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Soon: Gates Returns To Stand To Testify Against Ex-Boss. Aired 9-9:30a ET

Aired August 07, 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: -- many more hours of dramatic and possibly pivotal testimony from the star witness for the prosecution of bank fraud and tax evasion trial of former Trump campaign chair, Paul Manafort.

Rick Gates returns to the stand this morning having told jurors yesterday that he helped his former boss hide numerous foreign bank accounts from the IRS and helped himself to vast sums of cash from Manafort using fake expense account.

And that is not the only big story we're watching this hour. As we speak, voters in Ohio are deciding the outcome of the last special election before the midterms. That's why it's so important. Here again, a district where the president won by double digits is completely up for grabs and a substantial stepping stone to a democratic takeover of the house.

But we start at the U.S. District Court in Alexandria, Virginia. Our Joe Johns is outside. And Joe we're just about half an hour away from this trial getting under way once again. What are we expecting today?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: I think at first we're expecting more of the same. Gates was on the stand for about 45 minutes before they wrapped up for the day just last night. He's going to continue on direct testimony answering questions of the prosecution about what the government alleges is essentially a whole pattern of illegal conduct that stretched out over years and years and years.

In the time right before Mr. Manafort became the campaign manager for Donald Trump, by the way, Rick Gates became his deputy campaign manager. So against that backdrop, it's important I think to remind people who this guy really is. Gates was a long time personal confidante, if you will, of Paul Manafort and is believed to know basically all of the inner workings of the Manafort organization.

Also, extremely important to point out that the allegations against Mr. Manafort include dealings in Ukraine with hidden bank accounts and Gates is alleged to know everything about that, Poppy.

HARLOW: And I mean I was reading that it's going to be something like they expect, you know, three more hours of direct examination by the prosecution here then of course the cross-examination what will be more fireworks. But walk through what folks might have missed in terms of the key points yesterday from this testimony.

JOHNS: Right. That's important obviously, yes, we do have a cross- examination that could come as early as today. And they'll try to tear down the whole house that the prosecution has built up. So what happened yesterday probably the most key and important point was about the 15 foreign bank accounts. Of course, that's part of the indictment that is alleging wrongdoing by Paul Manafort.

Fifteen foreign bank accounts Mr. Gates said existed. They concealed the evidence of those from the United States government from the tax collectors, the Internal Revenue Service. And also important to say that Rick Gates has admitted to stealing hundreds of thousands of dollars from Paul Manafort, so that will all go in to the cross- examination when the defense tries to go after him and discredit the testimony in front of the jury, Poppy.

HARLOW: All right, Joe Johns we'll be watching. Thank you so much.

With me now, crime and justice reporter, Shimon Prokupecz and our legal analyst and former Federal prosecutor, Laura Coates. So much to go through and we're not even done with the direct examination here Laura. You have said now the battle is between the admitted liar and the accused liar, elaborate.

LAURA COATES, CNN LEGAL ANALYST: Well, you know, here you've got Paul Manafort who's being accused of committing all of these different crimes, and his credibility is at stake. And even at his opening statement through his defense counsel said listen, you cannot believe this person Rick Gates. He is admitted liar. He's got a plea deal with the Federal Government. He has every incentive to now not tell you everything that is true because he wants to get a good prison sentence or none at all.

And so, that's his battle right now. But the thing about this is, while they have framed it in this way of a battle of credibility, birds of a feather do flock together. And the jury will look at this and say, all right, I've got somebody here who's admitted to lying, who has been in on this overall conspiracy to try to evade having paying his taxes to Uncle Sam unlike the rest of us. And he's admitted to actually stealing from Paul Manafort.

But wouldn't you expect somebody who is doing the criminal activity that Manafort has been accused of to have associates who also do criminal activity?

HARLOW: So Laura to your point, I mean he has not been granted immunity. It's going to be up to the judge on whether he can get this sort of sweetened deal from the prosection. So he has every incentive to say exactly what the prosecution wants him to say, right?

