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EARLY START

Manafort's Deputy Testifies Against Him; President Trump Urged To Stop Tweeting About Trump Tower Meeting; Ohio Special Election: Neck-And-Neck In A GOP District; U.S. Reimposes Sanctions Against Iran. Aired 5:30-6a ET

Aired August 7, 2018 - 05:30   ET

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


(COMMERCIAL BREAK)

[05:30:14] CHRISTINE ROMANS, CNN ANCHOR: Stunning testimony from the star witness against President Trump's former campaign chairman Rick Gates. He says he broke the law for Paul Manafort. He also says he stole money from him.

(BEGIN VIDEO CLIP)

JOHN BOLTON, NATIONAL SECURITY ADVISER: We're going to put all the sanctions back in as they were before and more.

(END VIDEO CLIP)

PHIL MATTINGLY, CNN ANCHOR: Economic sanctions on Iran are now back in effect as of shortly after midnight. Will the pressure on Tehran force a further split with Europe?

ROMANS: Two fast-moving fires merging into one inferno, becoming the largest ever wildfire in California history.

MATTINGLY: Plus, what could today's high-stakes election in Ohio tell us about the November midterms?

Welcome back to EARLY START. I'm Phil Mattingly.

ROMANS: And I'm Christine Romans. Nice to see you here.

Thirty minutes past the hour. Get up, everyone. We've got a lot of news to talk about this morning.

We'll start here with Paul Manafort's right-hand man, Rick Gates. He is back on the witness stand this morning in the former Trump campaign chairman's trial on tax and fraud charges.

The stakes are high for the White House. Manafort and his deputy, together, know a great deal about what went on behind closed doors during key months of the 2016 campaign.

Yesterday, Gates admitted under a grant of immunity he had committed crimes alongside his former boss and against him as well.

Our Kara Scannell has more from the federal court in Alexandria, Virginia.

(BEGIN VIDEOTAPE)

KARA SCANNELL, CNN REPORTER: Rick Gates, the government's star witness, took the stand in a showdown we've been waiting for. Gates testified for 45 minutes and during that time Manafort stared him down, sitting just seats away from Gates in the witness chair.

Now, Gates averted Manafort's gaze, addressing his answers only to the prosecutors who asked him to explain what crimes he had committed and if he committed crimes with Manafort. Gates said that he had.

He explained that he helped Manafort file false tax returns and that he also helped him set up overseas accounts that were used as part of the alleged crime.

And Gates also offered a surprise twist saying that he had, himself, defrauded Manafort, his mentor and longtime boss. That he had stolen several hundred thousand dollars from him by inflating his expense account.

Now, Gates' testimony is expected to continue again on day six of the trial where prosecutors intend to question him for another three hours -- Christine, Phil.

(END VIDEOTAPE)

MATTINGLY: Kara, thanks so much.

Donald Trump, Jr. is dismissing the significance of his Trump Tower meeting, accusing the Russians of pulling a bait and switch. The president's son selecting a sympathetic environment to discuss the controversy, the Laura Ingraham radio show.

Don, Jr. claiming the Russians secured the meeting by promising dirt on Hillary Clinton. But, in fact, only wanted to discuss adoptions once everyone was actually in the room.

(BEGIN VIDEO CLIP)

DONALD TRUMP, JR., SON OF PRESIDENT DONALD TRUMP: In the 20-minute meeting it ended up being, you know, about essentially nothing that was relevant to any of these things. And, you know, that's all it is and that's all that they've got.

You know, that's not the premise that got them in the room and then they started -- it was essentially, you know, a bait and switch to talk about that and everyone has basically said that in testimony already. I mean, so this is -- this is nothing new.

(END VIDEO CLIP)

MATTINGLY: Now, the president's son said all the media scrutiny surrounding that 2016 meeting with the Russians, it's all just an attempt to divert attention from his father's accomplishments. ROMANS: All right. This week the president is on what the White House calls a working vacation at his New Jersey golf club, but shadowing the president's time off, the special counsel's Russia probe. He tweeted repeatedly over the weekend about the Trump Tower meeting and other aspects of Robert Mueller's investigation.

MATTINGLY: (Audio gap) -- with the Trump Tower tweets since they only give oxygen to the topic.

Senior White House correspondence Jeff Zeleny has the latest.

