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Report: Trump Compares Treatment of Paul Manafort to Al Capone; Trump Calls on Attorney General to end Russia Probe; White House Says Trump's Comment on Russian Probe Was Not An Order; Analysts Note That Jeff Sessions Had Recused Himself From The Russia Investigation; Trial of Paul Manafort Enters Day Number Two; Judge Does Not Allow Pictures of Manafort's Extravagant Spending in Court; Mueller Refers Foreign Agent Inquiries to New York Prosecutors; Iran Preparing Massive Military Exercise in Straight Of Hormuz. Aired 2- 2:30p ET

Aired August 1, 2018 - 14:00   ET

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


[14:00:00] CARRIE CORDERO, CNN LEGAL ANALYST: In every respect the president's weighing in on the Manafort trial is odd. The other thing interesting about the press conference is what Sarah Sanders did not bring up. Ongoing activity with the election according to information Facebook released yesterday, which is an ongoing national security threat to the election system. That wasn't very important to the White House today, apparently.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY ANALYST: That's what the Senate intel committee is focused on in their hearings. Chaired by Republican with majority of Republican members, they are discussing today that ongoing threat and what to do about it.

JOSH CAMPBELL, CNN LAW ENFORCEMENT ANALYST: The issue is it's about them. They can't see past their own investigation to worry or care these other things. They talk about this investigation going on too long. No subject of an investigation I ever had told me, if only I gave you a little more time you'd be able to clear me. They clearly want it to end. They don't get to decide the time line. Investigators have to do their work. She is in a tough spot. She has to go out and defend the indefensible. It is clear she is not part of a strategy because there is no strategy, their job is to gas light, continue to tell lies and hope it will stick. It's a shame.

GLORIA BORGER, CHIEF POLITICAL ANALYST: If it's a witch hunt, what are they saying about the dozen Russians indicted a couple weeks ago or the ones indicted months before that. I mean, is that fake? Is that not accurate? Did the White House come out and say, you know what, you really should leave these people alone, they went nefarious and maligned. They didn't. If it's a witch hunt, they got some of them. Maybe there are more.

WOLF BLITZER, CNN HOST: The president only offering his opinions under first amendment. He can offer his opinion, no orders at this time. Guys, thank you very much. Our special coverage continues right now with siding timed tasks

UNIDENTIFIED MALE: This is CNN breaking news.

BALDWIN: Wolf, thank you so much. We'll take it from here. I'm Brooke Baldwin. You're watching CNN. You just heard the White House denying the president is obstructing justice on this Russia investigation but it appears something has suddenly and deep by disturbed this president, because we're watching, if you've been following at any point today, this outburst on Twitter as President Trump launches his most aggressive attack yet against this Russia investigation, telling his attorney general to end the investigation right now.

Let me quote the tweet: "We're going to talk a lot about this. Attorney General Jeff Sessions should stop this rigged witch hunt right now before it continues to stain our country any further."

BALDWIN: It should be noted the attorney general has recused himself from all Russia related matters. The president direct attack on his own subordinate comes despite the fact his aide said they were not worried about the trial under way of former campaign chairman Paul Manafort. Here is what the White House has to say.

(BEGIN VIDEO CLIP)

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: It's not an order. It's the president's opinion. It's ridiculous all the corruption and dishonesty that's gone on with the launching of the witch hunt, the president has watched this process play out. He also wants to see it come to an end, as he stated many times. We look forward to that happening. He's fighting back. He stated his opinion clearly. He's certainly expressing the frustration he has with the level of corruption we've seen from people Like Jim Comey, Peter Strzok. There's a reason the president is angry and frankly most of America is angry as well. There's no reason he shouldn't be able to voice that opinion. Once again, as I said earlier, the president stating his opinion. It's not an order but he's been, I think, crystal clear about how he feels about this investigation from the beginning.

UNIDENTIFIED MALE: You said a moment ago the investigation itself is corrupt, the Mueller investigation. You mentioned Comey and McCabe and Strzok, they are not -- Strzok certainly he was for time --

SANDERS: The entire investigation is based off of a dirty, discredited dossier that was paid for by an opposing campaign and had a lot of corruption in the entity which was overseeing it Peter Strzok, James Comey, Andrew McCabe. We've laid this out many times. We don't have to go through it.

UNIDENTIFIED MALE: If corrupt, why doesn't the president end it? If he believes that, why doesn't he follow through oppose it?

SANDERS: Once again the president has allowed this process to play out but he thinks its time to come to an end.

