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Too Close to Call; Star Witness Grilled; Firefighters Gain Ground; Musk Stuns Wall Street; Pompeo to Meet with Kim Jong Un?; PGA Championship Tees Off Tomorrow. Aired 5-5:30a ET

Aired August 8, 2018 - 05:00   ET






CHRISTINE ROMANS, CNN ANCHOR: The Republican candidate declares victory. The president takes credit, but the numbers show Ohio's special election still too close to call.

PHIL MATTINGLY, CNN ANCHOR: Paul Manafort's lawyers grilled the prosecution's star witness, painting Rick Gates as a cheater and a thief who can't be trusted.

[05:00:03] ROMANS: Firefighters gained some ground in the largest wildfire in California history, but the battle is far from over.

MATTINGLY: And Tesla boss Elon Musk stuns Wall Street with a public declaration of his private ambition ambitions.

Good morning and welcome to EARLY START. I'm Phil Mattingly, in for Dave Briggs.

ROMANS: And I'm Christine Romans. It is Wednesday, August 8th. It is 5:00 a.m. exactly in the east.

And let's begin with this. If Ohio's 12th district is any indication, a blue wave could be coming in November. In a special election that many considered a bellwether for the midterms, the race between Republican Troy Balderson and Democrat Danny O'Connor is still too close to call this morning, an encouraging outcome for Democrats in a deep red district, no matter how it plays out. There are still more than 8,000 outstanding provisional and absentee ballots that could take days to count. Balderson currently leads O'Connor by less than one percentage point, fewer than 2,000 votes.

Both candidates spoke late last night, O'Connor refusing to concede, Balderson quick to claim victory.


BALDERSON: I'd like to thank President Trump.


America is on the right path and we're going to keep it going that way. Over the next three months, I'm going to do everything I can to keep America great again.

DANNY O'CONNOR (D), OHIO CONGRESSIONAL CANDIDATE: Because we see division and discord tearing apart our country. We must remember that each and every one of us are God's children and that all of us need to be treated with dignity and respect. And I think we could use a lot more of that spirit in Washington these days.


ROMANS: President Trump, from his vacation schedule, working vacation schedule, took time to declare Balderson the winner and take credit for it, even though the outcome is not official.

The president tweeting, when I decided to go to Ohio for Troy Balderson, he was down in early voting. That was not good. After my speech on Saturday night, there was a big turn for the better. Now, Troy wins a great victory during a very tough time of the year for voting. He will win big in November.

MATTINGLY: Several elements of that tweet, I'm not sure totally track with reality, but he looks like he's on the path to win.

Now, we've got a couple of other primaries to tell you about. And shout out to all of the political analysts and nerds waiting for Johnson County --

ROMANS: Johnson County is trending on Twitter.

MATTINGLY: It's trending on Twitter right now, congratulations.

All right, another race too close to call in Kansas, Johnson County. Secretary of State Kris Kobach, a hardliner on immigration who received President Trump's endorsement, is locked in a very tight race with Governor Jeff Colyer. The official result could be announced later today.

And in Missouri, CNN projects Attorney General Josh Hawley is the winner of the GOP primary for Senate. Republicans are hoping he can unseat Democrat Claire McCaskill in November.

In the Michigan gubernatorial primary, CNN projects State Attorney General Bill Schuette will be the Republican candidate in November. Former state legislative leader Gretchen Whitmer will be the Democratic candidate.

And CNN projects John James has captured the GOP nomination for U.S. Senate in Michigan. James, an African-American Iraq War vet endorsed by president Trump. He will face off with Democrat Debbie Stabenow in November. Former Trump campaign chairman Paul Manafort's longtime right-hand man

back on the witness stand today. Manafort's defense lawyers expected to pick up where they left off yesterday, trying to undermine Rick Gates' credibility in the eyes of the jury. Gates admitted to a host of transgressions.

So far, Manafort's defense team has not done much to pin the bank and tax fraud their client is charged with on Gates alone. That part of their cross examination may come later today.

More now from CNN's Jessica Schneider.


JESSICA SCHNEIDER, CNN CORRESPONDENT: Christine and Phil, Paul Manafort's lawyers went on the attack against Rick Gates on Tuesday. They hammered him with questions that even led Gates to admit on the stand that he had an extramarital affair a decade ago.

