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Gates Returns to Stand To Testify Against Ex-Boss Manafort; Tight Race In Ohio's Traditionally Republican 12th District. Aired 10- 10:30a ET

Aired August 7, 2018 - 10:00   ET


[10:00:09] POPPY HARLOW, CNN ANCHOR: Top of the hour, good morning, everyone, I'm Poppy Harlow in New York. Right now the former business partner, former protege and the former co-defendant of President Trump's former campaign Chief Rick Gates is back on the stand.

He is the prosecution's star witness in the bank fraud and tax evasion trial of Paul Manafort and likely faces several more hours of direct examination before what is sure to be a withering force by the defense. Yesterday Gates describe how he and Manafort. He says together had 15 foreign bank accounts from the IRS and admitted to stealing hundreds of thousands of dollars from his boss, Paul Manafort.

And speaking of flipping today, a ruby red district in Ohio may be the latest to elect a Democrat in a special election. We will get to that in grace in a moment. But first let's go outside of the federal courthouse in Alexandria, Virginia, on the trial of Paul Manafort.

Joe Johns is here with an update. Good morning, Joe.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning Poppy, that's Rick Gates back on the stand, taking questions from prosecutors, laying out the government case. They say it is illegal conduct that goes all the way from 2008 to 2015. That's seven years.

Meanwhile, I have to remind you that in 2016, Mr. Manafort took over as the campaign chairman for the Trump campaign, Rick Gates was right there beside him as his deputy. So what did we learn so far? Among the most important testimony is his testimony from Rick Gates his testimony that there were 15 foreign bank accounts that were maintained at the direction of Mr. Manafort, that they knew what they were doing was illegal.

That's very important because these are charges in the indictment against Paul Manafort. The defense has suggested and quite frankly that there are number of different elements that have to be meet before there's a requirement to report those foreign bank accounts.

But according to Gates, both men knew what they were doing is still legal. So that's the top of it, and after that, of course, we're going to have prosecution -- we're going to have the defense doing its cross-examination, and as you said, it's expected to be a very tough cross by any standard. Poppy, back to you.

HARLOW: Thank you very much, Joe Johns. Keep us posted.

Let's talk about what is happening and what is happening now. Gates is back on the stand. Our Justice correspondent Jessica Schneider is here, former U.S. attorney Greg Brower joins me, and CNN Legal Analyst and former Federal Prosecutor Shan Wu, who also previously represented Rick Gates.

So just -- Shan for our viewers lay out your representation previously of Rick Gates so it's all on the table.

SHAN WU, CNN LEGAL ANALYST: Right. We had represented Rick from the time that he was indicted to just before he pled guilty. So the guilty plea and any cooperation I was not involved in. And of course, anything I talk about is all on the public record, nothing confidential or privileged.

HARLOW: Understood. So building on that, what do you make Shan of the prosecution's strategy of laying out the crime, serious crimes that Rick Gates now admits to, just putting it all out there and not waiting for the cross and the defense to bring this out?

WU: That's a good strategy. It's by the book. The prosecutions wants to put out any dirty laundry before it gets revealed as a surprise to them. So this is the thing they'll normally want to do. They'll want the cooperating witness, as well as any non-cooperating witness to be up front with any issues that the defense might to use against them.

So that fully expected and theoretically will add credibility to Gates' testimony because he's willing to admit other things he's done wrong up front rather than being caught at it by the defense.

HARLOW: Jessica. We heard yesterday a lot of color from inside of the courtroom that Manafort was staring straight at Rick Gates. Some described it as staring with daggers the entire time. I mean, what can you tell us about that, how the jury might have responded?

JESSICA SCHNEIDER, CNN JUSTICE CORRRESPONDENT: Well, this was a no- holds-barred testimony. And we only saw about 90 minutes of it yesterday, Poppy. We are in for another three hours of direct examination.

And that's exactly right. Paul Manafort was really staring down Rick Gates as he was on the witness stand. What's interesting to note, Rick Gates, we know, never looked at Paul Manafort. He avoided eye contact. He really treated this like he was just there to do his job, to tell the jury what he promised prosecutors he would.

So who knows how the jury's reading into this. I mean, Paul Manafort's been sitting there silently throughout the trial that started just about a week ago. So who knows how the jury's reading into this.

[10:05:01] But Rick Gates is giving so much information here to the jury about exactly how this scheme played out with Paul Manafort, that he was an active part of. And also which is interesting here maybe, Poppy, is what the jury isn't hearing because Rick Gates has met with prosecutors 20 times already. They've agreed not to bring additional charges. And Rick Gates was an integral part of this operation with Paul Manafort but of course he was also with the Trump campaign.

