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Prosecutors in Manafort Trial Tell Jury to Follow the Money; U.S. to Impose New Sanctions on Russia; Firefighters Gain Ground on California Wildfire; Accused Parkland Shooter's Confession Released. Aired 4-4:30a ET

Aired August 9, 2018 - 04:00   ET



[04:00:13] REP. CHRIS COLLINS (R), NEW YORK: I will mount a vigorous defense in court to clear my name.


CHRISTINE ROMANS, CNN ANCHOR: A sitting congressman indicted for insider trading creating another midterm headache for the GOP.


RUDY GIULIANI, PRESIDENT TRUMP'S LAWYER: You are trying to trap him into perjury because you don't have a case.


PHIL MATTINGLY, CNN ANCHOR: President Trump's lawyers rejecting Robert Mueller's terms for a sit-down interview in the Russia investigation.

ROMANS: The Kremlin already responding to a brand new round of U.S. sanctions on Russia. We'll go live to Moscow.


UNIDENTIFIED REPORTER: Do you know how this fire started?



MATTINGLY: Police now say that man, despite his on-camera denial just days ago, started a destructive California wildfire still raging out of control.

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

ROMANS: All right. I'm Christine Romans. It is Thursday, August 9th, it is 4:00 a.m. in the East. Nice to have you here today and all this week. MATTINGLY: Thank you.

ROMANS: And a lot of news to cover here.

Representative Chris Collins defiantly refusing to step down after his indictment on insider trading charges. Federal prosecutors in Manhattan accused the New York congressman, his son and another man of securities and wire fraud. They're charged with exploiting secret drug trial information from an Australian pharmaceutical company. Collins vowed last night in a brief appearance before TV cameras that he will continue his run for re-election in November.


COLLINS: The charges that have been levied against me are meritless. And I will mount a vigorous defense in court to clear my name. I look forward to being fully vindicated and exonerated ending any and all questions relating to my affiliation with Innate.


ROMANS: That's Innate Immunotherapeutics where Collins was on the board of directors. Collins was the first sitting member of Congress to endorse Donald Trump's run for the White House. His indictment turns another state's Republican seat into a potential general election battleground.

MATTINGLY: The White House legal team says it has sent a counteroffer to Special Counsel Robert Mueller on a possible interview with the president. But sources tell CNN the president's lawyers are rejecting Mueller's latest terms and countering with a narrower scope for questioning. They do not want the president facing questions about obstruction.

Here's Giuliani talking last night to Sean Hannity.


GIULIANI: Stop the nonsense. You are trying to trap him into perjury because you don't have a case.


MATTINGLY: Now earlier Giuliani called the offer a good faith attempt to reach an agreement. Claiming the special counsel now has all the information he needs to wrap up the case within weeks.


GIULIANI: We do not want to run into the November elections. So back up from that. This should be over with by September 1st. We have now given him an answer. He obviously should take a few days to consider it. But we should get this resolved.

(END VIDEO CLIP) MATTINGLY: And Giuliani says the Trump legal team would prefer it if the Russia investigation wraps up well before the midterm election. But he also told reporters he believes Republicans will, quote, "benefit" if the probe actually drags into November.

ROMANS: Prosecutors in the bank and tax fraud trial of Paul Manafort expect to rest their case against the president's former campaign boss on Friday. Then the defense will present its case. So far 18 witnesses have testified, most notably Rick Gates, Manafort's ex- deputy and a former adviser to the Trump campaign.

Also taking the stand an IRS agent who told the court how Manafort avoided paying taxes on millions of dollars income.

We get more from CNN's Kara Scannell.

KARA SCANNELL, CNN CORRESPONDENT: Follow the money. That's what prosecutors asked the jury to do in a document-heavy day of presentation. Witnesses from the FBI and IRS walked the jury through documents, e-mails, bank accounts statement to show them the pathway that the money flowed through Ukrainian businessmen to Paul Manafort's accounts. They showed them bank account statements that Paul Manafort had signed. His passport photo that was included in that bank account. And how those funds then flew to U.S. vendors.

The jury heard from earlier in the week and last week detailing that he paid for a Mercedes and ostrich jacket, and bought several expensive real estate properties. The jury had also heard from prosecutors that in total that meant Manafort didn't pay taxes on $15 million. That's a key part of the case heading into its final days. Prosecutors told the judge they have eight more witnesses to call and they could wrap by the end of this week -- Christine, Phil.

