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Facebook Pulls Suspected Russian-linked Accounts; Pence Blames Obama for Cybersecurity Failures; 3D Gun Website Suspends Downloads After Court Ruling. Aired 9-9:30a ET

Aired August 1, 2018 - 09:00   ET

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


[09:00:00] POPPY HARLOW, CNN ANCHOR: 9:00 a.m. Eastern. I'm Poppy Harlow in New York. So glad you're with us.

Moments from now, Mueller versus Manafort day two. The gloves are already off in that Virginia courtroom where the former Trump campaign chair is accused of hiding millions of dollars to avoid paying taxes. Prosecutors are painting Paul Manafort as a shrewd liar who ran a worldwide scheme to fund his lavish lifestyle and in a bold move the defense is shifting the blame squarely to Mueller's star witness and Manafort's former deputy Rick Gates.

Let's go to the courthouse outside. Outside Joe Johns is there with more.

This was a very bold move by the defense to pin it all on Gates. What do we know?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: That's absolutely right. Rick Gates, the longtime deputy of Paul Manafort, and it's pretty clear in the attempt by the defense to establish reasonable doubt that they are going to try to essentially put Rick Gates on trial in this case. Nonetheless I think in the big picture it's important to say that prosecutors were putting on their case are trying to delve into what they call the extravagant lifestyle of Paul Manafort who they say made some $60 million from his work as a political consultant for Ukraine. Parked that money in offshore banks and essentially evaded taxes, evaded the Internal Revenue Service.

So today, though, we do expect to hear a little bit more of the deep dive into how U.S. political consultants of both parties actually were hired to work for Ukraine, the Party of Regents there. And we e expect on the stand today among others Daniel Rayban who is a Democratic political consultant, of course. Just yesterday the first witness was another Democratic political consultant, very well-known in the United States, Tad Devine, who was the chief strategist for the Democratic presidential candidate Bernie Sanders.

Also on the stand today, an FBI agent who is expected to sort of go through the nuts and bolts of what the FBI learned in their investigation. Of course this trial is docketed for three weeks and there's a lot of speculation now that it's moving so quickly. They won't use all of that time unless during deliberation thread on and on.

Back to you.

HARLOW: That's why they call it the rocket docket, right, Joe? Thanks for being there. Another big day ahead for sure.

Joining me now, CNN crime and justice reporter Shimon Prokupecz and former federal prosecutor in New York's Southern District, Elie Honig.

Good to have you both here. And Elie, what do you make of the defense strategy? I mean -- it's the first time we've seen exactly fully what their strategy is going to be. It's a bold move to nail -- try to nail, to pin this on Gates. Especially when Gates could be, will be, a key witness in the other part of the trial here, the other trial that Manafort is facing in D.C. And in charges related to Russia. What do you make of it?

ELIE HONIG, FORMER FEDERAL PROSECUTOR: Yes, Poppy, so we've now seen the defense strategy and as a former prosecutor I'm underwhelmed. The defense really seems to be it was everyone else but me. It was everyone else but Paul Manafort and I think that's going to be a hard sell for the jury because the simple facts are who built the business. Manafort. Who was the boss of the business? Who is Rick Gates' boss? Manafort. Who went around opening up all these bank accounts all across the world? It was Manafort.

And so, you know, they're going to try to point the finger at Rick Gates, but ultimately who's the one who made the most money?

HARLOW: Right.

HONIG: Who's the one who was jetting around the world with, you know, the infamous Ostrich jacket and the $20,000 watch? It was Manafort. So this idea of blame the cooperator, blame the number two guy is really a hard sell.

HARLOW: Right.

HONIG: It's not an uncommon approach, it doesn't succeed often and particularly here where you're not -- if you're the prosecutor, you're not just having to ask the jury to believe Rick Gates in a vacuum. There's a lot of documentation and a lot of other witnesses who will back him up.

HARLOW: Shimon, on that thread, what we heard from the defense team sort of elaborating on the bank accounts, for example, that Elie points out, will they -- you know, they're in his name, right? You can't fight that back. They're in Manafort's name.

