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Rick Gates Delivers a Public Lesson on Money Laundering and Political Corruption; Ohio Special Elections Too Close To Call; Source: North Korea Wants Second Trump-Kim Summit; White House Won't Clarify Trump's Inaccurate Wildfire Tweets. Aired 2-3a ET

Aired August 8, 2018 - 02:00   ET

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


[02:00:00] JOHN VAUSE, CNN ANCHOR: Is not competing.

(BEGIN VIDEO CLIP)

DANNY O'CONNOR, U.S. HOUSE DEMOCRATIC CANDIDATE: As we see division and discord tearing apart our country we must remember that each and every one of us are God's children and that all of us need to be treated with dignity and respect. And I think we could use a lot more of that spirit in Washington these days.

TROY BALDERSON, OHIO STATE SENATOR: I'd like to thank President Trump.

(CHEERING)

BALDERSON: It's time to get to work. Over the next three months I'm going to do everything I can to keep America great again. Because when we welcome -- when we -- we come back here in November, get ready, we've got to come back here in November ...

(CHEERING)

BALDERSON: ... I have earned your vote for a second time.

(END VIDEO CLIP)

VAUSE: Yes, they'll do it all again in just a couple of months. Let's bring out expert panel, we have Bill Schneider, a veteran political analyst and visiting professor at UCLA. Jessica Levinson, Professor of law and governance at Loyola Law School. Also with us Mo'Kelly, the host of the Mo'Kelly show here in Los Angeles. Shawn Steel, California Republican National Committee Member.

Bill, first to you. Great to have you with us.

BILL SCHNEIDER, POLITICAL ANALYST: Thank you.

VAUSE: We saw a couple of hours ago, the president taking credit for this result, even though it was a nail biter. He tweeted this out, "When I decided to go to Ohio for Troy Balderson, he was down in early voting 64 to 36. That was not good. After my speech on Saturday night, there was a big turn for the better. Now Troy wins a great victory during a very tough time of the year for voting. He will win big in November."

Okay, I mean you know, early voting and all that. You know you could argue everything in that tweet, but let's sort of maybe, does the president deserve any credit here? Is there an (inaudible) to say that his rally actually managed to get the few extra thousand people out to vote for the Republican?

SCHNEIDER: The Republican hasn't won yet. It's still too close to call. Although he's ahead.

VAUSE: Yes.

SCHNEIDER: And it's going to be difficult, I think, for the Democrat to make up the margin with the remaining votes. So, it's not clear how many votes are still out. I've heard different estimates, but the president clearly had an impact. He does stimulate a big Republican turnout.

He might have had an impact also tonight in Kansas where he endorsed Kris Kobach, who the last time I looked, was slightly ahead in that Republican primary over the Republican incumbent governor.

VAUSE: Yes.

SCHNEIDER: So, Trump does pull Republicans out and he has a clear base in the Republican Party.

VAUSE: Yes, we'll take a close look at some of the other races that took place around the country. So, that's a good point about Kansas, but Jessica, when we look at the bigger issue here, when it comes to Donald Trump and Republicans and motivating the base, is there a big issue in the sense that the disapproval of the president, his policies, his behavior, is that one of the reasons to blame for this ended up being a nail biter when it should have been, in any other normal time, an overwhelming win for a Republican.

JESSICA LEVINSON, PROFESSOR OF LAW: Well yes. So, this district should not have been close. We should not have had a special panel to talk about who's going to win.

We should not be talking about what the mandatory recount rules are for Ohio and the fact that a Democrat got this close in a district that, as you said, this has been a 30 year Republican stronghold.

This is a district that was won by Mitt Romney, this is a district that was won big by Donald Trump. This is a district, if you look at the registration numbers, yes, there are Democrats in this district, but this should have been a much safer Republican district.

And so, I think the fact that Donald Trump had to come, shows actually the negative impact of where we are.

There's a reason why we keep talking about flipping the House. Now, some of that is, historically it just happens that the party that's in power is going to loose in the midterms and we've seen that over and over again. But there's something different and unique about this precedence(ph).

VAUSE: Shawn, to that point, how did the seat go from being the reddest of, the reddest of ruby red seats for Republicans to now essentially just a, what, 1,700 votes deciding between a Republican and Democrat?

[02:05:00]SHAWN STEEL, CALIFORNIA REPULICAN NATIONAL COMMITTEE MEMBER: Well it's -- 200,000 people voted, but it was still a low turnout and the big shock and why it's going to be a runaway Republican victory in November is that 40 percent of Republicans turn out, which is about a third lower than it should have been.

By Trump coming out and stimulating the base, it truly made the difference. Now Trump, there's a lot of folks probably on this station, I'm guessing, that don't like Trump, but the other half of America likes him and he's actually doing better in the polls that Obama was at exactly the same time. And Harvard just ...

VAUSE: (Inaudible).

STEEL: ... but Harvard just ...