(BEGIN VIDEOTAPE)

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Christine and Phil, as President Trump continues his working vacation here in New Jersey one thing is clear. He's staying out of public view, at least so far, but it's clear what is on his mind -- at least one of the things on his mind, that Russia investigation.

We saw the tweets over the weekend when he was talking about specifically again trying to explain what happened in that Trump Tower meeting -- that key meeting in June of 2016.

The president, of course, saying that nothing was wrong. It was simply trying to get opposition research on Hillary Clinton. Well, of course, that is not the original explanation from a year ago.

So we know a couple of things since that tweet over the weekend.

We now know as we head into this week the president's aides and lawyers are asking him not to tweet, specifically about that Trump Tower meeting and this is why. It's adding more complication every time he weighs in. You know, it complicates the previous explanations for it.

We also are hearing from the president's aides that they believe in the next coming days -- at least they say -- the president's legal team will have an answer or a response at least to Bob Mueller's team.

Will he sit for that interview? Under what conditions will the president sit for an interview? And that's something that they hope to have accomplished by the end of this working vacation.

He'll be meeting with CEOs on Tuesday night -- tonight -- for dinner at his Bedminster Golf Club, doing fundraisers here as well. But so far, nothing else on the schedule.

[05:35:08] But again, it's clear this working vacation still has Russia hanging over it -- Christine and Phil.

(END VIDEOTAPE)

MATTINGLY: Thanks, Jeff Zeleny, on his working vacation of his own.

Now, for the political world, Democrats, Republicans, everyone will be glued to Ohio's 12th Congressional District tonight as voters head to the polls for a special election to fill a vacant House seat.

Now, the 12th District historically -- and by historically, I mean like the last 35 years -- leans strong Republican. But, 31-year-old Danny O'Connor is surging in the polls against Republican Troy Balderson in a race that could prove to be the bellwether for a blue wave in November.

We get more from Jason Carroll in Delaware, Ohio.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN NATIONAL CORRESPONDENT: Christine and Phil, it's really down to the wire at this point and Republican state senator Troy Balderson really should be writing his victory speech. But instead, he's fighting for every possible vote that he can get here in the 12 District against his opponent Danny O'Connor.

The race, at this point, is just too close to call which has really come to be somewhat of a surprise for some Republicans here because this is a seat that Republicans have held solidly for decades, but not this go-around.

What ends up happening in this race could very well end up pivoting on Independents -- who they end up voting for.

We spoke to some Independents out here in the district and they tell us who they end up voting for very much may pivot on how the president -- how they feel the president has been doing while in office.

MARA PROTICH, SUPPORTS DANNY O'CONNOR: I believe that a man's character is very important and I don't believe that our president currently has my best interest 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: And so you're just -- so you're defining decision wasn't about both candidates but about the president?

PROTICH: More about getting Democratic back into office and really for the people.

APRIL KENNEDY, SUPPORTS TROY BALDERSON: I think 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.

And I think that during the presidential election I believe that's how Trump ended up in office. I don't think that the whole world thought he was the perfect candidate nor has he proven to be. But I think that this race with Balderson is the same way.

CARROLL: Of course, President Trump was here over the weekend to rally the base and try to shore up support for Balderson.

It should be noted that President Trump carried this district by some 11 points two years ago. But again, right now as voters head to the polls this morning, the race is just too close to call -- Christine, Phil.

(END VIDEOTAPE)

ROMANS: All right, Jason Carroll. Thanks, Jason.

Let's bring in "CNN POLITICS" reporter Sarah Westwood. She joins us live from Washington. Good morning, Sarah.

You know, sometimes special elections, especially if you're a Democrat right now you're really hoping this is going to the symbol of a blue wave, but how significant is this one election for what we expect to happen in the fall?

SARAH WESTWOOD, CNN WHITE HOUSE REPORTER: Well, obviously, both sides see a lot of strategic value in winning a special election contest so close to the midterms. It would be a psychological boost for Republicans who are nervous about facing a blue wave in November. It would be confirmation of what Democrats already believe is going to happen if they won this district.

Obviously, Democrats are trying to replicate that the success that they recently had in Pennsylvania when they were able to get Conor Lamb, a Democrat, elected in a special election contest in a district that Trump had won handily.

Republicans are trying to replicate the success they had in Georgia's 6th District a few months ago when they were able to hold off a strong Democratic challenge in a district that Trump won just narrowly.