But when attorneys accused him of using Paul Manafort's money to fund his so-called secret life, Gates pushed back, saying the money actually came from bonuses. Now, of course, the defense team is doing everything they can to attack the integrity of Paul Manafort's former right-hand man. Gates said he had made some mistakes, but he insisted to the jury that he is now telling the truth.

And the defense team really wants to establish that Rick Gates was the one who developed that financial scheme to hide money from the U.S. government, not Paul Manafort. Paul Manafort's lawyer even asked the direct question of Gates, did you develop a scheme?

And then Gates responded, no, I just added some numbers to some reports. But really, prosecutors have gone to great lengths to show that it was, in fact, Manafort in charge. At the end of Gates' direct examination, prosecutors were painstaking to show the process where Manafort asked Gates on occasion how to add information to a PDF document, and when Gates said that when he got the document back, Manafort had actually changed some of the numbers, falsifying some of their financial reports.

[05:05:00] Of course, Rick Gates was a close associate to Paul Manafort for 12 years, but now he's flipped, he pleaded guilty, and he's telling all he knows to prosecutors. So, it will be interesting when he is back on the stand for more cross examination this morning -- Christine and Phil.


ROMANS: All right. Jessica Schneider, thank you for that.

Legal woes multiplying for Michael Cohen. "The Wall Street Journal" reporting President Trump's former lawyer and fixer is now under investigation for tax fraud. Sources tell "The Journal" the federal prosecutor in Manhattan is looking into whether Cohen underreported income from his taxi medallion business. The taxi licenses yielded hundreds of thousands of dollars over the last five years. "The Wall Street Journal" also reporting federal investigators are

looking into possible fraud against the bank that financed Cohen's taxi medallion business. Cohen has not been charged with a crime, and "The Journal" reports he previously denied wrongdoing.

MATTINGLY: Firefighters are still struggling to contain the largest wildfire in California history. At this point, the Mendocino Complex Fire has scorched nearly 293,000 acres, 75 homes have been destroyed. And the fire at this point is only 34 percent contained. Firefighters are up against hot, dry, and windy conditions.

CNN's Stephanie Elam has the latest from Mendocino, California.


STEPHANIE ELAM, CNN CORRESPONDENT: Christine and Phil, we are standing in the midst of some of the devastation from the Mendocino Complex Fire, which is actually two fires that started about the same time, burning near each other here.

And you can see how hot this fire got. The devastation here, even in this rural community, you can see that it has really ravaged some of the properties that are here.

And just to give you an idea of how bad the fire season has been, if you go down just a couple of blocks from where we are, there's another building that's burned down. You might think it's from this fire. It's actually from a different one. All in all right now, there are some 17 fires that are burning in the state.

And just to give you an idea of how bad this fire season has been with this one being the largest fire in state history at this point, some 550,000 acres of land that had been burned in the last three weeks because of wildfires.

And, Phil and Christine, fire season is far from over here.


ROMANS: All right. Stephanie, thank you for that.

The president is claiming without evidence that California's environmental regulations have worsened the fires raging there. The president tweeted this: California wildfires are being magnified by the bad environmental laws which aren't allowing massive amounts of readily available water to be properly utilized. It is being diverted into the Pacific Ocean.

Now, state and federal officials and wildfire experts say these claims are false. They say there is plenty of water to fight the flames. There is a debate in California about how much water should go to cities and how much to farmland, but officials say water is simply not being deliberately flushed into the ocean.

That's not happening. We don't know where the president got that idea. Even the White House can't say. His tweets sometimes correspond to segments on Fox News. That doesn't seem to be the case in this instance.

MATTINGLY: Last night, President Trump hosted an informal dinner for some of the country's top business leaders at his Bedminster golf club. The president and first lady welcomed two dozen CEOs and their spouses, including the heads of Pepsi, Fiat Chrysler, FedEx and Boeing.


MELANIA TRUMP, FIRST LADY: Welcome to Bedminster. It's great to have you here. And we're looking for a great discussion tonight and I just want to thank the president for doing an incredible job and for all of your help.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The policies of the other administration would have been more regulation and much higher taxes. And what you're witnessing now could never have happened. And growth has taken us out of a lot of problems that have been caused, and you're going to see super growth soon when it's all said, when it's working like a fine-tuned machine. You're going to see some real growth.


