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EARLY START

Manafort Prosecutors Expect to Rest Case Friday; Russia Slams New U.S. Sanctions; Firefighters Race to Extinguish Massive California Blaze; Parkland Shooter's Confession Released; Gaza Violence Escalates; Aired 4:30-5a ET

Aired August 9, 2018 - 04:30   ET

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


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[04:30:40] REP. CHRIS COLLINS (R), NEW YORK: I will mount a vigorous defense in court to clear my name.

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PHIL MATTINGLY, CNN ANCHOR: A sitting congressman indicted for insider trading creating another -- another midterm headache for the GOP.

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

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

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

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UNIDENTIFIED REPORTER: Do you know how this fire started?

FORREST GORDON CLARK, SUSPECT IN SOUTHERN CALIFORNIA WILDFIRE: I have no idea. I was asleep.

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

Welcome back to EARLY START, everybody. I'm Christine Romans.

MATTINGLY: I'm Phil Mattingly. It is 31 minutes past the hour. 4:31. This is the moment we get into the zone.

ROMANS: Yes. 4:31, get up. All right. If you're in L.A., go to sleep.

MATTINGLY: Yes, thanks for that.

(LAUGHTER)

MATTINGLY: All right.

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 to continue his run for re-election in November.

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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.

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

ROMANS: The White House legal team says it has sent a counteroffer to Special Counsel Robert Mueller on a possible interview with the president. Sources tell us that 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 last night and talking to Sean Hannity.

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

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ROMANS: 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 this case within weeks.

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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.

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ROMANS: Giuliani says the Trump legal team would prefer it if Russia -- if the Russia investigation wraps up well before the midterm election. But he also told reporters he believes Republicans will benefit if the probe drags into November.

MATTINGLY: Wrap it up. Get through November --

ROMANS: Drag on.

MATTINGLY: Here's the reality, nobody actually knows the timing right now.

ROMANS: Right.

MATTINGLY: We'll see. All right. 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, and obviously most notably Rick Gates, Manafort's ex-deputy and 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.

We get more now 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.

[04:35:03] 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.

ROMANS: All right, Kara Scannell for us, thank you so much.

The Trump administration set to slap a new round of sanctions on Russia as the punishment for the poisoning in Britain of a former Russian spy and his daughter. Now the State Department says the sanctions are required under international law banning the use of chemical and biological weapons. The first round of new sanctions set to go into effect in about two weeks.

For the response in the Kremlin, let's bring in senior international correspondent Matthew Chance live in Moscow.

Matthew, what are they saying?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, they're not happy about it. And I think to some extent, these came out of the blue because there's been a lot of expectation in Russia that there would be new sanctions from the United States against Russia, but they would be in punishment for the alleged meddling in the 2016 election.

The fact that chemical weapons or anti-chemical weapons legislation has been used I think was somewhat unexpected. But it doesn't mean that the Russians haven't criticized sanctions. Of course they have, saying that they were absurd and saying they were based on no proof, no clues, no logic. Again restating this Russian position that they had absolutely nothing to do with the Skripal poisoning. That they've characterized it as a sort of anti-Russian witch hunt. Of course they wouldn't have poisoned their own people on the streets of the British town of Salisbury.

And -- but of course it all comes out of that febrile political atmosphere in the United States as well where the pressure is really building, particularly in the aftermath of the Trump-Putin summit in Helsinki where Trump is perceived to have been -- to come across as weak in relation to the U.S. president. It comes out of the idea that pressure is building on the Trump administration and others inside the U.S. to take a much tougher, much firmer line against Russia.

And so the expectation here is that we're all going to see more sanctions in the weeks and the months ahead. What will the Russian response be? Well, there's not much they can do about it but in the past they have imposed counter sanctions and some measures like that, and they also now be considered -- Christine.

ROMANS: All right. Matthew Chance for us in Moscow. Thank you for that, Matthew.

MATTINGLY: Firefighters in California making headway on the Mendocino Complex Fire. The largest in state history. 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.

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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.

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MATTINGLY: Stephanie keeping an eye on a very important story. Thank you very much.

