leads us back to the money trail. Where is the money coming from? Who is funding the child, if it is your child? And so, therefore, I think links in terms of money and everything else are highly relevant and critical to who you are dealing with.

Who knows where that money is. And you know, Brooke, when prosecutors follow the money they always come to things. Last point, and I will say this, when you investigate someone, it could be about Russia. Obviously, this deals with that, but nothing is off-limits. You see that as we look at the Manafort prosecution, right, and his efforts to thwart that by saying, what does this have to do with Russia?

When you start looking into someone, everything else is fair game. I do think it's relevant and probative to inquire about the relationship to the child, and I do think that it could have a nexus to Russia. You never know, depending upon who is supporting the child, where the money is coming from and what is the connection between him and Roger Stone.


And, Bob, I saw you nodding with what Joey was saying.

Let me ask you, last question. I know you opened by saying storm clouds are brewing over -- around Roger Stone. So you have Kristin Davis now. You also -- as Joey mentioned, you have this close Stone aide, Andrew Miller, who had been ordered to testify in front of the Mueller grand jury, right? He had been fighting it.

So, if you are -- put yourself in Roger Stone's shoes. What are you thinking right now?

BIANCHI: I'm thinking that I need to get to the U.S. attorney's office as quickly as possible, sit down and try to have what we call a proffer session with them, ask them whether or not they are interested in any level of cooperation if Mr. Stone, in fact, has information.

This is what U.S. attorneys and prosecutors do. It can sound kind of bad, but what they're doing is squeezing the people that have relevant data and information. And Mr. Stone is a hot flash here because he was in contact with individuals who were leaking information, hacking into servers, Guccifer 2.0, WikiLeaks.

They are not looking at these things as coincidences. They are looking at it and saying, was somebody else involved in this higher up the food chain? So if I were representing him, I would de-load -- download all the data he's got. I would go to the U.S. attorneys and say, hey, guys, are you interested?

BALDWIN: Bob Bianchi Joey Jackson, gentlemen, a pleasure. Thank you so much.

BIANCHI: Thank you, Brooke.

JACKSON: Thank you.

BALDWIN: Still ahead here, a suspected Russian spy working inside the U.S. Embassy in Moscow, not for one year or two, but for more than a decade.

Details on how she was caught and what information she had access to.

Also ahead, China strikes back, threatening a new round of $60 billion in tariffs as payback for President Trump's latest escalation. So we will talk about whether the trade threats are enough to derail an otherwise booming economy.

And, later, a black woman trying to help the homeless is instead accused of stealing, and police show up to question her. We will talk to her live about how this all could have happened.

You're watching CNN. I'm Brooke Baldwin.



BALDWIN: Here is a quote: "Our democracy itself is in the crosshairs."

That is the urgent warning from the secretary of homeland security about Russia's interference in U.S. elections, but President Trump is downplaying the role of the Kremlin, dismissing the threat from his own intelligence chiefs, once again calling the Russia investigation just last night a hoax.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: In Helsinki, I had a great meeting with Putin. We discussed everything. I had a great meeting. I had a great meeting.


TRUMP: We got along really well. By the way, that's a good thing, not a bad thing. That's a really good thing.

Now, we're being hindered by the Russian hoax. It's a hoax, OK? (END VIDEO CLIP)

BALDWIN: Those comments coming mere hours after the heads of the FBI, Homeland Security, and national intelligence warned the threat is real from Russia, all of them saying the interference is still happening.



DAN COATS, U.S. DIRECTOR OF NATIONAL INTELLIGENCE: The intelligence community continues to be concerned about the threats of upcoming U.S. elections, both the midterms and the presidential elections of 2020.

KIRSTJEN NIELSEN, U.S. SECRETARY OF HOMELAND SECURITY: Our democracy itself is in the crosshairs.

CHRISTOPHER WRAY, FBI DIRECTOR: Make no mistake, the scope of this foreign influence threat is both broad and deep.


BALDWIN: With me now, CNN contributor Frank Bruni. He's an op-ed columnist for "The New York Times."

Frank Bruni, thank you for coming back in.

His intelligence chiefs just about this time yesterday could not have been more crystal clear. And to see Trump later that night refer to it as a hoax, it's almost like two different foreign policies from the same White House.