The defense is arguing well, that's how the oligarchs in Ukraine, that's how they mandated that it had to be. Is that going to fly?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Well, not really. I mean, it's OK to do business like that as long as you report it and that's really what Manafort is on trial for, is that he tried to hide this money, tried to make the most out of it, not pay taxes on any of it and then when it all dried up he went and got loans using -- filing fraudulent information on loans and then went on to live this lavish lifestyle.

HARLOW: Right.

[09:05:02] PROKUPECZ: It's fine. I mean, I think what this trial also shows us, Poppy, is just how lobbying works, how some of this political consulting is done outside the U.S. and it really should give us an inside look. You know, it may not be pretty in many cases and this is work that goes on all the time but the importance in all of this is that you report the work that you do and here the government says clearly that Manafort has not done so.

HARLOW: When you, Elie, look at the chances that Mueller does end up cooperating here, right? Because he could. I mean, he could cooperate until -- up until the end, right? Up until the case is handed over to the jury, and even than before a verdict. What are the chances that you think he might do that?

HONIG: Low, Poppy, but it's not impossible. I mean, there is a strategy that Manafort may be pursuing here which is sort of let's take two bites at the apple. You know, I have seen scenarios where a defendant has rolled the dice at trial. If they win, wonderful, they're acquitted, they walk out. But if they lose and they think they have enough to offer then you can approach the prosecution team and say, OK, you beat us, we're in a tough spot here but now we're ready to come in. Now if you're going to pull that off, from Manafort's position, you better have the goods, you better have something really interesting --

HARLOW: But will you get as sweet a deal, Elie? I mean, if you wait that long?

HONIG: No.

HARLOW: No, right?

HONIG: Yes, you've definitely given away some leverage at that time but look at the situation Manafort will be in if he is to be convict ed. He's 69 years old. You know, realistically he's looking at 10, 12 years if he gets convicted on this. So, no, he wouldn't get as good a deal as if he came in on day one.

HARLOW: Right.

HONIG: But it's better than the alternative.

HARLOW: Shimon, let me ask you about something else that CNN broke exclusively yesterday and that's Bob Mueller's team has actually referred a collection of cases away from his purview and like referred it over to the Southern District where Elie used to be a prosecutor. Talk to me about who these people are and what these cases have to do -- because you mentioned sort of how widespread these lobbying efforts with Ukraine, et cetera, were and not just among Republican consultants.

PROKUPECZ: No, there are Democrat consultants that have come up during the Mueller investigation and one that, you know, we've talked about and has been reported on a lot is Tony Podesta, a Democratic lobbyist.

HARLOW: Right.

PROKUPECZ: Also what we've learned is that that investigation involves just simply, as far as we know, that Tony Podesta did not file these FARA forms, these are registration forms that you need to file with the Department of Justice when you do this kind of work. It's also relating to work with the Ukraine, which is what Manafort is on trial for now. This all came up during the Manafort investigation. It's not entirely clear why it was referred or if there's any kind of criminal violation here by Tony Podesta.

But it's certainly something that Mueller felt was important to refer to the Southern District. What we've seen a lot of by the Mueller investigation, what has happened is that a lot of this work, a lot of this lobbying work has come up and it's really -- has made a lot of people here in Washington, D.C. nervous because for many years it was very lax. You never saw a really FARA violations but Mueller is certainly taking a different position on this and now the FBI has taken a different position.

And I just want to make another point, Poppy, on whether or not Manafort could cooperate.

HARLOW: Sure.

PROKUPECZ: There is something that the government certainly wants from Paul Manafort. We know that perhaps, you know, he was probably given a deal, a sweet kind of deal like Rick Gates has. But for whatever reason, he has chosen not to cooperate.

HARLOW: Yes.

