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Mueller Exploring Financials of Trump; Starr on Fishing Expedition; Grand Jury Subpoenas in Russia Probe; McMaster At War with Trump's Base; Sydney Police Foil Terror Plan. Aired 2-2:30p ET

Aired August 4, 2017 - 14:00   ET

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


[14:00:00] WOLF BLITZER, CNN ANCHOR: That's it for me. Thanks for watching. The news continues right now on CNN.

BROOKE BALDWIN, CNN ANCHOR: All right, you're watching CNN on this Friday afternoon. I'm Brooke Baldwin. Thank you so much for being with me.

As President Trump is about to head off for 17 days of R&R, he delivers arguably the biggest promise of his campaign while dealing with a new level of scrutiny by federal investigators.

The jobs numbers are doing exactly what the president wants, but the Russia investigation is crossing his red line.

First to the jobs numbers. A July report did come out today and more than 1 million more jobs have entered the economy since he took office. Unemployment has reached a 16-year low.

However, CNN has learned Special Counsel Bob Mueller is expanding the investigation beyond possible collusion with Russians during the election to the finances of both the president and his campaign associates.

Plus, Mueller has issued grand jury subpoenas regarding that June 2016 meeting that the president's son, Don Junior, held with a Russian lawyer, according to a person familiar with the matter.

But as the Russia case continues to widen, President Trump is using it to try and deepen his support. I want you to listen to what he told folks last night in West Virginia.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The Russia story is a total fabrication. It's just an excuse for the greatest loss in the history of American politics. What the prosecutors should be looking at are Hillary Clinton's 33,000 deleted e-mails.

Most people know there were no Russians in our campaign. There never were. We didn't win because of Russia. We won because of you. That, I can tell you.

The reason why Democrats only talk about the totally made-up Russia story is because they have no message, no agenda, and no vision. It just makes them feel better when they have nothing else to talk

about.

(END VIDEO CLIP)

BALDWIN: Let's begin with Pamela Brown there live for us in Washington.

And so this is all this great reporting from you and Evan and Shimon and the justice team, specifically on what these investigators are looking into of a financial nature which pre-dates the campaign.

PAMELA BROWN, CNN CORRESPONDENT: That's right. In fact, we're told that any leads, any investigative leads that are even unrelated to Russia or the campaign are still being referred to the special counsel. And we're told through our sources that investigators are trying to piece together the financials not only of President Trump but also his family members, also the Trump Organization. And so, as you know, as we've reported, subpoenas have already been issued by the grand jury as part of this investigation.

And we've also been told through our sources that investigators have been combing through a list of shell companies. They've been looking at a roster of people who have stayed at Trump Tower. They've even dug into the backgrounds of Russian associates, business associates, who were connected to the 2013 Miss Universe Pageant in Moscow that the president had brought to Moscow.

And they're also looking at buyers of Trump real estate. They are looking at basically trying to put the pieces of the puzzle together in this expanding investigation to see, in one part, if there were any financial crimes committed, but also to learn or make sure that there's not a threat of blackmail on behalf of the Russians in terms of being -- having financial leverage.

And also another reason why investigators are interested in this is because they can use what they gather as leverage in the investigation to perhaps encourage cooperation among some of the subjects in this investigation, Brooke.

BALDWIN: Let me ask you to stick around because of all the details and all your reporting.

BROWN: Yes.

BALDWIN: I want you to join this conversation in a second.

But, you know, the president's lawyers, they say they're cooperate. For how long? Especially, as I mentioned, President Trump has drawn the line in the sand as far as how far investigators can go. Here's what he told "The New York Times" last month.

(BEGIN VIDEO CLIP)

SCHMIDT: Mueller was looking at your finesses and your family's finances unrelated to Russia. Is that a red line? UNIDENTIFIED FEMALE: Would that be a breach of what his actual

(INAUDIBLE) is?