VAUSE: (Inaudible) less (inaudible).

STEEL: Somebody's not going to probably agree with this, but Harvard University, a respected institution, I think, the lefties like, they did a study that African-Americans are actually finding favor with Trump, up to 30 percent. No Republicans had that in the last 50 years. This view of Harvard.

VAUSE: Mo ...

STEEL: ... don't quote them all on that.

VAUSE: No ...

STEEL: Let me help you -- let me help you out there.

VAUSE: You had -- you've gone through everything now. You've gone from a district that Trump won by 11 points, that Romney won by 10 points and now it's a squeaker. So Mo ...

STEEL: Well let me help you -- we won. You lost, we won.

VAUSE: ... sure that explains what's going on in this district.

MO'KELLY, HOST OF MO'KELLY SHOW: Well you have to think about it this way, if you they need the president to get him over the hump in a supremely red district, that should tell you that the district was in jeopardy. That's the best reason that you could possibly give.

What that actually means is, there is a surge of momentum, at least in this area, we can't necessarily transpose that to the rest of the nation, but it does suggest that the president is not as popular, because that was a plus 11 district. STEEL: Mo, you're right, except I want you to have more of that momentum because you're going to keep loosing. We're going to pick up the Senate and we're going to keep the House.

VAUSE: Okay, so (inaudible) Republicans, in general would be ...

STEEL: More momentum ...

VAUSE: ... to campaign on the strength of economy as well as you know the Trump tax cuts for the November midterms and that is their hope, they believe, of actually maybe holding onto the House.

Earlier tonight Donald Trump held a dinner with business leaders. He said a few words. Here he is.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Through tax cuts, through regulation, powerful trade policies and that's what they are, powerful trade policies. Some of you probably love them and a couple of you probably don't because you're on the wrong side of the border. But, if you're from this country you're loving what's happening.

(END VIDEO CLIP)

VAUSE: Bill, he was basically talking about America great again, his policies are awesome, it's all about the strong economy. Noted that he did invite some business leaders to that dinner that he publicly disagreed with.

So, maybe that's progress on a personal side, but if the economy is so great, if the tax cuts are so wonderful, why did the Republicans throw that strategy out of the window within a month of this campaign and then revert to personal tax on the Democrat and going after Nancy Pelosi and others?

[02:10:00] SCHNEIDER: Because that gets the base going. It's red meat for the base. The economy is good and I think a lot of voters, when the economy is good, they always credit the president.

People believe in this country that the president is commander in chief of the economy. He's not. Nobody is. It's a $20 trillion economy, but they believe he is and so a lot of voters will say and they are saying, if things are going pretty well, why should we vote for change? Why should we want someone different? What happened in that district is very interesting. The best educated, most affluent suburbs of Columbus, Ohio, bled Republican voters to the Democrats.

What we're finding around the country today is, the wealthier you are, the more likely you are to be a Republican. The better educated you are, the more likely you are to be a Democrat.

And my students then say, well, what happens if you're wealthy and well educated, as a lot of people are? In that case, you're cross pressured, you're pulled in different directions. If you vote you're economic interest, you're going to vote Republican. If you vote your cultural values, liberal, you're going to vote Democratic.

VAUSE: Okay, so the president, he was very much invested in this election, a lot more than we've seen in the past. He rallied, he tweeted, he rallied some more. So, listen to this.

(BEGIN VIDEO CLIP)

TRUMP: If you want to stop the radicals, Pelosi and Waters, Maxine Water's, agenda, there's only one choice in this election, that's vote for Troy Balderson.

BALDERSON: Worst of all, dishonest Danny O'Connor will vote for Nancy Pelosi for speaker.

(YELLING)

(END VIDEO CLIP)

VAUSE: Okay, so Jessica, Pelosi worked a term for the Republicans back in 2010 and 2014, but given how close this result looks to be, has that moment now passed?

LEVINSON: I don't know. One thing I wanted to pick up on is we keep saying that the economy is strong, but the economy, as we said, is a multi-trillion dollar space. And so the economy is great for some people and if you look at macro numbers, some people are doing great.

VAUSE: Yes.

LEVINSON: But, if you look at inequality numbers and if you look at how the division between the top and the bottom is actually increasing exponentially, it tells a different story.

And so the recovery from this great recession is in the vast majority of cases, felt by the upper echelon of voters. I think Bill is exactly right. There is a tension between people who are voting with their pocketbooks as to people who are voting with their cultural values.

Now with respect to Nancy Pelosi, I mean I know that she is far from popular in this particular race, but I think we also have to look and Nancy Pelosi is a powerhouse fundraiser and I think that will be really then name of the game for her keeping her power.

VAUSE: And by what we've seen is that, you know, we've had this sort of -- this message from the Republicans, the personal attacks, the cultural issues, which they've resorted to a couple times on these special elections.