MATTINGLY: Kara Scannell, in Alexandria, where the ostrich jacket remains a key talking point. Interesting wardrobe choices.

All right. The Trump administration set to slap a new round of sanctions on Russia as the punishment for the poisoning of -- in Britain of former Russian spy and his daughter. The State Department says the sanctions are required under international law banning the use of chemical and biological weapons.

[04:05:07] The first round of new sanctions set to go into effect in about two weeks. So how is the Kremlin responding? Well, let's bring in senior international correspondent Matthew Chance.

And Matthew, there was some sense that this was coming. Now that it's here what is the Russian government saying?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Phil, I think that these sanctions that came on the basis of an anti-chemical weapons act in the United States came somewhat out of the blue. There's been a lot of expectation here in Russia because of the congressional bill that's being debated about imposing sanctions against Russia for its alleged meddling in the 2016 presidential election. That there would be more measures against Russia. But this is kind of a -- I think, you know, a bit of a curve ball. No

one here was talking about being sanctioned by the United States over the Skripal poisoning. And so I think there's been an element of surprise. The reaction, though, has been predictable, the Russians have criticized the U.S. sanctions saying that the theater of the absurd continues. There's no proof, no clues, no logic that are referenced to the claims of innocence that they've been insisting on. That they had anything to do with the Skripal poisoning, the poisoning of that Russian agent and his daughter, in wheelchair, in the United Kingdom back in March.

But, you know, remember, it all comes out of this political atmosphere in the United States. Sparked off perhaps of made worse by the Helsinki summit between President Trump and President Putin in which President Trump is perceived as being -- coming across as weak when he was standing next to the U.S. president. It means there's an increase drive in the United States to impose sanctions against Russia and ahead of the midterms in November. The Trump administration clearly feeling the pressure to go along with that -- Phil.

MATTINGLY: And no question, Matthew, it wasn't just Democrats, the president's Republican chairman in the House was asking them to impose these sanctions. And obviously another round could come in a couple of months to bite even harder.

Matthew Chance, in Moscow, thank you very much.

ROMANS: China vows to fight back against U.S. tariffs accusing the White House of having a, quote, "mobster mentality." Beijing announced tariffs on $16 billion worth of U.S. goods yesterday. That's a direct response to U.S. in the exact amount.

Chinese state media warns the trade conflict will only get worse if the Trump administration, quote, "cannot marshal its mobster mentality," adding that China is trying to avoid a trade war but in the face of the U.S.'s ever greater demand for protection money, China has no choice but to fight back.

So far China has threatened up to $110 billion in U.S. goods. Practically all of it U.S. imports. President Trump has also threatened to target everything the U.S. buys or $500 billion in Chinese goods. Tariffs on either side would hurt U.S. consumers and businesses. That's because U.S. companies pay to import goods and higher costs could mean they would have to raise prices or cut jobs.

In fact tariffs are causing a South Carolina company to lay off nearly all of its workers. Element Electronics imports parts from China to build TVs. It blames the layoffs and a plant closure directly on U.S. tariffs.

MATTINGLY: Firefighters in California are continuing or actually starting to make major headway in the fight against the Mendocino Complex Fire. The largest fire in state history. Now at this point the fire has scorched more than 302,000 acres. Officials say more than 100 homes had been destroyed. The inferno is now 47 percent contained. CNN's Stephanie Elam has the very latest from Colusa, California.


STEPHANIE ELAM, CNN CORRESPONDENT (on camera): We're standing on the front edge of the Mendocino Fire. Take a look at this. That blaze right there is actually part of what the firefighters are starting. This is a controlled burn. And they're doing this to burn out this fuel here because as the winds pick up in the afternoon and the humidity drops, that fire on the other side of the ridge behind that fire could spread. So they're trying to make a stand here to stop this fire from growing any further.

This fire is huge, but why has it been able to grow so big?

CHRIS VESTAL, CALIFORNIA DEPARTMENT OF FORESTRY AND FIRE PROTECTION: Well, the first priority is protecting the communities and the homes. Secondly in building our control lines we have to use a naturally occurring geographical feature to help us control the fire.