FRANK BRUNI, CNN CONTRIBUTOR: It's a tug of war is what you're seeing within the administration.

I think it's been going on for a long time. Donald Trump is all over the place, it is the Russians, it isn't the Russians, it's a 400-pound person, it's Voldemort. We have heard almost everything.


BRUNI: The people around him, the more kind of responsible, steady people around him, the people who were at the White House Briefing Room yesterday in that extraordinary assemblage that you saw, they get this and they're steady on it and they're certain about it.

I guarantee you that Donald Trump did not ask them to go out and do that, but the good thing is, they would never have done that without his permission. So for that moment in time -- and it means there are moments in time -- he did understand the gravity of this, he did understand that his White House, his administration has to be sending a message to the American people that he gets it.

But, of course, he gets it momentarily and then later on he doesn't get it. BALDWIN: Hang on a second. You're saying you don't think he sent them out there, but it certainly would have had to have his blessing to do that. Then whose idea would that have been?

BRUNI: I don't think that was his idea. I think it was the idea of those officials, who, for that moment in time, got the president's permission, convinced him, we need to be unwavering, we need to send a strong signal.

They have read the news reports. They have listened to conversations like ours. They know that there are reasonable Americans who have serious doubts about whether this president is compromised about Russia, about why this president can't say that there was Russian interference and that it's an enormous problem for our democracy.

And I think for a moment in time they were able to communicate to the president this administration needs to make a strong statement. And just visually, that was an unbelievably strong statement. You had the national security adviser, the director of national intelligence. You had a lineup of people.

BALDWIN: Which is so different normally from various guests who come on at the beginning of a briefing who stand there and filibuster and almost they hope to be this bright shiny object to deflect off what needs to be addressed in the briefing.

BRUNI: Right.

BALDWIN: So this next Monday will mark three weeks since Helsinki. I know. Three weeks. I know.

And the director of national intelligence, Dan Coats, stood up there and fielded a question, and it is clear to everyone in the room and everyone watching that he still doesn't know what happened between Trump and Putin. Watch.


COATS: I'm not in a position to either understand fully or talk about what happened at Helsinki.


BALDWIN: Not only did he not -- he wasn't able to answer. He then deferred to -- John Bolton comes up, and John Bolton stands up there and quotes Putin.

BRUNI: Right.

BALDWIN: Alarm bells being raised? I mean...

BRUNI: I don't think we are ever going to know exactly what happened in that conversation.

BALDWIN: We -- what about the director of national intelligence, though? BRUNI: Well, A, I don't think they have been able to get a briefing from Trump that they trust.

Here is the thing. I mean, they can sit down with him. He can say, here is what we talked about.

I'm not sure any of them -- because I think a lot of them are very seasoned people, I'm not sure any of them think for a moment they are getting the full story from the president. And I don't see that to imply something nefarious went on. Something nefarious may have gone on, we don't know, but they work for a man whose unsteadiness they see minute by minute, hour by hour.

And they know he cannot be trusted to remember fully what he said, to be fully honest about it. How often do we talk about this president's strange relationship with the truth?


BRUNI: That strange relationship with the truth is not only when he is at a microphone speaking to the American people or speaking to reporters. It's throughout the day.

BALDWIN: Frank Bruni, thank you so much.

BRUNI: Thank you.

BALDWIN: Thank you.

The $15,000 ostrich coat, the $18,000 python jacket, the stories of his lavish lifestyle setting the stage.

Now prosecutors are diving into the heart of this case, the details about Paul Manafort's alleged bank and tax fraud. Day four of this trial is under way, and we are still waiting to hear from the star witness from the prosecution's side, Manafort's former right-hand man Rick Gates.

Manafort's legal team has signaled they plan to make Gates a key portion of its defense, trying to blame Gates for Manafort's alleged crimes.

And we're hearing he could be called to testify as early as this afternoon.

So our senior justice correspondent, Evan Perez, is with me now in Alexandria, Virginia.

Talk about what you have seen today.


EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, Brooke, we're hearing the heart of the government's case, as you mentioned. These are two of Paul Manafort's accountants. These are people who prepared his income tax returns. And they both testified that they had no idea that these entities, these offshore shell corporations that he formed in Cyprus and in other countries, were, in fact, controlled by him, as the government says, that she is were the sources of money that he was getting paid from Ukrainian oligarchs.