And there were a few contacts that have come out with Russians during the campaign. And we know that Rick Gates has admitted that in September and October of 2016. He had actually talked to Konstantin Kilimnik, I'm probably getting pronouncing the name wrong, But he had talked to them and he with the Russian spy agency.

He's denied it, but that's information that the prosecutors are getting that the juries not going to hear. Because of course this trial can't mention Russia, but this is all things prosecutors are using, perhaps for future indictments.

HARLOW: That's a good point and I think Greg that's important to note. I mean, this is not a trial about Russia or President Trump. This is a trial about, tax evasion and bank fraud and these allegations against Manafort. But you also can't ignore the fact that Rick Gates and Paul Manafort were integral to the Trump campaign for the presidency.

I mean, if you look back at this August, 2016, interview that Kellyanne Conway, the counselor out the President did with PBS. Listen to what she said.


KELLYANNE CONWAY, FORMER TRUMP CAMPAIGN MANAGER: Campaigns are really for combining the message, the messenger, the delivery, the opportunities, the ground game, the data operation, all of which is really coming into place. And I have to credit Manafort and Gates for putting so much of that together.


HARLOW: Assuming it's not a crime to unwittingly hire at least alleged tax evaders and admit it on the part of gates. Greg, does the President truly have nothing to fear here other than bad optics?

GREG BROWER, FORMER U.S. ATTORNEY: No. I think there's potentially a lot more than that. And all of that, of course, is in the background of the investigation. As you mentioned, Poppy, it's not something that this jury is going to hear about. It's not a focus of these particular charges in this trial.

But it's all part of the background. And I'm assuming that the Mueller team wants to get this very narrow case out of the way, and then moving forward but with Rick Gates and potentially in future even Paul Manafort as a cooperating witness for further cases.

HARLOW: Jessica, back to you in terms of what is expected today and how the cross will go. Because the defense now -- I mean you're a lawyer, you know how this goes. The defense now knows that from the testimony from Gates yesterday and the prosecution is direct that they're going to lay out a lot of the bad, the illegal stuff that Gates now is admitting to doing.

So how do they cross him in the most effective way since they won't have these bombshells in the cross because they're already out there?

SCHNEIDER: Well, that's exactly right. And that was an effective play by prosecutors. Of course, you want to get all of that potentially bad information out during the direct examination so you can control it, so the jury can hear it.

So they've already done that. Rick Gates here admitting that, yes, he lied on credit card applications, on mortgage applications, and then he falsified some of those expense reports to then get the hundreds of thousands of dollars from Paul Manafort.

What the defense is going to do here, they're going to still hammer home on all of these lies that Rick Gates told. And the core of their argument, they told this to the jury during opening statements, they said, listen, we're going to show you that Rick Gates embezzled millions of dollars from Paul Manafort.

Again, something the prosecution has already touched on but that the defense will delve a lot more deeply into. And then Poppy, what they're probably also going to focus on is they're going to say, look Paul -- Rick Gates has admitted here, he has pleaded guilty to lying to federal investigators.

Why should you as the jury believe an admitted liar here? Maybe he's lying to you. So again, they'll cast some doubt on Rick Gates' overall testimony by pitting him as this admitted liar, something he's been charged with and pleaded guilty to.

HARLOW: Shan, what would you do if you were cross examining Rick Gates today?

WU: It needs to be a surgical cross-examination. It's got to be more than just generally bloodying him up. You've got to hit him with stuff that he has to admit to. For example, Mr. Gates, you knew how to hide things from Mr. Manafort, didn't you? And he's going to be stuck with that answer because it's the perfect cross exam question is he has no choice but to admit. It's got to be stuff like that. It can't just be generalities.

HARLOW: Right. Greg, what about you? What would you do on the cross?

BROWER: Yes, I agree with Shan. If the prosecution does its job, there will be nothing left for the jury to be surprised by. Nothing that the jury hasn't heard in terms of negative information about Rick Gates, his crimes and past lying.

[10:10:01] And so, I think what the defense is left with really is nothing more than reiterating and getting Mr. Gates to repeat understand over and over that he lied repeatedly. And then in closing arguments just try to emphasized to the jury that this admitted liar, you cannot believe him.

But again, if the prosecution does its job, and this is prosecution 101, the jury will not be surprised by anything they hear during the cross-examination.

HARLOW: Thank you all very much. Shan, Greg, Jessica, an explosive day ahead, that's to say the least in this courtroom in Virginia. Thanks.

Still to come, the President is being urged to stop tweeting about the 2016 Trump Tower meeting. By whom and why? Also this.


JASON CARROLL, CNN NATIONAL CORRESPONDENT: Wasn't about both candidates but about the President.