ELAM: So maybe like a bulldozer line coming through or maybe along a creek or along the ridge? These are things that you would look for as to be your wall of defense to try to stop the fire there?

VESTAL: Correct. We'll use existing roads, existing ridgelines, other geographic features that help in conducting our bulldozer lines as well as our hem lines.

ELAM (voice-over): Adding fuel to this fire season, the National Oceanic Atmospheric Administration says July was the hottest month on record in California's history. Those dry and warm conditions creating the perfect storm for wildfires.

Stephanie Elam, CNN, Colusa County, California.


ROMANS: All right, thanks, Stephanie. A lot of hard work there.

And the Holy Fire in Southern California triggering a new round of evacuations overnight. The flames inch closer to residential areas. 20,000 people have been ordered to leave as this wildfire explodes in Riverside County. Officials are battling the blaze from both the air and land. At this hour the fire is only 5 percent contained.

[04:10:03] In the meantime, a 51-year-old accused -- man accused of setting the destructive wildfire is scheduled to appear in court today. Here's that man, Forrest Gordon Clark, talking to a cameraman Monday two days before his arrest.


UNIDENTIFIED REPORTER: Do you know how this fire started?

CLARK: I have no idea. I was asleep. I actually hear folks in. I just woke up, dude. I got burned. (END VIDEO CLIP)

ROMANS: Clark faces an array of charges including suspicion of felony arson.

MATTINGLY: You wouldn't even think it's possible but even more disturbing details are emerging from the filthy New Mexico compound raided by the FBI. What prosecutors say the suspects had in store for the kids found there.

ROMANS: Plus chilling confession on camera from Parkland school shooter Nikolas Cruz.


MATTINGLY: Disturbing details emerging in New Mexico where 11 emaciated children were found living in filthy conditions in a makeshift compound.

[04:15:02] The prosecutors say the five suspects accused of abusing the kids were actually training them to commit school shootings. Authorities say the compound appeared to have an improvised shooting range and loaded firearms. An attorney for one of the defendants, Siraj Wahhaj, denies the allegations.

All five suspects pleaded not guilty to child abuse during a court appearance Wednesday. They're scheduled for pretrial detention hearing next week. Meantime, authorities are still trying to determine whether the remains they found on Monday belong to a missing Georgia boy. A search for that young child is what led authorities to the squalid compound in the first place.

ROMANS: All right. Newly released chilling video of the alleged Parkland shooter's confession. An interrogation video released by prosecutors, the 19-year-old accused of killing 17 students and teachers says he hears voices, punches his head and the face, and repeatedly says he wants to die.

CNN's Rosa Flores has the story.


ROSA FLORES, CNN CORRESPONDENT (voice-over): Newly released video of Parkland school shooter Nikolas Cruz being interrogated just hours after he shot and killed 17 people and injured 17 others shows him barefoot, dressed in a blue hospital gown, answering a detective's questions for several hours.

JOHN CURCIO, BROWARD COUNTY DETECTIVE: I'm just asking a very simple question. How you got to the school if you remember?

FLORES: The video shows him at times acting erratically, murmuring to himself about wanting to die. Forming his hand into the shape of a gun and putting it to his head.

NIKOLAS CRUZ, SUSPECT: Kill me. (EXPLETIVE DELETED). Kill me. At the end you're nothing but worthless (EXPLETIVE DELETED) dude. You deserve to die. Because you're (EXPLETIVE DELETED) worthless. And you (EXPLETIVE DELETED) everyone. I want to die.

FLORES: At one point, Cruz breaks down and sobs loudly after investigators grant his request to speak to his younger brother Zachary. But then he appears to laugh.

ZACHARY CRUZ, SUSPECT'S BROTHER: Why did do you this? This is -- don't even laugh at me.

N. CRUZ: I'm sorry, dude.

FLORES: Cruz told his interrogator that he carried out the mass shooting at the direction of a demonic voice inside his head, telling him to do evil things.

N. CRUZ: Burn, kill, destroy.

FLORES: But the narrative didn't seem to sit well with the Broward County detective.

CURCIO: I don't really believe there is a voice, to be honest with you.

FLORES: Growing agitated at that suggestion, Cruz abruptly demanded an attorney ending the five-hour interrogation.

