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GOP Lawmaker Chris Collins Indicted For Insider Trading; Trump- Mueller Negotiations Threaten To Hang Over Midterm Elections; U.S. To Impose New Sanctions On Russia; Firefighters Gaining Ground On California Wildfire. Aired 5:30-6a ET

Aired August 9, 2018 - 05:30   ET



[05:30:55] (BEGIN VIDEO CLIP)

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, ATTORNEY TO PRESIDENT DONALD TRUMP: 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: Russia is already responding to a brand new round of U.S. sanctions. We'll go live to Moscow.


UNIDENTIFIED MALE: Do you know how this fire started?



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

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

ROMANS: And I'm Christine Romans. It's 31 minutes past the hour. It is Thursday. And, Rep. Chris Collins is 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 T.V. cameras to continue his run for reelection 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. Collins was on the board of directors of that company.

Collins was the first sitting member of Congress to endorse Donald Trump's run for the White House.

His indictment turns another state Republican seat into a potential general election battleground.

MATTINGLY: Now, 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 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 Rudy Giuliani last night talking 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 quote "good faith attempt" to reach an agreement, claiming the special counsel now has all the information he needs to wrap up his case within weeks.


GIULIANI: We do not want to run into the November elections, so you back off from that. This should be over with by September first.

We have now given him an answer. Obviously, he should take a few days to consider it, but we should get this resolved.


MATTINGLY: Now, Giuliani says the Trump legal team would prefer it if the Russia investigation wraps up well before the midterm elections. But he also told reporters he now 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 of income.

We get more from CNN's Kara Scannell.


KARA SCANNELL, CNN REPORTER: 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 account statements 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 that the jury heard from earlier in the week and last week, detailing that he paid for a Mercedes, an 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.

[05:35:09] 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, I think has been living in Alexandria, Virginia over the course the last couple of weeks. Thank you very much.

Now, the Trump administration set to slap a new round of sanctions on Russia as punishment for the poisoning in Britain of a 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.

The first round of new sanctions set to go into effect in about two weeks. Now, what do you want to hear from Russia?

Let's bring in senior international correspondent Matthew Chance. He's live in Moscow.

And Matthew, it's no secret there's a lot of tension in this relationship right now. What's your sense of the reaction to this in Moscow?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, first of all, Phil, this, I think, will come as a major surprise to many here in Moscow and the authorities here because there's been a lot of expectations there would be sanctions coming -- new sanctions from the United States.

But they would be congressional sanctions. They're being debated right now, of course, over there in the U.S. And, they would be focused on punishing Russia for its alleged meddling in the 2016 presidential election.

To use anti-chemical weapons legislation to impose sanctions by the Trump administration, not by Congress, is something, as I say, I think was unexpected.

The reaction so far has been predictable by the Russians. Russian diplomats saying that this is an example of the theater of the absurd in the United States. There is no clues, no proof, no logic, no presumption of evidence.

Again, they're restating this Russian position that Russia had absolutely nothing to do with the poisoning of the Skripals in Wiltshire in the United Kingdom and, therefore, these U.S. sanctions are totally illegitimate.

But I think what we have to remember is this all comes out of that feverish political atmosphere that is at play over there in the United States, particularly after the summit in Helsinki between President Trump and President Putin of Russia in which President Trump is perceived as coming off as weak in comparison to the Russian leader.

And it shows how much pressure there is building in the U.S. right now to adopt a much stronger, much tougher stance towards the Kremlin.

So I think it comes out of that, Phil.

MATTINGLY: Yes, no question. A lot of pressure on Capitol Hill and a lot of pressure in the agencies, too.

And worth noting that this is just the first round. The second round of sanctions could be triggered in a couple of months. We'll have to keep an eye on all of that.

Matthew Chance in Moscow. Thanks very much.

ROMANS: All right, let's bring in "CNN POLITICS" digital director Zach Wolf, live from Washington. Good morning. And on the subject of those new sanctions on Russia, it's almost, as we've been saying, a split screen. On the one hand, you have the White House maybe reluctantly imposing sanctions on a regime that -- well, we're not talking about the Mueller interview, we're talking about the Russia -- the Russia probe -- or the Russia sanctions.

On the other hand, you have Rand Paul -- Sen. Rand Paul presenting a letter of introduction from Donald Trump to Vladimir Putin -- or trying to yesterday.

They're two very different optics.

ZACHARY WOLF, DIGITAL DIRECTOR, CNN POLITICS: Yes, very different optics and coming on the same day.

And the other element here is I think you can assume that the White House would rather impose sanctions for chemical weapons than for election meddling. That's the thing that President Trump thinks seems to delegitimize his entire presidency. So I'm sure he would rather do -- rather do chemical weapons.

But, you know, it is very strange to have Rand Paul delivering a letter of introduction, which is like something out of Dickens or -- you just don't hear about that much these days -- or trying to present a letter of introduction on the same day that they're slapping Russia with sanctions. It's not the kind of thing we've heard a lot about from previous administrations.