On the other side we've seen Democrats having this very consistent message. It's been about healthcare, it's been about economic fairness, they've been running moderate candidates who try to get -- in some ways to distance themselves from Pelosi, who've sort of presented themselves to the second amendment supporters, that kind of stuff. MO'KELLY: They've chosen candidates which might be a better fit for

those specific elections as opposed to running a national campaign. And if I could for second, it's kind of funny how Republicans keep talking about Nancy Pelosi as if Republicans would be more inclined to vote for a Democratic candidate if someone else is going to be Speaker of the House. So let's be clear on who is really running and who is sending out the message of -- which is actually speaking to the constituents.

That's why I think the Democrats in these special elections have done better, because they're actually speaking to the issues of the community as opposed to some national message of who might be the Speaker of the House. They don't mention Paul Ryan, they don't mention Kevin McCarthy, they don't mention anyone who might be the next Speaker of the House or some sort of boogeyman or boogeywoman, as it were.

VAUSE: You're itching to say something, Shawn. So why do they keep going after Pelosi?

STEEL: Well, let's -- let's look at the macro. Bill's going to correct me on this, so I'm going to depend on the professor.

I think there's been six congressional elections since Trump has been president. How many Democrats won? They were going to win all these seats, they spent $20 million in Atlanta and they spent -- probably by now $50 million, $60 million; they've lost them all.

SCHNEIDER (ph): No, no, no, no, no, no...

STEEL: They haven't won in Pennsylvania

(CROSSTALK)

UNKNOWN MALE: What about Alabama...

SCHNEIDER (ph): No.

STEEL: I said -- I said congressional, but you're also right about Alabama. And that was -- that was a great master (ph). And the Republican deserved to lose that.

UNKNOWN MALE: ...and they did great (ph).

UNKNOWN MALE: Yes.

STEEL: But the congressional seats, the Democrats -- let's mention this again, because you're making it sound like they're winning everything -- they're losing everything.

SCHNEIDER (ph): No, they won Pennsylvania.

STEEL: Except one congressional seat.

VAUSE: And to that point, though, you know...

(CROSSTALK)

STEEL: And we're going to get it back (ph).

VAUSE: ...it still doesn't give you a seat in Congress.

SCHNEIDER: No. Close doesn't matter in politics.

VAUSE (ph): Yes.

SCHNEIDER: Winning is winning. Winston Churchill was once asked, how big a majority do you need to be able to govern? And he said one will be enough.

VAUSE: Yes, exactly. Very quickly, though, because we know that Trump won this district, what, by 11 points? Margins slightly better than Mitt Romney 4 years earlier, I think it was about 10 (ph).

So I want to just get -- with -- with, you know, that in mind, if we look at the results now, is there any way to -- to know if this really bad couple of weeks that Donald Trump has had, you know, with the revelations in the Russia investigation, with the Trump Tower meeting, you know, essentially admitting that he had been lying, you know, over and over again when it comes to that leading, has -- would that have any impact on these results?

LEVISON: Well, look, I think there's going to be a lot of, you know, looking at this race and trying to figure out isolating factors, what actually affected this race. I would say when you listed the bad couple of weeks, I mean, a lot of us feel like it's been a bad year and a half.

So I think...

(CROSSTALK)

VAUSE: Yes, it's all relative.

LEVISON: ...yes we have seen hiccups, but Donald Trump has been really masterful, I think, at trying to in the worst weeks, move us to the less important story. So sure, let's talk about Paul Manafort, but what we're not looking at is really admissions of collusion. So how does the -- you know, how does the really bad on top of the typically weeks really play in here?

I mean, it's hard to say, other than we know that Democrats have not succeeded in all of the races since President Trump has become President Trump, but we also know that the gap in their losses...

VAUSE: Yes. Yes.

LEVINSON: ...has closed in a really extraordinary degree (ph).

VAUSE: And -- and that's the point, right, Mo, isn't it? It's all about the margin, not necessarily the -- who won.

[02:15:00]MO'KELLY: It's -- it's the margin, but you can't necessarily overvalue that margin. Because I don't believe all the races are transferrable. Why people were coming out for the Democrats in this poll -- in this election in Ohio was very different from what happened in New York.

VAUSE: Right. Yes (ph).

MO'KELLY: It is not the same. But at the same time, it is significant as we look at the overall movement of the party.

VAUSE: OK, we'd like you all to stay with us, because a lot more to get to this hour. We'll have another nailbiter to tell you about in Kansas (ph) in just a moment. It's coming down to the wire for another Republican candidate who was endorsed by the president.

(COMMERCIAL BREAK)

VAUSE: Welcome back, everybody, 11:17 here on the West Coast, and Donald Trump's candidate is holding on to a razor-thin lead in a special election for the U.S. House seat from Ohio. Troy Balderson is facing Danny O'Connor in the race, seen as a possible bellwether heading into November's midterm elections. Thousands of ballots are yet to be counted.

