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THE SITUATION ROOM

Trump's Taxes; Interview With Former U.S. Secretary of Defense Leon Panetta; Putin to Visit Trump?; Source: Investigators Think Kremlin Approved Ex-Spy's Poisoning; Trump Tax Returns May Be Sought in Lawsuit Accusing Trump's Business Holdings of Violating the Constitution; Congresswoman Esty Won't Reelection After Mishandling Sexual Abuse Allegations Against Top Aide. Aired 6-7p ET

Aired April 2, 2018 - 18:00   ET

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


[18:00:03]

WOLF BLITZER, CNN ANCHOR: Hosting Mr. Putin. New confirmation that President Trump spoke with the Russian leader about a possible one-on- one meeting at the White House, this as we're told investigators now believe an assassination attempt has Putin's fingerprints on it.

And getting Trump's taxes. A lawsuit alleging the president is violating the U.S. Constitution through his business holdings is moving forward. Will prosecutors get their hands on Mr. Trump's elusive tax returns? I will have an exclusive interview with one of the officials pursuing the case.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following breaking news in the Russia investigation. "The Wall Street Journal" reporting tonight that the special counsel, Robert Mueller, is looking into a claim by Trump ally Roger Stone that he met in 2016 with Julian Assange, the founder of WikiLeaks, that released DNC e-mails hacked by Russia.

"The Journal" reports that during grand jury testimony, Mueller's team has specifically asked about an e-mail in which Stone said he had dinner with Julian Assange.

I will get reaction from the former CIA Director Leon Panetta.

And our correspondents and analysts are also standing by.

First, let's go to our justice correspondent, Evan Perez.

Evan, why would the -- this alleged Stone-Assange meeting be significant?

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, Wolf, it would be a big piece of information for the special counsel, simply because this lies at the center of what the special counsel, Robert Mueller, is supposed to be investigating, which is whether or not there was any illegal coordination between people associated with the Donald Trump campaign and Russians.

Now, the e-mail that we're talking about, that "The Wall Street Journal" said it saw, is dated August 4, 2016, and it is from Roger Stone to Sam Nunberg. Both of them were informal advisers to then candidate Trump.

And in the e-mail, Roger Stone says -- quote -- "I dined with Julian Assange last night."

Now, Wolf, the problem with this is we have had multiple different stories from Roger Stone as to whether or not he had any actual contact with Julian Assange, the founder of WikiLeaks. In the past, he said that he did have contact. He also has said that he had contact with Julian Assange through an intermediary.

And just in the last couple of days, we have talked to him at CNN and he now denies that he ever had any contact with Julian Assange. He told "The Wall Street Journal," for instance, that he could provably show that he was not in the Ecuadorian Embassy having dinner with Julian Assange during the time of this e-mail, simply because he said he was flying somewhere and he produced the receipt from Delta Airlines for a flight.

So, again, we don't know what his story is, but it's a very significant thing if this e-mail is true. Again, it goes to the central mission of what the special counsel is investigating.

BLITZER: The e-mail was an e-mail that was sent to Sam Nunberg, one of his associates. And now Roger Stone says he was simply joking in that e-mail when he says that he actually had dinner with Julian Assange.

PEREZ: Right, it's par for the course with Roger Stone. He's, obviously, one of the many colorful characters that we have run into in this now year-long investigation by the special counsel.

But it's important to note that, again, the day after this interview, this e-mail was allegedly sent is the day that Roger Stone tweets out something about essentially calling Julian Assange a hero. He said -- quote -- "Hillary lies about Russian involvement in DNC hack. Julian Assange is a hero."

And obviously a few weeks later, in late August, he also foreshadows, seeming to know that the WikiLeaks was about to release e-mails that were hacked from John Podesta, who helped run the Hillary Clinton campaign. Again, there's a lot of questions here. And this is not the first we have heard that people are being asked about Roger Stone in the special counsel investigation.

BLITZER: And, of course, the president during the campaign said, "I love WikiLeaks," and I'm sure investigators are looking into that as well.

PEREZ: Right.

BLITZER: We're expecting a first tomorrow. The first sentencing of someone who has now pled guilty in the Mueller probe.

PEREZ: Right. This is a milestone in this investigation.

Alex van der Zwaan is pleading guilty to lying to special counsel Mueller's investigators. Under the guidelines, he could get between zero and six months in prison. We're expecting, I think it's even likely, that's he's going to get no prison time. He also faces $250,000 fine.

Look, he's got a baby due in August, Wolf. Even though he lied to the special counsel, he later corrected the record, provided the documents that the special counsel said that he was withholding and he's a very key witness, simply because he worked with Paul Manafort and Rick Gates, Paul Manafort, the former chairman of the Trump campaign, and Rick Gates, his associate, in this Ukraine business that they had.