MATTINGLY: I love the 5:30 a.m. Dickens name-drop. It's solid right there, Wolf. I appreciate that.

I move over to the Mueller investigation to the tactics that we've seen so far from the president's legal team.

And I want to play some sound from last night -- Alan Dershowitz on what the strategy is here. Take a listen.


ALAN DERSHOWITZ, HARVARD LAW PROFESSOR: They're going to make Mueller an offer he can't accept. And in the end, Mueller will say look, I can't accept this offer so we're going to subpoena you.

The president will be able to say look, I wanted to testify. It was Mueller who turned me down.


MATTINGLY: So Zach, is that the play here? Are they not being serious about an actual offer? This is just kind of a ploy to push things further and never actually sit down?

WOLF: Well, from those sound-bites you played of Rudy Giuliani earlier in the program, I'm not exactly sure what they want.

I mean, it sounds like he thinks they would have a strong hand if they went into this kind of Supreme Court fight over a subpoena and this was the main story heading into the -- heading into the November election. On the other hand, he says well, you can totally get it done.

So, you know, they'd like to have it both ways here and it's very muddled as to what they want. But, by not taking the offer they are certainly making sure that this is going to drag on. So they're pushing it into November at this point.

[05:40:02] ROMANS: Let's talk about Congressman Chris Collins because this was just a bombshell yesterday. And, I mean, for those of us who cover markets and trading and sometimes insider trading, this thing looks like a textbook of do not do.

He sits on the board of a company. He gets word that the company's main source of revenue -- potential revenue -- the drug trial is going to fail.

And on the White House grounds he calls his son six or seven times who then sells the stock to mitigate his own losses. That's according to the government.

How damaging is this for him and then, I guess, how damaging is it for the GOP in November?

WOLF: You know, I think we'll have to see. He promises he's going to run for reelection.

ROMANS: Yes --

WOLF: We'll have to see what --

ROMANS: -- and he says he didn't do it.

WOLF: And he says he didn't do it and we have to remember that, although the way they laid out the case yesterday was pretty damning. So this will be an interesting thing heading forward.

You know, I don't know how damaging it's going to be to the GOP simply because so much other things are going on.

What's interesting to me is that we've had so many examples of this sort of swamp mentality going on and this is -- this is maybe the swampiest thing you will hear -- a congressman allegedly insider trading from the White House lawn.

ROMANS: I didn't even realize that there were congressmen -- well, he's the only one who sits on a board.

MATTINGLY: He was the only one. He stepped down from the board.

ROMANS: I mean, to sit on a board of a company while you're an American lawmaker -- that just seems on its face, to me, as a conflict.

MATTINGLY: Particularly when you sit on the relevant committee of jurisdiction, the House Energy and Commerce Committee, which he was stripped of.

ROMANS: Right. That's a crime.

MATTINGLY: Yes, I don't know.

ROMANS: Stay tuned, I guess.

MATTINGLY: It will be interesting to see.

Zach Wolf, as always, thank you very much, my friend.

WOLF: Thank you.

ROMANS: 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.

MATTINGLY: Plus, a suspect accused of starting a California wildfire. The chilling threat he reportedly made just days earlier.


[05:46:13] ROMANS: 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 destroyed. The inferno is now 47 percent contained.

Our Stephanie Elam has the very latest from Colusa, California.


STEPHANIE ELAM, CNN CORRESPONDENT: 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 that's 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, PUBLIC INFORMATION OFFICER, CALIFORNIA DEPARTMENT OF FORESTRY AND FIRE PROTECTION: Well, our first priority is protecting the communities and the homes. Secondly, in building our control lines we have to use naturally occurring geographical features to help us control the fire.

ELAM: So maybe like a bulldozer line coming through or maybe along a creek or along a 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 use existing roads, existing ridgelines and other geographic features to help in conducting our bulldozer lines as well as our hand lines.

ELAM: Adding fuel to this fire season, the National Oceanic and 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.


MATTINGLY: Those pictures -- thank you very much, Stephanie.

All right.

The Holy Fire in Southern California triggering a new round of evacuations overnight as flames inch closer to residential areas. Twenty thousand 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 is only five percent contained.

In the meantime, a 51-year-old man accused of setting that destructive fire is scheduled to appear in court today. Here's that same man, Forrest Gordon Clark, talking to a freelance cameraman on Monday, two days before his arrest.


UNIDENTIFIED MALE: Do you know how this fire started?

CLARK: I have no idea. I was asleep. I have two earplugs in.

I just woke up, dude. I got burned.


MATTINGLY: Now, a local fire official tells the "Orange County Register" that Clark sent him an e-mail last week warning, quote, "This place will burn."

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

ROMANS: All right. Disturbing details emerging in New Mexico where 11 emaciated children were found living in filthy conditions 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 these allegations.

MATTINGLY: 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 no -- there was insufficient evidence to support his conviction on three counts of sexually assaulting an unconscious woman in 2015.

Turner was ordered by a judge to serve six months in jail even though prosecutors had pushed for a 6-year sentence. In the end, Turner actually served only three months behind bars because the jail was overcrowded.