TRUMP: I would say yes. Yes. I would say, yes. Over the years I've looked at maybe doing a deal in Russia, but I never did one, you know. Other than I held the Miss Universe Pageant there eight, nine years ago (ph).

(END VIDEO CLIP)

BALDWIN: So, with me, CNN political director David Chalian, former federal prosecutor Renato Mariotti is also here, and Pam is with us as well.

And so, David, just beginning with you. You know, that was that -- that sound bite, that was the red line that we refer to now, you know, where Trump has drawn this line with regard to looking into his finances and how he's pushing back on this investigation. But you -- you know, you know Pam's reporting is that, you know, they believe that this is part of the original mandate if there was illegal coordination of Russian security forces in the campaign, these investigators say fair game.

[14:05:17] DAVID CHALIAN, CNN POLITICAL DIRECTOR: Right. So as Pamela's report included, the original language from Rod Rosenstein, the deputy attorney general, when he set up the special prosecutor and appointed Mueller, you know, clearly said anything that may arise through this investigation. I mean it's such wide latitude.

So, in statute, in the way this was set up, there's really no red line. And then the Republicans on Capitol Hill that sat down with Dana Bash, Susan Collins and Lisa Murkowski, said very clearly, the president doesn't get to draw Bob Mueller's red lines. That's not how this works.

So I do think that you played that sound from the president last night from West Virginia. He didn't -- he wasn't going after Bob Mueller. Despite all the news of the day being a grand jury and the -- they were on the money trail and all the reporting that was out there, he didn't go after Mueller. What you heard there was his planned political attack on Democrats, on this being completely trumped up charges, and that seems to be the strategy that he's in right now. It's as almost as if his legal team got to him and got him convinced that Bob Mueller and his investigation is here to stick now and it's in a new phase. This is going to be with him and he can't wish it away.

BALDWIN: So, whether it's correct or not, politically, you know, he's saying to you, the voter, you know, those people are trying to delegitimize your vote. Well, when we think of, you know, special counsels, Renato, to you, just on the law, you think about the Clinton administration, you think about Whitewater. And, you know, just to make the point again, you know, that whole thing started when they were trying to investigate a land deal and wound up talking about Monica Lewinsky and this dress. So looking at the current situation, is it unusual for this kind of investigation to cover this much ground?

RENATO MARIOTTI, FORMER FEDERAL PROSECUTOR: It's not unusual at all. In fact, I spent years investigating white-collar crime. And every time I investigated any kind of white-collar case, you would always look at financial dealings, because they tell you who someone is connected to. It tells you who owes that person things, who they owe things to. It tells you about what their motives are. So it's a pretty common thing to look at financial dealings in any white-collar investigation. And certainly here, there may have been a lot of reasons for the president's finances or his businesses' finances to be relevant. For example, whether there's leverage that the Russians have over him or his family or perhaps a benefit that was given, et cetera.

BALDWIN: You say common. But let me play this sound. I was watching this morning and I went, what did he say? This is the special counsel, Ken Starr, speaking of Whitewater, he said this about the Mueller investigation on "NEW DAY." Roll it.

(BEGIN VIDEO CLIP)

KEN STARR, INDEPENDENT COUNSEL WHO INVESTIGATED PRESIDENT CLINTON: You're moving beyond collusion with Russian operatives or Russian interests or the Russian government itself and into that which doesn't seem to have a direct tie to Russia, then these questions are, in fact, raised. And it becomes a litigable, as we say, question that people are going to squawk about it and disagree about it. I don't think that it is clear one way or the other, but I do think it is a -- certainly a serious matter when a special counsel is accused -- and I was accused of that -- of exceeding his or her authority. That's a serious matter because we do not want investigators and prosecutors out on a fishing expedition.

(END VIDEO CLIP)

BALDWIN: A fishing expedition, David Chalian. That -- did your ears perk when you heard that?