COATES: He has every incentive to tell the truth because the prosecution would like that person who's testifying even with the cooperation deal to give all the information that they told them they would in the earlier meetings. Remember, you first meet with the prosecutors before you get any sort of plea offer that says, here's what I'm going to say. It will be corroborated by various mechanisms. [09:05:15] And then you have to stick to that truthful story. If you do not, if you withhold information, remember, he has not been sentenced. They have not guaranteed. They will argue in court for his plea and his prison to be a small amount of time. So he has to still cooperate until the very end. But the defense, you're absolutely right, Poppy, will try to say, you can't believe somebody who has every incentive to tell the government what they want to hear, whether it's the truth or not.

HARLOW: So Shimon, I mean we know the defense strategy here because they laid it out in the opening statement and that is that Manafort's an innocent victim, Gates ran this whole thing and he's a liar. How much do you think the admission from Gates purposefully in the direct examination by the prosecution that he did steal and he did lie and he was committing crimes may help the defense here?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: I think it's going to help them tremendously. But you have to think of it this way, Poppy. And that the prosecution here it appears has a ton of other evidence against Paul Manafort right now. And they've already laid some of that out within an accountant.

And what you see in these cases, usually, is you bring in all these other witnesses to corroborate everything that perhaps your key witness, your star witness which Rick Gates is sort of ease at this point. You use these other witnesses to kind of corroborate what Rick Gates is saying. And so far, they have done some of that.

The other thing is, you know, Rick Gates has all sorts of credibility issues. I mean he lied to investigators when they met with him about some of his dealings with the Ukrainians. So all of that, no doubt, is going to help the defense. And I'm sure knowing this defense team, there's going to be other indications of his credit issues with his credibility, perhaps other bombshells that are yet to come under cross-examination.

And also what you're seeing in this case is typical of what prosecutors do, is that they try to get everything that may be negative out ahead of a cross-examination obviously so that it doesn't appear like they're hiding anything. But certainly the idea I think we all sort of couldn't believe it when we heard yesterday that Rick Gates said that he had been stealing, essentially, from Paul Manafort, making up expense reports. I mean certainly that is going to help the defense.

HARLOW: Laura, do you believe that, you know, this testimony that we got yesterday and more of to come this morning from Rick Gates just ups the pressure and the heat on Manafort to take the stand?

COATES: It does. And it's simply a matter of whether or not you knew about it. Remember, you're going to have documents there to corroborate the testimony of Rick Gates and other witnesses including accountants. So we're going to say, this is largely documented. Either you had $3 million or you were a million dollars in the hole which is part of the testimony that's come in. Either you knew about the tax obligations or you didn't and you tried to evade them. So, the documentary evidence can speak for itself. What Gates is providing people is the insight into what Manafort knew and whether or not he intended to do this. And what is most interesting about the strategy here, Poppy, if I may just say, Shimon is absolutely right.

If I was the prosecutor in this case, I would have been very angry to have called my witness yesterday and allowed for defense to build a case based on what he said and have a whole night to think about it. On the other hand, the jury now has the big bombshell in their minds and they can be dismissive of it overnight going to the meat of the matter tomorrow about what Paul Manafort knew.

So on the one hand, it's frustrating to have your witness have this bombshell now the defense can dissect it overnight. Now, the jury says OK, fine. So he lied about something. So, he embezzled funds. All right, got it. Now, tell me what the person who's actually on trial has done wrong. And they've got hours before them this morning to do all that.

HARLOW: And Shimon, just remind us before we go of the charges here. I get really not just charges, what Rick Gates has pled guilty to because he faces, what, almost a decade in prison?

PROKUPECZ: Yes. But, yes, he does. But, you know, he said on the stand yesterday that prosecutors have indicated that to his attorneys that they wouldn't impose a lighter sentence like Laura was saying even in fact probation in this which he's likely to get because he's cooperating.