Another Trump candidate of choice, Kris Kobach, is neck-and-neck with incumbent Jeff Coyler in the Republican governor's race in Kansas. The winner will face Democratic state Senator Laura Kelly in November.

And in Missouri, CNN predicting Attorney General Josh Hawley will win the Republican Senate primary and will face the very vulnerable (ph) two-term incumbent Democrat, Claire McCaskill.

And Michigan now, CNN projects former state legislator, Gretchen Whitmer will be the Democratic candidate for governor, beating out progressive Abdul El-Sayed, who was hoping to become the first Muslim governor in the U.S.

OK, back to our panel now on all of this (ph). Just very quickly, Jessica, if we look at how the Democrats' night turned out, a lot of women taking away -- you know, winning these races. Which seems to be a part of the (ph) trend which we've seen, you know, for the last year or so.

LEVINSON: There have been a record number of women who have decided to either run for office or go into training programs to run for office. So there are groups like EMILY's List, there are lesser known groups that do almost exactly the same thing.

And if you look at study after study, what it has shown is that the Trump presidency has energized not just Millennials and not just members of minority communities, but disproportionately, in terms of who's going to actually run, from the city council level to State Assembly and Senate, to Congress, to Senate, it's been women who have said over and over again, "I'm going to take part in this aspect of civil -- civic life."

VAUSE: Right. LEVINSON: "And I'm going to declare my candidacy."

VAUSE: With that in mind, do you -- the president may have a 38 percent job approval nationwide, Bill, but he's still very popular in places like Kansas. And Kris Kobach, who received that presidential endorsement by tweet, but less than 24 hours before the polls opened, he believes, you know, it came just in time. It basically was a much- needed boost.

So you know, the president still has a lot of power, a lot of popularity to get his candidate, if you like, in these conservative states over the line, did it in Georgia just a couple weeks ago.

SCHNEIDER: He is the king of the base -- he has a real base in the Republican Party. Your base are the people who are with you when you're wrong. Ronald Reagan had a base during Iran-Contra, Clinton had a base during the Lewinsky scandal, Trump has had a base even during the Access Hollywood tapes.

They stayed with him because he's a fighter. He fights for what they believe in. Even evangelicals stay with him, though he doesn't exactly exemplify what they believe, because he delivered for them. And what they wanted was the Supreme Court and he's given them nominations of two Supreme Court Justices who they believe will be just what they want.

VAUSE: Yes, but Mo, you know, we had the Republican Party officials in Kansas who reportedly asked the president not to get...

SCHNEIDER: -- he delivered for them. And what they wanted was the Supreme Court and he's given them nominations of two Supreme Court justices who they believe will be just what they want.

[02:20:00]VAUSE: But Mo, you know, we had the Republican party officials in Kansas who reportedly asked the president not to get involved in this fight. Because they're more concerned about what happens come November (inaudible) you know, the -- the governor nominee for -- for the Republicans and essentially the division that will create, possibly opening the way for a good result for the Democrats.

MO'KELLY: Well, traditionally the president is the titular head of the party he or she would represent. But this president is not president of the United States, he's not president or the titular head of the Republican party, he's the president of his base. That is all who -- who he cares about. He has no interest in trying to grow it, he's not trying to reach out, he's not trying to reach across the aisle. He's only with the people who are with him unconditionally.

VAUSE: OK. Let's take a look at the president's scorecard when it comes to backing winners, first in the primaries event in general elections. In the primaries, it's overwhelming. 18 wins, one losses. And in the general election, not quite the same. What is that? One win, three losses. So Shawn, you know, that does seem to be the story of Donald Trump, in -- in many ways in that he animates the base and that gets them out. But then, that -- in the primary elections, but then -- you know, what

he does to get the base out also energizes the Democrats, you know, come the general elections.

STEEL: It's polarizing. I've never seen anything like it but I understand it. I think Obama graded (ph) the country so far to the left there was this tremendous alienation -- probably (ph) half the country. Some of the folks here don't know what I'm talking about but it was miserable for eight years under Obama. And so there's that reaction reaction and -- and --

(CROSSTALK)

STEEL: Well, actually the great -- depression under Obama didn't go very well for a whole long eight years but let's move on. Of the -- of the six congressional elections we talked about for House of Representatives, Republicans won five of the six and Trump endorsed Republicans each (ph) (inaudible). I'm going to have to talk to the scoreboard person because you got the numbers mixed up because Trump's winning most of the elections.

In California during the election, about half the Republicans didn't like Trump very much. I know that because I'm the national committee man (ph) and I get to talk to these folks all the time. It's about 90 percent now. So it's not just the base or the small group of people, it's -- it's a vast majority of the Republican party, the pure infrastructure (ph) from one end to the other. Trump has kept more than his promises, has been more effective and -- and he's actually a lot more popular.