[18:05:06]

BLITZER: Now, Mueller filed a document in advance of the sentencing, saying that van der Zwaan can't say anything publicly about this investigation. He knows what's going on. Talk about that.

PEREZ: Right.

Under this agreement that he has signed with the special counsel, he forfeits or he gives up his right to be able to get any information from the special counsel's office under the Freedom of Information Act.

And the reason for this is that they say he knows too much about the special counsel's investigation, including information that is not yet public. And so the concern here is that he could use information that he has from the investigation and could tip off other people.

It's very key here, Wolf, that just last week, in another filing in the van der Zwaan case, the special counsel let it be known that Rick Gates was in contact with someone that the special counsel says is a Russian spy, a Russian intelligence agent, and that Rick Gates knew he was -- this person was working for the Russians at the time that he was communicating with him in September and October of 2016.

Again, that's in the middle of the presidential campaign. And this is key, because, again, it goes to the central mission here of the Mueller investigation, which is proving or showing whether or not there was any illegal or improper contacts between Russians and the Trump campaign.

Paul Manafort, of course, was the campaign manager. And so this ties together all of those strands.

BLITZER: Yes. And Rick Gates was the deputy campaign chairman and he stayed on in the campaign after Paul Manafort left.

PEREZ: Into the inauguration.

BLITZER: That's correct. All right, Evan, thank you for that report. As the Mueller probe continues to look into possible collusion between

the Trump camp and Russia, the White House is now confirming a new overture by the president to the Russian leader, Vladimir Putin.

The two leaders discussing a potential meeting here in Washington at the White House.

Let's bring in our chief White House correspondent, Jim Acosta.

Jim, while the president makes nice with Putin, he's been on a new Twitter rant on multiple topics, including immigration.

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: That's right, Wolf. President Putin might feel right at home here at the White House, the way the president has been going off on the media and the Justice Department in recent days. He's also venting his frustrations on the issue of immigration.

The president sticking to his talking points when it comes to the young undocumented immigrants known as the dreamers who fall under the DACA program. But he was suddenly silent today when we reminded him he ended DACA.

(BEGIN VIDEOTAPE)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It was supposed to be very rainy and nasty and cold and windy and look what we have. Perfect weather. Perfect weather. Beautiful weather.

ACOSTA (voice-over): Just before President Trump welcomed guests to the White House for the annual Easter egg roll, he was hammering away on immigration, blaming Democrats for failing to extend the program that protects young undocumented people from deportation known as DACA.

"DACA is dead because the Democrats didn't care or act," the president tweeted. "And now everyone wants to get on to the DACA bandwagon. No longer works. Must build wall and secure our borders with proper border legislation."

When we pressed Mr. Trump on that at the Easter egg roll, he neglected to mention one thing. He terminated the DACA program.

(on camera): Mr. President, what about the DACA kids? Should they worry about what's going to happen to them, sir?

TRUMP: The Democrats have really let them down. They have really let them down. They had the great opportunity. The Democrats have really let them down. It's a shame. And now people are taking advantage of DACA and that's a shame. It should have never happened.

ACOSTA: Didn't you kill DACA, sir? Didn't you kill DACA?

(voice-over): The president didn't respond. Mr. Trump launched his immigration tweetstorm over the weekend, shortly after a segment on the issue aired on FOX News. But the president's tweets weren't limited to immigration. He also defended the conservative Sinclair Broadcasting Company, which has come under scrutiny for asking its local stations to air identical segments that appear to parrot Mr. Trump's attacks on the media.

The president tweeted, "So funny to watch fake news networks, among the most dishonest groups of people I have ever dealt, criticize Sinclair for being biased."

Mr. Trump also continued to harass "The Washington Post" and its owner, Jeff Bezos, who also founded the online retailer Amazon, complaining: "The post office loses a fortune shipping packages for the company."

He even took a swipe at the Department of Justice, putting justice in quotes, describing officials there as an embarrassment to our country. The president's hard-line rhetoric comes just as aides confirm he's considering hosting a meeting with Russia's Vladimir Putin at the White House, a sit-down he hinted at last month.

TRUMP: We had a very good call and I suspect that we will probably be meeting in the not-too-distant future.

ACOSTA: Another sign of the chaotic atmosphere at the White House, the back and forth over whether the president actually fired his Veterans Affairs secretary, David Shulkin. Shulkin says he was fired.

QUESTION: You received a phone call from Chief of Staff John Kelly, who fired you?

DAVID SHULKIN, FORMER U.S. SECRETARY OF VETERANS AFFAIRS: General Kelly gave me a heads-up.

[18:10:01]

QUESTION: The tweet fired you?

SHULKIN: Yes.

ACOSTA: While the White House has offered evasive statements, insisting Shulkin resigned.