Look, he told the jury yesterday that he met with prosecutors and investigators 20 times. So we don't know exactly on everything that he's cooperating. This may only be a small part its cooperation. But it's all similar charges to basically Paul Manafort with an additional charge of lying because when he met with investigators initially he had lied to them about some of his contact with Ukrainians and business dealings which obviously is something that helps the defense as well.

His credibility is going to be an issue at this trial. Prosecutors no doubt know that. And, you know, usually in these cases what happens though, these kinds of witnesses who plead guilty tend to face a substantial amount of time in jail. They usually don't get it. I mean we've seen these in mob cases, in terrorism cases. These witnesses are important in helping prosecutors bring cases and investigations.

[09:10:09] And like I said, we just don't know the -- this is what's really I think for all of us that what we don't know about Rick Gates' full cooperation because there have been indications that he's not even need in this case because they have all this overwhelming evidence.

HARLOW: All right, Shimon, thank you very much, Laura, good to have your expertise. Ahead for us, a lot this hour, President Trump's big test. Can Republicans hang on to a typically reliable Republican seat in Ohio or will Democrats pick up another congressional seat in the last special election before the midterms? The polls are open in Ohio. CNN will have extensive coverage of the results as they come in, of course much more on that race tonight in the prime time.

Plus, put down the phone. Key advisers now urging the president to stop tweeting about that Trump Tower meeting. Will he follow that advice? And in California, more than a dozen wildfires are burning out of control, now the largest wildfire in California's history paving a path of historic destruction.

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[09:15:13]

HARLOW: All right. The polls are now open in central Ohio where a Democrat is running a very tight race for Congress in a solidly red district. It is the last special election before the midterms, and that's why both Democrats and Republicans nationwide are now watching this race for clues as to what it might mean for November.

Our correspondent Ryan Nobles is in Westerville, Ohio this morning. How is it looking?

RYAN NOBLES, CNN CORRESPONDENT: Well, Poppy, we've seen a steady stream of voters here at this point, a place in Westerville. This is in Franklin County, one of the key counties in this 12th district in Ohio.

And we have got two candidates here locked in essentially a statistical tie. The Democrat is Danny O'Connor. He's a young man, not a ton of political experience, running against an established state senator by the name of Troy Balderson.

And Balderson has the support of President Trump. And that is the key element to this race and one of the reasons that it's getting so much national attention.

This is a district that has been in the hands of Republicans for more than 30 years. It's something that the governor here, John Kasich, who once held the seat, believes that it should be a slam dunk for Republicans.

But the fact that it's so close could have something to do with President Trump. Even though that is the case, Troy Balderson accepted the president's support, welcomed him here over the weekend. And this morning, President Trump tweeted his support of Balderson.

The results here today could end up being a bit of a foreshadowing for these races in November. Will Republicans stick by the president or run away from him? The results tonight could tell us a lot about what happened in the fall. Poppy?

HARLOW: Ryan, thank you so much. We'll check in with you all day. Let's listen to something that the Republican candidate Troy Balderson told voters last night that has everyone talking this morning. Listen.

(BEGIN VIDEO CLIP)

TROY BALDERSON, REPUBLICAN CONGRESSIONAL CANDIDATE: My opponent is from Franklin County. And Franklin County has been challenging. We don't want somebody from Franklin County representing us.

(END VIDEO CLIP)

HARLOW: With that, he wrote off a third of the voters. Why? Joining me now, CNN congressional correspondent Phil Mattingly and CNN politics senior writer and analyst Harry Enten.

So, you caught my attention this morning when you said this is analogous to someone running in New York City and writing off the entirety of Brooklyn. Why would he do this?

HARRY ENTEN, CNN POLITICS SENIOR WRITER AND ANALYST: If you were to look up in the dictionary "gaffe" and then there would be a picture beside it or maybe an audio that's rolling, that is exactly what you do.