CHALIAN: I mean --

BALDWIN: I mean --

CHALIAN: Without a doubt. Ken Starr is the textbook photo if you look up fishing expeditions as related to independent counsels. So it is odd to hear -- and he admitted that, that he was accused of that, but it is odd to hear him warn against fishing expeditions when, as you noted earlier, Brooke, his investigation started with a land deal and ended up with an intern in the oval office.

BALDWIN: Pam Brown, how would your sources or, you know, folks tied to the investigation respond to that?

BROWN: Well, I mean, you know, I think from the viewpoint of those involved in the probe, they think that everything they're doing is relevant. And, look, if they get a lead or unearth facts that could be a crime, you know, they're not going to turn a blind eye to it. So, in that regard, I think those involved in the special counsel probe feel like they are doing exactly what they were appointed to do, and they have been given wide latitude. But certainly I think it is sort of ironic that Kenneth Starr was sort of warning against this notion of a fishing expedition.

BALDWIN: Got it.

BROWN: You know, to the point David made.

BALDWIN: Right. Right. I think irony is precisely the word.

And, Renato, what about, you know, the grand jury also. This broke during the show yesterday, but we're just talking more about how they're issuing subpoenas of witnesses. How do you think hat changes the investigation? What does that tell you about the stage of the investigation now?

[14:10:05] MARIOTTI: I still think we're in an early stage. I know the viewers may not want to hear that. But I think what we're going to see in the months ahead are witnesses being called to testify before the grand jury using grand jury subpoenas, and that the purpose of that is to -- for, you know, not only to force people to testify who might be reluctant to cooperate, but also to get their testimony under oath. And I think we're also going to hear about a lot of grand jury subpoenas for documents and records. A prosecution and investigation like this is going to leave no stone unturned. If I was Mueller and on his team, I would be doing everything I could to gather all the information possible given the importance of the investigation.

BALDWIN: And, you know, just something our team was talking about this morning, and Chalian I know you're not a lawyer, but, you know, you're in Washington --

CHALIAN: To the great dismay of my mother, Brooke.

BALDWIN: Sorry, Mrs. Chalian. I think you've done all right.

How do they find grand jurors, you know, Americans who aren't plugged in, who aren't biased either way on this whole thing, to sit in a room and hash this out?

CHALIAN: You know, it's a good question. Although it's also not clear, Brooke, how much everyday Americans are focused in on the details of this story day in and day out the way we are in the media, in the beltway, I do think there's probably, to Pam's point of all her reporting, it's like you hear all of these things out there and you're living your life, you're going about your business, and then, you know, Pam's reporting today is like putting it all together. Here's where we are a year in. I think people check in and out. So I don't know that they've been so immersed in some way that they're unable to look at evidence in a fair manner.

BALDWIN: Sure. No.

BROWN: And can I just make one point really quickly?

BALDWIN: Yes, please do. Please do. BROWN: There's a key difference between impaneling a special grand jury, which is a judge, you get approval from a judge and then you convene a group of people dedicated to the case and have a set schedule, and just using a grand jury that's already sitting that just, you know, signs -- you know, just allows the subpoenas to go forward with documents and testimony. And to be clear, we don't know -- we don't know if Mueller has impaneled a special grand jury or if he's just using a sitting grand jury in D.C. I just think it's an important clarification to make.

BALDWIN: Totally. These are questions people are asking, trying to understand the process.

BROWN: Yes.

BALDWIN: Pamela and David and Renato, thank you so much.

Coming up, the theater, not that kind of theater, the theater in the West Wing, that's intensifying. New details about National Security Adviser H.R. McMaster and his standing in the White House. Why my next guest says the president's core supporters are declaring war on Trump's top national security aide.

Also, it's been called the most sophisticated terror plot ever attempted. This involved deadly gas, high-grade explosives and a commercial airliner. How authorities foiled this chilling ISIS plot.

And great jobs numbers out today. A million jobs added since the president has taken office. Unemployment rate, the lowest it's been in 16 years. Does the president get all the credit and why is Wall Street seemingly unfazed by all things Russia?