Now to another fire. 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 the wildfire explodes in Riverside County. Officials are battling the blaze from both the air and the land. At this hour the fire, it's only 5 percent contained.

Meantime, a 51-year-old man is accused of setting the destructive wildfire and is scheduled to appear in court today. Meanwhile, watch this. Here's that man, Forrest Gordon Clark, talking to a freelance cameraman on Monday two days before his arrest.

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UNIDENTIFIED REPORTER: Do you know how this fire started?

CLARK: I have no idea. I was asleep. I actually had earplugs in. I just woke up, dude. I got burned.

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MATTINGLY: That's wild. Clark faces an array of charges including suspicion of felony arson.

ROMANS: All right. The first U.S. city trying to rein in ride sharing, New York City passed a measure yesterday limiting the number of numbers working for companies like Uber and Lyft. The goal is to produce traffic by freezing new vehicle licenses for one year. Ride- sharing of course has revolutionized transportation, but increased congestion in big cities -- take New York. There were only about 12,000 ride-share vehicles back in 2015, now they're about 80,000.

MATTINGLY: Wow.

[04:40:07] ROMANS: And New York's new regulation could provide a model for other cities but Uber and Lyft warned the cap would mean higher fares and reduced service particularly for communities of color and in the outer boroughs. New York City is also Uber's largest market and this move could, you know, could hurt its growth.

Taxi drivers welcome the measure of course which also set the minimum wage for taxi driving. The rise in for hire vehicles have cut sharply into driver's paycheck. The New York Taxi Workers Alliance blames six suicides among cab drivers in recent months on that drop in income.

MATTINGLY: The raging Uber v. taxi battle that's going on across the country.

ROMANS: Yes.

MATTINGLY: The element of that. All right. Disturbing details emerge 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 confessions on camera from the Parkland school shooter's Nicholas Cruz.

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[04:45:11] ROMANS: 45 minutes past the hour. Disturbing details emerging in New Mexico where 11 emaciated children were found living in filth at a makeshift compound. Prosecutors say the five suspects accused of abusing the kids were 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 those allegations.

All five suspects pleaded not guilty to child abuse during a court appearance Wednesday. They're scheduled for a 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 little child is what led authorities to that squalid compound.

MATTINGLY: Newly released chilling video of the alleged Parkland shooter's confession. In an interrogation video released by prosecutors, the 19-year-old accused of killing 17 students and teachers says he hears voices, punches himself in the face, and repeatedly says he wants to die.

CNN's Rosa Flores has the story.

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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.

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ROMANS: Such tragedy there. A California appeals court has rejected the appeal of a former

Stanford swimmer convicted of sexual assault. Brock Turner's lawyer had argued there was insufficient evidence to support his conviction on three counts of sexual assault in an unconscious woman in 2015. Turner was ordered by a judge to serve six months in jail, even though prosecutors had pushed for a six-year sentence. In the end, Turner served only three months behind bars because the jail was overcrowded. Turner sentenced to an outcry from critics who called it too lenient resulting in a recall election that removed the trial judge, Aaron Persky, the judge who sentenced him to only six months when prosecutors wanted six years. He was recalled.

MATTINGLY: Yes. The backlash there very real.

ROMANS: Yes.

MATTINGLY: Actual results.

All right. There has been a sudden escalation of violence along the Israeli-Gaza border. Israel's military launching a series of air strikes against Hamas militants leaving three Palestinians dead including an 18-month-old baby. The attack comes after more than 150 rockets and mortars were fired from Gaza toward Israel.

Want to go live to the Israeli-Gaza border and bring in CNN's Oren Liebermann.

And, Oren, what's your sense of why now this escalation has actually occurred?

OREN LIEBERMANN, CNN CORRESPONDENT: Phil, this region has been tensed between Israel and Gaza for months now. And even if that tension hasn't bled into this specific escalation, it has created an environment where sudden escalations like this can happen. And that's exactly what we saw last night when a number of rockets at this point starting from last night with more than 150 rockets and mortars have fired by Gazan militants led by Hamas there,, most landed in open areas.