MATTINGLY: That guest list also included the heads of some much smaller companies who have been very close allies to the Trump administration over the last few years.

ROMANS: All right. Elon Musk may remove Tesla from the scrutiny of Wall Street, taking it private in what would be the biggest buyout in history. Musk simply stunned investors with this casually worded tweet yesterday, writing that he's considering taking Tesla private. He's already secured the funding. He didn't say where he got the money, but going private would cost, oh, about $71 billion, by far the largest buyout ever.

Musk faces pressure to turn Tesla into a profitable carmaker, but Tesla has burned through cash as it struggles to produce its first mass-market car, the Model 3. One analyst says this could be a way to strike back at Wall Street.


DAVID MADDEN, CMC MARKETS: This could be a temper tantrum by Elon Musk as a way of saying that I don't have to be bothered answering questions to market analysts or commentators or journalists or being under the scrutiny of Wall Street.


ROMANS: He's a maverick. People who love him call him a maverick. Some on Wall Street, you know, call him arrogant. And he has been contentious on conference calls.

Musk told employees that going private is the best path forward, adding that being subject to wild swings in our stock price is a major distraction and going private removes incentives to attack Tesla.

He often complains about short sellers, who investors who profit when the stock drops.

[05:10:03] Musk's tweet sent Tesla's stock up 9 percent. Trading was halted and later resumed, closing up 11 percent.

It's really unusual to see such an outspoken CEO talking about these sorts of things. The reason why you're public is so that you have public investors, you have shares sold to the public, and you need to be very open and honest with how your company is going, and he sometimes gets angry about that.

MATTINGLY: It's this weird thing, where you actually get a view into what he's thinking in real-time, which carries a lot of value, but it is also unusual and strange and possibly irresponsible. I do think it's his war with the shorts is playing huge in this.

ROMANS: War with the shorts.

MATTINGLY: Read his Twitter. You can see what I'm talking about.

All right. Iowa college student Mollie Tibbetts now missing for three weeks. Coming up, why her father believes she's still alive.

ROMANS: And why Secretary of State Mike Pompeo may be headed back to Pyongyang. A live report after this.


MATTINGLY: The White House is offering to send Secretary of State Mike Pompeo back to Pyongyang for a meeting with Kim Jong-un in a response to a letter sent by the North Korean leader to President Trump.

[05:15:07] National Security Adviser John Bolton not ruling out a second summit between the two men.

But first, he wants to see less rhetoric and more action on denuclearization from the Kim regime.

Let's go live to Hong Kong and bring in CNN's Will Ripley.

Will, you've been all over this from the beginning. What's your sense of where things actually stand right now?

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: It seems as if there is gridlock after Secretary Pompeo's most recent trip to Pyongyang. Basically, the North Koreans felt that the U.S. walked in there, made all of these unilateral demands without being willing to give some of the things that the North Koreans want that they say will build confidence, like easing sanctions step by step over time as opposed to all at once at the end of the denuclearization process, and the North Koreans also want a peace treaty formally ending the Korean War, and they have expressed dismay that the United States hasn't pushed further to make that happen. They called it a bold move when I was speaking with a source about it a couple weeks ago.

Their foreign minister talked about it over the weekend in Singapore when he was at the same security summit with Secretary of State Mike Pompeo and they shook hands briefly. They exchanged letters, or the U.S. exchanged its letter to the North Koreans in response to Kim Jong-un's letter to President Trump, but there was no meeting. So, that's where we stand right now, gridlock.

And a source told me a couple days ago that the North Koreans feel to break that gridlock, the best solution from their perspective is a sit-down, a round two summit with President Trump and Kim Jong-un. Because even though the North Koreans have criticized the State Department and internal politics in the U.S., their messaging has consistently praised the president. They say he has a vision and they think that their leader and the president are the two best people to sit down and execute that vision.

So, when could this summit potentially happen? Well, we know that the United Nations General Assembly kicks off next month in New York. A lot of world leaders fly in for that, Phil. Could Kim Jong-un be one of them?

As the president likes to say often, stay tuned.

MATTINGLY: That would be a circus, but an interesting one. Such a fascinating dynamic, leader to leader versus the rest of each administration and allies.