MERCEDES SCHLAPP, WHITE HOUSE SENIOR COMMUNICATIONS ADVISER: General Kelly called Secretary Shulkin and gave him the opportunity to resign. Obviously, the key here is that the president has made a decision.

(END VIDEOTAPE)

ACOSTA: As for DACA, the president apparently does not have his facts straight, as he often does with other issues. He keeps saying people are flowing into the U.S. to take advantage of the DACA program, but newcomers, we should point out, would not be eligible for DACA, because the president, as we mentioned earlier, ended it.

As for the president blaming Democrats for DACA, that's also false. As Democrats and Republicans have both offered proposals to save dreamers from deportation, but the president has rejected those plans time and again, Wolf.

BLITZER: All right, Jim, thank you, Jim Acosta at the White House.

Joining us now, the former Defense Secretary, former CIA Director Leon Panetta.

Mr. Secretary, thanks so much for joining us.

In light of what we now know about the Mueller investigation, at least so far, how important is this new information that Roger Stone had an e-mail in which he said he had dinner with Julian Assange? This is being reported by "The Wall Street Journal."

LEON PANETTA, FORMER U.S. SECRETARY OF DEFENSE: Well, there's no question that the Mueller investigation has reached crunch time, in the fact that they are now looking at just exactly whether or not there was any kind of conspiracy between members of the Trump campaign and the Russians.

We have already determined that the Russians attacked our election system. Indictments have been issued on that fact, and now the issue that Mueller has to turn to is what whether or not there was any activity here that involved any kind of deliberate conspiracy.

And having this information on the e-mail indicates that Mr. Stone, who was somebody involved in the campaign, obviously was contacting someone to determine whether or not they could get information to be used in the campaign.

Whether or not this is the truth, that remains to be determined, obviously, by Mr. Mueller. But I think it's an indication that we are now embarked on a very critical part of this investigation.

BLITZER: Yes, Roger Stone says he was simply joking in that e-mail.

Let's get to another sensitive issue. Alex van der Zwaan, the 33- year-old Dutch lawyer, worked for a major U.S. law firm, he apparently knew about Rick Gates' contacts with individuals close to Russian intelligence. What might we learn from van der Zwaan's sentencing tomorrow?

PANETTA: Well, again, the fact that he is pleading guilty indicates that there was something that was going on.

What the full extent of the information he has with regards to Gates and contacts with the Russians, I think will have to be determined, either upon sentencing or as part of the Mueller investigation.

BLITZER: What's your reaction, Mr. Secretary, to President Trump's decision to invite Vladimir Putin to come to the White House and the fact that we only learned about this invitation from the Russians?

PANETTA: Well, I have a lot of concern when the president issues that kind of invitation to an adversary. This is an adversary. Putin has been very aggressive against the United States, and, for that matter, the world. He's gone into the Crimea. He's gone into the Ukraine. He's taken

military force into Syria. He has attacked our election process. He's now, you know, using nerve agents to go after Russian spies.

I think Putin reads weakness, you know, on the part of the United States and others, for that matter. And to now have the president of the United States give him a call after the election to congratulate him and then not even mention any of these other issues, I think Putin just sees that as more of a sign of weakness.

BLITZER: You served as the CIA director. Do you believe Russian agents would have carried out that nerve agent attack in the U.K. without Vladimir Putin's approval?

PANETTA: Not at all.

Wolf, I don't know if you know this, but when I was CIA director, I was one of those that put together the negotiation to basically exchange 10 of the Russian spies for their -- for some of our spies, I think four of our spies, one of whom was the individual who the Russians went after.

In order to get that exchange approved, Putin had to agree to that. And I don't think there's any question that this former KGB agent would not allow the Russians to engage in a nerve attack in another country without knowing about it and without approving it.

[18:15:03]

BLITZER: Let me get to another sensitive issue, before I let you go, Mr. Secretary. President Trump is ending aide to Syrian rebels. There's $200 million appropriated. Says he's not going to spend it. At least, they haven't spent it yet. And he also says the U.S. will be pulling out its 2,000 troops from Syria very soon.

Who will fill that vacuum?

PANETTA: I think that's a very dangerous step for the president to take, because what he's doing is issuing an open invitation to Russia and Iran to have a permanent foothold in the Middle East in Syria. And if they do establish that foothold, and Assad wins this larger war, then the United States is going to be at a serious disadvantage, because ISIS will find a place at which they can continue to develop the plans that they have always been involved with to attack our country.

I think it would be a serious mistake for President Trump to walk away from the courage, to walk away from the battle of ISIS, but, most importantly, to walk away from leadership on the issue of what happens to Syria.