[04:50:12] Some two dozen were intercepted by Israel's Iron Dome aerial defense system. Some landed in populated villages along Gaza sending some injured Israelis to the hospital. Meanwhile, a furious Israeli response, a widespread Israeli airstrike carried out against what they say are Hamas military targets in Gaza. They say they've hit about 140 targets and includes weapon depots, headquarters, tunnels, tunnel manufacturing facilities, and more across some 20 different sites.

It's worth noting that now, some 12 hours or more after the sharp escalation started, it still has not ended. We're hearing Israeli fighter jets above us. We know that red alerts are going off. Those are rocket alarms in communities in Gaza south of us. So the question, what will bring about a de-escalation and cause both sides to step back? Because over the course of the last few months we've seen the U.N. step in and Egypt step in to bring about that de- escalation. This all happened amid talk of a longer-term ceasefire. Right now they're struggling to get even a short-term ceasefire -- Phil.

MATTINGLY: Yes, Oren Liebermann, everything just seems like it's on a knife's edge over there.

Thank you very much, Oren.

ROMANS: All right, 51 minutes past the hour. Elon Musk stunned investors with a tweet that he could take Tesla private.

MATTINGLY: You could say that.

ROMANS: But that may have gotten him in trouble with Wall Street's top regulator. CNN Money is next.

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[04:56:09] MATTINGLY: A government investigation now reveals there was no cyber attack against the FCC's Web site last year. Instead, well, you can just blame the incident on John Oliver fans. In May of 2017, the FCC's comments system was crippled by an overwhelming surge in traffic. Well, it turns out that surge took place right after the host of HBO's "Last Week Tonight" show called on his viewers to express their views we will say on net neutrality.

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JOHN OLIVER, HOST, "LAST WEEK TONIGHT": I'm calling upon all of you, the Internet's 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.

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MATTINGLY: Within minutes, traffic to the FCC's Web site spiked -- get this -- thirty-fold. As somebody who's perused many government regulation comment sections, that's not normal. Now 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.

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 you or what any other user is actually saying. It also says third party app developers don't have access to audio data.

The tech giant issued a statement in response to an inquiry from the Energy and Commerce Committee. Now 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's not clear whether Google -- at least at this point -- has responded.

ROMANS: Let's get a check on CNN Money this morning. Global stocks mixed today following Wall Street. The Nasdaq close higher thanks to a rising tech stocks for the Dow and the S&P 500 closed slightly lower.

Trade tensions were back. China slapped retaliatory tariffs on $16 billion worth of U.S. goods. There was also a drop in energy stocks. Crude oil prices hit a six-week low due to slowing Chinese demand.

Elon Musk stunned investors with that tweet, that he could take Tesla private. But that may have gotten him in trouble with Wall Street's top regulator. Tesla stock rose 11 percent after Musk tweeted he had secured funding for a buyout. Want to take Tesla private at $420. The "Wall Street Journal" reports the FCC is probing whether that is true and why Musk announced it on Twitter. Now companies can disclose info to shareholders on social medial but it can't give misleading information. Musk would be in trouble if there's evidence he made the statement to boost Tesla's share price.

Subscription service MoviePass is burning through cash, now tweaking its business model several times to try to stay in business. The CEO told me yesterday its latest plan should be its last.

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MITCH LOWE, CEO, MOVIEPASS: It is really tough to launch a business that shoots up like a rocket ship, but hasn't completely gotten the business model right. Because, you know, our vision is to get millions of people back into the theater. But you can't do that long term if you don't have a sustainable business model. And so we've had to fine tune the model as we go. We now have the right model.

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ROMANS: Yes. The fine tuning, he hopes, is done. MoviePass will now limit customers to three movies per month. Previously it was one movie per day. And you know, that made subscribers mad. Three million subscribers, they made a mandate. Still he said they can't survive under the old model. So this is the new --

MATTINGLY: The model doesn't work clearly.

ROMANS: This is the new plan.

MATTINGLY: By the way, it's a fascinating interview. You should go check it out.

ROMANS: Thank you.

MATTINGLY: At CNN.com, with the lovely Christine Romans.

ROMANS: Thank you.

MATTINGLY: I have great news for you. We have another hour. EARLY START continues right now.

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

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MATTINGLY: A sitting congressman indicted for insider trading creating another midterm headache for the GOP.