The reason he did that is because he recognizes that his votes are probably come mostly from outside of Franklin.

HARLOW: Sure.

ENTEN: But you don't write off counties. You don't do that. You try and keep your margins down where you're not doing well. I think that this just a guy who is feeling a lot of pressure, a lot of heat, recognizes the polls are closing in in a district he should be winning easily and I think the pressure got to him.

HARLOW: I mean, he did say this morning he's trying to clean it up, Phil. And he said, of course, I represent the whole district should I win, et cetera.

But the average Republican locally in this district has carried it by a little over 20 points since 2012. You've got spending here that is five times on the Republican side - outside Republican spending, five times that of outside Democratic spending and it's still 43-44. What does that tell Democrats? And should it be a warning to Republicans, even if Balderson pulls it off here?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Look, it's absolutely a warning. You can talk to any Republican who's involved with campaigns right now and they recognize this.

And for a couple reasons. The first one is, you look at this district and I will note - some people are overlooking the fact that there are rural areas in this district that are big Trump supporters.

HARLOW: That's who he was talking to last night. MATTINGLY: And that's who he was talking to last night. And that's

why President Trump came in on Saturday. This election is all about turnout, as they all are, but especially a special election, then those counties, those areas matter.

But it's also heavily suburban. Very highly educated - highest educated district in the entire state of Ohio. Those are the voters who we've polling - and Harry has covered this quite well that have trended far away from the president in 2016 and since then.

And that presents an opportunity. You add to that, the fact that it's in August, August 7, when a lot of people are in their final vacations before school, it's a special election, you don't generally get huge turnout anyway and you have enthusiasm driven by the president.

So, it's kind of a perfect storm where a district that Pat Teaberry, who recently retired, won by one-hundred-and-twenty-plus-thousand votes in 2016 is now very, very much in play.

HARLOW: Everyone is talking about these August vacations? Where's mine?

ENTEN: Who takes them?

HARLOW: OK. OK. When it comes to how either party is going to spin this, depending on who wins tonight, why is this race so important in terms of a sign for November nationwide?

ENTEN: I think it's a sign for a number of reasons. Number one, it's a well-educated district, as Phil was talking about, and Democrats want to target these well-educated districts that have traditionally been Republican. Two, it's in the industrial Midwest that Democrats want to pick up a lot of seats there.

And just talking about special elections in general, we have seen a sign throughout this cycle of Democrats doing well in these special elections, outperforming the partisan baseline. And what they would like here is to do that one more time to give them a nice boost heading into the midterms.

HARLOW: Let's talk about - this is not the only race today. I would be remiss not to mention Kansas, not to mention Michigan, but talking about Kansas, and you just wrote a piece on this.

The president's endorsement of Kris Kobach, of course, in the GOP primary. He ran the president's short-lived voter fraud sort of investigative team, if you will, that didn't come up with a lot.

But this is a big deal that the president has come in and supported him and it could cost.

ENTEN: I mean, look, he has gone against the Kansas state Republican Party. Jeff Colyer who is the incumbent governor, this is like incredible to me that you have the Republican president of the United States coming in and not endorsing the Republican sitting governor.

And Kris Kobach is the least popular major politician in that state.

HARLOW: So, is this just a loyalty play to say thanks?

ENTEN: I think it's a loyalty play. I think it's also the fact that he lines up more ideologically with him.

HARLOW: Sure.

ENTEN: But at the end of the day, if you look at Kris Kobach's numbers and you look at the polling for the general election, even though Kansas was won by Donald Trump by a little over 20 points, Kris Kobach could lose that seat for Republicans in the fall.

HARLOW: Let's talk about Michigan tonight. You've got - the odds are tough for him, but you do have the Democrat Abdul El-Sayed who's vying for the governor's seat. And if he wins, he would become Michigan's first Muslim governor - the country's first Muslim governor.