BLITZER: You think he will listen to his generals, who apparently are very concerned about a complete U.S. pullout from Syria? They're concerned that the Iranians, the Russians, Hezbollah would effectively have control of a great deal of land. PANETTA: Well, you know, the president criticized the moment when we

withdrew troops from Iraq, which created an opening for is. If this president now basically removes our troops from Syria, that will leave a vacuum in which is in Iran and Russia will expand their influence in the Middle East.

He will pay a price for this from history's point of view.

BLITZER: Very concerning, indeed.

Leon Panetta, thanks so much for joining us.

PANETTA: Nice to be with you.

BLITZER: Just ahead, we will have much more on the first sentencing expected in Robert Mueller's investigation. What secrets is the special counsel trying to keep under wraps?

And the Roger Stone connection to the Russia probe. We will talk about the breaking news on the longtime Trump ally under scrutiny by Mueller's team.

(COMMERCIAL BREAK)

[18:22:03]

BLITZER: Breaking tonight, a new report on the special counsel's interest in Roger Stone, a longtime Trump ally, whose name keeps coming up in connection with the Russia investigation.

"The Wall Street Journal" is reporting that Mueller's team is looking into an August 2016 e-mail in which Stone claimed to have dinner with the WikiLeaks founder, Julian Assange.

Let's bring in our legal and political experts.

And, Gloria, how would all of this fit into the overall Russia probe that Mueller's engaged in?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: What a tangled web he's got to sort of undo here. I mean, what he's looking into is the contacts between people who were in Donald Trump's orbit or campaign and the Russians.

And so, what you have is an e-mail that Roger Stone apparently sent to his one-time friend, Sam Nunberg, claiming that he had had dinner with Julian Assange. Roger Stone is, of course, now saying that never occurred, didn't happen, providing documents to "The Wall Street Journal" to prove that it didn't happen.

But we do know that the e-mail was dated August 4, and the next day, he publicly -- Mr. Stone publicly praised Julian Assange on Twitter. So what the special counsel has to do is figure out what is real and what isn't real and were there real contacts with Julian Assange.

And I am sure, by the way, that Roger Stone and Sam Nunberg are not the only two people they are looking at in terms of Julian Assange, because we know how important he may have been in this campaign in terms of dumping e-mails out, you know, John Podesta's e-mails, et cetera.

And I think that's a very important part of this investigation.

BLITZER: John Podesta was the chairman campaign for the Hillary Clinton campaign, and DNC e-mails as well.

Laura Coates, you're our legal analyst.

The first sentencing tomorrow, this 33-year-old lawyer, worked for a big U.S. law firm, he's about to be sentenced. And what do we anticipate learning as a result of this?

LAURA COATES, CNN LEGAL ANALYST: It's going to be quite the litmus test, on a number of fronts.

Number one, how lenient or accommodating will be the judge be in terms of silencing or putting a muzzle on people about the investigation? Up until now, Mueller has held things very, very closely to his vest, and with good reason, because the more he keeps everyone in Washington, D.C., and in the inner circle of Trump on their toes, the more likely that everyone will be able to jump when he needs them to do so.

So you want that sort of mystery going around. The judge is going to talk about that. Also, why is this person so important? There have been tales about van der Zwaan and what he knows and what he doesn't know, but to really single down for us and narrow down in a good way what he knows and what Gates knew and about the timing of his contact with somebody who was part of the Russian spies or the Russian intelligence officers in some way or fashion.

Also, finally, it will tell us about how much weight Mueller and his team is going to put behind sentence recommendations. Probably about six months, he's facing in prison if he were to go to prison. But how lenient he will be in what's called the allocution, meaning, what am I going to offer up to the judge as a potential punishment?

[18:25:11]

It will be very telling with people like Michael Flynn, Rick Gates, and the like.

(CROSSTALK)

BLITZER: And Manafort, if he decides to cooperate and plead guilty as well.

Kaitlan, what are you hearing from the White House about -- we're just learning today that the president has apparently invited Putin to not only have a meeting, he said so a few weeks ago on March 20, but actually to come to the White House, to the Oval Office?

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Well, it's not that shocking, right? Because right after that call, President Trump did say that they had a great call. He said that they discussed meeting in the not-too-distant future, but what it shows is just how comfortable and cozy that call between Trump and Putin truly was, because, as you will recall, right afterwards, President Trump was widely criticized for not bringing up Russian meddling in the election with him and not bringing up the poisoning of that former British spy -- Russian spy -- British spy -- excuse me -- with Vladimir Putin during that call.

But he did congratulate him on his election victory, even after his national security team told him not to congratulate him, because it was what some people like Senator John McCain called a sham victory. So it goes to show just how comfortable the president is speaking with him. He congratulated him. He did the same with El-Sisi today, another election where neither of them were going to lose those elections.