(On camera): The claim that he was directed to carry out mass murder on Valentine's Day at Marjorie Stoneman Douglas High School by demonic voices in his head is in stark contrast to the seemingly boastful videos that he made in the days before the shooting.

(Voice-over): Videos in which he laid bare his sinister plans, predicting he would achieve fame and notoriety. CNN chose not to air those videos when they surfaces in the months after the shooting, not wanting to fulfill Cruz's apparent desire for attention. But now that he is introduced a possible line of defense, we believe those videos provide a fuller context to his mindset and motivations.

N. CRUZ: Location is Stoneman Douglas in Parkland, Florida.

FLORES: Rosa Flores, CNN, Miami.


MATTINGLY: All these months later, still tough to find words on that.

Rosa Flores, thank you very much.

Now in Virginia, the city of Charlottesville declaring a state of emergency just days before the one-year anniversary of the deadly Unite the Right rally. That allows law enforcement to call on the National Guard if violence breaks out during the Unite the Right 2 rally scheduled this weekend in Charlottesville and outside of Washington, D.C. Now authorities took a lot of heat for underestimating the potential unrest at last year's rally where Heather Heyer was run over and killed by a suspected neo-Nazi sympathizer. There will be a gathering this weekend to honor Heyer's memory.

ROMANS: I can't believe it's been a year. Remarkable.

MATTINGLY: Feels like it's been six. It's crazy.

ROMANS: Coming up, the late-night comedians stunt that led to a federal investigation.

MATTINGLY: Plus, is your iPhone spying on you? I hope not. Apple responds just ahead.


[04:23:36] MATTINGLY: A government investigation reveals there was actually no cyber attack against the FCC Web site last year. Instead you can blame the incident on John Oliver fans. In May of 2017, the FCC's comments system was crippled by an overwhelming surge of traffic. Well, it turns out that surge took place right after the host of HBO's "Last Week Tonight" called on his viewers to express their views on net neutrality.


JOHN OLIVER, HOST, "LAST WEEK TONIGHT": I'm calling upon all of you, the Internet time-wasters and troublemakers, to join me once more in just five to 10 minutes of minor effort. I need you to do this. Once more unto the breach, my friends. Simply go to this URL and tell the FCC to preserve net neutrality and Title II.


MATTINGLY: The timeline laid out in the report is really something within minutes, traffic to the FCC Web sites spiked 30-fold. That caused a service disruption stretching from Sunday night into Monday morning. The FCC's chief information officer at the time, David Bray, described the incident as a series of denial of service cyber attacks. That triggered calls from Congress for an investigation. Bray has not responded to CNN's request for comment.

ROMANS: All right. Siri, are you spying on me? Apple says definitely not. In a letter to lawmakers, the tech giant insisted iPhones do not listen to what users are saying. It also says third party app developers don't have access to audio data.

[04:25:04] The tech giant issued a statement in response to an inquiry from the Energy and Commerce Committee. The committee wanted details from CEO Tim Cook about Apple's smartphone data collection practices. Google's parent company Alphabet received a similar letter but it is not clear whether Google has responded, and just anecdotally, no one believes Apple on this.


ROMANS: Everyone thinks their iPhone is -- MATTINGLY: The phones know too much.

ROMANS: Exactly.

MATTINGLY: The Alexa knows too much. Everything knows too much and yet everybody still buys the phone, still uses the Siri.

ROMANS: Yes. Yes.

MATTINGLY: Still using Alexa.

ROMANS: For the record, it is not listening to you.

MATTINGLY: Allegedly. No, but seriously.


MATTINGLY: The Motion Picture Academy announcing big changes to the Oscars. The ceremony now making room for the year's biggest blockbuster to enter the race, by adding a new category for, quote, "Achievement in Popular Film." I'm sure the traditionalists love that.

The Academy hopes to attract more viewers following a major slump in ratings over the past few years. Other changes are planned as well. A stricter adherence to a three-hour time limit on the telecast and an earlier air date for the 92nd Annual Oscars.

ROMANS: Good luck with that.

All right. Another GOP congressional seat in jeopardy after a lawmaker's stunning indictment.

MATTINGLY: And President Trump's lawyers respond to Robert Mueller's terms for a sit-down interview. Details on all of that just ahead.