PROKUPECZ: He could have done so in the beginning of this investigation perhaps. We know that the Mueller would probably love his cooperation but there is something and we don't know what that is that continues to stop Paul Manafort from cooperating, whether it's fear of someone, whether it's something else. But the idea is that he has a lot of information. He's done this kind of work for so many years, for different countries, he's been in the sort of political lobbying world for many, many years.

He would have a lot of information about a lot of people. And perhaps that is what concerns him, is that he comes in and starts talking about people, you know, his life could be at risk and his family's life could be at risk. But there is something certainly that is stopping him from cooperating.

HARLOW: That's an important point.

Gentlemen, thank you. Shimon, Elie, appreciate it.

We're also keeping a close eye on the president who's keeping a close eye on this trial, you can bet, officials say he's made it known that he wants frequent updates as this Mueller trial proceeds, as this Manafort trial proceeds, but that's likely not something that you will hear him talk about. In fact the president didn't mention the name Manafort or Mueller or say witch-hunt one time last night in his rally in Florida. That is not what we normally hear from him at the rally. He usually brings this stuff up.

Abby Phillip is at the White House with more. Do you know why? Do you know why he didn't wade into this at all yesterday?

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Well, poppy, this could be just the beginning of the president's attempt to play it cool in public while privately he's doing something entirely different. The president not talking about the Manafort case at this rally last night.

[09:10:03] But sources are telling CNN that the president behind the scenes is asking for more. He wants updates on what's going on day to day in this trial. The first major case of the special counsel investigation. He's talking to his lawyers about it and he's also watching the coverage on television.

This is a president who is clearly paying attention to what's going on even as his advisers publicly are saying this has absolutely nothing to do with this White House, Manafort is being tried for things that he did before he became the president's campaign chairman. But, again, Poppy, President Trump has also talked about this special counsel investigation ruining people's lives. And when he says that, he's also referring to Paul Manafort who was at one time his campaign chairman.

HARLOW: Abby, thank you for reporting from the White House for us this morning.

Ahead, a lot this hour, Facebook detects an effort to influence the midterms as we're less than 100 days away from voters going to the polls. What's being done to stop it.

Also President Trump takes a cue from candidate Trump. Will taking up his old campaign rally tactic be a winning strategy?

And downloads suspended. A judge blocks plans to allow blueprints for 3-D printed guns to be widely available online. This fight, though, is far from over.

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POPPY HARLOW, CNN ANCHOR, NEWSROOM: Facebook has shut down a network of accounts it says are possibly Russian linked and were organizing political events across the country. This, of course, raises more concerns about Russia still actively trying to interfere in US elections.

On a conference call about this yesterday, Facebook CEO Sheryl Sandberg said "security is an arms race and it is never done." Let's go to Dylan Byers, a reporter who joins me from Los Angeles with more.

Look, I mean, Facebook has invested so much money, so much time, so much effort into fighting this, but this just goes to show that it persists. Do they know definitively this is Russia?

DYLAN BYERS, CNN MONEY SENIOR REPORTER: They don't know definitively, Poppy, that it's Russia, but all signs point to some level of Russian involvement. So much of this activity looks similar to what Facebook found after the 2016 election.

Now, the difference, of course, this time is that Facebook is actually getting ahead of it. They are bringing it to Congress' attention ahead of the midterms. So, that's progress on Facebook's front.

But the larger picture here is exactly what you brought up. This is a problem that they can never fully solve. It's not something that can be prevented. It is simply something that can be monitored and then called out.

Like you said, they have invested so much money, so much time, so much manpower, a staff of 20,000 people monitoring this sort of thing. It's immense, but what it shows is that this is really the best they can do.

And as these efforts - these misinformation efforts become more sophisticated, it is going to require all that much more effort just to keep up in that arms race.

HARLOW: And, Dylan, I mean, what was interesting to me - one of the many interesting things out of this briefing that Facebook staff gave to lawmakers on the Hill yesterday is that they said finding this suspicious activity was even harder this time around. Do you know why that is?