And it just goes to show how comfortable that relationship between the two of them truly is.

BLITZER: He's been very active, David, today on Twitter, throughout the weekend. He really went after the FBI and the Justice Department today. "So sad," the president writes on Twitter, "that the Department of 'Justice'" -- justice in quotes -- "and the FBI are slow-walking and not giving the unredacted documents requested by Congress. An embarrassment to our country."

What's the impact of something like this, when the president of the United States slams the Department of Justice and the FBI?

DAVID SWERDLICK, CNN COMMENTATOR: Right, Wolf, you emphasized those quotation marks around the word justice in DOJ.

The president tweets this as if he's not the president of the United States and this is not his Justice Department headed by the attorney general that he appointed.

I suppose the White House thinks this is good messaging to signal to his supporters that he still sees himself as anti-establishment, an outsider. But at the end of the day, this has the effect of undermining Americans' faith in our institutions of government. And it puts out this very weird and, frankly, weak message, this idea that, oh, woe is me. I'm just the president of the United States. I'm just the leader of the free world.

I have no power against this bureaucracy, which, by the way, reports to me.

BLITZER: And he raises questions, Gloria, whether this is the Department of Justice. He puts the word justice in quotes.

BORGER: You know how demoralizing that is for people in law enforcement, when the president of the United States does that?

And, you know, I think he's walking a fine line here, because he's trying to distinguish between the so-called leaders, whom you point out are his leaders, and the rank and file. And, you know, that's very -- that's a tough line to walk. And people in this country respect the FBI and they respect the job that law enforcement does.

So he's on the street saying, we have got to support our police. On the other hand, he's dissing the FBI. I mean, that's kind of a mixed message, as far as I'm concerned. I don't know how far he gets with that, quite frankly.

COATES: You know, I'm a proud alum of the Justice Department. And I was a career official, not an appointee.

And it's extremely demoralizing to people who are currently there to know that they have withstood many an administration, they have served proudly, they have withstood political pressure, et cetera, and to find that the president, who is the head of the executive branch, which they fall under, is shaming them for a variety of reasons, based on news that he is planting in a variety of ways, is demoralizing, and self-defeating.

And, frankly, it undermines all the progress made in the previous two administrations trying to get a good community partnership with the Justice Department.

BLITZER: President Trump named the attorney general, the deputy attorney general, named the FBI director. These are all people that he nominated for those positions.

(CROSSTALK)

BLITZER: Stick around.

Just ahead, even as President Trump talks of hosting Vladimir Putin at the White House, investigators now believe Putin's government likely approved the attempted assassination of a former spy in the U.K. We will go live to Moscow.

(COMMERCIAL BREAK)

BLITZER: We're following the breaking news. The special counsel, Robert Mueller, reportedly looking into an alleged meeting between a Trump ally and the head of group that published e-mails hacked by the Russians. Stand by for more on that.

Right now, let's talk about the president's latest Twitter rant and the people who are apparently influencing him. As you know, Gloria, the president spent the weekend down in Mar-a-Lago and Palm Beach, his resort down there. He's had several prominent FOX personalities there. And the suggestion is they're clearly having an impact on him.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right, it's like he took the green room and invited everyone down from the FOX green room and said, "Come on over to Mar-a-Lago." These are people he's had in his living room for years. Now he's literally invited them there.

And I think there's a direct correlation not only between what he watches on FOX TV, but what these people were saying to him over the weekend. I don't think it's any surprise that he then started tweeting about DACA, immigration, justice, which we were just talking about, the FBI, NAFTA, sort of the discussion du jour that occurs.

And I think that we're reminding him that his base is unhappy, and they represent his base, I think they believe. And that telling him he better shape up on this stuff.

[18:35:08] And I think the president who, by the way, can sit down with anyone in the world and invited them -- and of course, Don King, to come to Mar-a-Lago this week. And I think it's a comfort level for him.

BLITZER: Yes. You were -- Kaitlan, you were down there this weekend, down in Mar-a-Lago, right?

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Yes, that's right. I was. And it's interesting --

BORGER: Were you invited to dinner?

COLLINS: For some reason, I think my invitation got lost in the mail.

But it's interesting to see who is there, who he is surrounded by, these FOX News personalities: Sean Hannity, Judge Jeanine Pirro. And who's not there, his top aides in the White House: John Kelly, Dan Scavino, these typical aides who usually travel with the president weren't there.

The one top aide who was there was Stephen Miller, who is certainly the most hardline on immigration in the West Wing at this moment. So it is interesting to see who he surrounds himself with. And you can almost guess what he was going to tweet.

I pointed out on Friday when we got down there, who was with him and who wasn't traveling with him, and it's interesting to see what tweets come out of that.