You're watching CNN. I'm Brooke Baldwin. We'll be right back.

(COMMERCIAL BREAK)

[14:17:13] BALDWIN: We're back. You're watching CNN. I'm Brooke Baldwin.

Reports are intensifying of this feud between National Security Adviser H.R. McMaster and the president's inner circle. General McMaster has seen his standing questioned after he removed a top intelligence adviser, seen as a continuation of his effort to purge acolytes of his predecessor, General Michael Flynn, from the National Security Council.

So I've got Kaitlan Collins joining us from the White House there, and Kimberly Dozier, CNN global affairs analyst.

But, Kaitlan, let me just kick things off to you because we're hearing two senior White House officials say General McMaster has been, I believe the word is irritated, by the impression that he has lost some standing with the president. What are you hearing?

KAITLAN COLLINS, CNN WHITE HOUSE REPORTER: Yes, that -- that's exactly right. We've heard from two White House officials that he is a little annoyed with all these reports that he's lost some good standing with the president. But McMaster has drawn the ire of some conservatives this week after two things. One, he dismissed Ezra Cohen-Watnick, this intelligence aide from the National Security Council. Ezra Cohen- Watnick was brought in by Michael Flynn before he was fired as national security adviser earlier this year.

And then, secondly, we found out this week that McMaster had written a letter to Susan Rice extending her security clearance. Now, this is Barack Obama's national security adviser who has been accused by some of mishandling classified information pertaining to Trump associates. So that's drawn some ire.

But the White House has said that McMaster sent this letter to all past national security advisers so they could weigh in on the current administration's discussion over these national security issues that arose when they were in office. So that's what we're being told right now. But we're definitely hearing that McMaster is feeling the heat here in the West Wing.

BALDWIN: So -- all right, so given that reporting, Kim, let me ask you, you know, we knew about some of the tensions, whether or not they should draw down on the 9,000 troops in Afghanistan and the back and forth and disagreement with the president and McMaster over that. But reading your "Daily Beast" piece today, you know, you talk about how the president's political base has declared this all-out war on the president's top national security aide. Why?

KIMBERLY DOZIER, CNN GLOBAL AFFAIRS ANALYST: Well, because some of the people that he has fired were known as banner carriers, spear carriers for the Trump campaign, the Trump administration. They were originally hired by Lieutenant General Mike Flynn. And so the concern in Trump's base is that this is H.R. trying to put his stamp on the National Security Council.

What I hear from others is that what you see is H.R. is getting rid of people who proved really hard to work with or some people whose loyalties seemed to be divided, who didn't understand the chain of command. That, yes, they were allowed to talk to people in Trump's inner circle over in the West Wing, but they had to let him know about it.

[14:20:05] So, what you see is a shaking out of the different tribes as they learn to work together, and the result of General Kelly, retired General Kelly, now being chief of staff and saying to McMaster, you're in charge. It's your team. If someone's not working, tell me and they're out.

BALDWIN: So you talk about the tribes. Where I'm curious is, how long has this whole -- has this been brewing? Because, you know, we remember back, McMaster was seen as a prized pick. When did this go wrong?

DOZIER: Well, look, you've got these different teams of people who are trying to come up with brand-new policies on a bunch of contentious issues, everything from how to solve or draw down the war in Afghanistan, to how to defeat ISIS. Past administrations haven't come up with solutions any quicker or easier, but you've got a president who wants things turned around quickly. So that puts more stress on the process.

And then you've got McMaster asking teams of people to go to the Pentagon, go to the CIA, get the information I need to turn around a white paper so I can present it to the president's staff, and that not happening fast enough. The people who didn't help it happen fast enough are out, and some of them, though, had, through the campaign or through the early weeks of the Trump administration, forged really close ties with people like Jared Kushner and Bannon, and that is where you get the complaints as they're on the way out.