Turner's sentence drew an outcry from critics at the time who called it too lenient and it resulted in a recall election that eventually removed trial judge Aaron Persky.

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

Global stocks mixed today following Wall Street. The Nasdaq closed higher thanks to a rise in tech.

The Dow and the S&P 500, though, closed slightly lower because trade tensions are back. China with retaliatory tariffs on $16 billion worth of U.S. goods.

Energy stocks also down. Crude oil prices hit a 6-week low because of slow Chinese demand.

[05:50:02] 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's stock popped 11 percent after Musk tweeted that he had secured funding for a buyout. See there -- "funding secured." That's really important here.

"The Wall Street Journal" is reporting the SEC is probing whether that is true and why Musk announced it on Twitter.

Now, companies can disclose information to shareholders on social media but they can't give misleading information. Musk could be in trouble if he made that statement to boost Tesla's share price.

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


MITCH LOWE, CEO, MOVIEPASS: It is really tough to launch a business that shoots up like a rocket ship but hasn't completely got the business model right because 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.

(END VIDEO CLIP) ROMANS: They burned through something like $20 million in May under the old model. It's now going to limit customers to three movies per month.

Previously, it was one movie a day so there were some frequent flyers -- like 15 percent of its customers who were -- who have seen a lot of movies and that was really burning through the cash.

MATTINGLY: We'll see if they actually have the right model now.

ROMANS: If they can do it, yes.

MATTINGLY: Time will tell -- all right.

Coming up, the late-night comedian stunt that led to a federal investigation.

ROMANS: Plus, is your iPhone spying on you? Apple responds, just ahead.


[05:56:06] ROMANS: A government investigation reveals there was no cyberattack against the FCC's Web site last year. Instead, you can blame the incident on John Oliver fans.

In May of 2017, the FCC's comment system was crippled by a surge in traffic. 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, HBO 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 onto the brinks, my friends. So if you'll go to this URL and tell the FCC to preserve net neutrality and Title II.


ROMANS: Within minutes, those time-wasters and troublemakers had traffic to the FCC Web site spiking 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 -- he described the incident as a series of denial and service cyberattacks. That is what triggered the calls from Congress for an investigation.

Bray still has not responded to CNN's request for a comment.

MATTINGLY: The Motion Picture Academy announcing big changes to the Oscars. The ceremony now making room for the year's biggest blockbusters to enter the race by adding a new category for "Achievement in Popular Film" and traditionalists roar.

The Academy hopes to attract more viewers following a major slump in ratings over the past few years.

ROMANS: 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. Apple's statement is in response to an inquiry from the Energy and Commerce Committee.

Google's parent company, Alphabet, received a similar letter but it's not clear whether Google has responded. And it's not clear whether anyone believes that because it is the most repeated urban myth that your phone is spying on you.

MATTINGLY: A little skeptical -- a little skeptical -- all right.

Finally, Stephen Colbert getting in a little fun at the expense of indictment congressman Chris Collins.


STEPHEN COLBERT, CBS HOST, "THE LATE SHOW WITH STEPHEN COLBERT": "CBS NEWS" has exclusive footage of Collins on the phone at the picnic. There he is in the circle on the phone right there, presumably calling his son.

Now, while "CBS NEWS" has acquired the video, "THE LATE SHOW" has acquired the audio. Jim, enhance.

Hello? Sell, sell, sell, sell, sell, sell, sell. This is Chris Collins. Sell, sell.

No, we'll never get caught -- sell.

According -- it's hard to hear but I think he's saying sell.


ROMANS: I'm still surprised -- sitting on the board of a drug company while also on the committee that oversees such things.

MATTINGLY: It raises questions, as they say.

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

MATTINGLY: And I'm Phil Mattingly. "NEW DAY" starts right now.


UNIDENTIFIED FEMALE: If he needs the president to testify then he will proceed to do that.

GIULIANI: We do not want to run into the November elections. This should be over with by September first. UNIDENTIFIED MALE: When you obstruct justice and you don't sit in the chair, it takes a lot longer.

UNIDENTIFIED MALE: Time is on Mueller's side, not President Trump's.

UNIDENTIFIED MALE: There's no question that he was handling the logistics of the business. Defense attorneys here want to strike at his credibility.

UNIDENTIFIED MALE: Rick Gates was earning his cooperation agreement. He gave the government what it needed to have.


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

JOHN BERMAN, CNN ANCHOR: So, welcome to our viewers in the United States and all around the world. This is NEW DAY. It's Thursday, August ninth, 6:00 here in New York.

Alisyn is off. Erica Hill here with me.

The Red Sox have won six in a row.

ERICA HILL, CNN ANCHOR: What more do you need? And our work is done.

BERMAN: It's a Christmas in August here -- it's fantastic.

Our "Starting Line" -- your move, Robert Mueller.

The president's legal team has now submitted a new offer of terms of just how the president will be willing to answer questions in the special counsel's investigation. This could be the most high-stakes interview of the year, certainly of the president's life if it ever happens, which is in major doubt.