BLITZER: You know, he was tweeting about Sinclair Broadcasting, the owner of about 170 local TV stations. And what was pretty shocking, David, was that the Sinclair Group forced all of these local anchors to read exactly the same copy about fake news. Let me play a little clip.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: The sharing of biased --

UNIDENTIFIED MALE: And false news has become all too common on social media.

UNIDENTIFIED MALE: More alarming is they are simply publishing things that aren't true. Not checking facts first. Unfortunately, some members of the media use their platforms to push their own personal bias and agenda to control exactly what people think. And this is extremely dangerous to our democracy. UNIDENTIFIED MALE: More alarming is they are simply publishing things

that aren't true. Not checking facts first. Unfortunately, some members of the media use their platforms to push their own personal bias and agenda to control exactly what people think. And this is extremely dangerous to our democracy.

UNIDENTIFIED MALE: More alarming is they are simply publishing things that aren't true. Not checking facts first. Unfortunately, some members of the media use their platforms to push their own personal bias and agenda to control exactly what people think. And this is extremely dangerous to our democracy.

(END VIDEO CLIP)

BLITZER: And we've got a map showing these Sinclair stations are all over the country. Clearly, they have an influence. It's pretty shocking to hear that. You force these anchors, some of them young, some of them, they need to make a living. They fear if they don't say what the owners want, they could be out on the street.

DAVID SWERDLICK, CNN POLITICAL ANALYST: I don't want to second-guess any individual journalist's decision. I will say this. I think Sinclair shot itself in the foot by doing this and trying to ratchet up the -- what I call the bias wars. This idea that, no, we're not biased; you're more biased. You're more biased than these people.

Look, the idea is that news organizations -- "Washington Post," CNN -- everybody works hard trying to get it right and get reporting out there. And when the reporting is wrong, we fix it.

But there's strong reporting, accurate reporting, and then there's inaccurate or not strong reporting. There's strong opinion analysis. There's not strong opinion analysis. That's what matters. Not this whole idea of "we're holier than thou" between news organizations.

BLITZER: You know, Laura, this, it's pretty shocking. The president says, "So funny to watch network news anchors, among the most dishonest groups of people I have ever dealt with, criticize Sinclair Broadcasting for being biased. Sinclair is far superior to CNN and even more fake, NBC, which is a total joke."

And these -- the copy that these local anchors had to read certainly echoes what the president has been saying.

LAURA JARRETT, CNN LEGAL ANALYST: It does. And I actually don't find propaganda as funny as the president of the United States seemed to do in that tweet. Because I think if you really believe in the First Amendment and free press and the role of the watchdog and gatekeeper and also objective informant, then you actually have to allow them to have and exercise their own rights, their own thought process. And you can't laugh at the idea that, if I give them a script and still call it journalism, people will think that we are patriots and believe in the First Amendment.

The propaganda has to be (UNINTELLIGIBLE) by anyone who believes in the Constitution of America, and I think that should be the president of the United States, who is the person to most ardently reject propaganda.

SWERDLICK: The president made it worse for Sinclair by tweeting that he liked Sinclair's coverage. Most journalists would rather be working for a news organization that is challenging the administration, not --

JARRETT: But Sinclair -- Sinclair had 15 exclusive Trump interviews over the -- in 2016. Not one of Hillary Clinton. They had Tim Kaine for a couple of them. They've almost always given money to Republican nominees. It's no surprise they are very conservative leaning. Still, I think this was a rejection of what the principles are for journalism.

COLLINS: And two more things to add to that you have to keep in mind. A chief political analyst for Sinclair is Boris Epshteyn, who worked with the Trump campaign and in the Trump White House for a little bit of time. And as you'll recall last year, Politico reported that Jared Kushner was telling people that he believed the Trump campaign had struck a deal with Sinclair for what they said was better coverage. But of course, obviously, that means more favorable to them.

BORGER: If you want to do a paid political advertisement, and you're Sinclair, go do it and say, "We provide fair and balanced," or whatever it is they want to say. But making it a part of your broadcast is something very different.

JARRETT: And by the way, the FCC is under investigation through its commissioner right now for giving favorable relaxation of rules on behalf of people like Sinclair Broadcasting to allow them to have even more power and leverage. They've got to watch that.

BLITZER: Clearly, this story is not going away.

Guys, stick around. Just ahead, investigators now are all but convinced that the Putin government approved the poisoning of a former Russian spy.

[18:40:00] But the Kremlin is pointing a finger of blame at Britain. We'll have a live report from Moscow.

(COMMERCIAL BREAK)

BLITZER: In Russia tonight, officials are pushing back against mounting suspicion that Vladimir Putin's government was behind the poisoning of a former Russian spy and his daughter in the U.K. CNN has confirmed that authorities investigating the attack in Britain believe the Kremlin is likely -- Kremlin likely gave its approval.