BALDWIN: So then quickly, as we look ahead to see what results from all of this, and I know there are scenarios here, we've talked to a number of government officials who say one possibility, although they're saying unlikely, is that McMaster could be transferred to (INAUDIBLE) troops in Afghanistan. Are you hearing that?

DOZIER: I think what you're going to see is he's got a reprieve now. He's got some time.

BALDWIN: Some breathing room.

DOZIER: You've got a few weeks, a few months to turn around this operation and get the president some of the new ideas he's been pushing for. So I think that's been -- that can has been kicked down the road.

BALDWIN: OK, Kimberly and Kaitlan, thanks, ladies.

DOZIER: Thank you.

BALDWIN: Coming up next, two major terror plots being called the most sophisticated terror plot ever attempted have been thwarted by authorities. One of them, a plan to put an IED on a commercial airline. How authorities stopped that.

Also, today's jobs numbers point to a strong economy. Does President Trump get all the credit?

We'll be right back.

(COMMERCIAL BREAK)

[14:26:59] BALDWIN: Authorities in Sydney, Australia, are breathing this massive sigh of relief here because they just foiled two major terror plots, both of them allegedly linked to ISIS. One plot involved planting an IED in the cargo of a commercial passenger plane. The other would have unleashed a toxic gas on the public, maybe in public transportation. Australia's police commissioner said the plans, if not stopped, could have been a catastrophic event.

(BEGIN VIDEO CLIP)

DEPUTY COMMISSIONER MICHAEL PHELAN, AUSTRALIAN FEDERAL POLICE: The investigation was in relation to an allegation that an Australian- based individual was planning to undertake preparations for an attack against Australian aviation targets. It is alleged that this individual was receiving information and being inspired and directed directly from ISIL in Syria. And this advice was coming from a senior member of the Islamic State.

This is one of the most sophisticated plots that has ever been attempted on Australian soil. And if it hadn't been for the great work of our intelligence agencies and law enforcement over a very quick period of time, then we could very well have had a catastrophic event in this country.

(END VIDEO CLIP)

BALDWIN: At least two people, both are brothers from Sydney, have been arrested and charged with terrorism-related offenses.

Rene Marsh is live with us. She's our CNN aviation and government regulation correspondent, and Paul Cruickshank is our senior terrorism analyst.

And so, Paul, before I get to you, Rene, just tell me more, just the details, the, you know, the sophistication level of this.

RENE MARSH, CNN AVIATION AND GOVERNMENT REGULATION CORRESPONDENT: Yes, Brooke, the coordination and the grade of weaponry used in this particular plot, hands down, it is extremely chilling. An ISIS commander essentially sent partially assembled bomb components via air cargo from Turkey to Australia. And the bomb parts include high military grade explosives. The intention was to build a bomb and place it in or on board a (INAUDIBLE) Airlines flight on July 15th.

What's new and really concerning here is that ISIS is essentially shipping do-it-yourself bomb kits to extremists in the west. Now, as you know, and we've covered, building those powerful bombs from scratch is probably one of the most difficult things for extremists. But what this plot shows is that ISIS is making it easier for them. Again, flying those partially assembled components to the west, then talking them through the final steps. Police say that this device was in luggage that was supposed to be checked, but at no stage did it actually get past airport security.

Australian police didn't elaborate as to why this attack never did proceed as planned. But the other part of this plot, Brooke, involved a plan to release this toxic gas in public. The two men involved, they have been identified. One is a 49-year-old, one a 32-year-old, Khaled Khayat, as well as Mahmoud Khayat. Both of them were living in Sydney.

BALDWIN: I'm still back on bomb parts via airmail, Paul Cruickshank.

MARSH: Right.

[14:30:03] BALDWIN: Can you tell me more about that?

PAUL CRUICKSHANK: Well, these are alarming details with a capital "a." This is sort of like the Ikea model of terrorism that they managed to get this high-grade military explosive to Turkey.