So obviously, both sides have poured a lot of money into this special election but it could come down to whether enough Trump voters in that district are motivated. That's the reason why President Trump took that trip to the Columbus area over the weekend to try to motivate some of those Republican voters to go to the polls despite the energy obviously being concentrated on the left right now.

MATTINGLY: Yes, Sarah, and I know you're super close with a lot of Washington Republicans -- political Republicans as well.

What are they telling you about kind of what they're feeling? We've seen the polls over the last 10 or 11 days, but what are you hearing from them as they keep an eye on this today?

WESTWOOD: A lot of Republicans are nervous because the race has tightened, particularly in the last few weeks. And because President Trump has already gone to Columbus -- then if Republicans lose, some of that will be reflected onto Trump and his credibility heading into the midterms because he sort of put his neck on the line for this race.

If he hadn't gone, then maybe Republicans would be able to brush this off as a low-energy candidate and maybe a number of other factors. But now, Trump is tied to this race in a way that can't be undone and so there's a fear that perhaps Trump's credibility will be diminished if Balderson loses today.

ROMANS: Let's talk about a little bit about Donald Trump, Jr.

[05:40:00] He went on the Laura Ingraham show and talked about that infamous June 2016 Trump Tower meeting and essentially said nothing to see here. We know -- this is what happened. We were told this was going to be a meeting to get dirt on Hillary Clinton, as often happens.

We went into this meeting -- it was a bait and switch by the Russians. They wanted to talk about adoption.

Nothing to see here. This is not a -- not a news story.

Does that put it to bed?

WESTWOOD: Well, if Donald Trump, Jr. had sort of been this forthcoming and this direct perhaps a year ago, maybe this story would be less of an issue now.

But, President Trump, the White House, Donald Trump, Jr., the campaign -- everyone involved in this situation has been very reluctant over the past however many number of months to address this issue head-on. There's been a lot of obfuscations, there's been a lot of trying to avoid direct questions about it.

And so even though Donald Trump, Jr. is basically giving a direct explanation of what we've sort of been told in bits and pieces and the written statements through clarifications from lawyers this is still newsworthy simply because we haven't heard directly from the parties involved a whole lot when it comes to this meeting. And that's left a lot of room for unanswered questions, uncertainty, and some suspicions to creep in.

MATTINGLY: And, Sarah, before we go I want to ask you about something that I think all of us would agree if we were paid a dollar for every time we've heard this we would now all be very wealthy -- the idea that Trump advisers are telling the president to stop tweeting about a specific thing. In this case, the Trump Tower meeting right now.

How realistic is that request based on your experience with covering the White House?

WESTWOOD: President Trump has been told over and over again in one form or another that maybe his agenda is not always being helped by the tone and tenor of his tweets. He has been very reluctant to be reined in by his advisers when it comes to his social media feed -- really when it comes to anything.

But he's been particularly resistant when it comes to his Twitter. He doesn't like being told what to put on it. And so obviously, he hasn't been silent on Twitter so far.

He likes to vent his anger about the Russia investigation on his Twitter. He believes that he's helping himself even though the numbers don't always bear that out.

It would be very surprising if he was able to put down the Twitter just because folks are telling him now, a year into the investigation, that it's causing trouble.

ROMANS: In that interview, Don, Jr. said that the focus on the scrutiny on the Trump Tower meeting in 2016 is to distract from all the accomplishments of his father. But, Donald Trump himself distracts from his accomplishment when he tweets about the Trump Tower meeting and other things that are --

MATTINGLY: His personal 280 characters --

ROMANS: Yes.

MATTINGLY: -- of freedom.

Sarah Westwood, one of the best reporters in Washington. Thanks so much for coming on this morning.

ROMANS: Nice to see you, Sarah.

WESTWOOD: Thank you.

MATTINGLY: All right.

Still to come, a frightening site from behind the wheel.

ROMANS: Whoa.

MATTINGLY: Wow. More on this deadly explosion caught on video just ahead.

ROMANS: Plus, one of the most prominent women leading a Fortune 500 company is stepping down. PepsiCo CEO Indra Nooyi exiting after 12 years. "CNN Money," next.

(COMMERCIAL BREAK)

[05:47:03] MATTINGLY: Just a few hours ago shortly after midnight eastern, U.S. sanctions against Iran went back into effect by order of President Trump.