Our senior international correspondent, Matthew Chance, is joining us live from Moscow right now. [18:45:03]

Matthew, what are you hearing from Russian officials?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, what we're hearing from Russian officials, Wolf, is what we've heard from them time and again, no matter what kind of serious allegation is leveled against them about their alleged violations of international norms and international law, and that's categorical denial. They've also been flooding the entire information space with conspiracy theories and alternative narratives. More than a dozen alternative explanations of what could have been behind the poisoning of Sergei and Yulia Skripal on the streets of Salisbury if it weren't -- if it weren't Russia. And that's exactly the strategy they've used in the past and they're using it again to confront these allegations that it was Russia that was behind that poisoning.

Take a listen.

(BEGIN VIDEOTAPE)

SERGEI LAVROV, RUSSIAN FOREIGN MINISTER (via translator): There could be a whole number of reasons. And none of them can be ruled out.

CHANCE (voice-over): Tonight, a defiant Kremlin lashing out and placing new blame, insisting again that it had nothing to do with a brazen assassination attempt of former Russian spy, Sergei Skripal and his daughter, Yulia, last month in Salisbury, England.

THERESA MAY, BRITISH PRIME MINISTER: No other country has a combination of the capability, the intent, and the motive to carry out such an act.

CHANCE: Sources say the sophisticated nature of the attack that included heavy doses of a nerve agent placed on Sergei Skripal's front doorknob points directly to orders from the Kremlin.

LAVROV: There are other explanations in addition to those mentioned by our western colleagues.

CHANCE: Russian Foreign Minister Sergei Lavrov shot back Monday, saying the poisoning may well have been planned by Britain to distract from Brexit.

LAVROV: It could have been beneficial for the British government, who ended up in a very difficult situation. Because it had failed to deliver the terms it had promised to the British electorate for Brexit.

CHANCE: This as the Russian embassy in London launched a barrage of 14 tweets in just over 30 minutes, questioning whether other nations were part of the murder plot. How is France relevant to the incident with two Russian nationals in the U.K.? the embassy posed. Has it been ascertained that the substance used in Salisbury originated from Russia? The British foreign office dismissed the tweet storm, saying, Russia has responded to the Salisbury incident in the same way they have to every other case, where they have flouted international law with denial, interaction, and disinformation.

Lavrov mirrored that language today, as he told the reporters that the relationship between Russia and the West is worse than it was during the Cold War. LAVROV: They resort to defamation, disinformation, and outright lies.

We respond to that wholeheartedly, insisting that any statements be substantiated with facts.

CHANCE: Though Sergei and Yulia Skripal's condition both improve, the two remain hospitalized in England as their home country continues to maintain its innocence in the case.

(END VIDEO CLIP)

CHANCE: The British authorities, Wolf, aren't buying those pleas of innocence from Moscow. In fact, the U.K. says it's preparing a whole raft of measures. First of all, to defend Britain and its people from this kind of attack in the future, but also measures that will raise the cost and punish Moscow for allowing this attack or ordering this attack to take place on British soil -- Wolf.

BLITZER: Matthew Chance in Moscow, thank you.

Just ahead, he could be one of the first people to force President Trump to finally go public with his secret tax returns. I'll speak live with the Maryland attorney general about a major lawsuit against the president, accusing him of violating the U.S. Constitution.

(COMMERCIAL BREAK)

[18:53:28] BLITZER: Tonight, Americans may be closer to getting a glimpse of President Trump's fiercely guarded tax returns as legal action by the state of Maryland and the District of Columbia moves forward. The lawsuit argues that Mr. Trump is improperly accepting gifts from foreign or state governments through his businesses in violation of the U.S. Constitution. A judge ruled last week that the case can proceed. That could potentially open the door for local prosecutors to force Mr. Trump to turn over at least some of his tax returns.

Joining us now, the Maryland Attorney General Bryan Frosh.

Attorney General, thanks so much for joining us.

So, tell us why you think this is unconstitutional what's going on.

BRIAN FROSH (D), MARYLAND ATTORNEY GENERAL: So, the Emoluments Clauses in our Constitution are the nation's original anti-corruption law. And they say that the president in particular can't accept payments, emoluments, or their kind, whatever.

BLITZER: Gifts.

FROSH: It's more than gifts, it's payments. And he can't accept them from foreign governments and he can't accept them from the United States other than his salary. And President Trump violates both of those provisions.

BLITZER: And specifically you're saying here in D.C., the Trump International Hotel? FROSH: Yes, exactly. The Trump International Hotel is referred to by

my friend Jamie Raskin as the Washington emolument. The president has it by a lease that says no federal official can receive any benefit whatever from. And Trump has refused to give it up or acknowledge that since his election.