And -- and -- and I got to tell you, we have different sets of universes and Rasmussen, for example, is showing that -- that -- that Trump is more popular today than more people attacking him. So --

VAUSE: We --

(CROSSTALK)

VAUSE: -- but Jessica, just to go (ph) to Shawn's point, you know, Colyer, who is the incumbent governor right now in Kansas, he raised more money than Kobach, who's endorsed by the NRA, he had the backing (ph) of, you know (ph), (inaudible) statesman Bob Dole (ph), you know, he was -- you know, (inaudible) credentials out there. You know, anti-abortion. But Kobach has a presidential tweet endorsing him. So does that mean -- you know, those traditional Republican values in a very conservative Republican state.

Is the president's endorsement (ph) now, you know, more influential, more powerful than what used to be conservative values?

[02:25:00]LEVINSON: Well I think what we're seeing in Kansas is what we're seeing in Washington D.C. and what we're seeing in many states throughout the nation, which is that there's tension between the Republican establishment and Donald Trump's Republican party. And I think what we're seeing, frankly, is that Donald Trump's Republican party is really coalescing. And that the old establishment is essentially falling in line.

And for a lot of people, this has become one of the biggest surprises of the Trump presidency, which is that this wasn't just, well, you know, Republicans have one world view and Democrats have another. The surprise was that the Republicans establishment fell in line behind President Trump even after he has really done nothing but propagate lies, harm the country, divide us along really a fractured fault line. And so I think yes, what we're seeing in Kansas is what we will see even more so in the midterms, where we will see President Trump saying this is my person.

And then I think the Republicans establishment is going to fall in line as they have.

VAUSE: Well, just -- Mo, just to finish out with you, what does the Republican party look like after President Trump's candidates are the ones who essentially, you know, win these primary results and stay (ph) for the midterm elections?

MO'KELLY: Well, I don't know what they'll look like but they'll sound like Donald Trump. We'll see a lot of Republicans, to Jessica's point, who'll run to the president. Because it's clear now, at least from the Republican base, they're going to want the Republican support. And so if they can get that from or through Donald Trump, then yes, they're going to run to him. Now, whether this will help the Republican party long term, ask me November 8.

VAUSE: Right. Shawn, you -- 15 seconds, you want to say something? Wrap it up (ph)?

STEEL: Yes. In -- in Orange County there's four hot congressional races. We have three women that are running against three white Democrats. In inland empire (ph), we have two Muslim Republicans that are running for assembly. So this idea that there's a lily (ph) white party isn't born by effect (ph). Jessica's right, there are more women engaged, but that also includes the Republican party.

VAUSE: OK. Fair point to finish on. Thank you guys. We have a lot more to go this hour. When we come back, we'll talk about credibility. Ahead, the key witness faces a very tough cross- examination in the Paul Manafort trial.

(COMMERCIAL BREAK)

UNIDENTIFIED MALE: This is CNN breaking news.

VAUSE: Welcome back, everybody. 29 minutes past 11:00 here on the West Coast. You're watching CNN Newsroom live from Los Angeles. I'm John Vause with the very latest from Ohio and the 12th Congressional district could, in fact, be headed for a recount. Donald Trump's candidate, Republican Troy Balderson holds a slim lead over Democrat Danny O'Connor. More than 8,000 absentee and provisional ballots are yet to be counted.

Donald Trump won this district by 11 points back in the 2016 presidential election. Well, the credibility in the prosecution's key witness in Paul Manafort's bank and tax fraud trial came under attack Tuesday. Rick Gates was Manafort's deputy for 10 years and now he's testifying against the former Trump campaign chairman. It was a blistering cross-examination by Manafort's lawyers. We have (ph) details

[02:30:00] VAUSE: -- Paul Manafort's bank and tax fraud trial came under attack Tuesday. Rick Gates was Manafort's deputy for 10 years and now he's testifying against the former Trump campaign chairman. It was a blistering cross-examination by Manafort's lawyers. We have details from Jim Sciutto.

(BEGIN VIDEOTAPE)

JIM SCIUTTO, CNN INTERNATIONAL CORRESPONDENT: Star witness Rick Gates back on the stand admitting during a harsh cross-examination to having an extra marital affair a decade ago, but denying accusations by Paul Manafort's lawyer that he was embezzling money from Manafort in order to fund his affair and what the defense attorney referred to as a secret life in London and elsewhere. Gates also testified today that two weeks after Donald Trump's election, Paul Manafort recommended that his banker Steven Calk become Secretary of the Army.

Calk allegedly loaned Manafort money under false pretenses. Gates detailed how broke Manafort was when he joined the Trump campaign in March 2016 working at the time for no salary. Gates said that Manafort's consulting firm had no clients then and that they were at the time trying to secure another political consulting contract in Ukraine, but had not yet been able to. In a 2015 e-mail exchange, Manafort was clearly frustrated. WTF, Manafort wrote to Gates.