Renewed sanctions targeting gold, steel, aluminum, and currency had been suspended as part of the 2015 Iran nuclear deal. But other nations that signed onto that deal -- well, they remain in the agreement and some have pledged to keep up trade in cooperation with Iran.

So, is America going at it alone this time?

Senior international correspondent Nick Paton Walsh joins us live from London.

And Nick, obviously, more sanctions to come in November. What's your sense of the immediate impact of these sanctions going into effect today?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, in truth, the Iranian economy is suffering quite substantially at the moment anyway and leading to pockets of isolated protests. But also, the local currency diminishing in its worth substantially. So everyone's feeling the heat already, certainly on the Iranian streets from that.

So midnight's change will, of course, limit access to precious metals, American currency, which is often used for international trade, but also it brings that countdown closer and closer towards the November broader sanctions against the banking sector and oil. Today will also hit the automotive industry as well.

So there are lots of things slowly tightening the screws here.

Is the U.S. going it alone? Well, kind of, but the fact that it's choosing to do that adds pressure to anyone else, frankly, who wants to continue doing business with the United States. You have to really choose between the U.S. and Iran.

The E.U., who've not backed out of the nuclear agreement, they're also key signatories to it now the U.S. has pulled out. They're suggesting that perhaps they would like to introduce protections for quote "legitimate business deals" with Iran.

There's a split here really and you've got to bear in mind Phil the broader picture. Before the nuclear deal came in the world was quite united in sanctions against Iran and the accusation of a nuclear program. Now the deal is falling apart slightly, some people are pro, some people are against.

President Rouhani said maybe talks right now are an option. I'm sure hardliners in his camp and hardliners in Washington will think that's not immediately a brilliant idea.

But we are into a tight window now ahead of November's increased sanctions on oil and banking, Phil.

MATTINGLY: Thanks, Nick. Obviously, a lot to keep a very close eye on there.

ROMANS: All right, 49 minutes past the hour.

Exhausted California firefighters struggling to contain the 16 major wildfires now devastating the state.

One has exploded over the last three days, nearly doubling in size. The Mendocino Complex fire is now the largest fire in the state's history.

The flames have scorched nearly 284,000 acres, surpassing the Thomas fire from last December. The Mendocino Complex fire is actually two wildfires burning across Clearlake -- around Clearlake rather, across several Northern California counties.

As of last night, the fire was 30 percent contained and more than 100 residences had been destroyed.

MATTINGLY: A deadly explosion caught on video in Italy -- unreal. A man got a shot of this blast on his cell phone during his commute in Bologna.

[05:50:02] Officials say a gas tanker exploded after running into the back of another truck. Three people were killed; between 60 and 70 others were also injured, some with serious burns.

The cause of the accident is still under investigation.

ROMANS: Now, let's get a check on "CNN Money" this Tuesday morning.

Global stocks pushing aside trade fears, instead focusing on big corporate profits. Right now, Europe and Asia are trading higher.

Wall Street also closed up thanks to some big earnings, like Warren Buffett's Berkshire Hathaway rose two percent after profit jumped 67 percent.

It's been a stellar second quarter. Corporate profits up 23 1/2 percent, the second-best quarter since the recession, and the season isn't over yet. Today, expect to hear from Snap, Disney, Papa John's, and Avis.

One of the most prominent women leading a Fortune 500 company is stepping down. PepsiCo's CEO Indra Nooyi exits on October third. She'll be replaced by Pepsi's global operations chief Ramon Laguarta.

Nooyi helped turned Pepsi into one of the most successful food and beverage companies in the world. Sales grew 80 percent during her 12- year tenure.

She's also just one of a handful of people of color and women to lead a Fortune 500 company. Her departure leaves only 24 women leading Fortune 500 firms.

Do you have MoviePass?

The movie subscription service will now limit you to three movies per month. Previously, customers could see one movie per day but MoviePass has run out of money and it needs to save cash to stay in business.

That's because of its low subscription price, $10 a month. That's less than some movie tickets cost, right? MoviePass has pay theaters to make up the difference.

MoviePass says most customers already see three movies or less per month. Now, the change begins August 15th.

You have two little kids. I bet you're not seeing three movies a year.

MATTINGLY: You can't afford -- it's like $150 to take your kids to the movies and get --

MoviePass sounds great in theory. I'm not totally sure from the business model perspective how it actually works but anything to avoid frankly, taking kids to a theater. In general, it sounds like a good idea.