(END VIDEO CLIP)

BALDWIN: On the last point, no. That is false. Sarah Sanders said it's entirely based on the dossier. It's categorically false. A reminder the investigation was triggered by Russia's attacking our democracy in the 2016 presidential election. David Gergen with me, CNN senior political analyst, former federal prosecutor. Elie Honig is here, April Ryan, CNN analyst and White House correspondent for American urban radio networks. Step back with me, April, first, before we get more into that Sarah was saying. When you look at Trump's Twitter feed today, something is clearly freaking him out right now.

[14:05:00] APRIL RYAN, CNN ANALYST AND WHITE HOUSE CORRESPONDENT FOR AMERICAN URBAN RADIO NETWORKS: Absolutely right, Brooke. He is very upset. This president is putting his emotions on Twitter. That's a straw hole of what I'm saying. From inside the White House, this is from Republican sources very close to this White House, there's a messaging issue in here. They are trying to fix this. The Manafort trial is making everyone frantic. They don't understand. It's toxic. That's one of the words used -- given to me last night from my source. They are trying to figure out how to wrap their heads around this.

This Manafort trial, even though Paul Manafort is on trial for tax evasion and fraud and things of that nature there's still issues of tentacles leading to Russia, tentacles how he tried to help a Ukrainian leader who has tentacles to the Kremlin. There are pieces that connect the dost. This president is upset. It is his opinion. According to what Sarah said before, the president of the United States to say this, there's a thing called rule of law and obstruction of justice. The question is how do you marry rule of law with this president's opinion as it looks like he could be obstructing justice by saying stop this now, when there's a separation between the Justice Department and White House that has been in existence forever.

BALDWIN: Let me dive into that. I'm going to come to you, throw the Trump tweet back up what he's saying to the AG this morning. In this tweet he's ordering his own attorney general to end this investigation into himself, the campaign, Russian interference that produced concrete results, right? Not to mention we're talking last week it was "The New York Times" that broke the story Mueller is now looking at Trump's tweets in this wide-ranging obstruction inquiry. So, is the tweet, is that obstruction?

ELIE HONIG, FORMER FEDERAL PROSECUTOR: So, Brooke, the things that the president is tweeting right now are dangerous, first, to the independence of the Department of Justice as we just discussed and also dangerous potentially to him. We just saw president's enablers trying to backtrack, not giving an order, just his personal preference. I don't follow that distinction. Rudy Giuliani said last week, if someone is going to obstruct justice they are going to do it secretly and quietly. Not so. I've seen plenty of criminals who commit crimes flagrantly and openly, especially those who think that they are untouchable and above the law.

BALDWIN: But that is the president and you read into Rudy Giuliani, he said should instead of must, right, which sounds familiar to something we talked about a couple weeks ago, should end this witch- hunt. Again, the question, though, could that tweet in and of itself be obstruction? HONIG: It could be in just to give you a comparison, I did a trial where we convicted someone of obstruction of justice because he tried to get one witness to change one fact of her testimony. The bar --

BALDWIN: That was it.

HONIG: That's it. The bar for obstruction of justice under the federal law is low. You don't have to do much. To say let's just burn the whole thing down, which is essentially what the president is saying, is way beyond that.

BALDWIN: How do you, David Gergen, explain what's going on with the White House, with what Rudy Giuliani is saying, first amendment rights, Trump can say what he wants on Twitter. This isn't an order. It's almost like this White House is trying to manipulate America but America isn't stupid.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I agree with that. There's something going on here that I don't think we fully understand.

BALDWIN: Something deeper.

GERGEN: Something going on inside the White House. I don't know whether they have gotten some new information about the Mueller team about what they know. They changed their whole story. First, no conclusion, no conclusion. Now the story is, hey, if there was conclusion, it's not a crime. Similarly, they are overreacting to the Manafort case. Normally in a situation like this the White House goes quiet, the president stands back. He doesn't want to get engaged with a former associates being tried.

BALDWIN: Why would he react to the Manafort trial and say he's being treated unfavorably?

GERGEN: Absolutely and I think by saying he is being treated unfavorably he's giving himself a pass toward a pardon. He's laying the groundwork for the possible outcome. I'm not saying he's going to do it, but he wants all his options open.

BALDWIN: Yes. If Trump this made this request, what we're going back, Elie to the tweet, if he made the request in private, wouldn't Mueller be investigating every single witness who might have heard it, any sort of anything, just like they had had those conversations with regard to Comey and Flynn and what was said and who heard it?