How could I be blindsided like this? Manafort said. This after learning that the taxes he was due to pay were much high than he had anticipated. Gates admitted that he also supplied false information to banks in order to help Manafort secure bank loans. Gates testified that Manafort made more than $5 million between 2011 and 2012 doing consulting work for a Ukrainian billionaire. Gates went into detail about how shell companies were used to move money into hidden accounts in Cyprus.

In one instance according to gates, a payment supported lobbying in the United States. Gates stated that Manafort reported some of the payments to U.S. tax officials as loans. Though they were in fact income adding that Manafort was, "Trying to decrease his taxable income." Prosecutors demonstrated that Manafort directed these activities through e-mails. There were hundreds of these, Gates said in court. Adding, "Typical practice was Mr. Manafort would send me a list of wire requests."

Gates admitted that he used information provided by Manafort to create invoices for fake amounts of money for wire transfers. But the money never actually went to the vendors. Instead, it went to the banks. The purpose of this according to Gates, so that the wire transfers would not be recorded on U.S. business records. Nonetheless, on Monday, the prosecutors elicited testimony from Mr. Gates and from one of Mr. Manafort's accountants that tied Manafort more closely to Russia. The accountant, Cindy Laporta testified that in 2006, Mr. Manafort

received $10 million loan from Oleg Deripaska, a Russian oligarch close to President Vladimir Putin. Ms. Laporta said she saw no evidence the loan was ever repaid.

(END VIDEOTAPE)

SCIUTTO: Throughout Paul Manafort's attorneys focus has been on undermining the credibility of Rick Gates saying, why should the jury believe him now considering the fact that he has lied before admitted to lying before to federal prosecutors? Rick Gates' answer is that he's taking responsibility now for those mistakes, and there was a powerful moment in the trial today when he said that is a choice that Paul Manafort has not taken as well. Jim Sciutto, CNN, at the courthouse in Virginia.

VAUSE: CNN's Legal Analyst Areva Martin joins us now. Also back with us Mo'Kelly and Shawn Steel. OK. Areva, let's talk through this. There is a lot in this trial. A lot happened on Tuesday. So let's just sum it up. Well, sum it up anyway. We've heard now that from Robert Gates about a seven-year long conspiracy with Manafort which includes lying to the IRS to avoid taxes, providing false information (INAUDIBLE) get millions of dollars of loans, Gates helped Manafort to open secret overseas bank accounts, tax , and bank fraud scheme which labeled income as loans to reduce Manafort's tax bill.

His account is also reclassified loans as income to get a better lending rate with these banks. Manafort's lawyers also allege possible embezzlement by Gates of millions of dollars. Overall, not a great day for Gates, but he has immunity, so what was the impact at the end of the day on Manafort?

AREVA MARTIN, CNN INTERNATIONAL LEGAL ANALYST: Well, the whole issue here is the credibility of Gates. And we knew all along that the defense attorneys were going to after him pretty hard. This is a guy that embezzled money from Paul Manafort, the guy that he was also involved in other criminal activity with. This is a guy that also lied to the FBI, federal prosecutors, so there's huge credibility issues. But this is the kind of witness that prosecutors typically use in these kinds of cases. You know, they didn't pick Rick Gates. They didn't pick Paul Manafort. Paul Manafort picked Rick Gates.

VAUSE: Is relying on Gates alone for evidence, the case would not be great?

[02:35:08] MARTIN: The case wouldn't have been brought because his credibility is so shot. The jurors are not likely to believe much of what he has to say. But there is this, you know, this trove of evidence of documents, e-mails, bank records, and we can't forget the witnesses that came before Rick Gates. These are people that don't have any interest. They weren't benefiting from this fraudulent scheme, this criminal scheme that Manafort was engaged in.

So these are people that got immunity and came forward and gave testimony. And we should expect to see other witnesses like that. Those are the witnesses that I think the jurors are going to really focus in on. They're going to say, OK, Rick Gates is a liar. Paul Manafort is a liar. But let's look at these other independent witnesses and then all of this documentary evidence. That's what's going to decide this trial.

VAUSE: Yes. So, Mo, for the first time, the Trump campaign was mentioned by name. In the past, it was always a presidential campaign. What it's starting to look like is that, you know, at best, the president didn't really know what Manafort was engaged or up to but there was this kind of scheme from Manafort allegedly. It hasn't been proven guilty yet. It's all alleged at this point. He is innocent until proven guilty.

MO'KELLY: We have to -- we have to be willing to admit that Paul Manafort was going to try to monetize, so use your point. Any opportunity which will present itself to think that he -- a broke man was trying to working for the Trump campaign and not have some sort of financial angle to come out of it will be pretty ignorant for us to assume. What is going to happen at this point is we're going to see the tendrils of this as far as financially extend far beyond just Rick Gates, far beyond just a Donald Trump hypothetically, presumably, we're going to find how deep and how close beyond Paul Manafort is this Trump campaign to rush on a financial level.