BYERS: Yes. That's absolutely right. And, look, it's something that both Facebook anticipated and lawmakers on Capitol Hill anticipated, was that the effort - every election cycle, the efforts of Russians and other actors are going to become more sophisticated. That's just the way it works. And that is why it's an arms race.

So, URL addresses, VPNs that were easily traced back to Russia around the 2016 campaign, now whoever is doing this are taking greater steps to sort of hide that activity.

And that is one of the reasons why Facebook doesn't want to definitively say this is Russia because it's not as easily traced to Russia. They want to leave that decision in the hands of Congress. They want Congress to assign responsibility for these actions.

But officials told lawmakers in these private meetings that it appeared to be Russia who was behind this.

HARLOW: Dylan, thank you for the reporting for us this morning from Los Angeles.

So, joining me now is a member of Congress who is very focused on this, Sen. Ed Markey, Democrat of Massachusetts. Sits on the Foreign Relations Committee. Thank you for being here.

SEN. ED MARKEY (D), MASSACHUSETTS: Thank you. Good morning. HARLOW: Let's talk about Facebook. I want to dive in on that because

you had a very contentious back-and-forth in April with Facebook founder and CEO Mark Zuckerberg when he testified before your committee.

And after that, you tweeted, "sorry doesn't cut it anymore." Given this new development, do you believe Facebook is doing enough right now to safeguard our democracy and our elections?

MARKEY: Facebook was in denial. It's clear they did not accept their responsibility to ensure that they dealt with the downside of the Internet. They were constantly touting all the good things that happened, but there's a Dickensian quality to the Internet. It's the best of wires and the worst of wires simultaneously.

Now, to their credit, Facebook is dedicating resources to ferret out those who are trying to subvert our election process. And that's to their credit, but it also is a warning to our country that, in the words of the 1960s movie, "the Russians are coming" again for our elections and that we have to be vigilant, but that has to start in the White House with the president of the United States stopping his denial of the reality that this is happening.

HARLOW: In April, when Mark Zuckerberg did testify before your committee and you had this back and forth, you've talked about the consent act, which you introduced earlier this year.

That is legislation that, if passed, would require companies like Facebook to get an opt-in from all of us that use it, that we would have to opt-in for our private information to be used, not opt out of certain things, not set certain privacies. We would have to opt in, and that's really different.

And you pushed him on that. And then, he conceded to you that, yes, he thinks that it's "the right principle." Do you think that Facebook with all of this investment, the hiring of 20,000 additional people, taking a big hit to their profit and their stock price as a result to fight this is doing enough now or can they, should they do more?

MARKEY: No. There is a lot more to be done especially on the privacy of individuals. In the consent act, we say, basically, you have a right to know that information is being gathered about you.

You have secondly a right to know that that information might be used for purposes that you did not intend.

And third, you have an absolute right to say no, you do not want this information to be shared. That has not happened yet. There is no law that is on the books and Facebook hasn't stepped up yet to advocate for such a law to be given as a privacy bill of rights to every single American in this era.

So, we're still at the dawn of this debate. His hearing back in the spring kind of triggered this national discussion, but we're still very far from having the laws be put on the books that, in fact, reflect the concern that every American has about their private information. And, by the way, that's reflected in the decline of Facebook's stock.

HARLOW: To be clear here, do you think, though, that Facebook is making quite a lot of sacrifices to try to make things right? And I ask you that because, we saw last week, the stock fell - it plummeted after you heard Mark Zuckerberg say on the investor call we're investing so much in security that it will significantly impact our profitability, making all these hires.

It sounds to me like you're saying it's good they're doing that, but they also have to do more than money can do and hiring can do, and that is get behind legislation like this. Is that right?

MARKEY: Yes, that's right. Their business model actually included a premise that they would not invest in privacy and they would not invest in security to the extent they should have. That, in fact, allowed their profits to be higher.

Now, they're beginning a process of making that investment, but they need to make the whole platform more secure to give people confidence that they can put their private information online secure, that it will not be compromised.