HONIG: What's unusual, the president is doing it out loud. That's why Mueller is looking at the tweets. People asked, is that fair game? Absolutely. It's a bedrock rule of courtroom procedure. You can use the defendant's own statements against them. Twitter is nothing but the president's own unvarnished statements. The key in any obstruction case is intent, what is in the person's mind? One of the things judges tell juries in divining intent, science has not given us a way to look into someone's mind.

[14:10:00] Twitter is pretty close. So, he can absolutely use that, and it is unusual to do it so openly but doesn't mean it's not being done.

GERGEN: It's worth remembering Mueller, if they find a crime they are not going to indict. This is not going to a court of law. If there's a question of obstruction as it's played out, it's going to be within the impeachment proceeding. That is going to be a power play. The Democrats who by then may be in control of the House, can define obstruction the way they want to, and Schiff just was saying today, he sees this as obstruction, so I don't think it's necessarily the court of law where this will be sorted out, is going to be within the politics of impeachment.

BALDWIN: April, can we go back to how Sarah stands up there today and says the entire investigation is based off this dossier when that is entirely false.

RYAN: Not true. Yes. You know, thinking about that press briefing, Sarah was flustered. She called on a reporter twice. She realized we weren't buying it. The sad piece is they understand they can say these things and 70 to 90 percent of those who support President Trump believe it. They are not actually looking at the issues of the rule of law or issues on the table, they are saying and people are believing it. The problem is we have to continue to come back and talk about how Russia hacked into the DNC, how Russia hacked into the pillar of our democracy, our electoral process.

BALDWIN: How Russia is hacking, current day.

RYAN: Active verb.

BALDWIN: Which she did not mention.

RYAN: The president depending on the day is or is not doing. So, at issue is they are trying to play this in the court of public opinion by spinning it or even I'm going to use the word and I don't like it, lying to the American public so they can have people believe them and not believe the facts that are on the table from this or justice department or administration before. This is the real issue. It is not a witch hunt, Russia started going into our process, sacred process, our elections process. Not the dossier. Yes, there's a dossier but started with Russian hacking that continues today.

BALDWIN: David Gergen, put your self in the shoes of the attorney general on the receiving end of this tweet. Listen, there's a heck of a lot of things the president has said about them that he's been like -- he's ignored. Do you ignore -- I know the president's attorneys are saying it wasn't an order. I don't know if you can have orders over Twitter. We're in new space. What does sessions do.

GERGEN: There's not a lot he can do. First of all, he doesn't have authority. He recused himself from the case. He took himself out. For him to shut it down would be in violation of his own voluntary recusal.

BALDWIN: Does the president not understand that?

GERGEN: He doesn't seem to. He acts as if he doesn't. I think what Sessions -- if you're in that situation he clearly wants to save his job whatever pressure the president brings on. But you must be looking for ways. Is there a way we can hasten the conclusion here? Can we get to that point more quickly? He's got to be careful because he can't consult Rosenstein on this as far as I can tell. If he's recused, he's recused.

HONIG: People have asked is there such a thing as un-recusal? Not that I've heard of. Jeff Sessions it's incredible to see the president in the course of two tweets say, Peter Strzok who sent texts, should have recused himself, but Jeff Sessions who dealt with Russians directly, part of the campaign, he should un-recuse himself somehow.

GERGEN: Good point.

BALDWIN: Thank you. We have more on this coming up. Day two of Paul Manafort trial. Already a huge surprise. The prosecution's star witness rick gates may not testify. Hear why. And a CNN exclusive Robert Mueller handing off several of his cases to New York federal prosecutors. What this could say about the Russia investigation.

[14:15:00] And President Trump escalates the trade war saying U.S. farmers hit by tariffs, quote, can take it. We'll talk to an Iowa soybean farmer coming up. You're watching CNN, I'm Brooke Baldwin.

(COMMERCIAL BREAK)

BALDWIN: Back to CNN. Paul Manafort day two, accused of hiding millions of dollars to fund his extravagant lifestyle.

[14:20:00] The trial a test for special counsel Robert Mueller's team facing a jury for the first time. Prosecutors a little Manafort committed bank and tax fraud, millions rallying for politicians in Ukraine. He said he spent it on lavish items like a custom $15,000 jacket made from an ostrich, a $21,000 watch. And court documents indicate Manafort spent nearly $850,000 at one men's clothing store in Manhattan over this six-year period. Manafort's defense team unveiling strategy, shift the blame to rick gates, Manafort's longtime associate and prosecution's star witness. Let's get to Jessica Schneider covering the trial for us. Let's start with Rick Gates. They talk about him in opening statements and now he might not testify.