Will Ripley in Hong Kong, thank you very much.

ROMANS: All right. To Iowa now, where the reward for a missing student is now over $300,000. Mollie Tibbetts' father says he believes his daughter is still alive.


ROB TIBBETTS, FATHER OF MISSING COLLEGE STUDENT: I think the longer this goes on, the absence of finding her, that she could be someplace where we can still get her back.


ROMANS: Rob Tibbetts says he believes his daughter may have gone willingly with someone she knew. His daughter was last seen jogging nearly three weeks ago.

Wayne Cheney (ph) is someone who lives near the search area. He has been questioned by the FBI. He told "The Des Moines Register" he refused to take a polygraph, saying, I have nothing to hide. He has not been charged in connection with this case.

Mollie's father, Rob, will join us on CNN's "NEW DAY" at 7:30 a.m. Eastern.

MATTINGLY: The city of Chicago vowing to put hundreds of additional police officers on the streets. The move coming after 66 people were shot over the weekend, 12 people died. Chicago's police chief says 430 officers are being put on street duty while 200 more will be on patrol over the weekend. Some officers will have their hours extended or vacations canceled. Officials say others are also being reassigned from other duties.

ROMANS: All right, is Tiger Woods about to snap a ten-year streak without winning a major? Andy Scholes has more in this morning's "Bleacher Report". That's next.


[05:22:47] MATTINGLY: Golf's final major of the season is set to tee off tomorrow, which means I will not leave my couch all weekend.

Will Tiger Woods end his major drought?

ROMANS: Andy Scholes has more in this morning's "Bleacher Report."

Hey, Andy.


Tiger hasn't won a major since the 2008 U.S. Open, so it's officially been more than a decade now. He played well at the British Open last month, finishing tied for sixth. Will the 100th PGA championship be where tiger finally gets back on top?

Well, he says he's just happy to be playing again.


TUGER WOODS, 14-TIME MAJOR CHAMPION: Just for me to be able to have this opportunity again, it's a dream come true. I've said this many times this year. I didn't know if I could do this again. And lo and behold, here I am.


SCHOLES: A WNBA team had to forfeit a game because of a nightmare day of travel. WNBA teams travel on commercial flights, and the Las Vegas Aces were scheduled to play in D.C. on Friday, but after delays and cancellations, it ended up taking them 26 hours to get from Vegas to D.C. They arrived just four hours before tip-off and decided they were just in no shape to play the game.

The WNBA tried to push tip-off back an hour, but the Aces still said they didn't feel it was healthy to play. The league ended up ruling that the result of the game would be a forfeit. It was costly for the Aces, who are now 2 1/2 games out of the final playoff spot.

All right, Mariners at the Rangers last night. Felix Hernandez makes Adrian Beltre look silly on this strikeout. And watch Felix. He just starts laughing at the swing Beltre made. He then points to the dugout, tells him to go sit down.

Well, fast forward to the sixth inning and Beltre gets his revenge with this blast. That's a home run to center. Beltre gets the last laugh. Rangers win, 11-4.

Finally, the series between the Fargo-Moorhead RedHawks and the Chicago Dogs may be the best independent league series of all time. After a bang-bang play at third base last night, the dogs' manager was so upset at the safe call, he decided to take third base, and then he walks over to the side and he's going to give the base to a kid.

Now, this came a night after a RedHawks player was so mad at being called out on strikes, he went into the dugout, got a trash can, and then placed it at home plate where the umpire normally stands.

[05:25:12] And you know what, guys, we have seen tens of thousands of tantrums in baseball over the last century, never seen that before. So, I definitely give that player points for creativity.

MATTINGLY: You know, Andy, we're going to know we're on your bad side when all of a sudden you show up after the tease and it's just the trash can in your chair. And like, it's an inventive move. That's why August Minor League Baseball, you know they're in a good place when that's starting to happen.

SCHOLES: And to think of that on the fly. Props to that player.

ROMANS: All right. Andy, thank you so much.

SCHOLES: All right.

ROMANS: Up next, all eyes on Ohio with a special election race that's still too close to call.

MATTINGLY: And high drama in the courtroom as the star witness against Paul Manafort is confronted about an extramarital affair.



BALDERSON: I'd like to thank President Trump.



MATTINGLY: The Republican candidate declares victory.