VAUSE: And Shawn, when we look at sort of the evidence which is now being presented and again, you know, the president saying he didn't know anything about it. He didn't know what was going on, how much longer can the president use that excuse against politically because legally I guess it's fine? But politically, how much longer can that last before it becomes a question of his credibility and his competence if you would like because, you know, he hired only the best people?

STEEL: Paul Manafort is a bad character and --

(CROSSTALK)

STEEL: -- this is a tax cheat case. Bottom line is he didn't pay his taxes. He hid them --

(CROSSTALK)

STEEL: -- and has hardly anything to do with Trump and has nothing to do with Russian collusion. Paul Manafort picked the wrong side in the Ukraine. He took the Russian side, Putin's side against the Ukrainian people. He made a lot of money. Apparently, he didn't pay a lot of taxes on that and he bought some really weird clothes and that's the kind of a boring case. And here's a funny thing, they're using a lot of perjured people for providing testimony. He might get off this thing. But I really don't think it has going to do with anything except Paul Manafort maybe spending a lot of time in jail.

MARTIN: I beg to differ with that to say that the campaign chairman for the president of the United States --

(CROSSTALK)

STEEL: Four months. Four months.

Martin: For the kinds of charges that he's on trial for, yes, this isn't a trial of Donald Trump but this is a trial of his judgment. It's a trial of his ability to vet people who are -- he brought into his orbit. This guy was in the closest, you know, confine -- the closest relationship with the President of the United States. And if we can't trust our president to pick people who are not going to be indicted, not once, but facing two criminal federal trial, that says a whole lot about this president --

(CROSSTALK)

KELLY: -- was named David Axelrod. I'm quite sure Shawn Steel's argument would have changed considerably.

VAUSE: But what about the others who are being charge George Papadopoulos, Michael Flynn (INAUDIBLE) done deals and admitted to lying and have been guilty on this other charges who were very close to the president?

STEEL: There's a whole another story here that the other half of America is listening to and we need to have both sides of America appreciate it. The FBI has known about Paul Manafort for years and they never --

(CROSSTALK)

STEEL: -- and they've never taken any action.

VAUSE: Hold on. Did they actually -- did the -- was the FBI obliged to inform Donald Trump about their investigation of Paul Manafort that have been ongoing --

(CROSSTALK)

STEEL: Well, they did, Dianne Feinstein.

MARTIN: They already know that the FBI provided lots of information to Donald Trump. He was given a ton of information --

(CROSSTALK)

STEEL: About Manafort?

MARTIN: -- investigations that were going on. He rarely listened to or, you know, received the information that was being provided to him. So whether, you know, one thing that's really concerning me about Shawn's statement, first of all, half of the country. Half of the country is not sitting here rooting for Donald Trump as Shawn would like for us to believe. That's just a false statement. And Donald Trump had an obligation to know who he was bringing into his campaign that they were criminals. He didn't do that. And now this is a huge stain on his presidency.

[02:40:01] VAUSE: Last word to Mo. KELLY: Let's think of it this way. It was his as in Donald Trump's

choice as Paul Manafort, Former campaign manager. It was his choice, Michael Flynn. It was his choice in terms of Rick Gates. It's his choice as far as Attorney General Jeff Sessions. All of them have connections to Russia. Let's do the simple math.

VAUSE: OK. On that, Shawn, thank you. Areva, thank you. Areva, as always, thank you too.

MARTIN: Thank you.

VAUSE: A short break. When we come back here, will the U.S. president and the North Korean leader meet for a second summit? Here's National Security Adviser announces that. Well, it's a possibility.

(COMMERCIAL BREAK)

[02:44:47] VAUSE: Welcome back, everybody. 11:44 here on the West Coast. And we're watching two races that have come down to the wire, special elections in the U.S. In Ohio, Trump backed Republican Troy Balderson, has a narrow lead over Democrat Danny O'Connor, in a special election for the 12th District.

And in the Republican governor's primary in Kansas, another Trump choice. Kris Kobach, neck-and-neck with the incumbent Jeff Colyer. U.S. President Donald Trump is now actually moving on to -- and he is prepared to meet with Kim Jong-un, again at any point. That's according to the U.S. National Security Advisor John Bolton.

He told Fox News that Secretary of State Mike Pompeo is also ready for any meeting. The president and the North Korean leader first met in Singapore, back in June. Behind the scenes, U.S. and North Korean officials have been talking about sanctions and other issues that might just derail nuclear talks.

Let's get to Will Ripley that are live for us in Hong Kong, as a big change of gears from the elections to North Korea. Will, OK. Do the North Koreans actually want to sit down and negotiate with Pompeo, the Secretary of State? Or is this all about meeting with Donald Trump, directly?

[02:45:51] WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: The sense I'm getting from speaking with sources and from even just listening to the messaging in North Korean state media is that they are holding up President Trump as their best hope for a deal that is favorable to North Korea.