They said that they thought these were clients. And so they saw money coming from these overseas accounts, and they just thought that these were client accounts that were essentially paying Paul Manafort.

The government has made this a key point in their case. They say that Paul Manafort should have declared these -- these accounts because he controlled them, and under U.S. law, he is supposed to declare these foreign bank accounts on his taxes.

And we also heard from one of the first -- this is the first of five witnesses who have been given immunity to testify against Paul Manafort. Cindy LaPorta, who is one of his accountants, she talked about how she saw some very suspicious, some very strange-looking loans, one for $900,000, $1.5 million was another one, and she didn't see all the documentations for these loans, which raised concerns for her.

We also heard that -- from one of his other accountants that he was being asked by Paul Manafort to assure a bank that one property that he owned on Fifth Avenue, Trump Tower property, was being used as his personal residence, when, in fact, it was being used as a rental property. Of course, that affects his taxes.

So according to the government, this is the key part of this case, right, that Paul Manafort lied to his accountants, lied to his bookkeeper, lied to the FBI.

We briefly heard, by the way, Brooke, from Paul Manafort's main defense lawyer, Kevin Downing, today in court, and he really kind of focused on the complications of Paul Manafort's taxes.

I think what we're going to get from them, from the defense, is, look, Paul Manafort was a wealthy guy, his taxes are really, really complicated. Jurors, don't buy what the government is telling you. If there were mistakes made, it's because it's so complicated.

BALDWIN: Evan Perez, again, waiting for Rick Gates to testify, thank you so much for the update on all things Paul Manafort.

As the unemployment rate falls again, China retaliating in the president's trade war. Look at the numbers today, up 135 points here with 40 minutes to go. Here is the dramatic move, and we will ask how far will this go, economically speaking.

And new details on the accused Russian spy who got close to everyone, from Republicans to Treasury officials, how she bragged about her Russian ties when she had a little bit too much to drink. We will talk with a former CIA agent about that ahead.


BALDWIN: Breaking news on that 12-year-old Chinese tourist that appeared to have been abducted from that Washington, D.C. airport.

Guess what we have just -- we have learned she's been found. She was found today in the New York City borough of Queens. Police say she is safe, that she is now in the custody of her parents. That's all we know so far.

I know there is all kinds of questions out there, so you know investigators are on this. And as soon as we get updates, we will pass them along.

Let's talk about the economy, though, new unemployment figures out today, and the positive news, the rate has dropped to 3.9 percent. That is nearly an 18-year low, but economists do point out that wages are rising at a much slower rate than they have in previous economic booms so far.

The threat of a trade war has not slowed economic growth, something President Trump was touting at that rally last night in Pennsylvania.


TRUMP: Manufacturing, consumer and business confidence has reached the highest level in the history of our country.

I would say that's pretty good.


TRUMP: Confidence is a good thing. Having confidence -- what do you think, having confidence is good, right? If you have confidence and you know what you're doing, you can't lose.

Now that we have the best economy in the history of our country, this is the time to straighten out the worst trade deals ever made by any country on Earth at any time.


BALDWIN: Here are the concerns. There are worries that the president's tariffs could put the brakes on growth. The administration is threatening to raise tariffs from 10 percent to 25 percent on $200 billion of Chinese imports.

Today, China retaliated, saying it would add its own tariffs on $60 billion of U.S. imports.

CNN went to Spartanburg, South Carolina, where a lot of jobs are tied to the BMW plant there. About 80,000 cars made at that plant are exported to China. And one Republican county commissioner who supports President Trump says he is worried about a trade war.

(BEGIN VIDEO CLIP) DAVID BRITT, SPARTANBURG, SOUTH CAROLINA, COUNTY COMMISSIONER: I'm extremely concerned because the impact, the ripple effect is, it goes beyond BMW and the automotive industry. These tariffs could put the foot on the throat of growth and stop it. We don't need that.


BALDWIN: Richard Quest is with me now.

And, you know, so the -- the unemployment numbers continuing to go down, wonderful news, the jobs -- the wage not -- not as fast as it should be.

I mean, what's going on?

RICHARD QUEST, CNN CORRESPONDENT: Well, that is a slight concern, not only because Americans want to have higher wages.


QUEST: But at this point --