BLITZER: And you're arguing the foreign governments are doing events there, staying there, bringing money to that hotel and the president personally will benefit?

[18:55:05] FROSH: Absolutely.

BLITZER: Why do you want -- I assume you want to see the president's tax returns.

FROSH: Well, that would be nice. We're entitled, we believe, in this lawsuit, to do discovery. And we believe the discovery will be pretty broad, get into the president's financial --

(CROSSTALK)

BLITZER: How important are those tax returns and when do you think that might happen?

FROSH: Well, it's hard to predict when it might, but sometimes within the next few months. And they're important, but his other financial information is equally important. We want to know who he is getting money from and what they're paying it for.

BLITZER: And if they provide that information, the president's attorneys, tax returns, other sources of income, can you release that publicly or does that have to stay confidential?

FROSH: Well, the normal rule is that it's public. I would not be surprised to hear that Donald Trump wants it to be confidential. I would expect he'll move the court to keep it under seal, will resist that.

BLITZER: Well, who decides all this?

FROSH: The judge will decide.

BLITZER: Which judge?

FROSH: Peter Messitte is a district court judge in Maryland who's been assigned the case.

BLITZER: He's a federal judge?

FROSH: He's a federal judge.

BLITZER: So, what is your sense? You're an experienced attorney. Where is this heading?

FROSH: Well, I think Judge Messitte sent a loud, clear message to President Trump the other day. And the message is you're not above the law, just like every other American. You have to abide by the law. You have to abide by the Constitution.

BLITZER: Do you think the president could divest at this point and end this whole thing?

FROSH: Well, he certainly could. He could divest all of his --

BLITZER: Then the lawsuit goes away?

FROSH: If he divests, it would.

BLITZER: Which is what other presidents have always done in the past.

FROSH: Every single one.

BLITZER: He has stubborn in this area, refusing to do so. We'll see what happens.

Attorney General, thanks so much for coming in.

FROSH: Thanks for having me.

BLITZER: Appreciate it very much.

And now we have breaking news on a member of the U.S. Congress announcing she won't seek re-election after admitting she failed to protect women on her staff from sexual abuse and harassment.

Let's go to our congressional correspondent Sunlen Serfaty.

Sunlen, the Connecticut Democrat Elizabeth Esty has faced very harsh criticism for her mishandling of these allegations against her chief of staff.

SUNLEN SERFATY, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf. The congresswoman has been under an incredible amount of pressure to resign over her handling of the situation in her office. And tonight, while she says she is keeping her seat, she announced that she will now no longer run for reelection.

(BEGIN VIDEOTAPE)

SERFATY (voice-over): Tonight, embattled Congresswoman Elizabeth Esty is bowing out, writing on Facebook today I have determined that it is in the best interest of my constituents and my family to end my time in Congress at the end of this year and not seek re-election.

Esty had been under fire for mishandling allegations of sexual harassment and abuse within her congressional office, allowing her chief of staff to remain on the job for three months after learning of his alleged pattern of harassment and abuse against a female staffer.

The congresswoman admitting tonight: in the terrible situation in my office, I could have and should have done better. To the survivor, I want to express my strongest apology for letting you down.

Pressure have been mounting for days on the congresswoman. MAE FLEXER (D), CONNECTICUT STATE SENATE: This mistake is too egregious to get past and it's time for her to step aside. Not only did the congresswoman not act, but that he continued to lead that staff for three months after the fact.

SERFATY: The embattled congresswoman had launched a behind the scenes damage control operation, attempting to save her political future, today calling for the House Ethics Committee to investigate her handling of the situation and writing a "dear colleague" letter to lawmakers on Capitol Hill, questioning, how did I not know? How did I not see it? What I do know is that wasn't an isolated incident on Capitol Hill and we can and must do better to ensure a safe environment for our employees.

Sources close to the congresswoman tell CNN she spent the weekend working the phones, calling allies in Connecticut and on Capitol Hill to gauge the political damage.

Apparently, it was not enough. The top Democrat in the House, Nancy Pelosi, breaking her silence today, reprimanding Etsy saying her actions did not protect the victim.

(END VIDEOTAPE)

SERFATY: And Esty's former chief of staff does not dispute that he took part in some abusive behavior, including sexual harassment and berating of a female staffer. But he does deny some of the allegations being made against him and tonight in a new statement, he is apologizing to his alleged victim, to the congresswoman and he says to any other people, Wolf, who were hurt by his actions -- Wolf.

BLITZER: I think her decision not to seek re-election sends a very strong message to a lot of her colleagues out there as well. They're going to be very cautious in dealing with these sensitive issues.

Sunlen, thank you so, so much for that report. Sunlen Serfaty reporting.

That's it for me. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM.

"ERIN BURNETT OUTFRONT" starts right now.