Even in statements at the ASEAN summit over the weekend by North Korea's foreign minister Ri Yong-ho, which were very critical of the U.S. Calling U.S. actions' alarming. Saying that the U.S. is not living up to its end of the bargain, not living up to the spirit of the June 12th agreement that was signed in Singapore.

They were focusing their criticism on the State Department. Not mentioning Secretary of State Mike Pompeo, but blaming U.S. internal strife and old mindset within the administration conflicting, they said with the grander view of the U.S. president.

So, it does seem, John, they want to meet with Trump. And they would like to do so, according to my source, before the midterm elections. Because they think they can put some pressure on the Trump administration to come out of the second meeting with something more substantive which President Trump can then use to gain political points ahead of the midterm. So, actually, the politics of North Korea all tied together somehow.

VAUSE: We've also heard -- you know, the administration -- the U.S. administration making sort of hints that this meeting was certainly on the cards or being considered, at least. So, if there is be the second summit, you're saying the North Koreans would like it -- you know, before the midterms that's what, 90 days away.

Is that possible according to the Americans? And I guess, where? That's the other big question. Where would they hold this summit?

RIPLEY: It is possible if, for example, Kim Jong-un were to come to New York for the United Nations General Assembly, which kicks off on September 18th. A lot of world leaders flying for that, there had been rumors that that the Americans and North Koreans were working out some sort of a deal to send Kim Jong-un or somebody of a very high- level like Kim Yong-chol, the chief nuclear negotiator.

But if Kim Jong-un did come to New York, could you imagine a meeting at Trump Tower with the North Korean leader and a sitting U.S. president. Remember President Trump hinted about a possible meeting just last week on Twitter when he was thanking Chairman Kim for returning the purported remains of U.S. Korean War service members.

Also thanked him for his letter and said, I'll see you soon. So, we just have to watch in and see what unfolds in the coming weeks.

VAUSE: You know, that's something I could not imagine just a year or so ago, but now I can. Will, thank you. Will Ripley, live for us in Hong Kong.

RIPLEY: Yes.

VAUSE: We'll take a short break. Next here on NEWSROOM, L.A., California fire season has only just begun, but the state is already facing historic wildfires and there is no end in sight

(COMMERCIAL BREAK)

[02:52:32] VAUSE: Welcome back, everybody it's just gone 11:52 here on the West Coast. And at this hour, it is still too close to call of the race to Ohio's 12th Congressional District. President Trump campaign for Republican Troy Balderson, who currently has the lead over Democrat Danny O'Connor.

Thousands of ballots are yet to be counted. The district has been Republicans for more than three decades. And Donald Trump won it by 11 points back in 2016. California is struggling to contain some of the worst wildfires it has ever seen. The U.S. president has not acknowledged a growing scientific consensus that climate change is contributing to the ferocity of fires.

Instead, he cited a whole bunch of other reasons, but it seems the White House is just not entirely sure what he's talking about. CNN's Stephanie Elam has more.

ELAM: Tonight, the Mendocino Fire charring almost 300,000 acres. Making it the largest wildfire in state history. So far, it has scorched an area larger than all of New York City's five boroughs put together.

Another fire erupting Monday in Orange and Riverside Counties. The Holy Fire has already burned over 4,000 acres. Across the Golden State, 17 large fires are raging as more than 14,000 firefighters battled the fast-moving flames. Spurred on by dry and windy conditions.

President Trump, Monday, blamed the state, inaccurately linking California's long-running water shortage to the intensity and spread of fires in the state. Tweeting, "California wildfires are being magnified and made so much worse by the bad environmental laws which aren't allowing massive amounts of readily available water to be properly utilized."

Trump also incorrectly suggesting that California diverts water into the Pacific Ocean. Tweeting, "Governor Jerry Brown must allow the free flow of the vast amounts of water coming from the north and foolishly being diverted into the Pacific Ocean."

But Cal Fire, the agency in charge of fighting these fires is rebuking those claims in a statement, saying, "There is nothing to release, there are no specifics to the tweet. We have plenty of water to fight these fires. The current weather is causing more severe and destructive fires."

White House officials have declined to clarify the president statement. Before the people devastated and threatened by these wildfires, the concern is less political and far more personal.

(BEGIN VIDEO CLIP)

SAM HARREL, SPOKESPERSON, FERGUSON FIRE: We're working as best we can with the resources that we have to manage this. But, Mother Nature has taken its course and we've needed to adapt to it.

(END VIDEO CLIP)

[02:55:09] ELAM: And John, just to give you an idea of how bad this fire season has been over the last three weeks, some 550,000 acres have been burned. Like what you're seeing here in this Mendocino Complex Fire which is now the largest fire in state history.

Just take a look at that and think about what this means for the state. And to know on top of it, John, that fire season is nowhere near the end.

VAUSE: Stephanie there in Clearlake, California. Thank you. And thank you for watching. I'm John Vause in Los Angeles. Please stay with us, the news continues with Rosemary Church. She's in Atlanta and she'll be with you after a very short break.

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END