MARA PROTICH, SUPPORTS O'CONNER: More about getting democratic back into office.


HARLOW: A pivotal special election today in Ohio. Coming down to the wire. And what it means for the midterms. Why is what happens today in Ohio 12 so important in November?

And Serena Williams putting it all out there for all mothers, what she said about feeling like a bad mom. The discussion ahead.


[10:15:27] HARLOW: Mr. President, please don't tweet about the Trump tower meeting. That's not from me. That's a message from his top advisers including, according to our reporting by Dana Bash. So far today he is listening. Will it last?

Caitlyn Collins joins me now. Here in New Jersey, close to the President. But he's not exactly answering questions right now. He's on vacation at his golf resort. But let's talk about this reporting that apparently his team, legal team his so concerned about at least one of the tweets this weekend, they've asked him to stop writing altogether about this meeting.

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: And Poppy, that's not exactly surprising given what the President tweeted this morning and just what a news cycle it created because it was his most explicit acknowledgment yet that meeting between his son and Russians was in Trump Tower, was about getting damaging information on Hillary Clinton and not about Russian adoptions, as the President's son said in a statement that the President himself dictate initially.

There are several other tweets, as well, that we know or are likely have concern to President's legal team. That one from last week where he urged Attorney General Jeff Sessions to end the Mueller investigation even though Jeff Sessions has recused himself from this. And this comes amid "The New York Times" reporting that these tweets have become a focus for the special counsel, Robert Mueller, something that he's looking at, what the President has tweeted about Jeff Sessions, about James Comey, and the like.

Of course, Poppy the President can get this advice about tweeting. He can be told not to tweet about certain things because they believe it's giving too much oxygen to a story like that. But this is the President's Twitter feed. He's been advised by people in the past and by his previous lawyers not to tweet about things like that and has done so anyway. We'll see if this is any different than that.

HARLOW: Right. Well, it's 10:17 in the morning, and there haven't been any yet. So, we'll see what happens. But Kaitlan, before you go, I mean the back and forth, the back and forth over whether or not the President is going to sit for the interview with Mueller's team, we know Mueller wants to do it, at least is insisting now on asking some obstruction-related questions, face to face with the President, so they can have followups.

The President says he wants to do this. Lawyers don't want him to. Where are things now?

COLLINS: Well, the President's legal team is prepared to respond to that proposal from Mueller. That is a proposal that says that they would limit the questions about obstruction of justice but that they still wanted to ask the questions to the President in person.

That is not something the President's legal team wants. Instead they want to limit those questions that he asked the President to questions about collusion and events that occurred before President Trump was inaugurated. But they are prepared to respond in the coming days. Of course, a word of caution here.

Poppy, these negotiations have been ongoing for eight months now. They hit a wall after the FBI raided Michael Cohen's home, office, and hotel. But the President has been expressing interest, lately sources tell us, in sitting down for an interview with the special counsel as he did in the previous months. That's not something his legal team wants, but in the end it could be the President who makes the final decision here Poppy.

HARLOW: Sure. Ultimately. His call. Kaitlan, thanks for the great reporting as always.

To Ohio we go next. It is the last major election before the midterms, and a very tight race in Ohio in a district where it really shouldn't be tight at all. This is a traditionally Republican district, Ohio 12.

[10:18:41] The polls are now open. There's still time to fight for votes. Look.


RICK HAHN, OWNER, NANCY'S HOME COOKING: I can say I'm still in a neutral zone. I'm not really leaning.

CARROLL: Down to the wire.

HAHN: Down to the wire.



HARLOW: So the polls are open in this morning at Central Ohio where a Democrat is running a tight race for a seat that's been in the Republican hands since the early 1980s. In the final hours of this hotly contested race, a stunning statement from Republican candidate Troy Balderson, listen to what he said last night.


TROY BALDERSON, REPUBLICAN CANDIDATE FOR SPECIAL ELECTION IN OHIO'S 12TH CONGRESSIONAL DISTRICT: My opponents in Franklin County, and Franklin County has been challenged. We don't want somebody from Franklin County representing us.


HARLOW: We don't want someone from Franklin County representing us. With that he took a shot at one-third of the electorate in the district that he is running to represent. Our Jason Carroll is there and has a look at this race.


BALDERSON: I can't thank you enough. Let's get motivated.

CARROLL (voice-over): Republican Senator Troy Balderson should be writing his victory speech. Instead he's fighting his Democratic opponent Danny O'Connor for every vote.


CARROLL (voice-over): The latest polls show a virtual tie. Yet it's a seat Republicans have solidly for decades. A loss here would be seen as a defeat not only for Balderson but also for the President.

BALDERSON: Mr. President, we don't want to go back. I'm not tired of winning.