ROMANS: For me, it's not the money, it's the time -- it's the time.

MATTINGLY: Yes, yes, exactly. All right.

A day at the zoo turned dangerous. More on this sudden and destructive weather coming up.

ROMANS: Plus, remember when a T.V. host told LeBron James to shut and dribble? We'll tell you how the NBA superstar has turned those words around.

(COMMERCIAL BREAK)

[05:56:41] ROMANS: A powerful hailstorm wreaked havoc at a Colorado zoo. Two animals were killed and 14 people were injured as chunks of hail as -- some as big as softballs rained down Monday at the Cheyenne Mountain Zoo in Colorado Springs.

The sudden barrage sent bears running for cover. The hailstorm damaged buildings and animal habitats. Five people were taken to a hospital.

The zoo will be closed today.

MATTINGLY: And, Showtime is partnering with LeBron James on a 3-part documentary entitled "Shut Up and Dribble." That may be familiar to you.

The series will examine the changing role of athletes in today's cultural and political environment through the lens of the NBA. Now, it is set to premiere in October.

As for the name -- well, that came from this Fox News host Laura Ingraham's suggestion back in February that James quote "shut up and dribble" after he publicly voiced support for the Golden State Warriors in their decision not to visit President Trump at the White House.

ROMANS: All right. Late-night comedians made fun of President Trump's working vacation.

(BEGIN VIDEO CLIP)

JIMMY KIMMEL, HOST, ABC "JIMMY KIMMEL LIVE!": President Trump is on vacation right now and you'll never believe where he went for vacation -- to his golf course. That's right, he golfs. Did you know that?

The president is on the front end of what will be an 11-day working vacation at the Trump National Golf Club in Bedminster, New Jersey. This way he gets to rage-tweet from an entirely different toilet.

STEPHEN COLBERT, HOST, CBS "THE LATE SHOW WITH STEPHEN COLBERT": The president is on vacation and I know people are like oh, shouldn't he be working? No. While he's on vacay, Trump staff has largely given up on futile

efforts to supervise him. Yes, at this point they're just leaving him alone with one of those cat water fountains you see in the airplane magazine and it's got a lever to give him a cheeseburger pellet.

JIMMY FALLON, HOST, NBC "THE TONIGHT SHOW STARRING JIMMY FALLON": Now, you could tell Trump was excited to get away. Check out what he was saying before he left -- watch this.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Vacation -- well, I never want it. Vacation -- have to get away. Vacation meant to be spent alone.

(END VIDEO CLIP)

ROMANS: Oh my gosh, that was very clever.

MATTINGLY: I'm OK with presidential vacations. They're a job.

ROMANS: I know. I know, absolutely and these guys were -- look, I hope many of you are going to get a good vacation this summer, right?

MATTINGLY: Yes.

ROMANS: All right, thanks for joining us. I'm Christine Romans.

MATTINGLY: And, I'm Phil Mattingly. We've survived two days. "NEW DAY" starts right now.

ROMANS: Two down, three to go.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Rick Gates saying he committed crimes at Paul Manafort's direction.

UNIDENTIFIED FEMALE: He really is testifying for his life.

UNIDENTIFIED MALE: It is always very damaging to the defendant when a cooperator takes the stand and says I committed crimes, so did that man, and here's how we did it together.

UNIDENTIFIED MALE: This has been a challenging and deadly fire season.

UNIDENTIFIED FEMALE: The Mendocino wildfire is now the largest in California history.

UNIDENTIFIED FEMALE: There's a lot of us that are saying our prayers that this just escapes us.

(END VIDEO CLIP)

ANNOUNCER: This is NEW DAY with Alisyn Camerota and John Berman.

ALISYN CAMEROTA, CNN ANCHOR: And we will be giving everybody an update on the wildfires in California.

Welcome to our viewers in the United States and around the world. This is NEW DAY. It's Tuesday, August seventh, 6:00 here in New York.

So, Rick Gates is a star witness in the government's case against former Trump campaign chief Paul Manafort and he's revealing lots of secrets.

Gates, who was Manafort's longtime deputy, telling the jury that he knowingly committed financial crimes alongside Manafort and at Manafort's direction. Gates said they had 15 foreign accounts that they did not report to the federal government and that they knew that was illegal.

Gates also testified that he embezzled several hundred thousand dollars --