He had support from some big names, Bernie Sanders, Alexandria Ocasio- Cortez who won her primary here in New York 14. What are his odds? Does he make history tonight?

MATTINGLY: Look, obviously, it would be history. I think he had a long road to climb. And some of the endorsements, even though he was very much kind of resembling a Bernie Sanders like candidate on the policy side of things for the entirety of his campaign, Bernie Sanders actually came in kind of late, but there is the boost, and it is there.

And it's worth remembering won Michigan when nobody thought he had any chance whatsoever. So, it's going to be really interesting to see. Again, it's one of those things where, at this time of year, with races that a lot of people aren't coming out unless you're super motivated, the candidate with the most motivated voters is going to likely win, you would think.

But I do think it's been a long shot mainly because of a fundraising issue. He wasn't raising the money that the heavyweight was supposed to raise. But, I think, over the course of the last two weeks - and, Harry, you can correct me if I'm wrong on this - in terms of name ID, in terms of attention, in terms of getting his message out and in terms of kind of almost attaching to a grassroots, it's very real inside the State of Michigan, he's had absolutely had momentum on it.

HARLOW: You think about Dearborn, Michigan, I think a lot of people don't know the major Arab American population right in Dearborn.

ENTEN: I would just point out Gretchen Whitmer, who is the leading candidate, this is the year of the woman and that is why she should be favored.

HARLOW: All right. Thank you both. You're going to have a long day. And, Phil, you've been here since like 2:00 in the morning. Thank you all very much.

The president's team has a new message to their boss. Stop tweeting about that Trump Tower meeting. Is their audience too little too late when it comes to the Mueller probe?

And we're just moments away from the opening bell on Wall Street. Looking like stocks are set to rise in the green this morning. That's where futures are pointing. Why? Because of strong corporate earnings. Overall corporate profits up more than 23 percent this quarter. The second best since the recession.

(COMMERCIAL BREAK)

HARLOW: This morning, President Trump out of the public eye, and so far no mention of that now infamous 2016 Trump Tower meeting on Twitter, or at least his Twitter feed. Why?

It might be because his legal team urged him to stop. This, as they are weighing an interview between the president and the special counsel. Let's go to New Jersey where Abby Phillip joins us.

You're pretty close to where the president is. He's on vacation at his nearby golf club. Why is it that his advisers, Abby, our reporting is, seem so worried about the president's recent tweets from this weekend?

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Well, Poppy, it might not come as a surprise to a lot of people that lawyers don't want their clients tweeting repeatedly about an ongoing investigation.

But in this case, his advisers are telling him something slightly different. Don't tweet about this because it's only fueling a media narrative. Even if we believe you did nothing wrong, his adviser are saying to him it's only restarting all these conversations about this issue of obstruction. It launched a slew of conversations about whether the president had lied about that meeting, whether or not he had something to hide.

So, their advice is just don't tweet about it. And for now, he's taken that advice, at least for the last day or so, Poppy.

HARLOW: But will he take their advice, Abby, when it comes to doing an interview? I mean, he said repeatedly I want to speak to Mueller, I want to do this interview, I have nothing to hide. His team, though, has been adamant. They don't want him to. What's the status?

PHILLIP: That's right. I mean, I think this is really not getting that much closer to a resolution. We were told yesterday by Rudy Giuliani that they're preparing to give a response back to Robert Mueller today or tomorrow about the status of the interview.

We don't exactly what they're going to say, but it's going to be just another volley in this back-and-forth that they had had for weeks.

But then, Giuliani also told "The Washington Post" recently that they are going to tell Mueller that they have a lot of concerns about the issue of obstruction, about the idea of allowing the president to answer any questions at all about obstruction. So, it seems very much that we are back where we've always been with this issue of the interview. The president's lawyers really trying to push back on the issue of obstruction, giving another response back to Mueller. We'll see how Mueller responds back to them, Poppy.

HARLOW: All right. Abby, thank you for the reporting. Let's talk to my panel about it.