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: That's the possibility prosecutors put out there earlier today. Really, it's probably not sitting well with Manafort's defense team. As you mentioned, the strategy they laid out on day one of the trial it pins it largely on Rick Gates. They called him an embezzler. They said he flipped on Manafort to save himself. Here is how it went down and interpret it how you will.

The prosecutor was actually questioning an FBI agent who is part of that raid on Manafort's condo last summer. The agent referenced a document found inside the home. It was called Gates agenda. The judge, T.S. Ellis, who has been very involved in this stopped the proceedings and said if you're going to call Mr. Gates, this is a waste of time. Obviously, it said Gates agenda. It gets interesting. The prosecutor responded, he may testify in this case, he may or not. That sent a shock wave through the courtroom. It is the prosecutor's prerogative who they call in this case. The defense team, they may have showed their hand too soon saying they plan to lay the blame on gates. Even though he is one of the witnesses of 35 people on the prosecution, the prosecution is not bound to call everyone on the list. Who knows, they may decide not to call him. The big question, will they or won't they?

BALDWIN: That's a question mark. What about the whole notion the judge today, we ran through extravagant items Manafort bought like this ostrich jacket. The judge said Mr. Manafort is not on trial for having a lavish lifestyle. Explain the judge's decision making.

SCHNEIDER: T.S. Ellis is cracking the whip in court. The prosecution wants to exemplify Paul Manafort's lifestyle. They want to do it in large part by showing some of the pictures of his clothing, showing the watch he bought, showing all of his expensive suits. The judge is trying it restrict some of the evidence here. He's not letting in some of these photographs. Brooke, what the prosecution is doing right now on the stand as we speak is 29-year-old Maximilian Katzmann, he works at his father's high-end clothing store in New York City, they are using him to talk about Manafort's lavish lifestyle. They say Manafort was one of their top five clients in this store. We know from prosecutors he spent hundreds of thousands on luxury clothing. Perhaps without some of these pictures, which might be more interesting for the jury, they are looking to get the evidence in through the latest witness, the 29-year-old who is going to talk about how much Manafort spent.

BALDWIN: Jessica, thank you so much. On the Manafort trial today turning now to another development in the Russia investigation, CNN has learned that Robert Mueller has handed off several cases to New York federal prosecutors according to people familiar with the matter. Prosecutors are looking at several high-profile American lobbyists and operatives to determine if they failed to register their work as foreign agents. With me, Erica Orden with the scoop, she has the story. Erica, tell me about the referrals.

ERICA ORDEN, CNN Reporter: Sure. We know the referrals happened in the spring they were referred by Robert Mueller to the U.S. Attorneys Office for Southern District of New York. Looking at whether longtime Democratic lobbyist Tony Podesta and his former firm, the Podesta Group, as well as former congressman Ben Webber and his firm, Mercury Public Affairs and Greg Craig, who is the former Obama White House counsel and also formally with this law firm performed, whether they performed work on behalf of the Ukrainian government without registering as foreign agents, which is a step that's required by federal law.

[14:25:00] BALDWIN: Tell me why this is so significant.

ORDEN: Sure. I should note that some of them have said that they did not form that registration because they were misled by intermediaries who were involved in the work. The significance of the referrals is that there's been an expectation as the Mueller investigation has progressed that if Mueller or the special counsel team came across work or investigative threads that weren't central to the question of whether the Trump campaign colluded with the Russian government that he would then -- the special council team might then farm them out or refer those cases out in part to protect against the idea they had gone beyond the scope of what they had been assigned to do or why the special counsel team was convened.

BALDWIN: It's a big deal, it's a big piece of news. Erica, thank you for breaking that with us.

Just in, as the rhetoric escalates between U.S. and Iran, we are now learning about activity picking up in the Persian Gulf over the next 48 hours. We'll take you live to the pentagon for that. Also, more on our breaking news, the president calling on the attorney general to end the Russia investigation. But now his lawyers are saying, hang on a second, they are playing clean up here over questions whether or not it is, in fact, obstruction via tweet.

[14:30:00] (COMMERCIAL BREAK)

BALDWIN: Just into CNN as President Trump and Iran have been trading insults over the fate of Tehran's nuclear program, monitoring what appears to be a buildup of Iranian military activity in the Persian Gulf, specifically the Strait of Hormuz. CNN Pentagon correspondent, Barbara Starr, what's going on?

BARBARA STARR, CNN CHIEF PENTAGON CORRESPONDENT: Brooke, good afternoon, what we are learning at this hour, U.S. military intelligence keeping a laser focus on the Strait of Hormuz were of course, much of the world's petroleum trade flows through that critical chokepoint.