And they have to make the investment, which they've begun to do, to put in the protections against compromise of our internet system in the country from invasion by the Russians and others that seek to - through this technology - to compromise our democracy, to insinuate itself into our electoral process.

The Vice President Mike Pence, speaking in New York yesterday, pointed his finger back at the Obama administration and said that that administration failed to do enough to fend off attacks and cybersecurity attacks. Let's listen.

(BEGIN VIDEO CLIP)

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: The last administration all but neglected cybersecurity even though the digital threats were growing more numerous and more dangerous by the day.

In 2014, a foreign government hacked actually into the White House network itself. And yet, in the face of constant attacks like that, the last administration too often chose silence and paralysis over strength and action.

(END VIDEO CLIP)

HARLOW: Should the Obama administration have done more, senator?

MARKEY: Well, that's just absolutely untrue. I was the author of the law in 2010 to mandate dramatic increase in the security of the electric grid inside of the United States. I was able to get that passed through the House of Representatives.

It was killed over here in the Senate, which is where I now serve by Republican senators at the behest of the electric utility industry of the United States. I had President Obama's support for that legislation. It was Republican senators which killed it.

Now, we hear crocodile tears - see crocodile tears being shed about their concern. Well, right now, they have an ability in this administration to put out an across-the-board red alert that they expect every single industry to install the state-of-the-art protections against cyberattacks in our country. They have yet to do it.

And so, let's now no longer have words. Let's have actions because I know from my own personal experience that they killed my bill after it had already passed the House of Representatives. And the electric grid is the single most vulnerable, dangerous thing.

And we know that China, that Russia, that other countries are probing our electric grid every single day. They still have not supported legislation that mandates the toughest possible security to be built around it.

[09:25:11] HARLOW: Senator, on the issue that is top of mind for many people this week, and that is the ability to post online plans to print 3D guns. A federal judge has temporarily halted that late last night, but this fight is far from over.

You have said that this would create a new supercharged era of gun violence. My colleague Laurie Segall sat down yesterday with a man named Cody Wilson. He's the one who brought the lawsuit forward and ultimately has settled with the State Department over this one that would have allowed these plans to be posted widely online. Here's what he said.

(BEGIN VIDEO CLIP)

LAURIE SEGALL, CNNMONEY TECHNOLOGY CORRESPONDENT: Are you worried that the government will reverse its decision?

CODY WILSON, FOUNDER, DEFENSE DISTRIBUTED: Like I told you, I already uploaded the plans. I mean, the ship has sailed. It's public domain information now. It's irrevocable. No one can take it back.

(END VIDEO CLIP)

HARLOW: He says it's already up online. People are already printing this out, you can't turn the ship around now. What's your reaction to that?

MARKEY: That's not true. A federal judge in Washington has already issued a restraining order, blocking any further downloading.

What we need is for Donald Trump once again to match his words that he is concerned with some action, but we don't expect that to happen because, ultimately, the NRA has this Republican-controlled Congress in a vice-like grip.

After Parkland, we could pass no legislation. After this revelation, about 3D guns being downloaded, we have crickets that we're hearing from the Republican side in terms of passing legislation to protect against their proliferation.

These guns require no background checks. They're undetectable. They're untraceable. They're going to be a gift to every terrorist, every criminal in the United States and, by the way, around the world because this is the Internet. It is global.

And this White House, beginning with Secretary Pompeo, Secretary Sessions, have given a green light to it and Donald Trump is going along with it. He's got a chance to issue an executive order to tell just put an end to it, to just tell his own administration to reverse position. He has not done it yet.

We just have to say to these people that we are not going to allow them to do it. We're at the dawn of the era. We just have to put the lid back on the pandora's box and not allow it to become an epidemic on every single street in our country.

HARLOW: Sen. Ed Markey, appreciate you being here this morning on both of these important issues.

MARKEY: Thank you.

HARLOW: We'll get a factcheck, by the way, on the NRA and where the president stands on this a little later in the show.

The president's wild style on the campaign trail worked the first time. Will it work this time around? Ahead.

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