CARROLL (voice-over): Trump won the district by 11 points two years ago. He held a campaign-style rally on Saturday to fire up his base.

[10:25:06] DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We must elect Troy Balderson.

CARROLL (voice-over): The Central Ohio district is primarily white. It covers rural stretches as well as suburbs of Columbus. Both sides courting voters who could tip the win in their favor, namely independents like these two women, Mara Protich and April Kennedy are friends and co-own a business together, Protich is supporting O'Connor. Whole Kennedy is backing Balderson.

PROTICH: A man's character is very important. I don't believe that our President currently has my best interests at heart. And I've watched some of the things that have happened in the past few months, and it's a little scary.

CARROLL (on camera): And so you're defining decision wasn't about both candidates but about the President?

PROTICH: More about getting Democratic back into office.

APRIL KENNEDY: I'm probably a lot like millions of Americans where it's not necessarily that you like the candidate of choice, but it's who you dislike less. I think that during the presidential election, I believe that's how Trump ended up in office. But I think this race with Balderson is the same way.

CARROLL (voice-over): Kennedy says she's concerned about O'Connor's ties to Democratic Leader Nancy Pelosi who was seen unfavorably by a majority of Americans according to a recent Gallup poll. O'Connor waffled on whether he would support Pelosi during a previous interview and attack ads keep tying him to the minority leader.

O'CONNER: Well, I've said time and time again that I would vote against Nancy Pelosi. We can need new leadership in Washington because what we see now is not working.

CARROLL (on camera): But do you think that's really resonating with some people around the fence, who are uncomfortable with --

O'CONNER: Yes. I mean, people are focused on that stuff.

CARROLL (voice-over): The GOP has spent $4.5 million on TV ads in the race versus Democrats who spent $3 million. Despite all that, diner owner Rick Hahn still remains undecided.

HAHN: I can say I'm still in a neutral zone. I'm not really leaning.

CARROLL (on camera): Down to the wire?

HAHN: Down to the wire.

CAROLL (voice-over): Jason Carroll, CNN, Columbus, Ohio.


HARLOW: Down to the wire. Jason, thank you so much for bringing that race home to all of us, for that reporting.

With me, Now Republican Congressman Warren Davidson of Ohio. His a member of the House Freedom Caucus and he sits on the House Financial Services Committee. Thanks for being here.

REP. WARREN DAVIDSON (R), OHIO: Thank you, Poppy. HARLOW: There is a delay, for our viewers. I'm sorry about that. We'll try not to speak over each other too much. I mean, let's talk about this district. This is such a safe Republican district until now. The race is neck and neck, 43 percent, 44 percent in the latest polling.

The president won this district by 11 points, double digits. It's one that Republicans have held by at least 20 points since 2012. Outside Republican, donations were five times that of outside Democratic donations. And yet it is so close. Is this a wake-up call for your party?

DAVIDSON: I think it highlights the importance of energy in any campaign. And in Ohio, I think it highlights -- people don't vote in Ohio. Just two years ago on June 7th of 2016, I won a special election to fill former Speaker Boehner's open seat.

And so that was the last special election for Congress in Ohio. Voter turnout was really low. People aren't used to voting in Ohio in June or August. So it's really going to be more of a test of who can get out the vote. And those are generally your most active voters.

HARLOW: So let me get your take on something that happened in the final hours. And I'll play it for our viewers again in case they missed it. This is last night, the Republican candidate, Troy Balderson, said this.


BALDERSON: My opponent's from Franklin County. Franklin County has been challenging. We don't want somebody from Franklin County representing us.


HARLOW: Writing off a third of the electorate in the district you want to represent. Now this morning, he tried to clean it up and said I want to represent everyone. But do you think that could be a fatal error for him?

DAVIDSON: Well, I don't know his district. I don't know the demographics of each of the counties there. But I've always found that you're usually better off to multiply your allies instead of your adversaries. I take from the comment that the majority of O'Connor's support is from Franklin County. So it wasn't about the county itself but the demographics of where O'Connor's support comes from.

HARLOW: Good point. Multiply your allies, not your adversaries. On tariffs, look, you have been very openly critical of the President's strategy here with tariffs. If people don't know, the district you represent, Ohio 8, is a big agriculture district.

You have gone as far as to say the approach with these tariffs from the White House, "Will cause a recession" if they are not stopped, if they are not turned around. What have they done to the people you represented and is President Trump to blame? DAVIDSON: Well, I don't blame president trump. Frankly, I was in manufacturing before I got elected to Congress.

[10:30:02] And when the President talked about fixing our trade deals and making -- righting some of the wrongs out of the bad policy they got us into this massive trade deficit with China taking advantage of our technology.